document stringlengths 8.64k 13.4k | summary stringlengths 179 2.97k | __index_level_0__ int64 0 16.8k |
|---|---|---|
these statements are often , but not always , made through the use of words or phrases such as “ may , ” “ should , ” “ could , ” “ predict , ” “ potential , ” “ believe , ” “ will likely result , ” “ expect , ” “ continue , ” “ will , ” “ anticipate , ” “ seek , ” “ estimate , ” “ intend , ” “ plan , ” “ projection , ” “ would ” and “ outlook , ” or the negative version of those words or other comparable words or phrases of a future or forward‑looking nature . these forward‑looking statements are not historical facts , and are based on current expectations , estimates and projections about the company 's industry , management 's beliefs and certain assumptions made by management , many of which , by their nature , are inherently uncertain and beyond the company 's control . accordingly , the company cautions you that any such forward‑looking statements are not guarantees of future performance and are subject to risks , assumptions and uncertainties that are difficult to predict . although the company believes that the expectations reflected in these forward‑looking statements are reasonable as of the date made , actual results may prove to be materially different from the results expressed or implied by the forward‑looking statements . there are or will be important factors that could cause the company 's actual results to differ materially from those indicated in these forward‑looking statements , including , but not limited to , the risks described in “ part i – item 1a . – risk factors ” and the following : · natural disasters and adverse weather ( including the effects of recent hurricanes , tropical storms and tropical depressions on the company 's market area ) , acts of terrorism , pandemics , an outbreak of hostilities or other international or domestic calamities and other matters beyond the company 's control ; · the geographic concentration of the company 's markets in beaumont and houston , texas ; · the company 's ability to prudently manage growth and execute its strategy ; · risks associated with the company 's acquisition and de novo branching strategy , including entry into new markets ; · changes in management personnel ; · the amount of nonperforming and classified assets that the company holds and the time and effort necessary to resolve nonperforming assets ; · deterioration of asset quality ; · interest rate risk associated with the company 's business ; · business and economic conditions generally and in the financial services industry , nationally and within the company 's primary markets ; · volatility and direction of oil prices and the strength of the energy industry , generally and within texas ; · the composition of the loan portfolio , including the identity of the company 's borrowers and the concentration of loans in specialized industries ; · changes in the value of collateral securing the company 's loans ; · the company 's ability to maintain important deposit customer relationships and its reputation ; · the company 's ability to maintain effective internal control over financial reporting ; · increased competition in the financial services industry , particularly from regional and national institutions ; · volatility and direction of market interest rates ; · liquidity risks associated with the company 's business ; · systems failures or interruptions involving our information technology and telecommunications systems or third‑party servicers ; · interruptions or breaches in the company 's information system security ; · the failure of certain third-party vendors to perform ; · environmental liability associated with the company 's lending activities ; · the institution and outcome of litigation and other legal proceedings against the company or to which it may become subject ; · repeal of federal prohibitions on payment of interest on demand deposits ; 42 · the costs and effects of regulatory or other governmental inquiries , the results of regulatory examinations , investigations ( including an ongoing fincen investigation ) , or reviews or the ability to obtain required regulatory approvals ; · changes in the laws , rules , regulations , interpretations or policies relating to financial institution , accounting , tax , trade , monetary and fiscal matters ; · further government intervention in the u.s. financial system ; and · other risks , uncertainties , and factors that are discussed from time to time in reports and documents filed with the sec . the foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this annual report on form 10-k. if one or more events related to these or other risks or uncertainties materialize , or if the company 's underlying assumptions prove to be incorrect , actual results may differ materially from what is anticipated . accordingly , you should not place undue reliance on any such forward‑looking statements . any forward‑looking statement speaks only as of the date made and the company does not undertake any obligation to publicly update or review any forward‑looking statement , whether as a result of new information , future developments or otherwise . new factors emerge from time to time and it is not possible to predict which will arise . in addition , the company can not assess the impact of each factor on its business or the extent to which any factor , or combination of factors , may cause actual results to differ materially from those contained in any forward‑looking statements . the following discussion and analysis of the company 's financial condition and results of operations should be read in conjunction with “ item 6. selected financial data ” and the consolidated financial statements and the accompanying notes included elsewhere in this annual report on form 10-k. this discussion and analysis includes forward-looking statements that are subject to certain risks and uncertainties and are based on certain assumptions that the company believes are reasonable but may prove to be inaccurate . story_separator_special_tag replace_table_token_13_th net interest income net interest income for the year ended december 31 , 2018 was $ 124.7 million , compared to $ 107.8 million for the year ended december 31 , 2017 , an increase of $ 16.9 million , or 15.7 % . interest income increased in 2018 , as compared to 2017 , due to higher average loans and securities and higher average yields on loans , securities and federal funds sold . interest expense increased in 2018 , as compared to 2017 , due to higher average interest-bearing deposits and higher rates on interest-bearing deposits , offset by lower interest expense in 2018 due to the payoff of our note payable in the fourth quarter of 2017. increases in rates on interest-earning assets increased net interest income by $ 10.1 million and increased rates paid on interest-bearing liabilities decreased net interest income by $ 3.0 million for the year december 31 , 2018 , compared to the year ended december 31 , 2017 . 48 the following table presents for the periods indicated , average outstanding balances for each major category of interest‑earning assets and interest‑bearing liabilities , the interest income or interest expense and the average yield or rate for the periods indicated . replace_table_token_14_th ( 1 ) includes average outstanding balances of loans held for sale . ( 2 ) net interest spread is the average yield on interest‑earning assets minus the average rate on interest‑bearing liabilities . ( 3 ) net interest margin is equal to net interest income divided by average interest‑earning assets . ( 4 ) tax equivalent adjustments of $ 1.1 million and $ 2.3 million for the years ended december 31 , 2018 and 2017 , respectively , have been computed using a federal income tax rate of 21 % for 2018 and 35 % for 2017 . 49 the following table presents information regarding the changes in interest income and interest expense for the periods indicated for each major component of interest‑earning assets and interest‑bearing liabilities and distinguishes between the changes attributable to changes in volume and changes attributable to changes in interest rates . for purposes of this table , changes attributable to both rate and volume that can not be segregated have been allocated to rate . replace_table_token_15_th provision for loan losses provision ( recapture ) for loan losses is an income adjustment used to maintain an allowance for loan losses at a level management deems appropriate to absorb inherent losses on existing loans . for the year ended december 31 , 2018 , the recapture of $ 1.8 million was due to strong credit quality , continuing low nonperforming and impaired loans , minimal charge-off history and an increase in recoveries during the year . a recapture of $ 338,000 was recorded for the year ended december 31 , 2017 , primarily due to the pay‑offs of certain classified and problem loans and the resulting reversal of their related allowance for loan losses . for a description of the factors considered by our management in determining the allowance for loan losses see “ management 's discussion and analysis of financial condition and results of operations—financial condition—allowance for loan losses. ” noninterest income noninterest income increased minimally between 2018 and 2017 , although there were increases in deposit account service charges , card interchange fees and earnings on bank-owned life insurance , partially offset by decreased gains on sales of fixed assets . the major categories of noninterest income for the periods indicated below were as follows : replace_table_token_16_th 50 deposit account service charges . we earn fees from our customers for deposit‑related services and these fees are a significant component of our noninterest income . service charges on deposit accounts were $ 6.3 million for the year ended december 31 , 2018 , an increase of $ 481,000 , or 8.3 % , over the same period in 2017. this increase was predominately due to an increase in non‑sufficient and overdraft charges incurred by our deposit customers . net gain on sale of assets . net gain on sale of assets consists of the gains associated with the sale of fixed assets , small business association , or sba , loans , mortgage loans and other assets . net gain on sale of assets was $ 660,000 for the year ended december 31 , 2018 , a decrease of $ 864,000 , or 56.7 % , over the same period in 2017. net gains on sale of assets for the year ended december 31 , 2018 , primarily related to sales of sba and mortgage loans . net gain on sale of assets for the year ended december 31 , 2017 , primarily related to the settlement of a legal matter related to one of our branches and the sale of certain assets of two branches in 2017. card interchange fees . we earn card interchange fees from merchants as issuer of debit cards . card interchange fees increased $ 288,000 for the year ended december 31 , 2018 , compared to the year ended december 31 , 2017 , due to an increase in the volume of such transactions . earnings on bank-owned life insurance . the company has purchased life insurance policies on certain employees , which are carried at their cash surrender value . changes in the cash surrender value of the policies are recorded in noninterest income . earnings on bank-owned life insurance increased $ 235,000 during the year ended december 31 , 2018 , compared to the year ended december 31 , 2017 , primarily due to the impact of purchases of additional policies in the first quarter of 2018. noninterest expense generally , noninterest expense is composed of employee expenses and costs associated with operating our facilities , obtaining and retaining customer relationships and providing bank services .
| results of operations year ended december 31 , 2019 vs year ended december 31 , 2018 net income for the year ended december 31 , 2019 increased 6.8 % , compared to the year ended december 31 , 2018. this increase is primarily due to increased net interest income and noninterest income , partially offset by a higher provision for loan losses and higher noninterest expense . see further analysis of these fluctuations in the related discussions that follow . replace_table_token_7_th net interest income net interest income for the year ended december 31 , 2019 was $ 136.0 million , compared to $ 124.7 million for the year ended december 31 , 2018 , an increase of $ 11.3 million , or 9.1 % . n et interest income increased in 2019 , compared to 2018 , primarily due to increases in average loan yields and volume , partially offset by increased average rates on interest-bearing deposits and higher average federal home loan bank advances . loan growth during 2019 was funded through increased interest-bearing deposits , noninterest-bearing deposits and federal home loan bank advances . during 2019 , the costs of interest-bearing deposits trended upward due to competitive stress on rates but remain a low-cost source of funds , as compared to other sources of funds such as debt . 44 the following table presents for the periods indicated , average outstanding balances for each major category of interest-earning assets and interest-bearing liabilities , the interest income or interest expense and the average yield or rate for the periods indicated . replace_table_token_8_th ( 1 ) includes average outstanding balances of loans held for sale . ( 2 ) net interest spread is the average yield on interest‑earning assets minus the average rate on interest‑bearing liabilities . ( 3 ) net interest margin is equal to net interest income divided by average interest‑earning assets .
| 5,900 |
management ; ( iii ) our overall financial results for the year story_separator_special_tag the following discussion and analysis of financial condition and results of operations of global partners lp should be read in conjunction with the historical consolidated financial statements of global partners lp and the notes thereto included elsewhere in this report . overview general we are a midstream logistics and marketing company . we are one of the largest distributors of gasoline ( including gasoline blendstocks such as ethanol and naphtha ) , distillates ( such as home heating oil , diesel and kerosene ) , residual oil and renewable fuels to wholesalers , retailers and commercial customers in the new england states and new york . we also engage in the purchasing , selling and logistics of transporting domestic and canadian crude oil and other products via rail , establishing a `` virtual pipeline '' from the mid-continent region of the united states and canada to the east and west coasts for distribution to refiners and other customers . we own , control or have access to one of the largest terminal networks of refined petroleum products and renewable fuels in the northeast . we also own and control terminals in north dakota and oregon that extend our origin-to-destination capabilities . we are a major multi-brand gasoline distributor and , as of december 31 , 2013 , had a portfolio of approximately 900 owned , leased and or supplied gasoline stations primarily in the northeast . we receive revenue from retail sales of gasoline , convenience store sales and gasoline station rental income . we are also a distributor of natural gas and propane . we purchase refined petroleum products , renewable fuels , crude oil , natural gas and propane primarily from domestic and foreign refiners and ethanol producers , crude oil producers , major and independent oil companies and trading companies , and we sell these products in three reporting segments : ( i ) wholesale , ( ii ) gasoline distribution and station operations and ( iii ) commercial which are discussed below . collectively , we sold approximately $ 19.4 billion of refined petroleum products , renewable fuels , crude oil , natural gas and propane for the year ended december 31 , 2013. in addition , we had other revenues of approximately $ 146.5 million , primarily from convenience store sales at our directly operated stores and rental income from dealer leased or commission agent leased gasoline stations . as of december 31 , 2013 , we owned , leased or maintained dedicated storage facilities at 26 petroleum product bulk terminals , each with the capacity of more than 50,000 barrels , including 22 refined product terminals located throughout the northeast . these terminals are supplied primarily by marine transport , pipeline , rail and or truck and collectively have approximately 10.2 million barrels of storage capacity . in addition to refined products , we have storage capacity at our albany , new york , clatskanie , oregon and north dakota terminals to store crude oil , at an albany , new york terminal to store propane and at select locations to store renewable fuels . in columbus , north dakota we constructed a 100,000 barrel storage tank and a truck offloading facility in 2012 and a 170,000 barrel storage tank in 2013 used as part of the development of that location as a hub for the gathering , storage , transportation and marketing of crude oil and other products . in beulah , north dakota , through basin transload llc , we constructed two 140,000 barrel storage tanks and a truck offloading facility used as part of the development of that location as a hub for gathering , storage , transportation and marketing of crude oil and other products . we also have throughput and exchange agreements at numerous bulk terminals and inland storage facilities . we lease a fleet of rail cars which are utilized in the transporting of crude oil and other products by rail . in addition , we have storage agreements at several of our terminals granting storage rights to third parties for which we receive a fee . 52 in september 2013 , our columbus , north dakota transloading facility began receiving crude oil from a newly completed seven-mile pipeline lateral connection constructed by tesoro logistics , which transports crude oil from various gathering points along the tesoro high plains pipeline system . also , in 2013 , we completed construction in albany , new york of a new rail-fed propane storage and distribution facility near our existing terminal in albany , new york and in april , we began receiving and distributing product from the facility . the 540,000-gallon facility can source propane directly from midwest and canadian regional sources via single line haul on canadian pacific as well as from the east coast . in addition , construction of a compressed natural gas loading station in bangor , maine was completed , and we have established a multi-year agreement with bangor gas to supply natural gas to the facility . like most independent marketers , we base our pricing on spot prices , fixed prices or indexed prices and routinely use the nymex , cme , ice or other counterparties to hedge the risk inherent in buying and selling commodities . through the use of regulated exchanges or derivatives , we seek to maintain a position that is substantially balanced between purchased volumes and sales volumes or future delivery obligations . wholesale we engage in the logistics of gathering , storage , transportation and marketing of refined petroleum products , renewable fuels , crude oil and propane . in february 2013 , we acquired a 60 % membership interest in basin transload , which operates two transloading facilities in columbus and beulah , north dakota for crude oil and other products , and 100 % of the membership interest in cascade kelly , which owns a west coast crude oil transloading and ethanol manufacturing facility near portland , oregon . story_separator_special_tag we receive crude oil in the mid-continent region of the united states and canada and aggregate crude oil by truck or pipeline in the mid-continent , transport it on land by train and ship it to refineries on the east and west coasts in barges . we sell residual oil to major housing units , such as public housing authorities , colleges and hospitals and large industrial facilities that use processed steam in their manufacturing processes . in addition , we sell bunker fuel , which we can custom blend , to cruise ships , bulk carriers and fishing fleets . we sell our natural gas to end users and our propane to home heating oil retailers and wholesale distributors . 54 due to the nature of our business and our reliance , in part , on consumer travel and spending patterns , we may experience more demand for gasoline and gasoline blendstocks during the late spring and summer months than during the fall and winter . travel and recreational activities are typically higher in these months in the geographic areas in which we operate , increasing the demand for gasoline and gasoline blendstocks that we distribute . therefore , our volumes in gasoline and gasoline blendstocks are typically higher in the second and third quarters of the calendar year . as demand for some of our refined petroleum products , specifically home heating oil and residual oil for space heating purposes , is generally greater during the winter months , heating oil and residual oil sales are generally higher during the first and fourth quarters of the calendar year . these factors may result in significant fluctuations in our quarterly operating results . generally , our wholesale customers use their own vehicles or contract carriers to take delivery of the gasoline and distillate products at bulk terminals and inland storage facilities that we own or control or with which we have throughput or exchange arrangements . our crude oil is aggregated by truck or pipeline in the mid-continent , transported on land by train and shipped to refineries on the east and west coasts in barges . ethanol is shipped primarily by rail and by barge . for our commercial customers , we generally arrange the delivery of the product to the customer 's designated location , typically hiring third-party common carriers to deliver the product . outlook this section identifies certain risks and certain economic or industry-wide factors that may affect our financial performance and results of operations in the future , both in the short-term and in the long-term . our results of operations and financial condition depend , in part , upon the following : our business is influenced by the overall forward market for refined petroleum products , renewable fuels and crude oil , and increases and or decreases in the prices of these products may adversely impact our financial condition , results of operations and cash available for distribution to our unitholders and the amount of borrowing available for working capital under our credit agreement results from our purchasing , storing , terminalling , transporting and selling operations are influenced by prices for refined petroleum products , renewable fuels and crude oil , pricing volatility and the market for such products . prices in the overall forward market for these products may affect our financial condition , results of operations and cash available for distribution to our unitholders . our margins can be significantly impacted by the forward product pricing curve , often referred to as the futures market . we typically hedge our exposure to petroleum product and renewable fuel price moves with futures contracts and , to a lesser extent , swaps . in markets where futures prices are higher than current prices , referred to as contango , we may use our storage capacity to improve our margins by storing products we have purchased at lower prices in the current market for delivery to customers at higher prices in the future . in markets where futures prices are lower than current prices , referred to as backwardation , inventories can depreciate in value and hedging costs are more expensive . for this reason , in these backward markets , we attempt to reduce our inventories in order to minimize these effects . when prices for the products we sell rise , some of our customers may have insufficient credit to purchase supply from us at their historical purchase volumes , and their customers , in turn , may adopt conservation measures which reduce consumption , thereby reducing demand for product . furthermore , when prices increase rapidly and dramatically , we may be unable to promptly pass our additional costs on to our customers , resulting in lower margins for us which could adversely affect our results of operations . higher prices for the products we sell may ( 1 ) diminish our access to trade credit support and or cause it to become more expensive and ( 2 ) decrease the amount of borrowings available for working capital under our credit agreement as a result of total available commitments , borrowing base limitations and advance rates thereunder . when prices for the products we sell decline , our exposure to risk of 55 loss in the event of nonperformance by our customers of our forward contracts may be increased as they and or their customers may breach their contracts and purchase the products we sell at the then lower market price from a competitor . a significant decrease in the price for crude oil could adversely affect the economics of the domestic crude oil production for the product which , in turn , could have an adverse effect on our crude oil logistics activities and sales . we commit substantial resources to pursuing acquisitions , although there is no certainty that we will successfully complete any acquisitions or receive the economic results we anticipate from completed acquisitions .
| events that impacted results during the year ended december 31 , 2013 , we experienced the following events : we recognized the results of the alliance acquisition for the full year compared to a ten-month period in 2012 as we acquired alliance on march 1 , 2012. in our wholesale segment , our product margin from gasoline and gasoline blendstocks sales decreased for 2013 compared to 2012 , due , in part , to the effect of increases in the liability related to rin forward commitments of $ 6.2 million and in the mark to market value of the rvo deficiency of $ 13.1 million , resulting in a $ 19.3 million unfavorable impact for 2013. while there was increased competition in gasoline during most of 2013 , which negatively impacted margins , market conditions were favorable in the second and fourth quarters . during 2013 , in part through the phillip 66 transaction and the february 2013 acquisitions of a 60 % membership interest in basin transload and a 100 % membership interest in cascade kelly , we continued our expansion into crude oil logistics which improved our crude oil product margin . despite the increase , our crude oil product margin was negatively impacted by temporary supply dislocations in the crude oil market during the third quarter of 2013. we continued to expand our wholesale gasoline and gasoline blendstocks and distillates businesses by expanding terminal throughput and sales locations at third-party facilities across the country . in our gasoline distribution and station operations segment , rising gasoline prices typically compress our gasoline product margins and declining gasoline prices typically improve our 61 gasoline product margins . the extent of the impact on our product margins depends on the magnitude , duration and direction of the market .
| 5,901 |
in september 2011 , the fasb issued asu no . 2011-08 , intangiblesgoodwill and othertesting goodwill for impairment . story_separator_special_tag the following discussion and analysis of transunion holding 's and transunion corp. 's financial condition and results of operations is provided on a combined basis as a supplement to , and should be read in conjunction with , part ii , item 6 , selected financial data , part i , item 1a , risk factors , and part ii , item 8 , financial statements and supplementary information , including transunion holding 's and transunion corp. 's audited consolidated financial statements and the accompanying combined notes . in addition to historical data , this discussion contains forward-looking statements about our business , operations and financial performance based on current expectations that involve risks , uncertainties and assumptions . our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors , including but not limited to those discussed in cautionary notice regarding forward-looking statements and part i , item 1a , risk factors. references in this discussion and analysis to the company , we , us , and our refer to transunion holding with its direct and indirect subsidiaries , including transunion corp. , or to transunion corp. and its subsidiaries for periods prior to the formation of transunion holding . when appropriate , transunion holding and transunion corp. are named explicitly for their specific related disclosures . each registrant included herein is not filing any information that does not relate to such registrant , and therefore makes no representation as to any such information . where the information provided in this discussion and analysis is substantially the same for each company , such information has been combined . where information is not substantially the same for each company , we have provided separate information . in addition , separate financial statements for each company are included in part ii , item 8 , financial statements and supplementary data. we operate transunion holding and transunion corp. as one business , with one management team . management believes combining this discussion and analysis provides the following benefits : enhances investors ' understanding of transunion holding and transunion corp. by enabling investors to view the business as a whole , the same manner as management views and operates the business ; provides a more readable presentation of required disclosures with less duplication , since a substantial portion of the company 's disclosures apply to both transunion holding and transunion corp. ; and creates time and cost efficiencies through the preparation of one combined report instead of two separate reports . overview we are a leading global provider of information and risk management solutions . we provide these solutions to businesses across multiple industries and to individual consumers . our technology and services enable businesses to make more timely and informed credit granting , risk management , underwriting , fraud protection and customer acquisition decisions by delivering high quality data , integrated with analytics and decision-making capabilities . our interactive website provides consumers with real-time access to their personal credit information and analytical tools that help them understand and proactively manage their personal finances . over a million unique consumers visit our website each month . we have operations in the united states , africa , canada , latin america , asia pacific and india and provide services in 33 countries . since our founding in 1968 , we have built a diversified and stable customer base of approximately 45,000 businesses in multiple industries , including financial services , insurance , healthcare , automotive , retail and communications . we generate revenues primarily from the sale of credit reports , credit marketing services , portfolio reviews and other credit-related services to qualified businesses both in the u.s. and internationally through direct and indirect channels . we maintain long-standing relationships with many of our largest customers , including relationships of over ten years with each of our top ten global financial services customers . we attribute the 39 length of our customer relationships to the critical nature of the services we provide , our consistency and reliability , and our innovative and collaborative approach to developing integrated solutions that meet our customers ' continually changing needs . we also generate revenues by providing subscription-based interactive services to consumers that help them understand and manage their personal finances and that protect them from identity theft . recent developments on november 1 , 2012 , transunion holding issued $ 400.0 million principal amount of 8.125 % /8.875 % senior unsecured pik toggle notes ( 8.125 % notes ) due june 15 , 2018 , at an offering price of 99.5 % in a private placement to certain investors . in connection with the issuance of these notes , transunion holding successfully completed a consent solicitation to amend the indenture governing its 9.625 % /10.375 % senior unsecured pik toggle notes ( 9.625 % notes ) . the amendment permitted the issuance of the additional $ 400 million of 8.125 % notes and allowed transunion holding to make a dividend payment to its shareholders . the amendment will also increase the interest rate applicable to the 9.625 % notes by 0.50 % if , prior to june 15 , 2015 , ( a ) the 9.625 % notes are rated caa1 or lower by moody 's investors service , inc. and ccc+ or lower by standard & poor 's , and ( b ) the consolidated debt ratio as defined in the consent solicitation statement is greater than or equal to 5.50 to 1.00. the 8.125 % notes are subject to a registration rights agreement that will require us to exchange the notes for an equal amount of notes registered with the sec . story_separator_special_tag 43 we operate transunion holding and transunion corp. as one business and to facilitate comparability with the prior years , we present below the combination of transunion holding consolidated results from inception through december 31 , 2012 , and transunion corp. predecessor consolidated results for the four months ended april 30 , 2012 ( combined results for the year 2012 ) , and compare this to the transunion corp. consolidated results for 2011 and 2010. we present the information in this format to assist readers in understanding and assessing the trends and significant changes in our results of operations on a comparable basis . we believe this presentation is appropriate because it provides a more meaningful comparison and more relevant analysis of our results of operations for 2012 compared to 2011 and 2010 , than a presentation of separate historical results for transunion holding and transunion corp. predecessor and successor periods would provide . the following table sets forth our historical results of operations for the periods indicated below : replace_table_token_5_th nm : not meaningful 44 key performance measures management , including our chief operating decision maker , evaluates the financial performance of our businesses based on a variety of key indicators . these indicators include the non-gaap measures adjusted operating income and adjusted ebitda , and the gaap measures revenue , cash provided by operating activities and cash paid for capital expenditures . for the twelve months ended december 31 , 2012 , 2011 and 2010 , these key indicators were as follows : replace_table_token_6_th nm : not meaningful ( 1 ) for the twelve months ended december 31 , 2012 , adjustments included $ 90.7 million of accelerated stock-based compensation and related expense resulting from the 2012 change in control transaction that were recorded in each segment and corporate as follows : usis $ 41.0 million ; international $ 14.4 million ; interactive $ 2.3 million ; and corporate $ 33.0 million . see part ii , item 8 , combined notes to consolidated financial statements , note 2 , change in control transactions , and note 15 , stock-based compensation , for further information about the impact of the 2012 change in control transaction . for the twelve months ended december 31 , 2011 , adjustments included a $ 3.6 million outsourcing vendor contract early termination fee and a $ 2.7 million software impairment and related restructuring charge due to a regulatory change requiring a software platform replacement . both of these expenses were recorded in our usis segment . for the twelve months ended december 31 , 2010 , adjustments included a $ 3.9 million gain on the trade in of mainframe computers recorded in our usis segment and $ 21.4 million of accelerated stock-based compensation and related expenses resulting from the 2010 change in control transaction that were recorded in each segment and in corporate as follows : usis $ 12.2 million ; international $ 2.6 million ; interactive $ 1.2 million ; and corporate $ 5.4 million . see part ii , 45 item 8 , combined notes to consolidated financial statements , note 2 , change in control transactions , and note 15 , stock-based compensation , for further information about the impact of the 2010 change in control transaction . ( 2 ) adjusted operating income and adjusted ebitda are non-gaap measures . we present adjusted operating income and adjusted ebitda as supplemental measures of our operating performance because they eliminate the impact of certain items that we do not consider indicative of our ongoing operating performance . in addition to its use as a measure of our operating performance , our board of directors and executive management team focus on adjusted ebitda as a compensation measure . the annual variable compensation for members of senior management is based in part on adjusted ebitda . adjusted operating income does not reflect certain stock-based compensation and certain other income and expense . adjusted ebitda does not reflect interest , income tax , depreciation , amortization , stock-based compensation or certain other income and expense . other companies in our industry may calculate adjusted operating income and adjusted ebitda differently than we do , limiting their usefulness as comparative measures . because of these limitations , adjusted operating income and adjusted ebitda should not be considered in isolation or as substitutes for performance measures calculated in accordance with gaap . adjusted operating income and adjusted ebitda are not measures of financial condition or profitability under gaap and should not be considered alternatives to cash flow from operating activities , as measures of liquidity or as alternatives to operating income or net income as indicators of operating performance . we believe that the most directly comparable gaap measure to adjusted operating income is operating income and the most directly comparable gaap measure to adjusted ebitda is net income attributable to the company . the reconciliations of adjusted operating income and adjusted ebitda to their nearest gaap measures are included in the table above . ( 3 ) for the twelve months ended december 31 , 2012 , operating income included additional depreciation and amortization as a result of the purchase accounting fair value adjustments to the tangible and intangible assets recorded in connection with the 2012 change in control transaction . see part ii , item 8 , combined notes to consolidated financial statements , note 2 , change in control transactions , for further information about the impact of the 2012 change in control transaction . ( 4 ) other income and expense above includes all amounts included on our consolidated statement of income in other income and expense , net , except for earnings from equity method investments and dividends received from cost method investments . for the twelve months ended december 31 , 2012 , other income and expense included $ 42.2 million of acquisition-related expenses , primarily related to the 2012 change in control transaction and the abandoned initial public offering process , and $ 8.6 million of other income and expense .
| factors affecting our results of operations the following are certain key factors that affect , or have recently affected , our results of operations : macroeconomic and industry trends our revenues are significantly influenced by general macroeconomic conditions , including the availability of affordable credit and capital , interest rates , inflation , employment levels , consumer confidence and housing demand . during 2012 and 2011 , in the united states and other markets , we have seen continuing signs of improved economic conditions and increased market stabilization . in the united states , we also saw improvement in the consumer lending market , including mortgage refinancings resulting from low long-term mortgage rates , increased auto loans and an increase in demand for our credit marketing services . these factors helped drive improved financial results in all of our segments during 2011 and 2012. the economic and market improvements , however , were tempered by continuing consumer uncertainty as concerns over both continuing high unemployment and an underperforming housing market have pressured growth in our businesses . our revenues are also significantly influenced by industry trends , including the demand for information services in the financial services , insurance , healthcare and other industries we serve . companies increasingly rely on data and analytics to make more informed decisions , operate their businesses more effectively and manage risk . similarly , consumers seek information to help them understand and proactively manage their personal finances and to better protect themselves against identity theft . we expect that increased demand for targeted data and sophisticated analytical tools will drive revenue growth in all of our segments . 2012 change in control transaction in connection with the 2012 change in control transaction , the company recognized a significant increase in stock-based compensation due to the accelerated vesting of outstanding options and a significant increase in depreciation and amortization expense as a result of the step-up in basis to fair value of the assets and liabilities of the company .
| 5,902 |
based upon its review , our board of directors has affirmatively determined that each of richard d. bronson , david b. henry , robin josephs , peggy lamb , dale anne reiss and james e. walker are “ independent ” members of our board of directors under all applicable standards for independence , including with respect to committee service on our audit committee by ms. reiss , mr. henry and mr. walker . under our charter , a majority of our directors must be independent directors , except for a period of up to 60 days after the death , removal or resignation of an independent director pending the election of a successor independent director . consistent with the nasaa reit guidelines , our charter defines an independent director as a director who is not and has not for the last two years been associated , directly or indirectly , with starwood capital . a director is deemed to be associated with starwood capital if he or she owns any interest ( other than an interest in us or an immaterial interest in an affiliate of us ) in , is employed by , is an officer or director of , or has any material business or professional relationship with starwood capital , the advisor or any of their affiliates , performs services ( other than as a director ) for us , or serves as a director or trustee for more than three reits sponsored by starwood capital or advised by the advisor . a business or professional relationship will be deemed material per se if the gross revenue derived by the director from starwood capital exceeds 5 % of ( 1 ) the director 's annual gross revenue derived from all sources during either of the last two years or ( 2 ) the director 's net worth on a fair market value basis . an indirect relationship is defined to include circumstances in which the director 's spouse , parents , children , siblings , mothers- or fathers-in-law story_separator_special_tag financial condition and results of operations the following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this annual report on form 10-k. in addition to historical data , this discussion contains forward-looking statements about our business , operations and financial performance based on current expectations that involve risks , uncertainties and assumptions . our actual results may differ materially from those in this discussion as a result of various factors , including but not limited to those discussed in part i. item 1a — “ risk factors ” in this annual report on form 10-k. overview we were formed on june 22 , 2017 as a maryland corporation to invest primarily in stabilized , income-oriented commercial real estate . our portfolio is principally comprised of properties , and debt secured by properties , located in the united states but may also be diversified on a global basis through investments in properties and debt secured by properties , outside of the united states , with a focus on europe . to a lesser extent , and subject to certain investment limitations , we also may invest in debt secured by commercial real estate and real estate-related securities . we are an externally advised , perpetual-life reit . we own all or substantially all of our assets through the operating partnership , of which we are the sole general partner . we and the operating partnership are externally managed by the advisor . our board of directors has at all times ultimate oversight and policy-making authority over us , including responsibility for governance , financial controls , compliance and disclosure . pursuant to the advisory agreement , we have delegated to the advisor the authority to source , evaluate and monitor our investment opportunities and make decisions related to the acquisition , management , financing and disposition of our assets , in accordance with our investment objectives , guidelines , policies and limitations , subject to oversight by our board of directors . we have elected to be taxed as a reit under the code for u.s. federal income tax purposes , commencing with our taxable year ending december 31 , 2019. we generally will not be subject to u.s. federal income taxes on our taxable income to the extent we annually distribute all of our net taxable income to stockholders and maintain our qualification as a reit . we have registered with the sec an offering of up to $ 5.0 billion in shares of common stock ( in any combination of purchases of class t , class s , class d and class i shares of our common stock ) , consisting of up to $ 4.0 billion in shares in our primary offering and up to $ 1.0 billion in shares pursuant to our distribution reinvestment plan ( the “ offering ” ) . the share classes have different upfront selling commissions and ongoing stockholder servicing fees . as of december 21 , 2018 , we satisfied the minimum offering requirement and our board of directors authorized the release of proceeds from escrow . we intend to continue selling shares in the offering on a monthly basis . as of march 26 , 2021 , we had received net proceeds in our offering of approximately $ 2.5 billion from selling an aggregate of 120,404,905 shares of our common stock ( consisting of 2,850,070 class t shares , 61,954,369 class s shares , 4,699,738 class d shares , and 50,900,728 class i shares ) . we have contributed the net proceeds from the offering to our operating partnership in exchange for a corresponding number of class t , class s , class d , and class i units . the operating partnership has primarily used the net proceeds to make investments in real estate and real estate-related securities as further described below under “ —portfolio. story_separator_special_tag management believes total return is a useful measure of the overall investment performance of our shares . annualized total return from inception through december 31 , 2020 , excluding upfront selling commissions and dealer manager fees , was 8.7 % for class t shares , 9.0 % for class s , 9.4 % for class d and 9.8 % for class i shares . annualized total return from inception through december 31 , 2020 , assuming full upfront selling commissions and dealer manager fees , was 6.9 % for class t , 7.2 % for class s and 8.6 % for class d shares . 62 investments : closed transactions with a total purchase price of $ 3.0 billion , resulting in a diversified portfolio of stabilized income-producing commercial real estate concentrated in high growth markets across the u.s. the following are our top five acquisitions for the year based on purchase price in acquisition date order : o between february 2020 and october 2020 , we acquired a fee-simple interest in an affordable housing multifamily portfolio ( the “ southeast affordable housing portfolio ” ) for $ 590.7 million , excluding closing costs . the southeast affordable housing portfolio is comprised of 22 separate multifamily communities with a total of 4,384 units . the southeast affordable housing portfolio had an occupancy of 96 % as of the acquisition date . o in february 2020 , we acquired a 362,000 square foot class a office tower ( the “ nashville office ” ) located in downtown nashville , tennessee for $ 264.1 million , excluding closing costs . o in march 2020 , through a joint venture with an affiliate of our sponsor , we acquired a leasehold interest in 60 state street ( “ 60 state ” ) , a 38-story class a office tower located in the heart of downtown boston , massachusetts . the purchase price for 60 state was $ 614.3 million , excluding closing costs . 60 state totals 911,394 square feet along with a 240-space subterranean parking garage . o in october 2020 , we acquired a fee-simple interest in an affordable housing multifamily portfolio ( “ mid-atlantic affordable housing portfolio ” ) for $ 531.3 million , excluding closing costs . the mid-atlantic affordable housing portfolio comprises 28 separate multifamily communities with a total of 3,660 units . the mid-atlantic affordable housing portfolio had an occupancy of 99 % as of the closing . o in december 2020 , we acquired a fee-simple interest in a 630 unit multifamily property located in ashburn , virginia ( the “ acadia ” ) for $ 190.2 million , excluding closing costs subsequent to december 31 , 2020 , we entered into an agreement to purchase three class a office buildings totaling 460,000 square feet located in the top suburban submarket of atlanta , georgia for $ 134.8 million . additionally , we entered into an agreement to provide 20 % of the acquisition financing for a real estate company based in the united kingdom for $ 500.4 million . financings : closed an aggregate of $ 1.9 billion in property-level financing and a $ 100.0 million unsecured line of credit that can be used for general corporate uses as needed . portfolio summary of portfolio the following chart outlines the percentage of our assets across investments in real properties , investments in real estate-related securities and cash and cash equivalents based on aum as of december 31 , 2020 : 63 the following charts further describe the composition of our assets across investments in real properties , investments in real estate-related securities and cash and cash equivalents and by geography based on aum as of december 31 , 2020 : investments in real estate as of december 31 , 2020 , we owned 144 real estate properties and one investment in an unconsolidated real estate venture with an aggregate purchase price of approximately $ 4.9 billion , excluding closing costs and related working capital . the following table provides a summary of our portfolio as of december 31 , 2020 ( $ in thousands ) : replace_table_token_11_th ( 1 ) the occupancy rate for our industrial , office and medical office investments is defined as all leased square footage divided by the total available square footage as of december 31 , 2020. the occupancy rate for our multifamily investments is defined as the number of leased units divided by the total unit count as of december 31 , 2020. the occupancy rate for our hotel investments is based on the trailing twelve month average occupancy for the period ended december 31 , 2020 . ( 2 ) based on fair value as of december 31 , 2020 . 64 the following table provides information regarding our portfolio of real properties as of december 31 , 2020 : replace_table_token_12_th ( 1 ) certain of the joint venture agreements entered into by us provide the seller or the other partner a profits interest based on certain internal rate of return hurdles being achieved . such investments are consolidated by us and any profits interest due to the other partner will be reported within net loss attributable to non-controlling interests in consolidated joint ventures . the table also includes a property owned by an unconsolidated entity . ( 2 ) purchase price excludes acquisition costs of $ 46.7 million . ( 3 ) the occupancy rate for our industrial , office and medical office investments is defined as all leased square footage divided by the total available square footage as of december 31 , 2020. the occupancy rate for our multifamily investments is defined as the number of leased units divided by the total unit count as of december 31 , 2020. the occupancy rate for our hotel investments is based on the trailing twelve month average occupancy for the period ended december 31 , 2020 .
| results of operations the following table sets forth information regarding our consolidated results of operations ( $ in thousands ) : replace_table_token_15_th revenues rental revenue primarily consists of base rent arising from tenant leases at our multifamily , industrial , office and medical office properties . rental revenue is recognized on a straight-line basis over the life of the lease , including any rent steps or abatement provisions . the increase in rental revenue was driven by the increase of consolidated properties from 71 to 144. while it is difficult to predict the future impact of covid-19 , our rent collections to date have not changed materially . as of january 19 , 2021 , we had collected 95 % of our december 2020 rental income , which is slightly lower than pre-pandemic levels . to date we have received very few requests from our tenants seeking concessions . 67 hotel revenue consists of income from our hotel properties . hotel revenue consists primarily of room revenue . during the year ended december 31 , 2020 , hotel revenue w as $ 22 . 2 million . beginning in march 2020 , our hotel segment experienced a material decrease in occupancy arising from the conditions caused by covid-19 . as a result of unprecedented travel declines and stay at home orders due to covid-19 , our average hotel occupancies declined from approximately 83 % in february 2020 to approximately 47 % in december 2020. during the year ended december 31 , 2020 , other revenue was $ 2.4 million . during the year ended december 31 , 2020 , other revenue primarily consists of deferred income of $ 0.8 million associated with the discharge of certain housing development loans . see note 2 – “ summary of significant accounting policies ” to our consolidated financial statements in this annual report on form 10-k for further details on the accounting treatment of deferred income .
| 5,903 |
on october 1 , 2013 the company 's board of directors approved a change in fiscal year end from june 30 to december 31. unless otherwise noted , all references to `` years '' in this report refer to the twelve-month period which ends on december 31 of each year . this form 10-k covers the three year period ended december 31 , 2016. overview we are a houston , texas based independent oil and natural gas company . our business is to maximize production and cash flow from our onshore texas and wyoming properties and our offshore properties in the shallow waters of the gulf of mexico ( “ gom ” ) , and to use that cash flow to explore , develop , exploit and acquire crude oil and natural gas properties in the onshore texas gulf coast and rocky mountain regions of the united states . on october 1 , 2013 , we completed a merger with crimson exploration inc. ( “ crimson ” ) ( the “ merger ” ) . the merger gave us access to high rate of return onshore prospects in known , prolific producing areas as well as long-life resource plays . in 2015 , our drilling activity focused primarily on the woodbine oil and liquids-rich play in madison and grimes counties , texas ( our southeast texas region ) , in the cretaceous sands in fayette and gonzales counties , texas ( our south texas region ) and wyoming where we were targeting the mowry shale and the muddy sandstone formations . in early 2016 we limited our drilling program due to the challenging commodity price environment . o ur only drilling activity in early 2016 was in weston county , wyoming where we completed our third well targeting the muddy sandstone formation . during the third quarter of 2016 , we acquired a 12,100 operated gross acre position ( 5,000 net ) in the southern delaware basin in pecos county , texas , and as of december 31 , 2016 , had increased our acreage to 12,500 gross operated acres ( 6,250 net ) . we began drilling our initial well in october 2016 , with first production from that well commencing in late january 2017. we currently have three subsequent southern delaware basin wills in varying states of drilling or completion and expect that our southern delaware basin position will be the primary focus of our drilling program for 2017. additionally , we have ( i ) a 37 % equity investment in exaro energy iii llc ( “ exaro ” ) , which is primarily focused on the development of proved natural gas reserves in the jonah field in wyoming ; ( ii ) operated properties producing from various conventional formations in various counties along the texas gulf coast ; and ( iii ) operated producing properties in the haynesville shale , mid bossier and james lime formations in east texas . until their sale in december 2016 , we also had operated producing properties in the denver julesburg basin ( “ dj basin ” ) in weld and adams counties in colorado . our production for the year ended december 31 , 2016 was approximately 26.0 bcfe ( or 71.0 mmcfe/d ) and was 68 % offshore and 32 % onshore . our production for the three months ended december 31 , 2016 was approximately 5.9 bcfe ( or 64.3 mmcfe/d ) and was 70 % offshore and 30 % onshore . as of december 31 , 2016 , our proved reserves were approximately 61 % offshore and 39 % onshore and were 85 % proved developed , which were approximately 72 % offshore and 28 % onshore . 52 revenues and profitability our revenues , profitability and future growth depend substantially on our ability to find , develop and acquire natural gas and oil reserves that are economically recoverable , as well as prevailing prices for natural gas and oil . reserve replacement generally , producing properties offshore in the gulf of mexico have high initial production rates , followed by steep declines . likewise , initial production rates on new wells in the onshore resource plays start out at a relatively high rate with a decline curve which results in 60 % to 70 % of the ultimate recovery of present value occurring in the first eighteen months of the well 's life . we must locate and develop , or acquire , new natural gas and oil reserves to replace those being depleted by production . substantial capital expenditures are required to find , develop and or acquire natural gas and oil reserves . a prolonged period of depressed commodity prices could have a significant impact on the value and volumetric quantities of our proved reserve portfolio , assuming no other changes in our development plans . the merger with crimson allowed the company to add significant proved developed and undeveloped reserves and provided the company with access to several onshore resource plays which have substantial reserve growth potential , including in oil and liquids rich plays that position us to move to a more balanced oil/gas profile . use of estimates the preparation of our financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements , and the reported amounts of revenues and expenses during the reporting periods . actual results could differ from those estimates . significant estimates with regard to these financial statements include estimates of remaining proved natural gas and oil reserves , the timing and costs of our future drilling , development and abandonment activities , and income taxes . related party transactions effective as of the close of business on december 31 , 2015 , the company and the other members of republic exploration llc ( “ rex ” ) agreed to dissolve and liquidate rex . rex 's assets were distributed proportionately to its members . story_separator_special_tag other expense for the year ended december 31 , 2015 was approximately $ 0.7 million , which is primarily related to $ 5.6 million of costs incurred in pursuit of an unsuccessful acquisition in the fourth quarter and interest expense of $ 3.2 million , partially offset by $ 6.1 million in proceeds related to favorable outcomes in two lawsuits and realized gains on derivatives of $ 2.3 million . other expense for the year ended december 31 , 2014 was approximately $ 2.7 million , which is primarily related to interest expense . capital resources and liquidity our primary cash requirements are for capital expenditures , working capital , operating expenses , acquisitions and principal and interest payments on indebtedness . our primary sources of liquidity are cash generated by operations , net of the realized effect of our hedging agreements , and amounts available to be drawn under our credit facility . 59 the table below summarizes certain measures of liquidity and capital expenditures , as well as our sources of capital from internal and external sources , for the periods indicated , in thousands . replace_table_token_28_th cash flow from operating activities , including changes in working capital , provided approximately $ 32.0 million in cash for the year ended december 31 , 2016 compared to $ 25.0 million for the year ended december 31 , 2015. the changes in working capital were approximately $ 7.8 million during 2016 , compared to a deficit in 2015 of approximately $ 27.2 million . cash flow from operating activities , excluding changes in working capital , provided approximately $ 24.2 million in cash for the year ended december 31 , 2016 compared to $ 52.2 million for the year ended december 31 , 2015. this decrease in cash provided by operating activities was primarily attributable to lower revenues associated with lower prices and lower production resulting from our reduced drilling activity in 2016 due to the low commodity price environment . cash flow from operating activities provided approximately $ 25.0 million in cash for the year ended december 31 , 2015 compared to $ 210.0 million for the year ended december 31 , 2014. this decrease in cash provided by operating activities was primarily attributable to lower oil and natural gas prices for 2015 , as well as a decline attributable to our reduced drilling activity in 2015 due to the low commodity price environment . cash used in investing activities was approximately $ 19.8 million for the year ended december 31 , 2016 , which included approximately $ 24.9 million for capital expenditures partially offset by $ 5.1 million for the sale of our colorado properties . cash used in investing activities was approximately $ 76.8 million for the year ended december 31 , 2015 , which included approximately $ 77.8 million for capital expenditures , partially offset by approximately $ 1.0 million in distributions from rex as a result the dissolution of that entity . cash used in investing activities was approximately $ 175.1 million for the year ended december 31 , 2014 , which included approximately $ 180.4 million for capital expenditures , partially offset by approximately $ 5.4 million related to the sale of assets and distributions from affiliates . cash used in financing activities was approximately $ 12.2 million for the year ended december 31 , 2016 compared to $ 51.9 million provided by financing activities in 2015. included in 2016 activity was $ 50.4 million in proceeds from our equity offering to fund the acquisition and early development of our southern delaware basin acreage and approximately $ 61.1 million in net repayments of outstandings under our rbc credit facility ( defined below ) . 2015 activity included net borrowings under our rbc credit facility to reduce the working capital obligations at december 31 , 2015. cash provided by financing activities was approximately $ 51.9 million for the year ended december 31 , 2015 compared to $ 34.9 million used in financing activities in 2014. the cash provided by financing activities in 2015 was primarily attributable to net borrowings under our rbc credit facility ( defined below ) used to reduce the working capital obligations at december 31 , 2014 , while the cash used in financing activities in 2014 reflected the net repayment of borrowings under the rbc credit facility that existed at the beginning of that year . credit facility in october 2013 , the company entered into a $ 500 million four-year revolving credit facility with royal bank of canada and other lenders ( the “ rbc credit facility ” ) . effective october 28 , 2016 , as part of the regular redetermination schedule , the borrowing base under the rbc credit facility was reaffirmed at $ 140 million , which is unchanged from the redetermination amount on may 6 , 2016. also effective may 6 , 2016 , the rbc credit facility was amended to , among other things , extend the maturity of the facility from october 1 , 2017 to october 1 , 2019 , increase the libor , u.s. prime rate and federal funds rate margins to 2.5 % - 4.0 % and increase the commitment fee to 0.5 % , regardless of the amount of the credit facility that is unused . the borrowing base under the facility is redetermined each november and may . 60 the rbc credit facility contains restrictive covenants which , among other things , restrict the declaration or payment of dividends by contango and require a current ratio of greater than or equal to 1.0 and a leverage ratio of less than or equal to 3.50 , both as defined in the rbc credit facility agreement . our compliance with these covenants is tested each quarter . at december 31 , 2016 , we were in compliance with the covenants under the rbc credit facility , and at current commodity prices , we do not except any covenant compliance issues over the next twelve months .
| results of operations the table below sets forth our average net daily production data in mmcfe/d from our fields for each of the periods indicated : replace_table_token_24_th ( 1 ) includes ship shoal 263 and south timbalier 17 . ( 2 ) includes madison and grimes counties , among others . ( 3 ) includes zavala and dimmit counties , among others . 53 ( 4 ) includes onshore wells in east texas , colorado , wyoming and tuscaloosa marine shale regions , among others . other offshore other offshore includes our ship shoal 263 well for all periods presented , except for periods after it was shut-in in september 2015. southeast texas during 2015 , we brought seven gross wells ( 3.9 net ) on production targeting the woodbine formation in our chalktown area , which we initiated in late 2014 , plus an additional one gross well ( 0.9 net ) in our iola/grimes area . we also drilled and brought on production one gross ( 0.7 net ) well in our chalktown area during 2015. no wells were brought on production in this area in 2016 . 54 year ended december 31 , 2016 compared to year ended december 31 , 2015 ; and year ended december 31 , 2015 compared to year ended december 31 , 2014 the table below sets forth revenue , production data , average sales prices and average production costs associated with our sales of natural gas , oil and natural gas liquids ( `` ngls '' ) from continuing operations for the years ended december 31 , 2016 , 2015 and 2014. oil , condensate and ngls are compared with natural gas in terms of cubic feet of natural gas equivalents . one barrel of oil , condensate or ngl is the energy equivalent of six mcf of natural gas . reported lease operating expenses include production taxes , such as ad valorem and severance .
| 5,904 |
and redemption of investments 33,568,147 31,974,810 15,185,210 purchase of investments ( 38,678,936 ) ( 9,014,000 ) ( increase ) decrease in operating assets : cash and cash equivalents , securitization accounts ( 21,164,208 ) ( 4,144,563 ) 952,777 interest receivable ( 23,321 ) 1,807,878 ( 386,293 ) management fee receivable 4,172 96,175 ( 90,558 ) other assets ( 9,657 ) 55,106 180,988 receivable from unsettled trades ( 59,511 ) increase ( decrease ) in operating liabilities : payable for unsettled trades ( 827,500 ) 4,900,000 management and incentive fees payable 681,864 1,768,859 190,426 accounts payable and accrued expenses ( 80,537 ) story_separator_special_tag the following discussion should be read in conjunction with our financial statements and related notes and other financial information appearing elsewhere in this annual report . in addition to historical information , the following discussion and other parts of this annual report contain forward-looking information that involves risks and uncertainties . our actual results could differ materially from those anticipated by such forward-looking information due to the factors discussed under part i , item 1a `` risk factors '' and `` note about forward-looking statements '' appearing elsewhere herein . overview we are a maryland corporation that has elected to be treated as a business development company ( `` bdc '' ) under the investment company act of 1940 ( the `` 1940 act '' ) . our investment objective is to generate current income and , to a lesser extent , capital appreciation from our investments . we invest primarily in leveraged loans and mezzanine debt issued by private u.s. middle market companies , both through direct lending and through participation in loan syndicates . we may also invest up to 30 % of the portfolio in opportunistic investments in order to seek to enhance returns to stockholders . such investments may include investments in distressed debt , which may include securities of companies in bankruptcy , foreign debt , private equity , securities of public companies that are not thinly traded and structured finance vehicles such as collateralized loan obligation funds . we have elected and qualified to be treated as a regulated investment company ( `` ric '' ) under subchapter m of the internal revenue code of 1986 , as amended ( the `` code '' ) . corporate history and recent developments we commenced operations , at the time known as gsc investment corp. , on march 23 , 2007 and completed an initial public offering of shares of common stock on march 28 , 2007. prior to july 30 , 2010 , we were externally managed and advised by gscp ( nj ) , l.p. , an entity affiliated with gsc group , inc. in connection with the consummation of a recapitalization transaction on july 30 , 2010 , we engaged saratoga investment advisors ( `` sia '' ) to replace gscp ( nj ) , l.p. as our investment adviser and changed our name to saratoga investment corp. as a result of the event of default under a revolving securitized credit facility with deutsche bank we previously had in place , the auditors of gsc investment corp. ( now known as saratoga investment corp. ) included in their audit report dated may 27 , 2010 that there was substantial doubt about gsc investment corp. 's ability to continue as a going concern . in light of the event of default under the revolving securitized credit facility , we engaged the investment banking firm of stifel , nicolaus & company to evaluate strategic transaction opportunities and consider alternatives for us in december 2008. on april 14 , 2010 , we entered into a stock purchase agreement with saratoga investment advisors and certain of its affiliates and an assignment , assumption and novation agreement with saratoga investment advisors , pursuant to which we assumed certain rights and obligations of saratoga investment advisors under a debt commitment letter saratoga investment advisors received from madison capital funding llc , indicating madison capital funding 's willingness to provide us with a $ 40 million senior secured revolving credit facility , subject to the satisfaction of certain terms and conditions . in addition , we and gscp ( nj ) , l.p. entered into a termination and release agreement , to be effective as of the closing of the transaction contemplated by the stock purchase agreement , pursuant to which gscp ( nj ) , l.p. , among other things , agreed to waive any and all accrued and unpaid deferred incentive management fees up to and as of the closing of the transaction contemplated by the stock purchase agreement but continued to be entitled to receive the base management fees earned through the date of the closing of the transaction contemplated by the stock purchase agreement . 54 on july 30 , 2010 , the transactions contemplated by the stock purchase agreement with saratoga investment advisors and certain of its affiliates were completed , and included the following actions : the private sale of 986,842 shares of our common stock for $ 15 million in aggregate purchase price to saratoga investment advisors and certain of its affiliates ; the closing of the $ 40 million senior secured revolving credit facility with madison capital funding ; the execution of a registration rights agreement with the investors in the private sale transaction , pursuant to which , among other things , we agreed to file a registration statement with the sec to register for resale the shares of our common stock sold in the private sale transaction , including any shares of common stock issued or issuable upon any stock split , dividend or other distribution , recapitalization or similar event relating thereto , and to use commercially reasonable efforts to cause such registration statement to be declared effective within 90 days after the date on which the registration statement was initially filed with the sec ; the execution of a trademark license agreement with saratoga investment advisors pursuant to which saratoga investment advisors granted us a non-exclusive , royalty-free license to use the `` saratoga '' name story_separator_special_tag in addition , all our investments are subject to the following valuation process : the audit committee of our board of directors reviews each preliminary valuation and saratoga investment advisors and independent valuation firm ( if applicable ) will supplement the preliminary valuation to reflect any comments provided by the audit committee ; and our board of directors discusses the valuations and approves the fair value of each investment , in good faith , based on the input of saratoga investment advisors , independent valuation firm ( to the extent applicable ) and the audit committee of our board of directors . 56 our investment in gsc investment corp. clo 2007 , ltd. ( `` saratoga clo '' ) is carried at fair value , which is based on a discounted cash flow model that utilizes prepayment , re-investment and loss assumptions based on historical experience and projected performance , economic factors , the characteristics of the underlying cash flow , and comparable yields for equity interests in collateralized loan obligation funds similar to saratoga clo , when available , as determined by our manager and recommended to our board of directors . specifically , we use intex cash flow models , or an appropriate substitute , to form the basis for the valuation of our investment in saratoga clo . the models use a set of assumptions including projected default rates , recovery rates , reinvestment rate and prepayment rates in order to arrive at estimated valuations . the assumptions are based on available market data and projections provided by third parties as well as management estimates . we use the output from the intex models ( i.e. , the estimated cash flows ) to perform a discounted cash flows analysis on expected future cash flows to determine a valuation for our investment in saratoga clo . revenue recognition income recognition interest income , adjusted for amortization of premium and accretion of discount , is recorded on an accrual basis to the extent that such amounts are expected to be collected . the company stops accruing interest on its investments when it is determined that interest is no longer collectible . discounts and premiums on investments purchased are accreted/amortized over the life of the respective investment using the effective yield method . the amortized cost of investments represents the original cost adjusted for the accretion of discounts and amortizations of premium on investments . loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected . accrued interest is generally reserved when a loan is placed on non-accrual status . interest payments received on non-accrual loans may be recognized as a reduction in principal depending upon management 's judgment regarding collectability . non-accrual loans are restored to accrual status when past due principal and interest is paid and , in management 's judgment , are likely to remain current , although we may make exceptions to this general rule if the loan has sufficient collateral value and is in the process of collection . interest income on our investment in saratoga clo is recorded using the effective interest method in accordance with the provisions of asc topic 325-40 , investments-other , beneficial interests in securitized financial assets , based on the anticipated yield and the estimated cash flows over the projected life of the investment . yields are revised when there are changes in actual or estimated cash flows due to changes in prepayments and or re-investments , credit losses or asset pricing . changes in estimated yield are recognized as an adjustment to the estimated yield over the remaining life of the investment from the date the estimated yield was changed . paid-in-kind interest the company holds debt investments in its portfolio that contain a payment-in-kind ( `` pik '' ) interest provision . the pik interest , which represents contractually deferred interest added to the investment balance that is generally due at maturity , is generally recorded on the accrual basis to the extent such amounts are expected to be collected . we stop accruing pik interest if we do not expect the issuer to be able to pay all principal and interest when due . capital gains incentive fee the company records an expense accrual relating to the capital gains incentive fee payable by the company to its investment adviser when the unrealized gains on its investments exceed all realized capital losses on its investments given the fact that a capital gains incentive fee would be owed to the investment adviser if the company were to liquidate its investment portfolio at such time . the actual 57 incentive fee payable to the company 's investment adviser related to capital gains will be determined and payable in arrears at the end of each fiscal year and will include only realized capital gains for the period . revenues we generate revenue in the form of interest income and capital gains on the debt investments that we hold and capital gains , if any , on equity interests that we may acquire . we expect our debt investments , whether in the form of leveraged loans or mezzanine debt , to have terms of up to ten years , and to bear interest at either a fixed or floating rate . interest on debt will be payable generally either quarterly or semi-annually . in some cases , our debt investments may provide for a portion of the interest to be paid-in-kind ( `` pik '' ) . to the extent interest is paid-in-kind , it will be payable through the increase of the principal amount of the obligation by the amount of interest due on the then-outstanding aggregate principal amount of such obligation . the principal amount of the debt and any accrued but unpaid interest will generally become due at the maturity date . in addition , we may generate revenue in the form of commitment , origination , structuring or diligence fees , fees for providing managerial assistance or investment management services and possibly consulting fees .
| results of operations operating results for the years ended february 29 , 2012 , and february 28 , 2011 and 2010 are as follows : replace_table_token_14_th investment income the composition of our investment income in each period was as follows : replace_table_token_15_th for the year ended february 28 , 2012 , total investment income decreased $ 0.6 million , or 3.9 % compared to the fiscal year ended february 28 , 2011. interest income from our investment in the subordinated notes of saratoga clo increased $ 0.9 million , or 27.4 % , to $ 4.2 million for the year ended february 28 , 2012 from $ 2.3 million for the fiscal year ended february 28 , 2011. for the year ended february 28 , 2011 , total investment income decreased $ 1.4 million , or 9.3 % compared to the fiscal year ended february 28 , 2010. the decrease is predominantly attributable to a smaller total average portfolio , partially offset by an increase in the effective interest rate earned on our investment in the subordinated notes of saratoga clo . interest income from our investment in the subordinated notes of saratoga clo increased $ 0.9 million , or 37.4 % , to $ 3.3 million for the year ended february 28 , 2011 from $ 2.4 million for the fiscal year ended february 28 , 2010. for the fiscal years ended february 29 , 2012 , and february 28 , 2011 and 2010 , total pik income was $ 1.4 million , $ 1.1 million and $ 0.9 million , respectively .
| 5,905 |
fair values determined by level 2 inputs utilize data points that are observable such as quoted prices , interest rates and yield curves . fair values determined by level 3 inputs are unobservable data points for the asset or liability , and includes situations where there is little , if any , market activity for the asset or liability : replace_table_token_10_th 9. stockholders ' equity common stock as of december 31 , 2019 , the company was authorized to issue 220,000,000 shares of common stock , consisting of 200,000,000 shares of class a common stock , par value $ 0.0001 per share and 20,000,000 of class f common stock , par value $ 0.0001 per share . holders of the company 's common stock are entitled to one vote for each share of common stock and vote together as a single class . at december 31 , 2019 , there were 40,000,000 shares of class a common stock ( inclusive of the 38,543,998 shares subject to redemption ) and 10,000,000 shares of class f common stock issued and outstanding . preferred stock as of december 31 , 2019 , the company was authorized to issue 1,000,000 shares of preferred stock , par value $ 0.0001 per share , with such designations , voting and other rights and preferences as may be determined from time to time by the board of directors . at december 31 , 2019 , there were no shares of preferred stock issued and outstanding . 60 pae business combination in connection with the pae business combination , the company amended and restated its certificate of incorporation on february 10 , 2020. pursuant to the terms of the amended and restated certificate of incorporation , the company has authorized 211,000,000 shares of capital stock , par value of $ 0.0001 per share , consisting of ( a ) 210,000,000 shares of common stock , all of which are class a stock , and ( b ) 1,000,000 shares of preferred stock . 10. subsequent events ( unaudited ) pae business combination as described in note 1 , the company completed the pae business combination on february 10 , 2020 , following stockholder approval . the following unaudited pro forma results of operations and earnings per share for the years ended december 31 , 2019 and 2018 assume the pae business combination was completed on january 1 , 2018. the pro forma results include adjustments to reflect the removal of transaction-related costs , interest earned on proceeds deposited in the trust account and the reduction in interest expenses due to debt paydown . replace_table_token_11_th 61 item 9. changes in and disagreements with accountants on accounting and financial disclosures information required by this item is set forth under item 4.01 of our current report on form 8-k filed with the sec on february 14 , 2020 , which information is incorporated herein by reference . item 9a . controls and procedures disclosure controls and procedures disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the exchange act is recorded , processed , summarized and reported within the time periods specified in the sec 's rules and forms . disclosure controls and procedures include , without limitation , controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the exchange act is accumulated and communicated to management , including our chief executive officer and chief financial officer , to allow timely decisions regarding required disclosure . as required by rules 13a-15 and 15d-15 under the exchange act , our chief executive officer and chief financial officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of december 31 , 2019. based upon their evaluation , our chief executive officer and chief financial officer concluded that our disclosure controls and procedures ( as defined in rules 13a-15 ( e ) and 15d-15 ( e ) under the exchange act ) were effective . internal control over financial reporting management is responsible for establishing and maintaining adequate internal control over financial reporting ( as defined in rules 13a-15 ( f ) and 15d-15 ( f ) under the exchange act ) . management assessed the effectiveness of the company 's internal control over financial reporting based on the criteria set forth by the committee of sponsoring organizations of the treadway commission in internal controlintegrated framework ( 2013 ) . based on this assessment , management concluded that , as of december 31 , 2019 , the company 's internal control over financial reporting was effective . this annual report on form 10-k does not include , and we are not required to include , an attestation report of our independent registered public accounting firm on the effectiveness of our internal control over financial reporting pursuant to section 404 for story_separator_special_tag the following discussion and analysis of the financial condition and results of operations of gores holding iii , inc. should be read in conjunction with the audited consolidated 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 recent developments pae business combination on the closing date , the company consummated the previously announced business combination pursuant to the merger agreement , which provided for the business combination . as a result of the first merger , the company owns 100 % of the outstanding common stock of story_separator_special_tag fair values determined by level 2 inputs utilize data points that are observable such as quoted prices , interest rates and yield curves . fair values determined by level 3 inputs are unobservable data points for the asset or liability , and includes situations where there is little , if any , market activity for the asset or liability : replace_table_token_10_th 9. stockholders ' equity common stock as of december 31 , 2019 , the company was authorized to issue 220,000,000 shares of common stock , consisting of 200,000,000 shares of class a common stock , par value $ 0.0001 per share and 20,000,000 of class f common stock , par value $ 0.0001 per share . holders of the company 's common stock are entitled to one vote for each share of common stock and vote together as a single class . at december 31 , 2019 , there were 40,000,000 shares of class a common stock ( inclusive of the 38,543,998 shares subject to redemption ) and 10,000,000 shares of class f common stock issued and outstanding . preferred stock as of december 31 , 2019 , the company was authorized to issue 1,000,000 shares of preferred stock , par value $ 0.0001 per share , with such designations , voting and other rights and preferences as may be determined from time to time by the board of directors . at december 31 , 2019 , there were no shares of preferred stock issued and outstanding . 60 pae business combination in connection with the pae business combination , the company amended and restated its certificate of incorporation on february 10 , 2020. pursuant to the terms of the amended and restated certificate of incorporation , the company has authorized 211,000,000 shares of capital stock , par value of $ 0.0001 per share , consisting of ( a ) 210,000,000 shares of common stock , all of which are class a stock , and ( b ) 1,000,000 shares of preferred stock . 10. subsequent events ( unaudited ) pae business combination as described in note 1 , the company completed the pae business combination on february 10 , 2020 , following stockholder approval . the following unaudited pro forma results of operations and earnings per share for the years ended december 31 , 2019 and 2018 assume the pae business combination was completed on january 1 , 2018. the pro forma results include adjustments to reflect the removal of transaction-related costs , interest earned on proceeds deposited in the trust account and the reduction in interest expenses due to debt paydown . replace_table_token_11_th 61 item 9. changes in and disagreements with accountants on accounting and financial disclosures information required by this item is set forth under item 4.01 of our current report on form 8-k filed with the sec on february 14 , 2020 , which information is incorporated herein by reference . item 9a . controls and procedures disclosure controls and procedures disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the exchange act is recorded , processed , summarized and reported within the time periods specified in the sec 's rules and forms . disclosure controls and procedures include , without limitation , controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the exchange act is accumulated and communicated to management , including our chief executive officer and chief financial officer , to allow timely decisions regarding required disclosure . as required by rules 13a-15 and 15d-15 under the exchange act , our chief executive officer and chief financial officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of december 31 , 2019. based upon their evaluation , our chief executive officer and chief financial officer concluded that our disclosure controls and procedures ( as defined in rules 13a-15 ( e ) and 15d-15 ( e ) under the exchange act ) were effective . internal control over financial reporting management is responsible for establishing and maintaining adequate internal control over financial reporting ( as defined in rules 13a-15 ( f ) and 15d-15 ( f ) under the exchange act ) . management assessed the effectiveness of the company 's internal control over financial reporting based on the criteria set forth by the committee of sponsoring organizations of the treadway commission in internal controlintegrated framework ( 2013 ) . based on this assessment , management concluded that , as of december 31 , 2019 , the company 's internal control over financial reporting was effective . this annual report on form 10-k does not include , and we are not required to include , an attestation report of our independent registered public accounting firm on the effectiveness of our internal control over financial reporting pursuant to section 404 for story_separator_special_tag the following discussion and analysis of the financial condition and results of operations of gores holding iii , inc. should be read in conjunction with the audited consolidated 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 recent developments pae business combination on the closing date , the company consummated the previously announced business combination pursuant to the merger agreement , which provided for the business combination . as a result of the first merger , the company owns 100 % of the outstanding common stock of
| results of operations for the calendar years ended december 31 , 2019 and 2018 , and the period from october 23 , 2017 ( inception ) to december 31 , 2017 , we had a net income ( loss ) of $ 1,458,376 , $ 1,736,729 and $ ( 23,684 ) , respectively . our activities during these periods mainly consisted of identifying and evaluating prospective acquisition candidates for a business combination . we generated $ 8,488,158 , $ 2,609,060 and $ 0 in interest income for the calendar years ended december 31 , 2019 and 2018 and the period from october 23 , 2017 ( inception ) to december 31 , 2017 respectively . as indicated in the accompanying consolidated financial statements , as of december 31 , 2019 and 2018 , we had $ 244,960 and $ 856,182 , respectively , in cash . liquidity and capital resources in november 2017 , our sponsor purchased an aggregate of 10,781,250 founder shares for an aggregate purchase price of $ 25,000 , or approximately $ 0.002 per share . subsequently , our sponsor transferred an aggregate of 75,000 founder shares to messrs. randall bort , william patton and jeffrey rea , our former independent directors . on october 22 , 2018 , following the expiration of the unexercised portion of the underwriter 's over-allotment option , our sponsor forfeited 781,250 founder shares so that the remaining founder shares held by our initial stockholders represented 20.0 % of the outstanding shares upon ipo closing date . on september 11 , 2018 , we consummated our ipo of 40,000,000 units at a price of $ 10.00 per unit , including 2,500,000 units as a result of the underwriter 's partial exercise of their over-allotment option , generating gross proceeds of $ 400,000,000. on the ipo closing date , we completed the private sale of an aggregate of 6,666,666 private placement warrants , each exercisable to purchase one share of common stock at $ 11.50 per share , to our sponsor , at a price of $ 1.50
| 5,906 |
8. quarterly financial results ( unaudited ) the following table sets forth certain unaudited quarterly results of operations of the company for the year ended december 31 , 2014. in the opinion of management , this information has been prepared on the same basis as the audited financial statements and all necessary adjustments , consisting only of normally recurring adjustments , have been included in the amounts stated below to present fairly the quarterly information when read in conjunction with the audited financial statements and related notes . the quarterly operating results are not necessarily indicative of future results of operations . replace_table_token_4_th f-16 item 9. changes in and disagreements with accountants on accounting and financial disclosure none . item 9a . controls and procedures evaluation of disclosure controls and procedures disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the exchange act is recorded , processed , summarized and reported within the time periods specified in the sec 's rules and forms . disclosure controls and procedures include , without limitation , controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the exchange act is accumulated and communicated to management , including our chief executive officer and chief financial officer , to allow timely decisions regarding required disclosure . as required by rules 13a-15 and 15d-15 under the exchange act , our chief executive officer and chief financial officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of december 31 , 2014. based upon their evaluation , our chief executive officer and chief financial officer concluded that our disclosure controls and procedures ( as defined in rules 13a-15 ( e ) and 15d-15 ( e ) under the exchange act ) were effective . management 's report on internal controls over financial reporting our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in exchange act rule 13a-15 ( f ) . internal control over financial reporting is a process used to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with gaap . internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets ; provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with gaap , and that our receipts and expenditures are being made only in accordance with the authorization of our board of directors and management ; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition , use or disposition of our assets that could have a material effect on our financial statements . an internal control system over financial reporting has inherent limitations and may not prevent or detect misstatements . therefore , even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation . also , projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions , or that the degree of compliance with the policies or procedures may deteriorate . however , these inherent limitations are known features of the financial reporting process . therefore , it is possible to design safeguards into the process to reduce , though not fully eliminate , risk . our management assessed the effectiveness of our internal control over financial reporting as of december 31 , 2014. in making this assessment , our management used the criteria set forth by the committee of sponsoring organizations of the treadway commission in internal controlsintegrated framework . based on our management 's assessment and those criteria , our management believes that we maintained effective internal control over financial reporting as of december 31 , 2014. this annual report on form 10-k does not include an attestation report of our registered public accounting firm on story_separator_special_tag story_separator_special_tag periods therein . early application is permitted for any annual reporting period or interim period for which the entity 's financial statements have not yet been issued . upon adoption , entities will no longer present or disclose any information required by topic 915. we early adopted the new standard beginning july 1 , 2014. liquidity and capital resources our liquidity needs have been satisfied to date through receipt of $ 25,000 from the sale of the founder shares to our sponsor and amounts held outside of our trust account . we received proceeds of 221,500,000 from ( i ) the sale of the units in our initial public offering , after deducting offering expenses of approximately $ 750,000 , underwriting commissions of $ 4,410,000 ( excluding deferred underwriting commissions of up to $ 7,717,500 ) , and ( ii ) the sale of the private placement warrants for a purchase price of $ 6,160,000 ( including proceeds from the partial exercise by the underwriters of their over-allotment option ) . $ 220,500,000 of such proceeds is currently held in the trust account , $ 7,717,500 of which may be used to satisfy deferred underwriting commissions . as of december 31 , 2014 , investment securities in our trust account consisted of $ 220,502,961 in shares in money market accounts invested in u.s. government treasury securities . 56 as of december 31 , 2014 , we had a cash balance of $ 733,386 , held outside of our trust account , which is available for use by us to cover the costs associated with identifying a target business and negotiating a business transaction and other general corporate uses . we intend to use substantially all of the story_separator_special_tag 8. quarterly financial results ( unaudited ) the following table sets forth certain unaudited quarterly results of operations of the company for the year ended december 31 , 2014. in the opinion of management , this information has been prepared on the same basis as the audited financial statements and all necessary adjustments , consisting only of normally recurring adjustments , have been included in the amounts stated below to present fairly the quarterly information when read in conjunction with the audited financial statements and related notes . the quarterly operating results are not necessarily indicative of future results of operations . replace_table_token_4_th f-16 item 9. changes in and disagreements with accountants on accounting and financial disclosure none . item 9a . controls and procedures evaluation of disclosure controls and procedures disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the exchange act is recorded , processed , summarized and reported within the time periods specified in the sec 's rules and forms . disclosure controls and procedures include , without limitation , controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the exchange act is accumulated and communicated to management , including our chief executive officer and chief financial officer , to allow timely decisions regarding required disclosure . as required by rules 13a-15 and 15d-15 under the exchange act , our chief executive officer and chief financial officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of december 31 , 2014. based upon their evaluation , our chief executive officer and chief financial officer concluded that our disclosure controls and procedures ( as defined in rules 13a-15 ( e ) and 15d-15 ( e ) under the exchange act ) were effective . management 's report on internal controls over financial reporting our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in exchange act rule 13a-15 ( f ) . internal control over financial reporting is a process used to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with gaap . internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets ; provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with gaap , and that our receipts and expenditures are being made only in accordance with the authorization of our board of directors and management ; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition , use or disposition of our assets that could have a material effect on our financial statements . an internal control system over financial reporting has inherent limitations and may not prevent or detect misstatements . therefore , even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation . also , projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions , or that the degree of compliance with the policies or procedures may deteriorate . however , these inherent limitations are known features of the financial reporting process . therefore , it is possible to design safeguards into the process to reduce , though not fully eliminate , risk . our management assessed the effectiveness of our internal control over financial reporting as of december 31 , 2014. in making this assessment , our management used the criteria set forth by the committee of sponsoring organizations of the treadway commission in internal controlsintegrated framework . based on our management 's assessment and those criteria , our management believes that we maintained effective internal control over financial reporting as of december 31 , 2014. this annual report on form 10-k does not include an attestation report of our registered public accounting firm on story_separator_special_tag story_separator_special_tag periods therein . early application is permitted for any annual reporting period or interim period for which the entity 's financial statements have not yet been issued . upon adoption , entities will no longer present or disclose any information required by topic 915. we early adopted the new standard beginning july 1 , 2014. liquidity and capital resources our liquidity needs have been satisfied to date through receipt of $ 25,000 from the sale of the founder shares to our sponsor and amounts held outside of our trust account . we received proceeds of 221,500,000 from ( i ) the sale of the units in our initial public offering , after deducting offering expenses of approximately $ 750,000 , underwriting commissions of $ 4,410,000 ( excluding deferred underwriting commissions of up to $ 7,717,500 ) , and ( ii ) the sale of the private placement warrants for a purchase price of $ 6,160,000 ( including proceeds from the partial exercise by the underwriters of their over-allotment option ) . $ 220,500,000 of such proceeds is currently held in the trust account , $ 7,717,500 of which may be used to satisfy deferred underwriting commissions . as of december 31 , 2014 , investment securities in our trust account consisted of $ 220,502,961 in shares in money market accounts invested in u.s. government treasury securities . 56 as of december 31 , 2014 , we had a cash balance of $ 733,386 , held outside of our trust account , which is available for use by us to cover the costs associated with identifying a target business and negotiating a business transaction and other general corporate uses . we intend to use substantially all of the
| overview we are a blank check company 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 consummated our initial public offering on february 19 , 2014. we are currently in the process of evaluating and identifying targets for a business combination . we intend to use cash from the proceeds of our initial public offering ( including proceeds from the exercise by the underwriters of their over-allotment option ) the sale of the sponsors ' warrants , our capital stock , and our debt or a combination of our cash , stock and debt to fund a business combination . we are evaluating acquisition opportunities and , at any given time , may be in various stages of due diligence or preliminary discussions with respect to a number of potential acquisitions . from time to time , we may enter into non-binding letters of intent , but we are currently not subject to any definitive agreement with respect to any business combination . however , we can not assure you that we will identify any suitable target candidates or , if identified , that we will be able to complete the acquisition of such candidates on favorable terms or at all .
| 5,907 |
those statements include statements regarding the intent , belief or current expectations of apricus biosciences , inc. and subsidiaries ( “ we , ” “ us , ” “ our , ” the “ company ” or “ apricus ” ) and our management team . any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties , and actual results may differ materially from those projected in the forward-looking statements . these risks and uncertainties include but are not limited to those risks and uncertainties set forth in item 1a of this report . in light of the significant risks and uncertainties inherent in the forward-looking statements included in this report , the inclusion of such statements should not be regarded as a representation by us or any other person that our objectives and plans will be achieved . further , these forward-looking statements reflect our view only as of the date of this report . except as required by law , we undertake no obligations to update any forward-looking statements and we disclaim any intent to update forward- 32 looking statements after the date of this report to reflect subsequent developments . accordingly , you should also carefully consider the factors set forth in other reports or documents that we file from time to time with the securities and exchange commission . vitaros is our trademark in the united states , which is pending registration and subject to our agreement with warner chilcott company , inc. , now a subsidiary of allergan ( “ allergan ” ) . vitaros is a registered trademark of ferring international center s.a. ( “ ferring ” ) in certain countries outside of the united states . in addition , we own trademarks for nexact ® and rayva . solely for convenience , trademarks and tradenames referred to in this annual report on form 10-k appear without the ® and symbols , but those references are not intended to indicate , in any way , that we will not assert , to the fullest extent under applicable law , our rights or that the applicable owner will not assert its rights , to these trademarks and tradenames . all share data have been adjusted to reflect a 10-for-1 reverse stock split that was effected on october 24 , 2016. overview we are a biopharmaceutical company focused on the development of innovative product candidates in the areas of urology and rheumatology . we have two product candidates currently in development . vitaros is a product candidate in the united states for the treatment of erectile dysfunction ( “ ed ” ) , which we in-licensed from warner chilcott company , inc. , now a subsidiary of allergan . rayva is our product candidate in phase 2 development for the treatment of raynaud 's phenomenon , secondary to scleroderma , for which we own worldwide rights . on march 8 , 2017 , we entered into the ferring asset purchase agreement with ferring , pursuant to which we sold to ferring our assets and rights related to vitaros outside of the united states for approximately $ 11.5 million . in addition to the upfront payment received , ferring will pay us up to $ 0.7 million for the delivery of certain product-related inventory . we are also eligible to receive two additional quarterly payments totaling $ 0.5 million related to transition services , subject to certain limitations . our product candidates vitaros vitaros ( alprostadil ) is a topically-applied cream formulation of alprostadil , which is designed to dilated blood vessels . this combined with nexact , our proprietary permeation enhancer , increases blood flow to the penis , causing an erection . vitaros is currently in development in the united states for the treatment of ed and approved and commercialized in certain countries outside of the united states . allergan owns the rights to vitaros in the united states and in september 2015 , we entered into an agreement with allergan to license the u.s. development and commercialization rights for vitaros . pursuant to the ferring asset purchase agreement , ferring now owns the rights to vitaros outside of the united states . with our broad vitaros expertise and internal know-how , coupled with the proven success in obtaining regulatory approvals for vitaros in other territories , we believe we are well equipped to pursue regulatory approval for vitaros in the united states . we initiated certain activities in 2015 to address issues previously raised by the u.s. food and drug administration ( “ fda ” ) in a 2008 non-approvable letter , including possible safety risks associated with our proprietary permeating enhancer , nexact , and certain chemistry , manufacturing and control issues . we plan to re-submit a revised new drug application ( “ nda ” ) with the fda during the third quarter of 2017. rayva rayva is our product candidate for the treatment of raynaud 's phenomenon associated with scleroderma ( systemic sclerosis ) . rayva is a topically-applied cream formulation of alprostadil designed to dilate blood vessels , which is combined with a proprietary permeation enhancer nexact , and applied on-demand to the affected extremities . rayva received clearance in may 2014 from the fda to begin clinical studies . we reported results from our phase 2a clinical trial of rayva for the treatment of raynaud 's phenomenon secondary to scleroderma in september 2015 , which we believe supports moving rayva forward into future clinical trials . we expect to finalize the rayva phase 2b delivery device and study protocol , explore u.s. and european union orphan designation and seek an ex-u.s. collaboration partner prior to initiating any future clinical studies . 33 story_separator_special_tag million , $ 4.8 million , $ 1.6 million and $ 0.1 million , respectively , were determined using the black-scholes option pricing model on each respective transaction date and recorded as the initial carrying values of the common stock warrant liabilities . story_separator_special_tag additionally , on any date on which ( i ) we submit a purchase notice to aspire capital for at least 10,000 shares of our common stock and ( ii ) the last closing trade price for our common stock is higher than $ 3.00 , we have the right , in our sole discretion , to present aspire capital with a volume-weighted average price purchase notice ( each , a “ vwap purchase notice ” ) directing aspire capital to purchase an amount of our common stock equal to up to 30 % of the aggregate shares of our common stock traded on the next business day ( the “ vwap purchase date ” ) , subject to certain limitations . the purchase price per share of our common stock sold to aspire capital pursuant to a vwap purchase notice shall be the lesser of ( i ) the closing sale price of our common stock on the vwap purchase date or ( ii ) 97 % of the volume weighted average price of our common stock traded on the vwap purchase date , subject to certain qualifications . pursuant to the aspire purchase agreement , in no case may we issue more than 1.2 million shares of our common stock ( which is equal to approximately 19.99 % of our common stock outstanding on the aspire closing date ) to aspire capital unless ( i ) the average price paid for all shares issued under the aspire purchase agreement is at least $ 3.820 per share ( a price equal to the most recent consolidated closing bid price of our common stock prior to the execution of the aspire purchase agreement ) or ( ii ) we receive stockholder approval to issue more shares to aspire capital . through december 31 , 2016 , we issued a total of 455,064 shares for gross proceeds of $ 1.2 million . as of march 7 , 2017 , all of the reserve was available under the committed equity financing facility since our stock price was above $ 1.00 . however , in connection with the september 2016 financing , we agreed not to make any further sales under the aspire purchase agreement for a period of twelve months following the date of the september 2016 financing . pursuant to the aspire purchase agreement , we and aspire capital terminated the prior common stock purchase agreement , dated august 12 , 2014 , between the parties . in january 2016 , we entered into subscription agreements with certain purchasers pursuant to which we agreed to sell an aggregate of 1,136,364 shares of our common stock and warrants to purchase up to an additional 568,184 shares of our common stock to the purchasers for an aggregate offering price of $ 10.0 million , which took place in two separate closings . each share of common stock was sold at a price of $ 8.80 and included one half of a warrant to purchase a share of common stock . the warrants have an exercise price of $ 8.80 per share , became exercisable six months and one day after the date of issuance and will expire on the seventh anniversary of the date of issuance . during the first closing in january 2016 , we sold an aggregate of 252,842 shares and warrants to purchase up to 126,421 shares of common stock for gross proceeds of $ 2.2 million . the remaining shares and warrants were sold in a subsequent closing in march 2016 for gross proceeds of $ 7.8 million following stockholder approval at a special meeting on march 2 , 2016. as of december 31 , 2016 , we had cash and cash equivalents of approximately $ 2.1 million . during the first quarter of 2017 , we raised additional funds of $ 11.5 million upon the closing of the ferring asset purchase agreement . in addition to the upfront payment received , ferring will pay us up to $ 0.7 million for the delivery of certain product-related inventory . we are also eligible to receive two additional quarterly payments totaling $ 0.5 million related to transition services , subject to certain limitations . we currently have an effective shelf registration statement on form s-3 ( no . 333-198066 ) filed with the securities and exchange commission ( “ sec ” ) under which we may offer from time to time any combination of debt securities , common and preferred stock and warrants . as of march 7 , 2017 , we had approximately $ 74.1 million available under our form s-3 shelf registration statement . however , under current sec regulations , at any time during which the aggregate market value of our common stock held by non-affiliates ( “ public float ” ) is less than $ 75.0 million , the amount we can raise through primary public offerings of securities in any twelve-month period using shelf registration statements , including sales under the aspire purchase agreement , is limited to an aggregate of one-third of our public float . sec regulations permit us to use the highest closing sales price of our common stock ( or the average of the last bid and last ask prices of our common stock ) on any day within 60 days of sales under the shelf registration statement . as of march 7 , 2017 , our public float was approximately $ 20.1 million based on 6.3 million shares of our common stock outstanding at a price of $ 3.21 per share , which was the closing sale price of our common stock on february 17 , 2017 . since our public float is currently less than $ 75.0 million , as of march 7 , 2017 , we may only sell an aggregate of approximately $ 6.7 million of securities under our shelf registration statements on form s-3 .
| results of operations revenues and gross profit were as follows ( in thousands , except percentages ) : replace_table_token_2_th revenue license fee revenue the increase in license fee revenue from 2015 to 2016 was due to variations in the timing and amount of payments from our commercialization partners . license fee revenue during the year ended december 31 , 2016 consisted primarily of $ 3.9 million recognized due to the expansion of our license agreement with ferring to commercialize vitaros in certain european and asia-pacific countries . license fee revenue during the year ended december 31 , 2015 consisted of $ 2.25 million in license fee revenue recognized for the upfront payment related to the ferring license agreement and $ 1.35 million from sandoz , consisting of $ 0.35 million for the expansion of its existing territory into certain asian and pacific countries during the first quarter of 2015 and $ 1.0 million that had been previously deferred awaiting the satisfaction of a contractual condition in the sandoz license agreement that was met in the third quarter of 2015. royalty revenue our royalty revenue is computed based on sales reported to us by our licensee partners on a quarterly basis , which are typically one quarter in arrears , and agreed upon royalty rates for the respective license agreement . royalty revenue during the years ended december 31 , 2016 and 2015 of $ 1.1 million and $ 0.7 million , respectively , was related to sales of vitaros by takeda pharmaceuticals international gmbh ( “ takeda ” ) , hexal ag , an affiliate with the sandoz division of the novartis group of companies ( “ sandoz ” ) , recordati ireland ltd. ( `` recordati '' ) , laboratories majorelle ( `` majorelle '' ) and bracco spa , now a subsidiary of dompé primary s.r.l . ( “ dompé ” ) in their respective territories .
| 5,908 |
the following summarizes the activity for these restructurings : replace_table_token_21_th from 2013 to 2015 , abbott management approved various plans to reduce costs and improve efficiencies across various functional areas . in 2013 , abbott management also approved plans to streamline certain manufacturing operations in order to reduce costs and improve efficiencies in abbott 's established pharmaceuticals business . in 2012 , abbott management approved plans to streamline various commercial operations in order to reduce costs and improve efficiencies in abbott 's core diagnostics , established pharmaceuticals and nutritionals businesses . abbott recorded employee related severance charges of approximately $ 66 story_separator_special_tag story_separator_special_tag also entered into interest rate swap contracts totaling $ 2.5 billion related to the debt issuance . these contracts have the effect of changing abbott 's obligation from a fixed interest rate to a variable interest rate obligation . in the fourth quarter of 2014 , abbott extinguished approximately $ 500 million of long-term debt that was assumed as part of the acquisition of cfr and incurred a charge of $ 18.3 million related to the early repayment of this debt . abbott declared dividends of $ 0.98 per share in 2015 compared to $ 0.90 per share in 2014 , a 9 % increase . dividends paid were $ 1.443 billion in 2015 compared to $ 1.342 billion in 2014. the year-over-year change in dividends reflects the impact of the increase in the dividend rate . in december 2015 , abbott 26 increased the company 's quarterly dividend to $ 0.26 per share from $ 0.24 per share , effective with the dividend paid in february 2016. in addition to preparing for the close of the alere acquisition , abbott will focus on several other key initiatives in 2016. in the nutritional business , abbott will continue to build its product portfolio with the introduction of new science-based products , expand in high-growth emerging markets and implement additional margin improvement initiatives . in the established pharmaceuticals business , abbott will continue to focus on obtaining additional product approvals across numerous countries and increasing its penetration of emerging markets . in the diagnostics business , abbott will focus on the development of next-generation instrument platforms and other advanced technologies , expansion in emerging markets , and further improvements in the segment 's operating margin . in the vascular business , abbott will continue to focus on marketing products in the coronary and endovascular franchises , and increasing mitraclip sales , as well as further clinical development of absorb , its bioresorbable vascular scaffold ( bvs ) device and a further penetration of absorb in numerous countries . in abbott 's other segments , abbott will focus on developing differentiated technologies in higher growth markets . critical accounting policies sales rebates in 2015 , approximately 42 percent of abbott 's consolidated gross revenues were subject to various forms of rebates and allowances that abbott recorded as reductions of revenues at the time of sale . most of these rebates and allowances in 2015 are in the nutritional products and diabetes care segments . abbott provides rebates to state agencies that administer the special supplemental nutrition program for women , infants , and children ( wic ) , wholesalers , group purchasing organizations , and other government agencies and private entities . rebate amounts are usually based upon the volume of purchases using contractual or statutory prices for a product . factors used in the rebate calculations include the identification of which products have been sold subject to a rebate , which customer or government agency price terms apply , and the estimated lag time between sale and payment of a rebate . using historical trends , adjusted for current changes , abbott estimates the amount of the rebate that will be paid , and records the liability as a reduction of gross sales when abbott records its sale of the product . settlement of the rebate generally occurs from one to six months after sale . abbott regularly analyzes the historical rebate trends and makes adjustments to reserves for changes in trends and terms of rebate programs . rebates and chargebacks charged against gross sales in 2015 , 2014 and 2013 amounted to approximately $ 2.2 billion , $ 2.1 billion and $ 1.9 billion , respectively , or 21.6 percent , 20.1 percent and 19.1 percent , respectively , based on gross sales of approximately $ 10.3 billion , $ 10.3 billion and $ 10.2 billion , respectively , subject to rebate . a one-percentage point increase in the percentage of rebates to related gross sales would decrease net sales by approximately $ 101 million in 2015. abbott considers a one-percentage point increase to be a reasonably likely increase in the percentage of rebates to related gross sales . other allowances charged against gross sales were approximately $ 124 million , $ 138 million and $ 146 million for cash discounts in 2015 , 2014 and 2013 , respectively , and $ 238 million , $ 210 million and $ 208 million for returns in 2015 , 2014 and 2013 , respectively . cash discounts are known within 15 to 30 days of sale , and therefore can be reliably estimated . returns can be reliably estimated because abbott 's historical returns are low , and because sales returns terms and other sales terms have remained relatively unchanged for several periods . management analyzes the adequacy of ending rebate accrual balances each quarter . in the domestic nutritional business , management uses both internal and external data available to estimate the level of inventory in the distribution channel . management has access to several large customers ' inventory management data , and for other customers , utilizes data from a third party that measures time on the retail shelf . these sources allow management to make reliable estimates of inventory in the distribution channel . except for a transition period before or after a change in the supplier for the wic business in a state , inventory in the distribution channel does not vary substantially . story_separator_special_tag at december 31 , 2015 , goodwill amounted to $ 9.6 billion and intangibles amounted to $ 5.6 billion , and amortization expense in continuing operations for intangible assets amounted to $ 601 million in 2015 , $ 555 million in 2014 and $ 588 million in 2013. there were no impairments of goodwill in 2015 , 2014 or 2013. litigation abbott accounts for litigation losses in accordance with fasb accounting standards codification no . 450 , `` contingencies . '' under asc no . 450 , loss contingency provisions are recorded for probable losses at management 's best estimate of a loss , or when a best estimate can not be made , a minimum loss contingency amount is recorded . these estimates are often initially developed substantially earlier than the ultimate loss is known , and the estimates are refined each accounting period as additional information becomes known . accordingly , abbott is often initially unable to develop a best estimate of loss , and therefore the minimum amount , which could be zero , is recorded . as information becomes known , either the minimum loss amount is increased , resulting in additional loss provisions , or a best estimate can be made , also resulting in additional loss provisions . occasionally , a best estimate amount is changed to a lower amount when events result in an expectation of a more favorable outcome than previously expected . abbott estimates the range of possible loss to be from approximately $ 35 million to $ 50 million for its legal proceedings and environmental exposures . accruals of approximately $ 45 million have been recorded at december 31 , 2015 for these proceedings and exposures . these accruals represent management 's best estimate of probable loss , as defined by fasb asc no . 450 , `` contingencies . '' 29 results of operations sales the following table details the components of sales growth by reportable segment for the last three years : replace_table_token_3_th the increases in total net sales in 2015 and 2014 reflect unit growth , partially offset by the impact of unfavorable foreign exchange . the price declines related to vascular products sales in 2015 and 2014 primarily reflect pricing pressure on drug eluting stents and other coronary products as a result of market competition in the u.s. and other major markets . the impact of reimbursement reductions by the centers for medicare and medicaid services on abbott 's diabetes care business also contributed to the overall 3.9 % price decline in the u.s. in 2014 . 30 a comparison of significant product and product group sales is as follows . percent changes are versus the prior year and are based on unrounded numbers . replace_table_token_4_th ( 1 ) coronary devices include des/bvs product portfolio , structural heart , guidewires , balloon catheters , and other coronary products . endovascular includes vessel closure , carotid stents and other peripheral products . replace_table_token_5_th ( 2 ) coronary devices include des/bvs product portfolio , structural heart , guidewires , balloon catheters , and other coronary products . endovascular includes vessel closure , carotid stents and other peripheral products . excluding the unfavorable impact of foreign exchange , total established pharmaceutical products sales increased 34.1 percent in 2015 and 14.9 percent in 2014. the established pharmaceutical products 31 segment is focused on several key emerging markets including india , russia , china and brazil . excluding the impact of foreign exchange , sales in these key emerging markets increased 32.4 percent in 2015 and 11.0 percent in 2014. excluding the impact of foreign exchange , sales in established pharmaceuticals ' other emerging markets increased 39.6 percent in 2015 and increased 30.1 percent in 2014. the increases in 2015 and 2014 include the impact of the acquisitions of cfr pharmaceuticals in september 2014 and veropharm in december 2014. excluding sales from the acquisitions and the impact of foreign exchange , revenues increased 13.4 % in 2015 and 7.9 % in 2014. excluding the unfavorable impact of foreign exchange , total nutritional products sales increased 5.5 percent in 2015 and 5.0 percent in 2014. in abbott 's international pediatric nutritional business , the 2015 increase in sales was driven by growth in china , russia , and several countries in latin america and the middle east as a result of share gains and market growth . the increase in 2015 u.s. pediatric nutritional sales primarily reflects higher infant formula revenue from new product launches . excluding the unfavorable impact of foreign exchange , the 2015 and 2014 increases in international adult nutritional sales are due primarily to volume growth in emerging markets and continued expansion of the adult nutrition category internationally . the decrease in 2015 and 2014 u.s. adult nutritional sales reflects the effects of increased competition and market dynamics in retail and institutional categories . excluding the unfavorable impact of foreign exchange , total diagnostic products sales increased 7.3 percent in 2015 and 6.4 percent in 2014. the sales increases were primarily driven by share gains in the core laboratory markets in the u.s. and internationally . 2015 and 2014 sales of immunochemistry products , the largest category in this segment , reflect continued execution of abbott 's strategy to deliver integrated solutions to large healthcare customers . excluding the unfavorable impact of foreign exchange , total vascular products sales grew 1.3 % in 2015 and were virtually flat in 2014. in 2015 , growth of abbott 's mitraclip structural heart product , its endovascular business , including the supera peripheral stent , and the absorb bioresorbable vascular scaffold in various international markets was almost entirely offset by continued pricing pressures in des products . abbott has periodically sold product rights to non-strategic products and has recorded the related gains in net sales in accordance with abbott 's revenue recognition policies as discussed in note 1 to the consolidated financial statements .
| financial review abbott 's revenues are derived primarily from the sale of a broad line of health care products under short-term receivable arrangements . patent protection and licenses , technological and performance features , and inclusion of abbott 's products under a contract most impact which products are sold ; price controls , competition and rebates most impact the net selling prices of products ; and foreign currency translation impacts the measurement of net sales and costs . abbott 's primary products are nutritional products , branded generic pharmaceuticals , diagnostic testing products and vascular products . sales in international markets comprise approximately 70 percent of consolidated net sales . on february 27 , 2015 , abbott completed the sale of its developed markets branded generics pharmaceuticals business to mylan inc. ( mylan ) for 110 million shares of a newly formed publicly traded entity that combined mylan 's existing business and abbott 's developed markets pharmaceuticals business . on february 10 , 2015 , abbott completed the sale of its animal health business to zoetis inc. on january 1 , 2013 , abbott completed the separation of abbvie inc. ( abbvie ) , which was formed to hold abbott 's research-based proprietary pharmaceuticals business . the historical operating results of these businesses prior to disposition or separation are excluded from earnings from continuing operations and are presented on the earnings from discontinued operations line in abbott 's consolidated statement of earnings . any assets or liabilities related to these businesses are being reported as held for disposition in abbott 's consolidated balance sheet as of december 31 , 2015 and 2014. the cash flows of these businesses up through the date of disposition or separation are included in its consolidated statements of cash flows for all periods presented . over the last three years , sales growth was driven primarily by the established pharmaceuticals , nutritional and diagnostics businesses .
| 5,909 |
cautionary statement concerning forward-looking statements see item 1 of this annual report on form 10-k for information regarding forward-looking statements . critical accounting policies and estimates management 's discussion and analysis of financial condition and results of operations is based on our consolidated financial statements , which have been prepared in accordance with u.s. generally accepted accounting principles . the preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses . note 1 to our audited consolidated financial statements contains a summary of our significant accounting policies . management believes our policy with respect to the methodology for the determination of the allowance for loan losses involves a higher degree of complexity and requires management to make difficult and subjective judgments which often require assumptions or estimates about highly uncertain matters . changes in these judgments , assumptions or estimates could materially impact results of operations . this critical policy and its application are periodically reviewed with the audit committee and our board of directors . allowance for loan losses and related provision the allowance for loan losses represents management 's estimate of probable incurred loan losses inherent in the loan portfolio . determining the amount of the allowance for loan losses is considered a critical accounting estimate because it requires significant judgment and the use of estimates related to the amount and timing of expected future cash flows on impaired loans , estimated probable incurred losses on pools of homogeneous loans based on historical loss experience , and consideration of current economic trends and conditions , all of which may be susceptible to significant change . the loan portfolio also represents the largest asset type on the company 's consolidated statements of condition . the evaluation of the adequacy of the allowance for loan losses includes , among other factors , an analysis of historical loss rates by loan category applied to current loan totals . however , actual loan losses may be higher or lower than historical trends , which vary . actual losses on specified problem loans , which also are provided for in the evaluation , may vary from estimated loss percentages , which are established based upon a limited number of potential loss classifications . the allowance for loan losses is established through a provision for loan losses charged to expense . management believes that the current allowance for loan losses will be adequate to absorb probable incurred loan losses on existing loans that may become uncollectible based on the evaluation of known and inherent risks in the originated loan portfolio . the evaluation takes into consideration such factors as changes in the nature and size of the portfolio , overall portfolio quality , and specific problem loans and current economic conditions which may affect our borrowers ' ability to pay . the evaluation also details historical losses by loan category and the resulting loan loss rates which are projected for current loan total amounts . loss estimates for specified problem loans are also detailed . various regulatory agencies , as an integral part of their examination process , periodically review our allowance for loan losses . such agencies may require us to make additional provisions for loan losses based upon information available to them at the time of their examination . all of the factors considered in the analysis of the adequacy of the allowance for loan losses may be subject to change . to the extent actual outcomes differ from management estimates , additional provisions for loan losses may be required that could materially adversely impact earnings in future periods . additional information can be found in note 1 of the notes to consolidated financial statements . income taxes the objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity 's financial statements or tax returns . judgment is required in assessing the future tax consequences of events that have been recognized in the company 's consolidated financial statements or tax returns . fluctuations in the actual outcome of these future tax consequences could impact the company 's consolidated financial condition or results of operations . notes 1 ( under the caption “ use of estimates ” ) and 12 of the notes to consolidated financial statements include additional discussion on the accounting for income taxes . - 27 - goodwill the company has adopted the provisions of fasb asc 350-10-05 , which requires that goodwill be reported separate from other intangible assets in the consolidated statements of condition and not be amortized but tested for impairment annually or more frequently if indicators arise for impairment . no impairment charge was deemed necessary for the years ended december 31 , 2017 , 2016 and 2015. overview and strategy we serve as a holding company for the bank , which is our primary asset and only operating subsidiary . we follow a business plan that emphasizes the delivery of customized banking services in our market area to customers who desire a high level of personalized service and responsiveness . the bank conducts a traditional banking business , making commercial loans , consumer loans and residential and commercial real estate loans . in addition , the bank offers various non-deposit products through non-proprietary relationships with third party vendors . the bank relies upon deposits as the primary funding source for its assets . the bank offers traditional deposit products . many of our customer relationships start with referrals from existing customers . we then seek to cross sell our products to customers to grow the customer relationship . for example , we will frequently offer an interest rate concession on credit products for customers that maintain a noninterest-bearing deposit account at the bank . this strategy has helped maintain our funding costs and the growth of our interest expense even as we have substantially increased our total deposits . story_separator_special_tag salaries and employee benefits increased by $ 4.0 million , fdic insurance increased by $ 0.5 million and data processing increased by $ 0.4 million . noninterest expenses for the full-year 2016 increased by $ 4.0 million , or 7.4 % to $ 58.5 million from $ 54.5 million in 2015. the increase was primarily attributable to an increased level of business and staff resulting from organic growth . salary and employee benefits increased by $ 3.3 million , occupancy and equipment expenses increased by $ 1.0 million , fdic insurance increased by $ 0.8 million , data processing increased by $ 0.4 million , marketing and advertising increased by $ 0.2 million and other expenses increased by $ 0.6 million , partially offset by a 2015 loss on an extinguishment of debt for $ 2.4 million . income taxes on december 22 , 2017 , h.r . 1 , commonly known as the tax cuts and jobs act ( the “ act ” ) , was signed into law . the act includes provisions that will affect the company 's income tax expense , including the reducing the federal tax rate from 35 % to 21 % effective january 1 , 2018. as a result of the rate reduction , the company was required to re-measure , through income tax expense in the period of enactment , its deferred tax assets and liabilities using the enacted rate at which the company expects them to be recovered or settled . pursuant to the securities and exchange commission staff accounting bulletin no . 118 , income tax accounting implications of the tax cuts and jobs act ( “ sab 118 ” ) , given the amount and complexity of the changes in tax law resulting from the tax reform act , the company has not finalized the accounting for the income tax effects of the tax reform act . this includes the re-measurement of deferred taxes . the impact of the tax reform act may differ from this estimate , during the one-year measurement period due to , among other things , further refinement of the company 's calculations , changes in interpretations and assumptions the company has made , guidance that may be issued and actions the company may take as a result of the tax reform act . as a result of the tax reform act , the company recorded a tax charge of approximately $ 5.6 million due to a re-measurement of deferred tax assets and liabilities . income tax expense was $ 25.3 million for the full-year 2017 compared to $ 11.8 million for the full-year 2016 and $ 19.9 million for the full-year 2015. tax expense for 2017 included the aforementioned , estimated $ 5.6 million charge to adjust the value of deferred tax assets to reflect the lower corporate tax rate , resulting from the act . the higher level of income tax expense in 2017 also reflected increased pretax income . the effective tax rates were 36.9 % in 2017 , 27.5 % for 2016 and 32.5 % for 2015. excluding the effect of the $ 5.6 million charge , the effective tax rate in 2017 was 28.8 % . the effective tax rate in 2016 from 2015 decreased due to a decrease in the proportion of income subject to income taxes . for a more detailed description of income taxes see note 12 of the notes to consolidated financial statements . financial condition overview at december 31 , 2017 , the company 's total assets were $ 5.1 billion , an increase of $ 682 million from december 31 , 2016. total loans ( including loans held-for-sale ) were $ 4.2 billion , an increase of $ 642 million from december 31 , 2016. deposits were $ 3.8 billion , an increase of $ 451 million from december 31 , 2016. at december 31 , 2016 , the company 's total assets were $ 4.4 billion , an increase of $ 410 million from december 31 , 2015. total loans ( including loans held-for-sale ) were $ 3.6 billion , an increase of $ 455 million from december 31 , 2015. deposits were $ 3.3 billion , an increase of $ 553 million from december 31 , 2015. loan portfolio the bank 's lending activities are generally oriented to small-to-medium sized businesses , high net worth individuals , professional practices and consumer and retail clients living and working in the bank 's market area of bergen , union , morris , essex , hudson , mercer and monmouth counties , new jersey , as well as nyc 's five boroughs , and commencing in 2018 , long island through its melville , new york office . the bank has not made loans to borrowers outside of the united states . the bank believes that its strategy of high-quality client service , competitive rate structures and selective marketing have enabled it to gain market share . - 32 - commercial loans are loans made for business purposes and are primarily secured by collateral such as cash balances with the bank , marketable securities held by or under the control of the bank , business assets including accounts receivable , inventory and equipment and liens on commercial and residential real estate . commercial construction loans are loans to finance the construction of commercial or residential properties secured by first liens on such properties . commercial real estate loans include loans secured by first liens on completed commercial properties , including multi-family properties , to purchase or refinance such properties . residential mortgages include loans secured by first liens on residential real estate , and are generally made to existing clients of the bank to purchase or refinance primary and secondary residences . home equity loans and lines of credit include loans secured by first or second liens on residential real estate for primary or secondary residences . consumer loans are made to individuals who qualify for auto loans , cash reserve , credit cards and installment loans .
| operating results overview net income for the year ended december 31 , 2017 was $ 43.2 million , an increase of $ 12.1 million , or 39.1 % , compared to net income of $ 31.1 million for 2016. net income available to common shareholders for the year ended december 31 , 2017 was $ 43.2 million , an increase of $ 12.2 million , or 39.2 % , compared to net income available to common shareholders of $ 31.1 million for 2016. diluted earnings per share were $ 1.34 for 2017 , a 32.7 % increase from $ 1.01 for 2016. the change in net income from 2016 to 2017 was attributable to the following : · increased net interest income of $ 14.9 million primarily due to organic growth , · decreased provision for loan losses of $ 32.7 million primarily due to $ 36.5 million in charge-offs of taxi medallion loans in 2016. in 2017 , charges related to the taxi medallion portfolio were recorded as a valuation allowance in noninterest expenses ( see below ) , · decrease in noninterest income of $ 1.7 million primarily resulting from lower net gains on the sale of investment securities ( $ 2.6 million ) , offset by current year increase in boli income ( $ 0.6 million ) and a net gain on the sale of loans held-for-sale in 2017 ( $ 0.5 million ) , · noninterest expense increased approximately $ 20.3 million primarily due to a $ 15.6 million increase in valuation allowance for loans held-for-sale related to the company 's taxi medallion loans , an increase in salaries and employee benefits ( $ 4.1 million ) , fdic insurance ( $ 0.5 million ) , data processing ( $ 0.4 million ) and other expenses ( $ 0.3 million ) , offset by a decrease in occupancy and equipment expense ( $ 0.4 million ) .
| 5,910 |
the rate reduction is effective on january 1 , 2018. the company 's net deferred tax assets represent a decrease in corporate taxes expected to be paid in the future . under generally accepted accounting principles deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis . 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 company 's net deferred tax asset was determined based on the current enacted federal tax rate of 35 % prior to the passage of the act . as a result of the reduction in the corporate income tax rate from 35 % to 21 % and story_separator_special_tag you should read the following discussion and analysis together with `` item 6. selected consolidated financial data '' and our consolidated financial statements and related notes included in this report . the discussion in this report contains forward-looking statements that involve risks and uncertainties , such as statements of our plans , objectives , expectations and intentions . the cautionary statements made in this report should be read as applying to all related forward-looking statements wherever they appear in this report . factors that could cause or contribute to these differences include those discussed in `` item 1a . risk factors , '' as well as those discussed elsewhere . you should read `` item 1a . risk factors '' and `` special note regarding forward-looking statements . '' our actual results could differ materially from those discussed here . factors that could cause or contribute to these differences include , but are not limited to : future economic instability in the global economy , which could affect spending on internet services ; the impact of changing foreign exchange rates ( in particular the euro to us dollar and canadian dollar to us dollar exchange rates ) on the translation of our non-us dollar denominated revenues , expenses , assets and liabilities ; legal and operational difficulties in new markets ; the imposition of a requirement that we contribute to the united states universal service fund on the basis of our internet revenue ; changes in government policy and or regulation , including rules regarding data protection , cyber security and net neutrality ; increasing competition leading to lower prices for our services ; our ability to attract new customers and to increase and maintain the volume of traffic on our network ; the ability to maintain our internet peering arrangements on favorable terms ; our ability to renew our long-term leases of optical fiber that comprise our network ; our reliance on an equipment vendor , cisco systems inc. , and the potential for hardware or software problems associated with such equipment ; the dependence of our network on the quality and dependability of third-party fiber providers ; our ability to retain certain customers that comprise a significant portion of our revenue base ; the management of network failures and or disruptions ; and outcomes in litigation as well as other risks discussed from time to time in our filings with the securities and exchange commission , including , without limitation , this annual report on form 10-k. general overview we are a facilities-based provider of low-cost , high-speed internet access , private network services and data center colocation space . our network is specifically designed and optimized to transmit packet-switched data using ip . we deliver our services primarily to small and medium-sized businesses , communications service providers and other bandwidth-intensive organizations in north america , europe and in asia . our on-net service consists of high-speed internet access and private network services at speeds ranging from 100 megabits per second to 100 gigabits per second . we offer our on-net services to customers located in buildings that are physically connected to our network . we provide on-net internet access and private network services to corporate customers and net-centric customers . our corporate customers are located in multi-tenant office buildings and in our data centers and typically include law firms , financial services firms , advertising and marketing firms and other professional services businesses . our net-centric customers include bandwidth-intensive users such as other internet access providers , telephone companies , cable television companies , web hosting companies , content delivery networks and commercial content and application service providers . these net-centric customers generally receive our services in colocation facilities and in our data centers . our off-net services are sold to businesses that are connected to our network primarily by means of `` last mile '' access service lines obtained from other carriers , primarily in the form of metropolitan ethernet circuits . our non-core services , which consist primarily of legacy services of companies whose assets or businesses we have acquired . we do not actively market these non-core services and expect the service revenue associated with them to continue to decline . 26 our network is comprised of in-building riser facilities , metropolitan optical fiber networks , metropolitan traffic aggregation points and inter-city transport facilities . our network is physically connected entirely through our facilities to 2,506 buildings in which we provide our on-net services , including 1,653 multi-tenant office buildings . we also provide on-net services in carrier-neutral data centers , cogent controlled data centers and single-tenant office buildings . we operate 53 cogent controlled data centers totaling 603,000 square feet . because of our integrated network architecture , we are not dependent on local telephone companies or cable companies to serve our on-net customers . we emphasize the sale of our on-net services because we believe we have a competitive advantage in providing these services and these services generate gross profit margins that are greater than the gross profit margins of our off-net services . story_separator_special_tag our income tax expense was $ 25.2 million for 2017 and $ 9.3 million for 2016. the increase in our income tax expense was primarily related to an increase in deferred income tax expense due to an increase in income before taxes in the united states and the impact of the tax cuts and jobs act ( the `` act '' ) . on december 22 , 2017 , the president of the united states signed into law the act . the act amended the internal revenue code and reduced the corporate tax rate from a maximum rate of 35 % to a flat 21 % rate . the rate reduction is effective on january 1 , 2018 and may reduce our future income taxes payable once we become a cash taxpayer in the united states . as a result of the reduction in the corporate income tax rate and other provisions under the act , we were required to revalue our net deferred tax asset at december 31 , 2017 resulting in a reduction in our net deferred tax asset of $ 9.0 million and we recorded a transition tax of $ 2.3 million related to our foreign operations for a total income tax expense of approximately $ 11.3 million , which was recorded as additional noncash income tax expense in the three months and year ended december 31 , 2017. the actual impact on our net deferred tax asset may vary from this amount from certain changes in interpretations and assumptions we have made and as further guidance related to the act may be issued . buildings on-net . as of december 31 , 2017 and 2016 we had a total of 2,506 and 2,373 on-net buildings connected to our network , respectively . 30 year ended december 31 , 2016 compared to the year ended december 31 , 2015 our management reviews and analyzes several key financial measures in order to manage our business and assess the quality of and variability of our service revenue , operating results and cash flows . the following summary tables present a comparison of our results of operations with respect to certain key financial measures . the comparisons illustrated in the tables are discussed in greater detail below . replace_table_token_6_th nmnot meaningful ( 1 ) includes non-cash equity-based compensation expense of $ 573 and $ 584 for 2016 and 2015 , respectively . ( 2 ) includes non-cash equity-based compensation expense of $ 10,162 and $ 10,931 for 2016 and 2015 , respectively . replace_table_token_7_th service revenue . our service revenue increased 10.6 % from 2015 to 2016. exchange rates negatively impacted our increase in service revenue by approximately $ 0.9 million . all foreign currency comparisons herein reflect results for 2016 translated at the average foreign currency exchange rates for 2015. for 2016 and 2015 , on-net , off-net and non-core revenues represented 72.4 % , 27.4 % and 0.2 % and 72.9 % , 26.8 % and 0.3 % of our service revenue , respectively . revenue recognition standards include guidance relating to any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include , but is not limited to , gross receipts taxes , universal service fund fees and certain state regulatory fees . we record these taxes 31 billed to our customers on a gross basis ( as service revenue and network operations expense ) in our consolidated statements of operations . the impact of these taxes including the universal service fund resulted in an increase of our revenues for 2016 of approximately $ 5.5 million . revenue from our corporate and net-centric customers represented 60.4 % and 39.6 % of our service revenue , respectively , for 2016 , and represented 58.3 % and 41.7 % of our service revenue , respectively , for 2015. revenue from corporate customers increased 14.7 % from $ 235.5 million for 2015 to $ 270.1 million for 2016 due to an increase in our number of corporate customers . revenue from our net-centric customers increased by 4.8 % from $ 168.7 million for 2015 to $ 176.8 million for 2016 primarily due to an increase in our number of net-centric customers , partially offset by the negative impact of foreign exchange and a decline in our average price per megabit . our on-net revenue increased 9.8 % from 2015 to 2016. we increased the number of our on-net customer connections by 16.3 % from december 31 , 2015 to december 31 , 2016. on-net customer connections increased at a greater rate than on-net revenues primarily due to the 4.9 % decline in our on-net arpu , primarily from a decline in arpu for our net centric customers . arpu is determined by dividing revenue for the period by the average customer connections for that period . our average price per megabit for our installed base of customers is determined by dividing the aggregate monthly recurring fixed charges for those customers by the aggregate committed data rate for the same customers . the decline in on-net arpu is partly attributed to volume and term based pricing discounts . additionally , on-net customers who cancel their service from our installed base of customers , in general , have an arpu that is greater than the arpu for our new customers due to declining prices primarily for our on-net services sold to our net-centric customers . these trends resulted in the reduction to our on-net arpu and a 16.8 % decline in our average price per megabit for our installed base of customers . our off-net revenue increased 12.9 % from 2015 to 2016. our off-net customer connections increased 18.1 % from december 31 , 2015 to december 31 , 2016. our off-net customer connections increased at a greater rate than our off-net revenue due to the 5.0 % decrease in our off-net arpu .
| results of operations year ended december 31 , 2017 compared to the year ended december 31 , 2016 our management reviews and analyzes several key financial measures in order to manage our business and assess the quality of and variability of our service revenue , operating results and cash flows . the following summary tables present a comparison of our results of operations with respect to certain key financial measures . the comparisons illustrated in the tables are discussed in greater detail below . replace_table_token_4_th nmnot meaningful ( 1 ) includes non-cash equity-based compensation expense of $ 604 and $ 573 for 2017 and 2016 , respectively . ( 2 ) includes non-cash equity-based compensation expense of $ 12,686 and $ 10,162 for 2017 and 2016 , respectively . replace_table_token_5_th 28 service revenue . our service revenue increased 8.6 % from 2016 to 2017. exchange rates positively impacted our increase in service revenue by approximately $ 1.9 million . all foreign currency comparisons herein reflect results for 2017 translated at the average foreign currency exchange rates for 2016. for 2017 and 2016 , on-net , off-net and non-core revenues represented 71.4 % , 28.4 % and 0.2 % and 72.4 % , 27.4 % and 0.2 % of our service revenue , respectively . revenue recognition standards include guidance relating to any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include , but is not limited to , gross receipts taxes , universal service fund fees and certain state regulatory fees . we record these taxes billed to our customers on a gross basis ( as service revenue and network operations expense ) in our consolidated statements of operations . the impact of these taxes including the universal service fund resulted in an increase of our revenues for 2017 of approximately $ 1.8 million .
| 5,911 |
the company and story_separator_special_tag the following discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this annual report on form 10-k. this annual report on form 10-k , including the following sections , contains forward-looking statements within the meaning of the federal securities laws . these statements are subject to risks and uncertainties that could cause actual results and events to differ materially from those expressed or implied by such forward-looking statements . for a detailed discussion of these risks and uncertainties , see the “ risk factors ” section in item 1a 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 form 10-k. we undertake no obligation to update forward-looking statements , which reflect events or circumstances occurring after the date of this form 10-k. overview we are a clinical stage , immunology focused biopharmaceutical company developing drugs and antibodies that target the most critical cellular elements of the immune system . our strategy is to focus our efforts on the development of immune modulator product candidates to treat covid-19 , t-cell lymphomas , other cancers and autoimmune diseases . we have built a pipeline of five programs , three of which are in clinical development . our lead product candidate is cpi-006 , a potent humanized monoclonal antibody that is designed to react with a specific site on cd73 . in both preclinical and in vivo studies in cancer patients and patients with covid-19 , cpi-006 has demonstrated binding to various immune cells and the inducement of a humoral adaptive immune response . we believe cpi-006 has the potential to be an important new therapeutic agent with a novel mechanism of action for the treatment of a broad range of infectious diseases and cancers . we are evaluating cpi-006 in a global , randomized , double-blind , phase 3 trial designed to evaluate the efficacy and safety of cpi-006 compared to placebo in hospitalized patients with mild-to-moderate covid-19 . the primary endpoint of the trial is the proportion of patients progressing to respiratory failure or death during the 28 days after dosing . the trial was designed with input from the u.s. food and drug administration , or fda . our next product candidate , cpi-818 , is a selective , covalent inhibitor of itk and is in a multi-center phase 1/1b clinical trial in patients with various malignant t-cell lymphomas . cpi-818 is designed to inhibit the proliferation of certain malignant t-cells , and we believe it also has the potential to regulate the growth of abnormal t cells involved in autoimmunity . our third product candidate , ciforadenant ( formerly cpi-444 ) , is an oral , small molecule antagonist of the a2a receptor for adenosine with which we completed a phase 2 expansion protocol in combination with genentech , inc. 's cancer immunotherapy , tecentriq® ( atezolizumab ) for patients with either advanced or refractory renal cell cancer ( “ rcc ” ) . we have identified a novel biomarker that may enable us to select patients most likely to benefit from ciforadenant . in studies presented at the american society of oncology ( “ asco ” ) meeting in 2020 , patients expressing this marker in their tumor had a 17 % response rate . activity was seen with both cpi-444 as a monotherapy and in combination with tecentriq . we have refined our strategy with ciforadenant and plan to collaborate with an academic consortium to evaluate ciforadenant in a first line rcc phase 2 trial as a triplet combination with pembrolizumab and a tyrosine kinase inhibitor ( “ tki ” ) . to date , the majority of our efforts have been focused on the research , development and advancement of cpi-006 , cpi-818 and ciforadenant , and we have not generated any revenue from product sales and , as a result , we have incurred significant losses . we expect to continue to incur significant research and development and general and administrative expenses related to our operations . our net loss for the years ended december 31 , 2020 and 2019 was $ 6.0 million and $ 46.7 million , respectively . as of december 31 , 2020 , we had an accumulated deficit of $ 223.1 million . we expect to continue to incur losses for the foreseeable future , and we anticipate these losses will increase as we continue our development of , seek regulatory approval for and begin to commercialize cpi-006 , cpi-818 and ciforadenant , and as we develop other product candidates . even if we achieve profitability in the future , we may not be able to sustain profitability in subsequent periods . 84 since our inception and through december 31 , 2019 , we have funded our operations primarily through the sale and issuance of stock . on march 22 , 2016 , our registration statement on form s-1 ( file no . 333-208850 ) relating to our initial public offering ( “ ipo ” ) of our common stock was declared effective by the sec . shares of our common stock began trading on the nasdaq global market on march 23 , 2016. the ipo closed on march 29 , 2016 , pursuant to which we sold 4,700,000 shares of our common stock at a public offering price of $ 15.00 per share . in april 2016 , we sold an additional 502,618 shares of our common stock to the underwriters upon partial exercise of their over-allotment option , at the initial offering price of $ 15.00 per share . we received aggregate net proceeds of approximately $ 70.6 million , after underwriting discounts , commissions and offering expenses . immediately prior to the consummation of the ipo , all of our outstanding shares of convertible preferred stock were converted into 14.3 million shares of our common stock . story_separator_special_tag we may need to undertake additional actions that could impact our operations if required by applicable laws or regulations or if we determine such actions to be in the best interests of our employees . components of results of operations revenue to date , we have not generated any revenues . we do not expect to receive any revenues from any product candidates that we develop unless and until we obtain regulatory approval and commercialize our products or enter into revenue-generating collaboration agreements with third parties . research and development expenses our research and development expenses consist primarily of costs incurred to conduct research and development of our product candidates . we record research and development expenses as incurred . research and development expenses include : ● employee-related expenses , including salaries , benefits , travel and non-cash stock-based compensation expense ; ● external research and development expenses incurred under arrangements with third parties , such as contract research organizations , preclinical testing organizations , contract manufacturing organizations , academic and non-profit institutions and consultants ; ● costs to acquire technologies to be used in research and development that have not reached technological feasibility and have no alternative future use ; ● license fees ; and ● other expenses , which include direct and allocated expenses for laboratory , facilities and other costs . we plan to increase our research and development expenses substantially as we continue the development and potential commercialization of our product candidates . our current planned research and development activities include the following : ● enrollment and completion of our phase 3 clinical trial of cpi-006 in hospitalized covid-19 patients ; 86 ● completion of our phase 1/1b clinical trial and amended phase 1b/2 clinical trial of ciforadenant ; ● completion of our ongoing phase 1/1b clinical trial of cpi-006 in cancer patients ; ● enrollment and completion of our ongoing phase 1/1b clinical trial of cpi-818 ; ● process development and manufacturing of drug supply of cpi-006 , cpi-818 and ciforadenant ; and ● preclinical studies under our other programs in order to select development product candidates . in addition to our product candidates that are in clinical development , we believe it is important to continue substantial investment in potential new product candidates to build the value of our product candidate pipeline and our business . our expenditures on current and future preclinical and clinical development programs are subject to numerous uncertainties related to timing and cost to completion . the duration , costs and timing of clinical trials and development of product candidates will depend on a variety of factors , including many of which are beyond our control . the process of conducting the necessary clinical research to obtain regulatory approval is costly and time consuming , and the successful development of our product candidates is uncertain . the risks and uncertainties associated with our research and development projects are discussed more fully in “ part i , item 1a—risk factors. ” as a result of these risks and uncertainties , we are unable to determine with any degree of certainty the duration and completion costs of our research and development projects or if , when or to what extent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval . we may never succeed in achieving regulatory approval for any of our product candidates . general and administrative expenses general and administrative expenses include personnel costs , expenses for outside professional services and allocated expenses . personnel costs consist of salaries , benefits and stock-based compensation . outside professional services consist of legal , accounting and audit services and other consulting fees . allocated expenses consist of rent expense related to our office and research and development facility . we expect that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research and development and potential commercialization of one or more of our product candidates . story_separator_special_tag gain on deconsolidation of angel pharmaceuticals of $ 37.5 million represents the fair value of our investment in angel pharmaceuticals at the date angel pharmaceuticals was deconsolidated from our financial statements . loss from equity method investment for the year ended december 31 , 2020 , the loss from equity method investment of $ 0.2 million represents our share of the angel pharmaceutical 's loss for the period from deconsolidation of our investment in angel pharmaceuticals through december 31 , 2020. liquidity and capital resources sources of liquidity as of december 31 , 2020 , we had cash , cash equivalents and marketable securities of $ 44.3 million and an accumulated deficit of $ 223.1 million , compared to cash , cash equivalents and marketable securities of $ 78.0 million and an accumulated deficit of $ 217.1 million as of december 31 , 2019. we have financed our operations primarily through sales of our common stock and convertible preferred stock . in march 2016 , we consummated our ipo and sold 4,700,000 shares of our common stock at a price of $ 15.00 per share , and in april 2016 , sold 502,618 shares at a price of $ 15.00 per share pursuant to the partial exercise of the underwriters ' option to purchase additional shares of common stock . we received net proceeds of approximately $ 70.6 million , after deducting underwriting discounts , commissions and offering expenses . immediately prior to the consummation of our ipo , all outstanding shares of the convertible preferred stock were converted into common stock on a one-for-one basis . in march 2018 , in a follow-on offering , we sold 8,117,647 shares of our common stock at a price of $ 8.50 per share , which included 1,058,823 shares issued pursuant to the underwriters ' exercise of their option to purchase additional shares of common stock . we received aggregate net proceeds of approximately $ 64.9 million , after underwriting discounts , commissions and offering expenses .
| results of operations comparison of the periods below as indicated ( in thousands ) : replace_table_token_5_th 87 research and development expenses research and development expenses for the years ended december 31 , 2020 and 2019 , consisted of the following costs by program ( specific program costs consist solely of external costs ) : replace_table_token_6_th for the year ended december 31 , 2020 , the decrease in ciforadenant costs of $ 2.0 million as compared to the year ended december 31 , 2019 , primarily consisted of a decrease of $ 1.5 million in clinical trial expenses , a decrease of $ 0.2 million in drug manufacturing costs and a decrease of $ 0.3 million in other outside services . for the year ended december 31 , 2020 , the increase in cpi-006 costs of $ 2.2 million as compared to the year ended december 31 , 2019 , primarily consisted of an increase of $ 3.5 million in clinical trial expenses as well as an increase of $ 0.4 million in other outside services , partially offset by a decrease of $ 1.7 million in drug manufacturing costs . for the year ended december 31 , 2020 , the decrease in cpi-818 costs of $ 3.8 million as compared to the year ended december 31 , 2019 , primarily consisted of a decrease of $ 2.7 million in drug manufacturing costs , a decrease of $ 0.4 million in clinical trial expenses and a decrease of $ 0.7 million in other outside services . for the year ended december 31 , 2020 , the decrease in costs related to other programs of $ 0.3 million as compared to the year ended december 31 , 2019 , primarily consisted of a decrease of $ 0.6 million in outside services , partially offset by an increase of $ 0.3 million in drug manufacturing costs .
| 5,912 |
at the time of the broadband spin-off , liberty broadband was comprised of , ( i ) liberty 's former interest in charter communications , inc. ( “ legacy charter ” ) , ( ii ) liberty 's former wholly-owned subsidiary trueposition , inc. ( “ trueposition ” ) , ( iii ) liberty 's former minority equity investment in time warner cable , inc. ( “ time warner cable ” , “ twc ” , “ legacy time warner cable ” or “ legacy twc ” ) , ( iv ) certain deferred tax liabilities , as well as liabilities related to the time warner cable written call options and ( v ) initial indebtedness , pursuant to margin loans entered into prior to the completion of the broadband spin-off . the broadband spin-off was accounted for at historical cost due to the pro rata nature of the distribution to holders of liberty common stock . in the broadband spin-off , record holders of liberty series a , series b and series c common stock received one-fourth of a share of the corresponding series of liberty broadband common stock for each share of liberty common stock held by them , with cash paid in lieu of fractional shares . in addition , following the completion of the broadband spin-off , on december 10 , 2014 , stockholders received a subscription right to acquire one share of series c liberty broadband common stock for every five shares of liberty broadband common stock they held at a per share subscription price of $ 40.36 , which was a 20 % discount to the 20-trading day volume weighted average trading price of the series c liberty broadband common stock following the completion of the broadband spin-off . the rights offering was fully subscribed on january 9 , 2015 , with 17,277,224 shares of series c common stock issued to those rightsholders exercising basic and , as applicable , oversubscription privileges . the subscription rights were issued to raise capital for general corporate purposes of liberty broadband . the broadband spin-off and rights offering were intended to be tax-free to stockholders of liberty . during september 2015 , liberty entered into a closing agreement with the irs which provided that the broadband spin-off qualified for tax-free treatment . on may 18 , 2016 , time warner cable merged with legacy charter ( the “ time warner cable merger ” ) . in connection with the time warner cable merger , legacy charter underwent a corporate reorganization , resulting in cch i , llc , a former subsidiary of legacy charter ( “ charter ” ) , becoming the new publicly traded parent company . also on may 18 , 2016 , the previously announced acquisition of bright house networks , llc ( “ bright house ” or “ legacy bright house ” ) from advance/newhouse partnership ( “ a/n ” ) by charter ( the “ bright house transaction ” ) was completed . in connection with the time warner cable merger and bright house transaction , liberty broadband entered into certain agreements with legacy charter , charter , liberty interactive corporation ( “ liberty interactive ” ) and time warner cable . in connection with the time warner cable merger and bright house transaction ( collectively , the “ transactions ” ) , liberty broadband exchanged its shares of time warner cable for shares of charter and purchased additional shares of charter . as a result , and pursuant to proxy agreements entered into with liberty interactive and a/n , liberty broadband controls 25.01 % of the aggregate voting power of charter . in addition , in connection with the time warner cable merger , liberty broadband funded its purchase of shares of charter class a common stock using proceeds of $ 4.4 billion related to subscriptions for approximately 78.3 million newly issued shares of liberty broadband series c common stock . the financial information represents a combination of the historical financial information of skyhook , liberty broadband 's interest in charter , liberty 's former minority equity investment in time warner cable and certain deferred tax liabilities . this financial information refers to the combination of the aforementioned subsidiary , investments , and financial instruments , as “ liberty broadband , ” “ the company , ” “ us , ” “ we ” and “ our ” here and in the notes to the consolidated financial statements , except as the context otherwise requires . ii-4 strategies and challenges executive summary skyhook holding , inc. ( formerly known as “ trueposition ” ) markets and sells two primary products : ( 1 ) a location determination service called the precision location solution ; and ( 2 ) a location intelligence and data insights service called geospatial insights . skyhook 's revenue is derived from the sale and integration of its precision location solution ( including the licensing of software and data components that make up that solution ) and the licensing of geospatial insights data . in addition , skyhook earns revenue through entering into licensing agreements with companies to utilize its underlying intellectual property ( including patents ) . charter is the second largest cable operator in the united states and a leading broadband communications services company providing video , internet and voice services to approximately 27.2 million residential and business customers at december 31 , 2017. in addition , charter sells video and online advertising inventory to local , regional and national advertising customers and fiber-delivered communications and managed information technology ( “ it ” ) solutions to large enterprise customers . charter also owns and operates regional sports networks and local sports , news and community channels and sells security and home management services in the residential marketplace . liberty acquired its interest in charter on may 1 , 2013. at december 31 , 2017 , liberty broadband owned approximately 54.1 million shares of charter class a common stock , representing an approximate 22.7 % economic ownership interest in the issued and outstanding shares . story_separator_special_tag as a result , the company determined the fair value of skyhook . as the reporting unit 's carrying value now exceeded the fair value , we performed a step 2 impairment test and recorded a $ 20.7 million impairment loss related to skyhook 's goodwill during december 2015 . operating income ( loss ) operating income ( loss ) declined $ 4.3 million and $ 80.1 million for the years ended december 31 , 2017 and 2016 , respectively , as compared to the corresponding prior year periods , due to the items discussed above . adjusted oibda we define adjusted oibda as revenue less operating expenses and selling , general and administrative expenses ( excluding stock compensation ) . our chief operating decision maker and management team use this measure of performance in conjunction with other measures to evaluate our businesses and make decisions about allocating resources among our businesses . we believe this is an important indicator of the operational strength and performance of our businesses , including each business 's ability to service debt and fund capital expenditures . in addition , this measure allows us to view operating results , perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance . this measure of performance excludes such costs as depreciation and amortization , stock-based compensation , separately reported litigation settlements and restructuring and impairment charges that are included in the measurement of operating income pursuant to generally accepted accounting principles in the united states ( “ gaap ” ) . accordingly , adjusted oibda should be considered in addition to , but not as a substitute for , operating income , net income , cash flow provided by operating activities and other measures of financial performance prepared in accordance with gaap . see note 12 to the accompanying consolidated financial statements for a reconciliation of adjusted oibda to operating income and earnings ( loss ) from continuing operations before income taxes . adjusted oibda declined $ 5.0 million and $ 43.1 million in the years ended december 31 , 2017 and 2016 , respectively , as compared to the corresponding prior year periods . adjusted oibda for the years ended december 31 , 2017 , 2016 and 2015 included $ 6.9 million , $ 8.7 million , and $ 11.9 million of corporate selling , general and administrative expenses , respectively . the decrease in adjusted oibda for the year ended december 31 , 2017 is due to the $ 17.5 million decrease in revenue , discussed above , partially offset by a $ 3.2 million decline in legal expenses and a $ 9.3 million improvement in operating , research and development , and selling , general and administrative expenses during the year ( discussed above ) . the decrease in adjusted oibda for the year ended december 31 , 2016 is due to the $ 60.6 million decrease in revenue , discussed above , partially offset by a $ 3.8 million decline in legal expenses during the year ( discussed above ) and a $ 13.7 million improvement in operating , research and development , and selling , general and administrative expenses during the year ( discussed above ) . ii-8 other income and expense : components of other income ( expense ) are presented in the table below . replace_table_token_7_th interest expense interest expense increased $ 4.6 million and $ 7.5 million during the years ended december 31 , 2017 and 2016 , respectively . the increase in 2017 was primarily due to an increase in libor during 2017 as compared to the prior year . the increase in 2016 is attributable to additional amounts outstanding on the two margin loan agreements entered into by our wholly owned subsidiary ( the “ 2016 margin loan agreements ” ) during 2016 as compared to the prior year . see note 6 in the accompanying consolidated financial statements for additional information on our margin loan agreements . dividend and interest income dividend and interest income decreased $ 3.6 million and increased $ 1.2 million for each of the years ended december 31 , 2017 and 2016 , respectively , as compared to the corresponding prior year periods . the decrease in 2017 was the result of a loss of dividend income previously received from time warner cable , following the time warner cable merger during may 2016. the increase in 2016 was the result of increased interest income due to a higher cash and short-term marketable securities balance during the first and second quarters of 2016 , with an increase in interest rates during the entire year in 2016 , partially offset by a loss of dividend income due to the time warner cable merger during may 2016. share of earnings ( losses ) of affiliates share of earnings ( losses ) from affiliates improved $ 1,867.4 million and $ 762.5 million during the years ended december 31 , 2017 and 2016 , respectively , as compared to the corresponding prior year periods . share of earnings ( losses ) from affiliates is attributable to the company 's ownership interest in charter . in may 2013 , the company acquired its initial investment in legacy charter . upon acquisition , the company allocated the excess basis , between the book basis of legacy charter and fair value of the shares acquired , and ascribed remaining useful lives of 7 years and 13 years to property and equipment and customer relationships , respectively , and indefinite lives to franchise fees , trademarks and goodwill . outstanding debt is amortized over the contractual period using the effective interest rate method . amortization related to debt and intangible assets with identifiable useful lives is included in the company 's share of earnings ( losses ) from affiliates line item in the accompanying consolidated statements of operations and aggregated $ 277 million , $ 42 million , and $ 52 million , net of related taxes , for the years ended december 31 , 2017 , 2016 and 2015 , respectively .
| consolidated operating results : replace_table_token_6_th revenue revenue decreased $ 17.5 million and $ 60.6 million for the years ended december 31 , 2017 and 2016 , respectively , as compared to the corresponding prior year periods . the decrease in revenue in 2017 was attributable to the fact that skyhook entered into a patent license in 2016 pursuant to which skyhook agreed to grant to the licensee a perpetual , non-exclusive , non-transferable , worldwide license to patents and patent applications for a one-time payment of $ 17.5 million , and no comparable license was entered in 2017. the decrease in revenue in 2016 was due to the loss of skyhook 's largest legacy u-tdoa service customer whose contract expired on december 31 , 2015. this customer accounted for approximately 85 % of skyhook 's revenue during 2015. the decrease in revenue in 2016 resulting from the lost customer was partially offset by the new license agreement entered into during 2016 discussed above . apart from the one-time revenue received from the license agreement in 2016 , and excluding the recognition of $ 35.5 million of deferred revenue in 2015 upon the expiration of the aforementioned contract with skyhook 's largest legacy u-tdoa service customer on december 31 , 2015 , revenue from skyhook 's operations decreased by approximately $ 42.6 million during 2016. ii-6 operating , research and development , and selling , general and administrative expenses operating , research and development , and selling , general and administrative expenses , decreased collectively by $ 12.5 million and $ 17.5 million for december 31 , 2017 and 2016 , respectively , as compared to the corresponding prior year periods . the decrease in 2017 was due to headcount reductions and other cost containment measures taken by skyhook upon combining the operations of its businesses , coupled with reduced legal expenses at both skyhook and corporate .
| 5,913 |
the company accounts for its stock-based employee compensation using a fair value-based method of accounting . the company uses the black-scholes option pricing model to estimate the weighted-average grant date fair value of stock options granted . expected volatilities are based on historical volatilities of the stock of comparable companies . the expected term of options granted represents the period of time that options granted are expected to be outstanding . the risk-free rate for periods within the contractual life of the option is based on the u.s. treasury yield curve in effect at the time of grant . results may vary depending on the assumptions applied within the model . restricted stock awards are issued and measured at market value on the date of grant . the benefits of tax deductions in excess of recognized compensation cost , if any , are reported as a financing cash flow . 105 bloomin ' brands , inc. notes to consolidated financial statements net income attributable to bloomin ' brands , inc. per common share basic net income per common share is computed on the basis of the weighted average number of common shares that were outstanding during the period . diluted net income per share includes the dilutive effect of common stock equivalents consisting of restricted stock and stock options , using the treasury stock method . performance-based restricted stock and stock options are considered dilutive when the related performance criterion has been met . segment reporting the company operates restaurants under five brands that have similar economic characteristics , nature of products and services , class of customer and distribution methods , and the company believes it meets the criteria for aggregating its six operating segments , which are the five brands and the company 's international outback steakhouse operations , into a single reporting segment in accordance with the applicable accounting guidance . approximately 8 % , 9 % and 8 % of the company 's total revenues for the years ended december 31 , 2012 , 2011 and 2010 , respectively , were attributable to operations in foreign countries and guam . approximately 3 % and 2 % of the company 's total long-lived assets , excluding goodwill and intangible assets , were located in foreign countries where the company holds assets as of december 31 , 2012 and 2011 , respectively . reclassifications the company has reclassified certain items in the accompanying consolidated financial statements for prior periods to be comparable with the classification for the fiscal year ended december 31 , 2012 . these reclassifications had no effect on previously reported net income . recently adopted financial accounting standards in may 2011 , the financial accounting standards board ( the “ fasb ” ) issued accounting standards update ( “ asu ” ) no . 2011-04 , “ fair value measurement ( topic 820 ) : amendments to achieve common fair value measurement and disclosure requirements in u.s. gaap and ifrss ” ( “ asu no . 2011-04 ” ) , that establishes a number of new requirements for fair value measurements . these include : ( i ) a prohibition on grouping financial instruments for purposes of determining fair value , except when an entity manages market and credit risks on the basis of the entity 's net exposure to the group ; ( ii ) an extension of the prohibition against the use of a blockage factor to all fair value measurements ( that prohibition currently applies only to financial instruments with quoted prices in active markets ) ; and ( iii ) a requirement that for recurring level 3 fair value measurements , entities disclose quantitative information about unobservable inputs , a description of the valuation process used and qualitative details about the sensitivity of the measurements . additionally , for items not carried at fair value but for which fair value is disclosed , entities will be required to disclose the level within the fair value hierarchy that applies to the fair value measurement disclosed . asu no . 2011-04 is effective for interim and annual periods beginning after december 15 , 2011. the adoption of asu no . 2011-04 on january 1 , 2012 increased the company 's fair value disclosure requirements but did not have an impact on the company 's financial position , results of operations or cash flows . in june 2011 , the fasb issued asu no . 2011-05 , “ comprehensive income ( topic 220 ) : presentation of comprehensive income ” ( “ asu no . 2011-05 ” ) , that eliminates the option to report other comprehensive income and its components in the statement of changes in equity . instead , the new guidance requires the company to present the components of net income and other comprehensive income in one continuous statement , referred to as the statement of comprehensive income , or in two separate but consecutive statements . while the new guidance changes the presentation of comprehensive income , there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance . asu no . 2011-05 must be applied retrospectively and is effective for public companies during the interim and annual periods beginning after december 15 , 2011. additionally , in december 2011 , the fasb issued asu no . 2011-12 , “ comprehensive income ( topic 220 ) : deferral of the effective date for amendments to the presentation of reclassifications of items out of accumulated other comprehensive income in 106 bloomin ' brands , inc. notes to consolidated financial statements accounting standards update no . 2011-05 ” ( “ asu no . 2011-12 ” ) , which indefinitely defers the requirement in asu no . 2011-05 to present reclassification adjustments out of accumulated other comprehensive income by component in both the statement in which net income is presented and the statement in which other comprehensive income is presented . the deferral story_separator_special_tag the company accounts for its stock-based employee compensation using a fair value-based method of accounting . the company uses the black-scholes option pricing model to estimate the weighted-average grant date fair value of stock options granted . expected volatilities are based on historical volatilities of the stock of comparable companies . the expected term of options granted represents the period of time that options granted are expected to be outstanding . the risk-free rate for periods within the contractual life of the option is based on the u.s. treasury yield curve in effect at the time of grant . results may vary depending on the assumptions applied within the model . restricted stock awards are issued and measured at market value on the date of grant . the benefits of tax deductions in excess of recognized compensation cost , if any , are reported as a financing cash flow . 105 bloomin ' brands , inc. notes to consolidated financial statements net income attributable to bloomin ' brands , inc. per common share basic net income per common share is computed on the basis of the weighted average number of common shares that were outstanding during the period . diluted net income per share includes the dilutive effect of common stock equivalents consisting of restricted stock and stock options , using the treasury stock method . performance-based restricted stock and stock options are considered dilutive when the related performance criterion has been met . segment reporting the company operates restaurants under five brands that have similar economic characteristics , nature of products and services , class of customer and distribution methods , and the company believes it meets the criteria for aggregating its six operating segments , which are the five brands and the company 's international outback steakhouse operations , into a single reporting segment in accordance with the applicable accounting guidance . approximately 8 % , 9 % and 8 % of the company 's total revenues for the years ended december 31 , 2012 , 2011 and 2010 , respectively , were attributable to operations in foreign countries and guam . approximately 3 % and 2 % of the company 's total long-lived assets , excluding goodwill and intangible assets , were located in foreign countries where the company holds assets as of december 31 , 2012 and 2011 , respectively . reclassifications the company has reclassified certain items in the accompanying consolidated financial statements for prior periods to be comparable with the classification for the fiscal year ended december 31 , 2012 . these reclassifications had no effect on previously reported net income . recently adopted financial accounting standards in may 2011 , the financial accounting standards board ( the “ fasb ” ) issued accounting standards update ( “ asu ” ) no . 2011-04 , “ fair value measurement ( topic 820 ) : amendments to achieve common fair value measurement and disclosure requirements in u.s. gaap and ifrss ” ( “ asu no . 2011-04 ” ) , that establishes a number of new requirements for fair value measurements . these include : ( i ) a prohibition on grouping financial instruments for purposes of determining fair value , except when an entity manages market and credit risks on the basis of the entity 's net exposure to the group ; ( ii ) an extension of the prohibition against the use of a blockage factor to all fair value measurements ( that prohibition currently applies only to financial instruments with quoted prices in active markets ) ; and ( iii ) a requirement that for recurring level 3 fair value measurements , entities disclose quantitative information about unobservable inputs , a description of the valuation process used and qualitative details about the sensitivity of the measurements . additionally , for items not carried at fair value but for which fair value is disclosed , entities will be required to disclose the level within the fair value hierarchy that applies to the fair value measurement disclosed . asu no . 2011-04 is effective for interim and annual periods beginning after december 15 , 2011. the adoption of asu no . 2011-04 on january 1 , 2012 increased the company 's fair value disclosure requirements but did not have an impact on the company 's financial position , results of operations or cash flows . in june 2011 , the fasb issued asu no . 2011-05 , “ comprehensive income ( topic 220 ) : presentation of comprehensive income ” ( “ asu no . 2011-05 ” ) , that eliminates the option to report other comprehensive income and its components in the statement of changes in equity . instead , the new guidance requires the company to present the components of net income and other comprehensive income in one continuous statement , referred to as the statement of comprehensive income , or in two separate but consecutive statements . while the new guidance changes the presentation of comprehensive income , there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance . asu no . 2011-05 must be applied retrospectively and is effective for public companies during the interim and annual periods beginning after december 15 , 2011. additionally , in december 2011 , the fasb issued asu no . 2011-12 , “ comprehensive income ( topic 220 ) : deferral of the effective date for amendments to the presentation of reclassifications of items out of accumulated other comprehensive income in 106 bloomin ' brands , inc. notes to consolidated financial statements accounting standards update no . 2011-05 ” ( “ asu no . 2011-12 ” ) , which indefinitely defers the requirement in asu no . 2011-05 to present reclassification adjustments out of accumulated other comprehensive income by component in both the statement in which net income is presented and the statement in which other comprehensive income is presented . the deferral
| financial condition and results of operations in july 2012 , the fasb issued asu no . 2012-02 , “ intangibles-goodwill and other ( topic 350 ) : testing indefinite-lived intangible assets for impairment ” ( “ asu no . 2012-02 ” ) , which permits an entity to make a qualitative assessment of whether it is more likely than not that an indefinite-lived intangible asset 's fair value is less than its carrying value before applying the two-step quantitative impairment test . if it is determined through the qualitative assessment that an indefinite-lived intangible asset 's fair value is more likely than not greater than its carrying value , the remaining impairment steps would be unnecessary . the qualitative assessment is optional , allowing entities to go directly to the quantitative assessment . asu no . 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after september 15 , 2012 , with early adoption permitted . we will adopt asu no . 2012-02 effective january 1 , 2013. this guidance will not have an impact on our financial position , results of operations or cash flows . in january 2013 , the emerging issues task force ( “ eitf ” ) reached a final consensus on eitf issue no . 11-a “ parent 's accounting for the cumulative translation adjustment upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity ” ( “ eitf 11-a ” ) . under the final consensus , an entity would recognize cumulative translation adjustments in earnings when it ceases to have a controlling financial interest in a subsidiary or group of assets within a consolidated foreign entity and the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets resided .
| 5,914 |
this final rule became effective on november 5 , 2018 , but the staff of the sec provided relief on the effective date of the rule with respect to the analysis of stockholders ' equity until the company 's form 10-q for its fiscal quarter ending march 31 , 2019. in august 2018 , the fasb issued asu no . 2018-13 , fair value measurement ( topic 820 ) , which modifies the disclosures on fair value measurements by removing story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements , the accompanying notes , and other information included in this annual report on form 10-k. in particular , the disclosure contained in item 1a of this annual report may reflect trends , demands , commitments , events , or uncertainties that could materially impact our results of operations and liquidity and capital resources . the following discussion contains forward-looking statements , such as statements regarding our future operating results and financial position , our business strategy and plans , our market growth and trends , and our objectives for future operations . please see `` note regarding forward-looking statements '' for more information about relying on these forward-looking statements . the following discussion also contains information using industry publications . please see `` note regarding industry and market data '' for more information about relying on these industry publications . when we use the term `` basis points '' in the following discussion , we refer to units of one‑hundredth of one percent . prior to our quarterly report on form 10-q for the quarter ended june 30 , 2018 , we had one reportable segment ( `` real estate '' ) that reflected revenue derived from commissions and fees charged on real estate services transactions closed by us or partner agents representing customers in buying and selling homes . beginning with our quarterly report on form 10-q for the quarter ended june 30 , 2018 , we recognized a new reportable segment ( `` properties '' ) that reflects revenue from when we sell homes that we previously bought directly from homeowners . concurrent with our recognition of the new `` properties '' segment , we changed the name of our `` real estate '' segment to `` real estate services . '' prior to our quarterly report on form 10-q for the quarter ended june 30 , 2018 , we included the results from our `` properties '' segment as part of our `` other '' segment . we have separated our `` properties '' segment results from `` other '' segment results for all periods presented . overview we help people buy and sell homes . our primary business is a residential real estate brokerage , representing customers in over 85 markets throughout the united states and canada . we pair our own agents with our own technology to create a service that is faster , better , and costs less . we meet customers through our listings-search website and mobile application . we use the same combination of technology and local service to originate mortgage loans and offer title and settlement services ; we also buy homes directly from consumers who want an immediate sale , taking responsibility for selling the home while the original owner moves on . our mission is to redefine real estate in the consumer 's favor . key business metrics in addition to the measures presented in our consolidated financial statements , we use the following key metrics to evaluate our business , develop financial forecasts , and make strategic decisions . 23 replace_table_token_2_th monthly average visitors the number of , and growth in , visitors to our website and mobile application are important leading indicators of our business activity because these channels are the primary ways we meet customers . for a particular period , monthly average visitors refers to the average of the number of unique visitors to our website and mobile application for each of the months in that period . monthly average visitors are influenced by , among other things , market conditions that affect interest in buying or selling homes , the level and success of our marketing programs , and seasonality . we believe we can continue to increase monthly visitors , which helps our growth . given the lengthy process to buy or sell a home , a visitor during one month may not convert to a revenue-generating customer until many months later , if at all . when we refer to `` monthly average visitors '' for a particular period , we are referring to the average number of unique visitors to our website and our mobile application for each of the months in that period , as measured by google analytics , a product that provides digital marketing intelligence . visitors are tracked by google analytics using cookies , with a unique cookie being assigned to each browser or mobile application on a device . for any given month , we count all of the unique cookies that visited our website or either our ios or android mobile application during that month ; each such unique cookie is a unique visitor . if a person accesses our mobile application using different devices within a given month , each such mobile device is counted as a separate visitor for that month . if the same person accesses our website using an anonymous browser , or clears or resets cookies on his or her device , each access with a new cookie is counted as a new unique visitor for that month . real estate services transactions increasing the number of real estate services transactions in which we or our partner agents represent homebuyers and home sellers is critical to increasing our revenue and , in turn , to achieving profitability . story_separator_special_tag redfinnow is our primary properties offering . other revenue other services revenue includes fees earned from mortgage banking services , title settlement services , walk score data services , and advertising . intercompany eliminations intercompany eliminations represents revenue earned from transactions between operating segments which we eliminate in consolidating our financial statements . cost of revenue and gross margin cost of revenue consists primarily of personnel costs ( including base pay , benefits , and stock-based compensation ) , transaction bonuses , home-touring and field expenses , listing expenses , office and occupancy expenses , depreciation and amortization related to fixed assets and acquired intangible assets , and property costs related to our properties business . property costs include the property purchase price , capitalized improvements , selling expenses directly attributable to the transaction , and property maintenance expenses . gross profit is revenue less cost of revenue . gross margin is gross profit expressed as a percentage of revenue . our gross margin has and will continue to be affected by a number of factors , but the most important are : the mix of revenue across our segments , real estate services revenue per 26 transaction , agent and support-staff productivity , personnel costs and transaction bonuses , and the cost of properties relative to their final sales price . operating expenses technology and development our primary technology and development expenses are building software for our customers and employees to work together buying and selling homes , and building a website and mobile application to meet customers looking to move . these expenses consist primarily of personnel costs including stock-based compensation , data-license expenses , software costs , and equipment and infrastructure costs , such as for data centers and hosted services . technology and development expenses also include amortization of capitalized internal-use software and website and mobile application development costs . marketing marketing expenses consist primarily of media costs for online and offline advertising , as well as personnel costs including stock-based compensation . we expect to increase offline advertising media costs to approximately $ 37 million to $ 47 million in 2019 , compared to around $ 12 million in 2018. general and administrative general and administrative expenses consist primarily of personnel costs including stock-based compensation , facilities costs and related expenses for our executive , finance , human resources , and legal organizations , depreciation related to our fixed assets , and fees for outside services . outside services are principally comprised of external legal , audit , and tax services . interest income interest income consists primarily of interest earned on our cash , cash equivalents and short-term investments . during the year ended december 31 , 2018 , we did not have any short-term investments . interest expense interest expense consists of interest payable on our convertible senior notes , which we issued in july 2018. interest is payable on the notes at the rate of 1.75 % semiannually in arrears on january 15 and july 15 , commencing on january 15 , 2019. interest expense also includes the amortization of debt discount and issuance costs related to the notes . story_separator_special_tag information for each quarter has been prepared on a basis consistent with our audited consolidated financial statements included in item 8 of this annual report on form 10-k , and reflect , in the opinion of management , all adjustments of a normal , recurring nature that are necessary for a fair presentation of the financial information contained in those statements . the following quarterly financial data should be read in conjunction with our audited consolidated financial statements included in item 8 of this annual report on form 10-k. quarterly results 33 replace_table_token_13_th ( 1 ) includes stock-based compensation as follows : replace_table_token_14_th replace_table_token_15_th ( 1 ) includes stock-based compensation as follows : 34 replace_table_token_16_th revenue for the periods above has followed a seasonal pattern largely consistent with the residential real estate industry . accordingly , revenue in 2018 and 2017 increased sequentially from the first quarter to the second quarter . in 2018 , revenue declined sequentially by 2 % from the second quarter to the third quarter ( in contrast to a 4 % increase for the same period in 2017 ) , we believe as the result of less favorable market conditions compared the same period in the prior year . revenue in the fourth quarters of 2018 and 2017 declined sequentially . cost of revenue has also reflected seasonality . cost of revenue in 2018 and 2017 increased sequentially from the first quarter through the third quarter . in the fourth quarters of 2018 and 2017 , the cost of revenue declined sequentially due to lower real estate services transaction volume . in 2018 , the sequential cost of revenue decline was less in the fourth quarter when compared to 2017 because of increased revenue , and a related increase to cost of revenue , from our properties business . technology and development expenses are influenced period to period by the timing of development project expenses , including the additional use of contract software developers as well as the utilization of interns , who typically work with the company during the third quarter . marketing expenses are influenced by seasonal factors and the timing of advertising campaigns . we have historically spent more on advertising during the first half of the year than the second half of the year . quarterly key business metrics replace_table_token_17_th similar to our revenue , monthly average visitors to our website and mobile application has typically followed a seasonal pattern , increasing sequentially in 2018 and 2017 from the first quarter through the third quarter . monthly average visitors declined sequentially during the fourth quarters of 2018 and 2017 following seasonality .
| results of operations the following tables set forth our results of operations for the periods presented and as a percentage of our revenue for those periods . 27 replace_table_token_3_th ( 1 ) includes stock-based compensation as follows : replace_table_token_4_th replace_table_token_5_th ( 1 ) includes stock-based compensation as follows : 28 replace_table_token_6_th comparison of the years ended december 31 , 2018 and 2017 revenue replace_table_token_7_th in 2018 , revenue increased by $ 116.9 million , or 32 % , as compared with 2017. brokerage revenue represented $ 75.9 million , or 65 % , of the increase . brokerage revenue grew 23 % during the period , driven by a 23 % increase in brokerage real estate transactions and a 0.3 % increase in real estate services revenue per brokerage transaction . the increase in brokerage transactions was attributable to higher levels of customer awareness of redfin and increasing customer demand for redfin services . properties revenue grew $ 34.5 million , or 329 % , as compared with 2017 , driven by greater market presence and consumer awareness of redfinnow , which resulted in a 267 % increase in the number of properties sold . other revenue increased $ 1.9 million , or 24 % , as compared with 2017. cost of revenue and gross margin 29 replace_table_token_8_th in 2018 , total cost of revenue increased by $ 109.3 million , or 42 % , as compared with 2017. this increase in cost of revenue was primarily attributable to a $ 34.8 million increase in personnel costs and stock-based compensation due to increased lead agent and related support-staff headcount , a $ 32.6 million increase in the cost of homes purchased through properties , a $ 17.9 million increase in transaction bonuses , and a $ 12.6 million increase in home-touring and field costs .
| 5,915 |
as of december 31 , 2013 , minimum payments due under all non-cancelable lease agreements were as follows ( in thousands ) : replace_table_token_32_th 53 legal contingencies on february 7 , 2012 , a lawsuit seeking class-action certification was filed against the company in the united states district court for the northern district of california , no . 12-cv-00609 , alleging that the design of one the company 's software products and the 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 included elsewhere in this form 10-k. the following discussion includes forward-looking statements . please see the section entitled “ risk factors ” in item 1a of this report for important information to consider when evaluating these statements . overview support.com is a leading provider of cloud-based services and software that enable technology support for a connected world . our service programs help leading brands create new revenue streams and deepen customer relationships . our cloud-based nexus service platform ( “ nexus platform ” ) enables companies to resolve connected technology issues quickly , boost their support productivity , and dramatically improve their customer experience . we offer turnkey solutions including technology and labor and we also provide the nexus platform separately on a software-as-a-service ( ” saas ” ) basis . support.com is the choice of leading communications providers , top retailers , and other important brands in software and connected technology . total revenue for the year ended december 31 , 2013 increased by $ 16.2 million , or 23 % , from 2012. revenue from services increased by $ 16.2 million , or 28 % , from 2012. the increase in services revenue over the prior year was due to growth in our partner programs , primarily the programs for comcast . revenue from software and other was consistent year-over-year at $ 14.3 million , with revenue from end-user software products declining and saas revenue growing . cost of services for the year ended december 31 , 2013 increased 16 % from 2012 as a result of the hiring of additional technology specialists to support revenue growth . services gross margin improved from 35 % to 41 % year-over-year primarily as a result of improved operational processes , refinements to service delivery methodology and further technology enablement . cost of software and other for the year ended december 31 , 2013 declined 18 % year-over-year due to lower royalty rate payments to third-party developers . software and other gross margin slightly improved from 90 % to 92 % year-over-year . total gross margin for the year ended december 31 , 2013 was 50 % , compared to 46 % in 2012. the increase in total gross margin was driven by improved services gross margin offset by a lower percentage of software and other in the revenue mix . operating expenses for the year ended december 31 , 2013 decreased 15 % from 2012 , driven by lower sales expense related to our end-user software products and a reduction in the contact center sales agent workforce completed at the end of the second quarter of 2012. during the fourth quarter of 2013 , the company and comcast terminated the agreement under which the company had provided services for comcast 's xfinity signature support program . in addition , the company entered into a master services agreement call handling services , and a statement of work # 1 ( collectively , the “ agreement ” ) , with comcast . under the agreement , the company will , at specified hourly rates , provide bundled home networking support services to comcast customers leasing equipment from comcast , and train company employees in the performance of such services , for a period commencing october 1 , 2013. our key goals for 2014 are to increase saas revenue from our nexus platform , to expand existing service programs , to launch service programs with new partners to improve service delivery efficiency and to execute on our product roadmap to provide full lifecycle support for the internet of things . we intend the following discussion of our financial condition and results of operations to provide information that will assist in understanding our consolidated financial statements , the changes in certain key items in those consolidated financial statements from year to year , and the primary factors that accounted for those changes , as well as how certain accounting principles , policies and estimates affect our consolidated financial statements . critical accounting policies and estimates in preparing our consolidated financial statements in conformity with generally accepted accounting principles in the united states , we make assumptions , judgments and estimates that can have a significant impact on our revenue and operating results , as well as on the value of certain assets and liabilities on our consolidated balance sheet . we base our assumptions , judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances . actual results could differ materially from these estimates under different assumptions or conditions . on a regular basis we evaluate our assumptions , judgments and estimates and make changes accordingly . we believe that the assumptions , judgments and estimates involved in the accounting for revenue recognition , fair value measurements , purchase accounting in business combinations , accounting for goodwill and other intangible assets , stock-based compensation and accounting for income taxes have the greatest potential impact on our consolidated financial statements , so we consider these to be our critical accounting policies . we discuss below the critical accounting estimates associated with these policies . for further information on the critical accounting policies , see note 1 of our notes to consolidated financial statements . 24 revenue recognition our revenue recognition policy is one of our critical accounting policies because revenue is a key component of our results of operations , and revenue recognition is based on complex rules which require us to make judgments . story_separator_special_tag if the fair value of the reporting unit exceeds the carrying value , goodwill is not considered impaired and no further testing is required . if the carrying value exceeds the fair value , goodwill is potentially impaired and the second step of the impairment test must be performed . in the second step , we compare the implied fair value of the goodwill , as defined by asc 350 , to the carrying value to determine the impairment loss , if any . we performed our annual goodwill impairment tests on september 30 , 2013 , 2012 , and 2011 and concluded that there was no impairment . we assess the impairment of identifiable intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable . an impairment loss would be recognized when the sum of the future net cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying value . if our estimates regarding future cash flows derived from such assets were to change , we may record an impairment charge to the value of these assets . such impairment loss would be measured as the difference between the carrying value of the asset and its fair value . stock-based compensation we account for stock-based compensation in accordance with the provisions of asc 718 , compensation – stock compensation . under the fair value recognition provisions of asc 718 , stock-based compensation cost is estimated at the grant date based on the fair value of the award and is recognized as expense ratably over the requisite service period of the award . we estimate the fair value of stock-based awards on the grant date using the black-scholes-merton option-pricing model . determining the appropriate fair value model and calculating the fair value of stock-based awards requires judgment , including estimating stock price volatility , forfeiture rates and expected life . if any of these assumptions used in the option-pricing models change , our stock-based compensation expense could change on our consolidated financial statements . accounting for income taxes we are required to estimate our income taxes in each of the tax jurisdictions in which we operate . this process involves management 's estimation of our current tax exposures together with an assessment of temporary differences determined based on the difference between the financial statement and tax basis of certain items . these differences result in net deferred tax assets and liabilities , which are included in our consolidated balance sheet . we must assess the likelihood that we will be able to recover our deferred tax assets . if recovery is not likely , we must increase our provision for taxes by recording a valuation allowance against the deferred tax assets that we estimate will not ultimately be recoverable . we currently have provided a full valuation allowance on our u.s. deferred tax assets and a full valuation allowance on certain foreign deferred tax assets that management determined are not likely to be realized due to cumulative net losses since inception and the difficulty in accurately forecasting the company 's results . if any of our estimates change , we may change the likelihood of recovery and our tax expense as well as the value of our deferred tax assets would change . our deferred tax assets do not include excess tax benefits related to stock-based compensation post asc 718 adoption . the total excess tax benefit component of our federal and state net operating loss carryforwards is $ 4.3 million as of december 31 , 2013. consistent with prior years , the excess tax benefit reflected in our net operating loss carryforwards will be accounted for as a credit to stockholders ' equity , if and when realized . in determining if and when excess tax benefits have been realized , we have elected to utilize the with-and-without approach with respect to such excess tax benefits . 26 our income tax calculations are based on the application of the respective u.s. federal , state or foreign tax law . the company 's tax filings , however , are subject to audit by the respective tax authorities . accordingly , we recognize tax liabilities based on our estimate of whether , and the extent to which , additional taxes will be due when such estimates are more-likely-than-not to be sustained . an uncertain income tax position will not be recognized if it has less than a 50 % likelihood of being sustained . our policy is to include interest and penalties related to unrecognized tax benefits as a component of income tax expense . to the extent the final tax liabilities are different than the amounts originally accrued , the increases or decreases are recorded as income tax expense or benefit in the consolidated statements of operations . story_separator_special_tag 4px 0px ; width : 100 % ; border-top-width : 0px ; border-bottom-width : 0px ; height : 2px ; color : # 000000 ; clear : both ; border-left-width : 0px '' / > cost of software and other . cost of software and other consists primarily of third-party royalty fees for our end-user software products , as well as hosting infrastructure for our nexus platform . certain of these products were developed using third-party research and development resources , and the third-party receives royalty payments on sales of products it developed . the decrease of $ 249,000 in cost of software and other for the year ended december 31 , 2013 compared to 2012 was primarily due to a reduction of third-party royalty fees as the company reduced the reliance on third-party software products . the decrease of $ 323,000 in cost of software and other for the year ended december 31 , 2012 compared to 2011 was primarily due to reduced sales of end-user software products developed by the third-party as software revenues declined year-over-year and we reduced the reliance on third-party software products . operating expenses replace_table_token_9_th research and development .
| results of operations the following table presents certain consolidated statements of operations data for the periods indicated as a percentage of total revenue : replace_table_token_5_th years ended december 31 , 2013 , 2012 , and 2011 : revenue replace_table_token_6_th services revenue consists primarily of fees for technology services generated from our partners . we provide these services remotely , generally using service delivery personnel who utilize our proprietary technology to deliver the services . services revenue for the year ended december 31 , 2013 increased by $ 16.2 million from 2012. the increase was due primarily to continued growth in our partner programs , primarily the programs for comcast . for the year ended december 31 , 2013 , services revenue generated from our partnerships was $ 70.6 million compared to $ 54.4 million for 2012. direct services revenue remained consistent year-over-year at $ 3.2 million . 27 services revenue for the year ended december 31 , 2012 increased by $ 20.4 million from 2011. the increase was primarily due to growth in our partner programs , primarily the programs for comcast . for the year ended december 31 , 2012 , services revenue generated from our partnerships was $ 54.4 million compared to $ 34.5 million for 2011. direct services revenue was $ 3.2 million in 2012 compared to $ 2.8 million in 2011. software and other revenue is comprised primarily of fees for end-user software products provided through direct customer downloads , and through the sale of this software via partners as well as the licensing of our nexus platform . software and other revenue was consistent year-over year at $ 14.3 million .
| 5,916 |
the company also formally assesses , both at the hedge 's inception and on an ongoing basis , whether the derivative instruments that are used are highly effective in offsetting changes in fair values or cash flows of the hedged items . the company discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in the fair value or cash flows of the hedged item , story_separator_special_tag of financial condition and results of operations . the purpose of this analysis is to provide the reader with information relevant to understanding and assessing the company 's results of operations for each of the past three years and financial condition for each of the past two years . to fully appreciate this analysis , the reader is encouraged to review the consolidated financial statements and accompanying notes thereto appearing under item 8 of this report , and statistical data presented in this document . cautionary statement concerning forward-looking statements see the first page of this annual report on form 10-k for information regarding forward-looking statements . critical accounting policies and estimates management 's discussion and analysis of financial condition and results of operations is based on our consolidated financial statements , which have been prepared in accordance with u.s. generally accepted accounting principles . the preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses . note 2 to our audited consolidated financial statements contains a summary of our significant accounting policies . management believes our policy with respect to the methodology for the determination of the allowance for loan losses involves more complexity and requires management to make difficult and subjective judgments which often require assumptions or estimates about highly uncertain matters . changes in these judgments , assumptions or estimates could materially impact results of operations . this critical policy and its application are periodically reviewed with the audit committee and our board of directors . allowance for loan losses the allowance for loan losses represents management 's estimate of probable loan losses inherent in the loan portfolio . determining the amount of the allowance for loan losses is considered a critical accounting estimate because it requires significant judgment and the use of estimates related to the amount and timing of expected future cash flows on impaired loans , estimated losses on pools of homogeneous loans based on historical loss experience , and consideration of current economic trends and conditions , all of which may be susceptible to significant change . the loan portfolio also represents the largest asset type on the company 's consolidated statements of financial condition . the evaluation of the adequacy of the allowance for loan losses includes , among other factors , an analysis of historical loss rates by loan category applied to current loan totals and qualitative factors . however , actual loan losses may be higher or lower than historical trends , which vary . actual losses on specified problem loans , which also are provided for in the evaluation , may vary from estimated loss percentages , which are established based upon a limited number of potential loss classifications . the allowance for loan losses is established through a provision for loan losses charged to expense . management believes that the current allowance for loan losses will be adequate to absorb loan losses on existing loans that may become uncollectible based on the evaluation of known and inherent risks in the loan portfolio . the evaluation takes into consideration such factors as changes in the nature and size of the portfolio , overall portfolio quality , and specific problem loans and current economic conditions which may affect our borrowers ' ability to pay . the evaluation also details historical losses by loan category and the resulting loan loss rates which are projected for current loan total amounts . loss estimates for specified problem loans are also detailed . in addition , the occ , as an integral part of its examination process , periodically reviews our allowance for loan losses . the occ may require us to make additional provisions for loan losses based upon information available at the time of the examination . all of the factors considered in the analysis of the adequacy of the allowance for loan losses may be subject to change . to the extent actual outcomes differ from management estimates , additional provisions for loan losses may be required that could materially adversely impact earnings in future periods . qualitative or environmental factors that may result in further adjustments to the quantitative analyses include items such as changes in lending policies and procedures , economic and business conditions , nature and volume of the portfolio , changes in delinquency , concentration of credit trends , and value of underlying collateral . the total net adjustments due to all qualitative factors increased the allowance for loan losses by approximately $ 6.7 million and $ 6.2 million at september 30 , 2019 and september 30 , 2018 , respectively . -24- an unallocated component is maintained to cover uncertainties that could affect management 's estimate of probable losses . the unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfoli o. other real estate owned assets acquired through foreclosure consist of other real estate owned and financial assets acquired from debtors . other real estate owned is carried at the lower of cost or fair value , less estimated selling costs . the fair value of other real estate owned is determined using current market appraisals obtained from approved independent appraisers , agreements of sale , and comparable market analysis from real estate brokers , where applicable . story_separator_special_tag the company did not have a dta valuation allowance as of september 30 , 2019 and september 30 , 2018. other-than-temporary impairment of securities securities are evaluated on a quarterly basis , and more frequently when market conditions warrant such an evaluation , to determine whether declines in their value are other-than-temporary . to determine whether a loss in value is other-than-temporary , management utilizes criteria such as the reasons underlying the decline , the magnitude and duration of the decline and whether management intends to sell or expects that it is more likely than not that it will be required to sell the security prior to an anticipated recovery of the fair value . the term “ other-than-temporary ” is not intended to indicate that the decline is permanent but indicates that the prospects for a near-term recovery of value is not necessarily favorable , or that there is a lack of evidence to support a realizable value equal to or greater than the carrying value of the investment . once a decline in value for a debt security is determined to be other-than-temporary , the other-than-temporary impairment is separated into ( a ) the amount of the total other-than-temporary impairment related to a decrease in cash flows expected to be collected from the debt security ( the credit loss ) and ( b ) the amount of the total other-than-temporary impairment related to all other factors . the amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings . the amount of the total other-than-temporary impairment related to all other factors is recognized in other comprehensive income . derivatives the company enters derivative financial instruments to manage exposures that arise from business activities that result in the payment of future uncertain cash amounts , the value of which are determined by interest rates . the company is exposed to certain risks arising from both its business operations and economic conditions . the company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities . the company manages economic risks , including interest rate , liquidity , and credit risk primarily by managing the amount , sources , and duration of its debt funding and the use of derivative financial instruments . the company primarily uses interest rate swaps as part of its interest rate risk management strategy . interest rate swaps are valued by a third party , using models that primarily use market observable inputs , such as yield curves , and are validated by comparison with valuations provided by the respective counterparties . the credit risk associated with derivative financial instruments that are subject to master netting agreements is measured on a net basis by counterparty portfolio . the significant assumptions used in the models , which include assumptions for interest rates , are independently verified against observable market data where possible . where observable market data is not available , the estimate of fair value becomes more subjective and involves a high degree of judgment . in this circumstance , fair value is estimated based on management 's judgment regarding the value that market participants would assign to the asset or liability . this valuation process takes into consideration factors such as market illiquidity . imprecision in estimating these factors can impact the amount recorded on the balance sheet for an asset or liability with related impacts to earnings or other comprehensive income . -26- other assets increased from $ 4.5 million at september 30 , 2018 to $ 12.5 million at september 30 , 2019 while other liabilities increased from $ 1.9 million at september 30 , 2018 to $ 8.5 million at september 30 , 2019 primarily due to the bank 's commercial loan hedging program during fiscal 2019 . overview and strategy our business strategy is to operate as a well-capitalized and profitable financial institution dedicated to providing exceptional personal service to our individual and business customers . highlights of our business strategy are discussed below : deposit growth and strategies . the federal reserve cut interest rates three times or 75 basis points during 2019 , reversing nearly all of the 2018 rate increases based on its view of slowing global growth and trade war uncertainty . with the federal reserve now signaling a pause to evaluate economic data , the bank is focusing on continuing to shifting its asset sensitivity to neutral . competition for deposits in the company 's marketplace was intense during the fiscal year , and t his competition , impacted by higher deposit betas and borrowing costs , has caused compression in the bank 's net interest margin . in an effort to continue improving earnings , i.e . improve the net interest margin , we are implementing specific product and pricing strategies designed to decrease the yield on deposits and control the cost of funding . we are also focused on increasing our core deposits , which we define as all deposit accounts other than certificates of deposit . at september 30 , 2019 , our core deposits amounted to 70.9 percent of total deposits ( $ 676.2 million ) , compared to 69.9 percent of total deposits ( $ 541.2 million ) at september 30 , 2018. we have continued our promotional efforts to increase core deposits . we review our deposit products on an ongoing basis and we are considering additional deposit products and are currently offering more through flexible delivery options , such as mobile banking , as part of our efforts to increase core deposits . we expect to increase our commercial checking and business accounts and we also plan to enhance our cross-marketing as part of our efforts to gain secure additional deposit relationships with our deposits from loan customers and private banking clients . growing and diversifying our loan portfolio and resuming commercial real estate and construction and development lending .
| review processes that include analysis of credit requests and ongoing examination of outstanding loans and delinquencies , with particular attention to portfolio dynamics and mix . the company strives to identify loans experiencing difficulty early enough to correct the problems , to record charge-offs promptly based on realistic assessments of current collateral values , and to maintain an adequate allowance for loan losses at all times . it is generally the company 's policy to discontinue interest accruals once a loan is past due as to interest or principal payments for a period of ninety days . when a loan is placed on non-accrual status , interest accruals cease and uncollected accrued interest is reversed and charged against current income . payments received on non-accrual loans are applied against principal . a loan may only be restored to an accruing basis when it again becomes well secured and in the process of collection or all past due amounts have been collected and a satisfactory period of ongoing repayment exists . accruing loans past due 90 days or more are generally well secured and in the process of collection . for additional information regarding loans , see note 6 of the notes to the consolidated financial statements . -43- non-performing and past due loans and oreo non-performing loans include non-accrual loans and accruing loans which are contractually past due 90 days or more . non-accrual loans represent loans on which interest accruals have been suspended . it is the company 's general policy to consider the charge-off of loans at the point they become past due in excess of 90 days , with the exception of loans that are both well-secured and in the process of collection .
| 5,917 |
we are the largest bank or thrift institution headquartered in delaware , the third largest financial institution in the state on the basis of total deposits traditionally garnered in-market and among the top 100 trust companies in the country . our primary market area is the mid-atlantic region of the united states , which is characterized by a diversified manufacturing and service economy . our long-term strategy is to serve small and mid-size businesses through loans , deposits , investments , and related financial services , and to gather retail core deposits . our strategy of “ engaged associates delivering stellar service to create customer advocates ” focuses on exceeding customer expectations , delivering stellar service and building customer advocacy through highly trained , relationship oriented , friendly , knowledgeable and empowered associates . we provide residential and commercial real estate , commercial and consumer lending services , as well as retail deposit and cash management services and trust and wealth management services . lending activities are funded primarily with retail deposits and borrowings . the federal deposit insurance corporation ( “ fdic ” ) insures our customers ' deposits to their legal maximum . we serve our customers primarily from our 49 banking and trust offices located in delaware ( 39 ) , pennsylvania ( 8 ) , virginia ( 1 ) and nevada ( 1 ) and through our website at www.wsfsbank.com . we have two consolidated subsidiaries , wsfs bank and montchanin capital management , inc. ( “ montchanin ” ) . we also have one unconsolidated affiliate , wsfs capital trust iii ( “ the trust ” ) . wsfs bank has two fully-owned subsidiaries , wsfs investment group , inc. and monarch entity services , llc ( “ monarch ” ) . wsfs investment group , inc. markets various third-party insurance products and securities through the bank 's retail banking system and monarch provides commercial domicile services which include employees , directors , subleases and registered agent services in delaware and nevada . montchanin has one consolidated subsidiary , cypress capital management , llc ( “ cypress ” ) . cypress is a wilmington-based investment advisory firm serving high net-worth individuals and institutions . cypress had approximately $ 569 million in assets under management at december 31 , 2011 . 45 story_separator_special_tag includes reverse mortgages . 48 provision for loan losses . we maintain an allowance for loan losses at an appropriate level based on our assessment of the estimable and probable losses in the loan portfolio , pursuant to accounting literature , which is discussed further in the “ nonperforming assets ” section of this management 's discussion and analysis . our evaluation is based upon a review of the portfolio and requires significant judgment . for the year ended december 31 , 2011 , we recorded a provision for loan losses of $ 28.0 million compared to $ 41.9 million in 2010 and $ 47.8 million in 2009. this decrease was due to a number of factors , including the change in our portfolio mix , a decline in impaired loans and the stabilization of the economy and real estate valuations during 2011. noninterest income . noninterest income increased to $ 63.6 million in 2011 from $ 50.1 million in 2010. excluding the impact of net securities gains in both periods and $ 1.2 million in unanticipated boli income in 2011 , noninterest income increased by $ 8.5 million , or 17 % . noninterest income increased $ 7.1 million in fiduciary and investment management income resulting primarily from the december 2010 acquisition of christiana bank & trust ( “ cb & t ” ) . in addition , increases in credit/debit card and atm fees and deposit service charges , resulting from increased volume and franchise growth and exceeded year-over-year declines in mortgage banking revenues . noninterest income was essentially unchanged at $ 50.1 million in 2010 compared to $ 50.2 million for 2009. the $ 1.8 million decrease in loan fees in 2010 was mainly attributable to the wind down of 1 st reverse financial services , llc during 2009 , which produced no loan fees from this business in 2010. in addition , net gains on sales of securities decreased by $ 2.4 million in 2010 compared to 2009 , but still reflected $ 1.0 million of net gains in 2010 despite the sale of nearly all of our downgraded mbs . increases in several items essentially offset these decreases , including an increase of $ 2.4 million in credit/debit card and atm income during 2010. this increase was primarily due to growth in prime-based bailment fees at cash connect ( our atm division ) . in addition , fiduciary and investment management income increased $ 1.2 million during 2010 resulting from our acquisition of cb & t in the fourth quarter of 2010 as well as growth of our existing wealth management and investment businesses during the year . noninterest expenses . noninterest expense increased to $ 127.5 million in 2011 from $ 109.3 million in 2010. excluding the cb & t integration costs of $ 780,000 in 2011 and $ 1.7 million in 2010 , noninterest expenses increased by $ 19.0 million , or 18 % , over 2010. during the year , loan workout and oreo expenses increased $ 2.4 million and included the impact from bulk sales of oreo and readying other problem assets under agreement of sale for disposition in early 2012. marketing expenses also increased by $ 1.1 million mainly due to our “ right here ” marketing campaign in the third quarter of 2011. the remaining increase in expenses over the prior year was the result of normal ongoing operational costs related to the cb & t acquisition , organic franchise growth including the opening , relocation and renovation of eight branches , the hiring of additional commercial relationship managers ( and the full year of impact for 2010 adds ) and related infrastructure and support costs . noninterest expenses increased $ 828,000 during 2010 compared to 2009. during 2009 there were $ 6.1 million of non-routine items . story_separator_special_tag in addition , other comprehensive income increased $ 4.7 million , or 72 % , during 2011 , due to an increase in unrealized gains on available-for-sale securities . asset/liability management our primary asset/liability management goal is to optimize long term net interest income opportunities within the constraints of managing interest rate risk , ensuring adequate liquidity and funding and maintaining a strong capital base . in general , interest rate risk is mitigated by closely matching the maturities or repricing periods of interest-sensitive assets and liabilities to ensure a favorable interest rate spread . we regularly review our interest-rate sensitivity , and use a variety of strategies as needed to adjust that sensitivity within acceptable tolerance ranges established by management and the board of directors . changing the relative proportions of fixed-rate and adjustable-rate assets and liabilities is one of our primary strategies to accomplish this objective . the matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “ interest-rate sensitive ” and by monitoring our interest-sensitivity gap . an interest-sensitivity gap is considered positive when the amount of interest-rate sensitive assets exceeds the amount of interest-rate sensitive liabilities repricing within a defined period , and is considered negative when the amount of interest-rate sensitive liabilities exceeds the amount of interest-rate sensitive assets repricing within a defined period . for additional information related to interest rate sensitivity , see item 7a . quantitative and qualitative disclosures about market risk . 51 the repricing and maturities of our interest-rate sensitive assets and interest-rate sensitive liabilities at december 31 , 2011 are shown in the following table : less than one to over total one year five years five years ( dollars in thousands ) interest-rate sensitive assets : commercial loans ( 2 ) $ 1,173,700 $ 161,430 $ 54,589 $ 1,389,719 real estate loans ( 1 ) ( 2 ) 719,332 203,602 84,178 1,007,112 mortgage-backed securities 261,270 432,233 135,722 829,225 consumer loans ( 2 ) 215,853 46,628 28,498 290,979 investment securities 9,562 30,898 37,875 78,335 loans held-for-sale ( 2 ) 10,235 - - 10,235 2,389,952 874,791 340,862 3,605,605 interest-rate sensitive liabilities : money market and interest-bearing demand deposits 860,413 - 334,652 1,195,065 retail certificates of deposits 198,466 119,241 892 318,599 fhlb advances 327,553 211,129 - 538,682 savings deposits 184,417 - 183,973 368,390 brokered certificates of deposit 287,429 381 - 287,810 other borrowed funds 92,925 25,002 - 117,927 jumbo certificates of deposit 254,583 91,985 - 346,568 ira certificates of deposit 51,241 36,943 5,244 93,428 trust preferred borrowings 67,011 - - 67,011 total interest sensitive liabilities 2,324,038 484,681 524,761 3,333,480 ( deficiency ) excess of interest-rate sensitive assets over interest-rate liabilities ( “ interest-rate sensitive gap ” ) $ 65,914 $ 390,110 $ ( 183,899 ) $ 272,125 one-year interest-rate sensitive assets/ 102.84 % interest-rate sensitive liabilities one-year interest-rate sensitive gap as a 1.54 % percent of total assets ( 1 ) includes commercial mortgage , construction , and residential mortgage loans ( 2 ) loan balances exclude nonaccruing loans , deferred fees and costs generally , during a period of rising interest rates , a positive gap would result in an increase in net interest income while a negative gap would adversely affect net interest income . conversely , during a period of falling rates , a positive gap would result in a decrease in net interest income while a negative gap would augment net interest income . however , the interest-sensitivity table does not provide a comprehensive representation of the impact of interest rate changes on net interest income . each category of assets or liabilities will not be affected equally or simultaneously by changes in the general level of interest rates . even assets and liabilities which contractually reprice within the rate period may not , in fact , reprice at the same price , at the same time or with the same frequency . it is also important to consider that the table represents a specific point in time . variations can occur as we adjust our interest-sensitivity position throughout the year . to provide a more accurate position of our one-year gap , certain deposit classifications are based on the interest-rate sensitive attributes and not on the contractual repricing characteristics of these deposits . we estimate , based on historical trends of our deposit accounts , that 75 % of our money market deposits , 50 % of our interest-bearing demand deposits and 50 % of our savings deposits are sensitive to interest rate changes . accordingly , these interest-sensitive portions are classified in the “ less than one year ” category with the remainder in the “ over five years ” category . 52 deposit rates other than time deposit rates are variable . changes in deposit rates are generally subject to local market conditions and our discretion and are not indexed to any particular rate . reverse mortgages we hold an investment in reverse mortgages of $ ( 646,000 ) at december 31 , 2011 representing a second-lien participation in 14 reverse mortgages with a third party . these loans were originated in the early 1990s . these reverse mortgage loans are contracts that require the lender to make monthly advances throughout each borrower 's life or until each borrower relocates , prepays or the home is sold , at which time the loan becomes due and payable . reverse mortgages are nonrecourse obligations , which means that the loan repayments are generally limited to the net sale proceeds of the borrower 's residence . we account for our investment in reverse mortgages by estimating the value of the future cash flows on the reverse mortgages at a rate deemed appropriate for these mortgages , based on the market rate for similar collateral . actual cash flows from these mortgage loans can result in volatility in the recorded value of reverse mortgage assets . as a result , income varies significantly from reporting period to reporting period .
| results of operations we recorded net income of $ 22.7 million for the year ended december 31 , 2011 , a 61 % increase compared to $ 14.1 million for the year ended december 31 , 2010 , and a significant increase from $ 663,000 for the year ended december 31 , 2009. income allocable to common stockholders ' ( after preferred stock dividends ) was $ 19.9 million , or $ 2.28 per diluted common share ( a 56 % increase in diluted eps ) , for the year ended december 31 , 2011 , compared to income allocable to common shareholders ' of $ 11.3 million , or $ 1.46 per diluted common share , and a loss of $ 1.9 million , or $ 0.30 per common share , for the years ended december 31 , 2010 and 2009 , respectively . earnings for 2011 were impacted by a lower provision for loan losses which decreased $ 13.9 million to $ 28.0 million . in addition , fiduciary and investment management income increased $ 7.1 million due to the addition of the christiana trust division in december of 2010. partially offsetting these favorable items was an increase of $ 18.1 million in noninterest expenses during 2011. this increase was due to added operating expenses from the addition of christiana trust as well as overall franchise growth including the addition of five new branches , the relocation of three branches and the addition of twelve commercial relationship managers and related support staff . net interest income .
| 5,918 |
aam had an existing accounts payable balance of story_separator_special_tag company overview on april 6 , 2017 , alpha spv i , inc. , a wholly-owned subsidiary of american axle & manufacturing holdings , inc. ( holdings ) , merged with and into metaldyne performance group inc. ( mpg ) , with mpg as the surviving corporation in the merger . upon completion of the merger , mpg became a wholly-owned subsidiary of holdings . as a result , we are now a global tier i supplier to the automotive , commercial and industrial markets . we design , engineer , validate and manufacture driveline , metal forming , powertrain and casting products , employing over 25,000 associates , operating at more than 90 facilities in 17 countries , to support our customers on global and regional platforms with a continued focus on delivering operational excellence , technology leadership and quality . we are the principal supplier of driveline components to general motors company ( gm ) for its full-size rear-wheel drive ( rwd ) light trucks and suvs manufactured in north america , supplying substantially all of gm 's rear axle and four-wheel drive and all-wheel drive ( 4wd/awd ) axle requirements for these vehicle platforms . we also supply gm with various products from our metal forming and powertrain segments . sales to gm were approximately 47 % of our consolidated net sales in 2017 , 67 % in 2016 , and 66 % in 2015 . we are also a supplier to gm for certain axles and other driveline products for the life of each gm vehicle program covered by lifetime program contracts and long term program contracts ( collectively , lpcs ) . substantially all of our sales to gm are made under purchase orders pursuant to the lpcs . the lpcs have terms equal to the lives of the relevant vehicle programs or their respective derivatives , which typically run five to seven years , and require us to remain competitive with respect to technology , design , quality and cost . we also supply driveline system products for fca us llc ( fca ) for heavy-duty ram full-size pickup trucks and its derivatives , the awd jeep cherokee , and a passenger car driveshaft program . in addition , we sell various products to fca from each our metal forming , powertrain and casting segments . sales to fca were approximately 14 % of our consolidated net sales in 2017 , 18 % in 2016 and 20 % in 2015 . in addition to gm and fca , we are a supplier to several major automotive original equipment manufacturers ( oems ) and tier i suppliers . our consolidated net sales to customers other than gm were $ 3,334.6 million in 2017 as compared to $ 1,287.8 million in 2016 and $ 1,317.1 million in 2015 . our acquisition of mpg has significantly increased the diversification in our product portfolio , and has accelerated customer diversification initiatives . as a result of our acquisition of mpg , sales to gm and fca as a percentage of consolidated net sales has been reduced . industry trends there are a number of significant trends affecting the highly competitive global automotive industry . intense competition , volatility in fuel , steel , metallic and other commodity prices and significant pricing pressures remain . at the same time , the industry is focused on investing in future products that will incorporate the latest technology and meet changing customer demands . the continued advancement of technology and product innovation , as well as the capability to source programs on a global basis , are critical to attracting and retaining business in the global automotive industry . increased demand for fuel efficiency and emissions reductions there has been an increased demand for technologies designed to help reduce emissions , increase fuel economy and minimize the environmental impact of vehicles . as a result , oems and suppliers are competing to develop and market new and alternative technologies , such as electric vehicles , hybrid vehicles , fuel cells , and fuel-efficient engines . at the same time , oems and suppliers are improving products to increase fuel economy and reduce emissions through lightweighting and efficiency initiatives . we are responding with ongoing research and development ( r & d ) efforts that focus on fuel economy , emissions reductions and environmental improvements by integrating electronics and technology . through the development of our ecotrac ® disconnecting awd system , e-aam hybrid and electric driveline systems , quantum tm lightweight axle technology , high-efficiency axles , powerlite ® axles and powerdense ® gears , high strength connecting rod technology and refined vibration control systems , forged axle tubes , and high strength 23 ductile iron ductile - ite , we have significantly advanced our efforts to improve fuel efficiency , safety , and ride and handling performance while reducing emissions and mass . these efforts have led to new business awards and further position us to compete in the global marketplace . in addition to aam 's organic growth in technology and processes , our acquisition of mpg has provided us with complementary technologies , expanded our product portfolio , significantly diversified our global customer base , and strengthened our long-term financial profile through greater scale . the anticipated synergies of this acquisition are expected to enhance aam 's ability to compete in today 's technological and regulatory environment , while remaining cost competitive through increased scale and integration . evolution of the automotive industry as demand for car-sharing , ride-sharing and autonomous vehicles increases oems are increasingly focused on offering their own car-sharing rental businesses and ride-sharing services , in addition to selling vehicles . car-sharing typically allows consumers to rent a car for a short period of time , while ride-sharing matches people to available carpools or other services that provide on-demand rides with the use of an online application . story_separator_special_tag we expect our interest expense , including the borrowings under our new senior secured credit facilities and the issuance of the notes , to be approximately $ 225 million on an annual basis . the weighted-average interest rate of our total debt outstanding was 5.8 % in 2017 , 6.6 % in 2016 and 6.3 % in 2015 . investment income investment income was $ 2.9 million in 2017 and 2016 , and $ 2.6 million in 2015 . investment income includes interest earned on cash and cash equivalents during the period . 26 other income ( expense ) following are the components of other income ( expense ) for 2017 , 2016 and 2015 : debt refinancing and redemption costs in 2017 , we expensed $ 2.7 million of prepayment premiums related to the extinguishment of mpg 's existing debt at the date of the acquisition and $ 0.8 million for the write-off of the remaining unamortized debt issuance costs related to our 5.125 % notes that were redeemed in the fourth quarter of 2017. there were no such costs in 2016 , and in 2015 , we expensed $ 0.8 million of unamortized debt issuance costs related to a voluntary election to prepay our outstanding term facility . other , net other , net , which includes the net effect of foreign exchange gains and losses and our proportionate share of earnings from equity in unconsolidated subsidiaries , was expense of $ 6.8 million in 2017 , compared to income of $ 8.8 million in 2016 , and income of $ 12.0 million in 2015 . the change in other , net primarily relates to foreign exchange remeasurement losses as a result of the u.s. dollar weakening against the mexican peso and euro . income tax expense income tax expense was $ 2.5 million in 2017 , $ 58.3 million in 2016 , and $ 37.1 million in 2015 . our effective income tax rate was 0.7 % in 2017 as compared to 19.5 % in 2016 and 13.6 % in 2015 . our income tax expense and effective income tax rate for 2017 were lower than our income tax expense and effective income tax rate for 2016 as a result of an increase in the proportionate share of earnings attributable to lower tax rate jurisdictions . in addition , subsequent to the acquisition of mpg , we re-evaluated our valuation allowance position with regard to jurisdictions in which consolidated state tax returns are filed and recorded an income tax benefit for the year ended december 31 , 2017. this was partially offset by a discrete tax adjustment related to certain non-deductible transaction and acquisition-related costs . further , we recognized a net benefit in 2017 related to accounting for the following provisions of the tax cuts and jobs act : 1 ) remeasurement of our net deferred tax liabilities in the u.s. from 35 % to 21 % ; and 2 ) a one-time transition tax on certain foreign earnings for which u.s. tax was previously deferred , which also resulted in a benefit related to the reduction of a previously recorded deferred tax liability on these foreign earnings . our effective income tax rate for 2016 was higher than our effective income tax rate for 2015 primarily due to the impact of an $ 11.5 million reduction in income tax expense related to uncertain tax positions attributable to transfer pricing in the fourth quarter of 2015. our income tax expense and effective income tax rate for 2017 , 2016 and 2015 , as compared to the u.s. federal statutory rate of 35 % , also reflect favorable foreign tax rates , partially offset by our inability to realize a tax benefit for current foreign losses . net income attributable to aam and earnings per share ( eps ) net income attributable to aam was $ 337.1 million in 2017 as compared to $ 240.7 million in 2016 and $ 235.6 million in 2015 . diluted earnings per share was $ 3.21 in 2017 as compared to $ 3.06 per share in 2016 and $ 3.02 per share in 2015 . primarily as a result of the issuance of aam common shares in conjunction with our acquisition of mpg , our eps denominator increased by approximately 26 million shares for 2017 compared to 2016 . net income and eps were primarily impacted by the factors discussed in net sales , cost of goods sold , sg & a , amortization of intangible assets , restructuring and acquisition-related costs , other income ( expense ) and income tax expense above , as well as the issuance of the additional shares . 27 segment reporting prior to our acquisition of mpg on april 6 , 2017 , we operated in one reportable segment : the manufacture , engineer , design and validation of driveline systems and related components and chassis modules for light trucks , sport utility vehicles ( suvs ) , crossover vehicles , passenger cars and commercial vehicles . subsequent to our acquisition of mpg , our business was organized into four operating segments , each representing a reportable segment under asc 280 segment reporting . the four segments are driveline , metal forming , powertrain and casting . the following tables outline our sales and segment adjusted ebitda for each of our reporting segments for the years ended december 31 , 2017 , 2016 and 2015 : replace_table_token_7_th replace_table_token_8_th replace_table_token_9_th the increase in driveline sales for the year ended december 31 , 2017 , as compared to the year ended december 31 , 2016 , primarily reflect the impact of program launches from our new business backlog , as well as an increase in metal market pass-throughs to our customers , which was partially offset by the impact of annual productivity price-downs for certain programs . driveline sales for the year ended december 31 , 2017 were also positively impacted by increased production volumes on the light truck and suv programs we currently support .
| results of operations net sales net sales increased to $ 6,266.0 million in 2017 as compared to $ 3,948.0 million in 2016 and $ 3,903.1 million in 2015 . the impact of our acquisition of mpg on net sales in 2017 was approximately $ 2,022 million . excluding the impact of our acquisition of mpg , our sales in 2017 , as compared to 2016 , reflect an increase in production volumes for the light truck and suv programs we currently support , as well as the impact of program launches from our new business backlog and an increase in metal market pass-throughs to our customers , partially offset by the impact of annual productivity price-downs for certain programs . the increase in sales in 2016 , as compared to 2015 , primarily reflects an increase of approximately 8 % in production volumes for the north american light truck and suv programs we currently support , which was partially offset by a reduction of approximately $ 51.0 million in commercial vehicle sales due to an expired program and reductions in both metal market pass throughs to our customers and the impact of foreign exchange related to translation adjustments . cost of goods sold cost of goods sold was $ 5,146.9 million in 2017 as compared to $ 3,221.9 million in 2016 and $ 3,267.7 million in 2015 . the impact on cost of goods sold of our acquisition of mpg was approximately $ 1,739 million in 2017 , which includes $ 24.9 million for the step-up of inventory to fair value as a result of purchase accounting .
| 5,919 |
in 2011 , we operated our business in three reportable segments : ( i ) cell therapy united states ; ( ii ) regenerative medicine china ; and ( iii ) pharmaceutical manufacturing china . we are pursuing the divestiture of the majority of our china operations and anticipate they will have been exited by the close of 2012. through the cell therapy united states segment , we are focused on the development of proprietary cellular therapies in cardiovascular disease , immunology and regenerative medicine and becoming a single source for collection , storage , manufacturing , therapeutic development and transportation of cells for cell based medicine and regenerative science . within this segment , we also are a provider of adult stem cell collection , processing and storage services in the u.s. , enabling healthy individuals to donate and store their stem cells for personal therapeutic use . in addition , the company collects and stores cord blood cells of newborns which help to ensure a supply of autologous stem cells for the child should they be needed for future medical treatment . the company strengthened its expertise in cellular therapies , for its cell therapy united states segment , with its january 19 , 2011 acquisition of progenitor cell therapy , llc , a delaware limited liability company ( pct ) . pct is engaged in a wide range of services in the cell therapy market for the treatment of human disease , including , but not limited to contract manufacturing , product and process development , regulatory consulting , product characterization and comparability , and storage , distribution , manufacturing and transportation of cell therapy products . pct 's legacy business relationships also afford neostem introductions to innovative therapeutic programs . in march 2011 pct 's wholly owned subsidiary , athelos , inc. ( athelos ) , acquired rights and technology for a t-cell based immunomodulatory therapeutic in exchange for an approximate 20 % interest in athelos . the company further strengthened its breadth in cellular therapies through its october 17 , 2011 acquisition of amorcyte , inc. amorcyte is a development stage cell therapy company focusing on novel treatments for cardiovascular disease . amorcyte 's lead product candidate is amr-001 . in january 2012 , amorcyte enrolled its first patient in our preserve phase 2 trial to investigate amr-001 's ability to preserve heart function after a heart attack . the company views the pct and amorcyte acquisitions as fundamental to building a foundation in achieving its strategic mission of capturing the paradigm shift to cell therapy . through our regenerative medicine china segment , in 2009 , we began several china-based , regenerative medicine initiatives including : ( i ) constructing a stem cell research and development laboratory and processing facility in beijing , ( ii ) establishing relationships with hospitals to provide cell-based therapies , and ( iii ) obtaining product licenses covering several adult stem cell therapeutics focused on regenerative medicine . as a result of certain changes in the prc regulatory environment , the company has determined to take steps to restrict , and expects to ultimately eliminate , its regenerative medicine business in the prc . we acquired our pharmaceutical manufacturing china segment when on october 30 , 2009 , china biopharmaceuticals holdings , inc. ( cbh ) merged with a wholly-owned subsidiary of neostem ( the erye merger ) . as a result of the erye merger , neostem acquired cbh 's 51 % ownership interest in erye , a sino-foreign joint venture with limited liability organized under the laws of the prc . erye was 89 founded more than 50 years ago and represents an established , vertically-integrated pharmaceutical business . historically , erye has concentrated its efforts on the manufacturing and distribution of generic antibiotic products . in 2010 , erye began transferring its operations to its newly constructed manufacturing facility , as to which construction is now substantially completed . the relocation and the new production lines have been completed and received cgmp certification . as part of its plan to focus its business on capturing the paradigm shift to cell therapies following the january 2011 acquisition of pct , the company is pursuing strategic alternatives with respect to its interest in erye . to support our liquidity needs , the company raised an aggregate of approximately $ 21.2 million through the issuance of common stock and warrants through private placements and a public offering in 2011. in february 2012 , the company raised an aggregate of approximately $ 2.25 million in a private placement of common stock . story_separator_special_tag revenue by 5 % . the cost of revenue for cell therapy united states reporting segment was $ 8,701,300 an increase of approximately $ 8,672,400 principally related to the cost of revenue for pct . operating expenses for the year ended december 31 , 2011 operating expenses totaled $ 72,281,000 compared to $ 39,031,300 for the year ended december 31 , 2010 , representing an increase of $ 33,249,700 or 85 % . historically , to minimize our use of cash , we have used a variety of equity and equity-linked instruments to pay for services and to incentivize employees , consultants and other service providers . the use of these instruments has resulted in significant charges to the results of operations . in general , these equity and equity-linked instruments were used to pay for employee and consultant compensation , director fees , marketing services , investor relations and other activities . story_separator_special_tag included in other income and expense in 2010 was other income of $ 656,300 due to a 92 settlement agreement reached with a business partner involved in the development of the platform research organization in china , whereby the business partner relinquished rights to certain shares of our common stock . the company valued the shares at their fair market value on the day the shares were relinquished . also included in other income and expense in 2010 was $ 138,300 in expense for fair value adjustments on derivative liabilities related to the company 's series e preferred stock issuance in november 2010 and other outstanding warrants . included in interest expense in 2010 was $ 281,200 in amortization of preferred stock discount and issuance costs related to the company 's series e preferred stock . provision for taxes the income tax provision for the years ended december 31 , 2011 and 2010 , were $ 392,800 and $ 550,900 , respectively , and were related to foreign taxes for our operations in china . the provision for income taxes and the realization of deferred tax liability for pharmaceutical manufacturing china is based on , for the year ended december 31 , 2011 , a statutory rate of 25 % and , for the year ended december 31 , 2010 , a statutory rate of 12.5 % . non-controlling interests in connection with accounting for the company 's 51 % interest in erye , we account for the 49 % minority shareholder share of erye 's net income or loss with a charge to noncontrolling interests . for the year ended december 31 , 2011 erye 's minority shareholders ' share of net loss totaled approximately $ 9,148,600. for the year ended december 31 , 2010 , erye 's minority shareholders ' share of net income totaled approximately $ 3,908,700. in addition , the company acquired rights to use patents under licenses from becton , dickinson and company in march 2011 , in exchange for an approximately 20 % interest in pct 's athelos subsidiary . noncontrolling interest also reflects becton 's share of losses incurred by athelos during the year ended december 301 2011 of approximately $ 299,800. preferred dividends the convertible redeemable series e preferred stock calls for annual dividends of 7 % based on the stated value of the preferred stock and for the year ended december 31 , 2011 we recorded dividends of approximately $ 639,800. in the year ended december 31 , 2010 the company recorded dividends of approximately $ 238,000 , including $ 153,500 on the convertible redeemable series c preferred stock which called for an annual dividend of 5 % based on the stated value of the preferred stock . the convertible redeemable series c preferred stock was converted into neostem common stock in may 2010. analysis of liquidity and capital resources at december 31 , 2011 we had a cash balance of approximately $ 12,745,400 , working capital of approximately $ 2,164,900 , and shareholders ' equity of approximately $ 62,025,600. during the year ended december 31 , 2011 , we met our immediate cash requirements through existing cash balances , private placements and a public offering of our common stock and warrants , which in total , raised an aggregate of approximately $ 21,152,700 , the issuance of notes payable and bank loans providing $ 2,160,000 net , for our operations in china and the use of equity and equity-linked instruments to pay for services and compensation . we incurred a net loss of approximately $ 56,582,900 for the year ended december 31 , 2011. the following chart represents the net funds provided by or used in operating , financing and investing activities for each period indicated ( in thousands ) : replace_table_token_6_th 93 operating activities our cash used for operating activities in the year ended december 31 , 2011 totaled approximately $ 20,928,000 , which is the sum of ( i ) our net loss , adjusted for non-cash expenses totaling $ 16,209,500 ( which includes adjustments for common stock , common stock options and common stock purchase warrants issued for services rendered and charitable contribution in the aggregate amount of approximately $ 10,266,000 , depreciation and amortization of approximately $ 8,978,300 , goodwill impairments charges of $ 19,432,700 , the write-off of in process research and development of approximately $ 1,150,000 , amortization of preferred stock discount and issuance cost of approximately $ 2,440,200 ) , and ( ii ) changes in operating assets and liabilities of approximately $ 4,718,500. investing activities during the years ended december 31 , 2011 and 2010 , we spent approximately $ 5,910,300 and $ 16,377,700 , respectively , for property and equipment principally related to the construction of erye 's new manufacturing facility . financing activities the company raised an aggregate of approximately $ 6.3 million in a series of private placements consummated from march 2011 to july 2011 pursuant to which 18 persons and entities acquired an aggregate of 4,938,125 shares of common stock ( purchase price of $ 1.28 per share ) . the investors included steven . s. myers ( one of the company 's directors ) ( who purchased 390,625 shares ) and dr. andrew l. pecora ( the chief medical officer of the company 's subsidiary pct , who is now the chief medical officer and a director of neostem , and the chief scientific officer of amorcyte ) ( who purchased 78,125 shares ) . on july 22 , 2011 , the company completed an underwritten offering of 13,750,000 units at a purchase price of $ 1.20 per unit , with each unit consisting of one share of common stock and a five year warrant to purchase 0.75 of a share of common stock at an exercise price of $ 1.45 per share ( the offering ) .
| results of operations year ended december 31 , 2011 compared to year ended december 31 , 2010 revenues for the year ended december 31 , 2011 , total revenues were approximately $ 73,718,000 compared to $ 69,821,300 for the year ended december 31 , 2010. revenues for 2011 and 2010 were comprised of the following ( in thousands ) : replace_table_token_5_th revenues for our pharmaceutical manufacturing china reporting segment were approximately $ 63,393,600 for the year ended december 31 , 2011 compared to $ 69,584,300 for the year ended december 31 , 2010 , representing a decrease of approximately $ 6,190,700 or 9 % . the decrease was primarily due to a strategic decision to adjust the product mix , decreasing sales of certain low margin pharmaceutical intermediates to other pharmaceutical manufacturers in order to create capacity for higher margin products in the future , which resulted in 10 % reduction in overall sales . as an example , in q1 2011 erye introduced two new products , omeprazole and cloxacillin which are expected to contribute to higher margins than the discontinued pharmaceutical intermediates , and we have several other products under development that may be introduced over the next three to four years . revenues from sales of antibiotics , cephalosporins and other therapeutic products declined approximately 3 % compared to the same period for 2010 primarily from the impact of specific policies on volume control for certain drugs , including ongoing restriction on antibiotics , and the average price of antibiotics and cephalosporins , which were offset by increased revenues resulting from changes in foreign exchange rates between the chinese rmb and united states dollar by approximately 5 % . we recognize that there will be continuous price pressure on erye as over 70 % of erye 's manufactured drugs are on china 's essential drug list . there has been evidence of such price pressure i.e.
| 5,920 |
special note regarding forward-looking statements all statements other than statements of historical fact included in this form 10-k including , without limitation , statements under “ management 's discussion and analysis of financial condition and results of operations ” regarding our financial position , business strategy and the plans and objectives of management for future operations , are forward-looking statements . when used in this form 10-k , words such as “ anticipate , ” “ believe , ” “ estimate , ” “ expect , ” “ intend ” and similar expressions , as they relate to us or our management , identify forward-looking statements . such forward-looking statements are based on the beliefs of management , as well as assumptions made by , and information currently available to , our management . actual results could differ materially from those contemplated by the forward-looking statements as a result of a number of factors , including those set forth under the risk factors and business sections in this form 10-k. overview we are a marine enterprise group primarily engaging in ocean fishing through our operating subsidiary , fujian provincial pingtan county ocean fishing group co. , ltd. , or pingtan fishing , which is organized in the people 's republic of china ( “ prc ” ) . we harvest a variety of fish species with many of our owned vessels or licensed vessels for which we have exclusive operating license rights . these vessels are located within the indian exclusive economic zone ( “ eez ” ) , the arafura sea of indonesia , the international waters of atlantic and pacific oceans , and the international waters of the indian ocean . we provide high quality seafood to a diverse group of customers including distributors , restaurant owners and exporters in the prc . in june 2013 , we expanded our fleet from 40 to 86 vessels through a purchase of 46 fishing trawlers . we began operating these vessels in the third quarter of 2013 and have been entitled to net profits from their operation . each vessel carries a crew of 10 to 15 persons . these vessels have resulted in additional carrying capacity of approximately 45,000 to 50,000 tons of fish . in september 2013 , we further increased our fleet to 106 vessels with the acquisition of 20 newly-built fishing trawlers . these vessels have a run-in period of 3 - 6 months , during which each is placed into the sea for testing prior to full operation . at full operation , each vessel is capable of harvesting 900 to 1,000 tons of fish . subsequent to our fleet expansions , in september 2013 , the bureau of fisheries of the ministry of agriculture and rural affairs of the people 's republic of china ( “ moa ” ) issued a notification that it would suspend accepting shipbuilding applications for tuna harvesting vessels , squid harvesting vessels , pacific saury harvesting vessels , trawlers operating on international waters , seine on international waters , and trawlers operating on the arafura sea , indonesia . we believe the announcement is a positive indicator for long-term stability and balance in china 's fishing industry . on december 4 , 2013 , in connection with the sale of china dredging group co. , ltd ( “ cdgc ” or “ china dredging ” ) to fuzhou honglong ocean fishery co. , ltd ( “ hong long ” ) , an affiliate company majority owned by an immediate family member of the company 's ceo , we acquired 20-year operating license rights in connection with the lease of 20 fishing drifters for the appraised fair market value of approximately $ 216.1 million , whereby we are entitled to 100 % of the operations and net profits ( losses ) from the vessels for the term of the lease . in september 2014 , we further expanded our fleet to 129 vessels with the addition of 3 newly-built light luring seine vessels . at full operation , each vessel is capable of harvesting 2,000 tons of fish . in june 2015 , we purchased 4 longline fishing vessels and 2 squid jigging vessels for the appraised fair market value of approximately $ 56.2 million from hong long and fuzhou yishun deep-sea fishing co. , ltd. ( “ yishun ” ) , which is an affiliate company majority owned by an immediate family member of the company 's ceo . these vessels are primarily focused on catching tuna and squid . 28 in october 2016 , we deployed 13 vessels , which were granted fishing licenses by the ministry of agriculture and fisheries of the democratic republic of timor-leste ( “ maf ” ) , to operate in the indo-pacific waters of the country . these fishing licenses were valid for one year . the vessels were purchased from hong long in june 2013. in september 2017 , we were informed that the fishing licenses of the 13 vessels were suspended and the vessels were docked in the port by the maf . the maf alleged and investigated whether false statements were made during the licensing process and the vessels were simultaneously registered in indonesia . we disputed these allegations and the government of timor-leste eventually agreed to release these vessels as no evidence was presented to support such allegations . the 13 vessels have returned to china for regular maintenance . in march 2017 , we purchased from hong long 1 refrigerated transport vessel and 4 squid jigging vessels for the appraised fair market value of approximately $ 38.5 million . of those vessels , 2 finished renovation in october 2017 , the company obtained the ownership certificates of those 2 vessels and deployed them to international waters . at present , the company has not obtained the ownership of the remaining 3 vessels but is entitled to 100 % of the operations and net profits ( losses ) from the vessels . in december 2017 , we deployed 2 squid jigging vessels to the international waters of the south-west atlantic ocean . story_separator_special_tag our ability to obtain , sustain or renew such licenses and permits on acceptable terms is subject to changes in regulations and policies and is at the discretion of the applicable government agencies . our inability to obtain , or loss or denial of extensions to , any of our applicable licenses or permits could hamper our ability to generate revenue from our operations . ● resource & environmental factors : our fishing expeditions are based in the indian exclusive economic zone , the international waters of atlantic and pacific oceans , the international waters of indian ocean and the arafura sea of indonesia . any earthquake , tsunami , adverse weather or oceanic conditions or other calamities in such areas may result in disruption to our operations and could adversely affect our sales . adverse weather conditions such as storms , cyclones and typhoons or cataclysmic events may also decrease the volume of fish catches or may even hamper our operations . our fishing volumes may also be adversely affected by major climatic disruptions such as el nino , which in the past has caused significant decreases in seafood catch worldwide . besides weather patterns , other unpredictable factors , such as fish migration , may also have impact our harvest volume . ● fluctuation on fuel prices : our operations may be adversely affected by fluctuations in fuel prices . changes in fuel prices may result in increases in the selling prices of our products , and may , in turn , adversely affect our sales volume , revenue and operating profit . ● competition : we engage in the business in the bay of bengal in india , the international waters of atlantic and pacific oceans , the international waters of indian ocean , and the arafura sea of indonesian . competition within our designated fishing areas is not currently significant as the region is not overfished or regulated by government limits on the number of vessels that are allowed to fish in the territories ; however , there is no guarantee that competition will not become more intense . competition in the consumer market in china , however , is keen . we compete with other fishing companies which offer similar and varied products . there is significant demand for fish in the chinese market . we believe our catch appeals to a wide segment of consumers because of the low price points of our products . ● fishing licenses : each of our fishing vessels requires approval from the ministry of agriculture and rural affairs of the people 's republic of china to carry out ocean fishing projects in foreign territories . these approvals are granted annually and normally valid for a period of twelve months ; when the inspection certificate of a vessel is valid for less than 12 months , the approval will be granted with the validity period equal to that indicated on the inspection certificate and will be extended to full validity period when new inspection certificate is issued . different countries may have different policies for foreign cooperation in fisheries . some countries require fishing licenses issued by the accessed country ; some others may require establishment of a joint venture or sole proprietorship to obtain local licenses . during the indonesian moratorium , we were informed that fishing licenses of four vessels operated through pt avona , one of the local companies through which we conduct business in indonesia , and the fishery business license of pt dwikarya , the other local company through which we conduct business in indonesia , were revoked . in september 2017 , we were informed that the fishing licenses of the 13 vessels operating in the indo-pacific waters of timor-leste were suspended . these vessels have returned to china for regular maintenance . story_separator_special_tag text-align : justify ; text-indent : -0.25in '' > ● other miscellaneous selling expense for the year ended december 31 , 2018 increased by $ 108,594 , or 912.5 % , as compared to the year ended december 31 , 2017. general and administrative expense general and administrative expense totaled $ 10,304,750 for the year ended december 31 , 2018 , as compared to $ 9,579,404 for the year ended december 31 , 2017 , a slight increase of $ 725,346 or 7.6 % . general and administrative expense for the years ended december 31 , 2018 and 2017 consisted of the following : replace_table_token_12_th ● we recorded the depreciation in relation to vessels that are not operating as operation expense rather than cost of revenue . for the year ended december 31 , 2018 , depreciation expense increased by $ 715,948 , or 14.1 % , as compared to the year ended december 31 , 2017 . ● for the year ended december 31 , 2018 , compensation and related benefits increased by $ 363,618 , or 30.3 % as compared to the year ended december 31 , 2017. the increase was mainly attributable to booking the salaries of the crews that are not in operation in east timor and indonesia into g & a expenses of approximately $ 353,000 and an increase in benefits for our management staff of approximately $ 10,000 . ● professional fees , which primarily consist of legal fees , accounting fees , investor relations services charge , valuation service fees , consulting fees , and other fees associated with being a public company , for the year ended december 31 , 2018 , decreased by $ 684,491 , or 30.6 % , as compared to the year ended december 31 , 2017. the decrease in the year ended december 31 , 2018 was primarily attributable to a decrease in legal fees of approximately $ 636,000 , a decrease in valuation services fees of approximately $ 15,000 , a decrease in consulting fees of approximately $ 65,000 , and a decrease in investor relations services charges of approximately $ 28,000 , offset by an increase in accounting fees of approximately $ 64,000 .
| results of operations comparison of results of operations for the year ended december 31 , 2018 and 2017 revenue we recognize revenue from sales of frozen fish and other marine catches when persuasive evidence of an arrangement exists , delivery has occurred , the price to the customer is fixed or determinable , and collection of the resulting receivable is reasonably assured . with respect to the sales to third party customers , the majority of whom are sole proprietor regional wholesalers in the prc , we recognize revenue when customers receive purchased goods at our cold storage warehouse , after payment is received or credit sale is approved for recurring customers with excellent payment histories . 30 we do not offer promotional payments , customer coupons , rebates or other cash redemption offers to customers . we do not accept returns from customers . deposits or advance payments from customers prior to delivery of goods are recorded as advances from customers . for the years ended december 31 , 2018 and 2017 , our revenue by species of fish was as follows ( dollars in thousands , except for average price ) : replace_table_token_7_th replace_table_token_8_th for the year ended december 31 , 2018 , we had revenue of $ 64,256,088 , as compared to revenue of $ 63,209,687 for the year ended december 31 , 2017 , a slight increase of $ 1,046,401 , or 1.7 % . sales volumes in the year ended december 31 , 2018 increased 46.2 % to 26,290,393 kg from 17,985,528 kg in the year ended december 31 , 2017. the increase was mainly attributable to more landings of catch delivered to warehouse .
| 5,921 |
the company analogizes to asc 606 for the accounting for distinct performance obligations for which there is a customer relationship . prior to recognizing revenue , the company makes estimates of the transaction price , including variable consideration that is subject to a constraint . amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative 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 the section of this annual report entitled “ selected financial data ” and our consolidated financial statements and related notes included elsewhere in this annual report . this discussion and analysis generally covers our financial condition and results of operations for the year ended december 31 , 2019 , including year-over-year comparisons versus the year ended december 31 , 2018. our annual report on form 10-k for the year ended december 31 , 2018 includes a discussion and analysis of our financial condition and results of operations for the year ended december 31 , 2017 in item 7 of part ii , “ management 's discussion and analysis of financial condition and results of operations. ” overview ultragenyx pharmaceutical inc. ( we or the company ) is a biopharmaceutical company focused on the identification , acquisition , development , and commercialization of novel products for the treatment of serious rare and ultra-rare genetic diseases . we target diseases for which the unmet medical need is high , the biology for treatment is clear , and for which there are typically no approved therapies treating the underlying disease . our strategy , which is predicated upon time- and cost-efficient drug development , allows us to pursue multiple programs in parallel with the goal of delivering safe and effective therapies to patients with the utmost urgency . approved therapies and clinical product candidates our current approved therapies and clinical-stage pipeline consist of three product categories : biologics , small molecules , and gene therapy product candidates . our biologic products include approved therapies crysvita® ( burosumab ) and mepsevii® ( vestronidase alfa ) : crysvita is an antibody targeting fibroblast growth factor 23 , or fgf23 , developed for the treatment of x-linked hypophosphatemia , or xlh , a rare , hereditary , progressive and lifelong musculoskeletal disorder characterized by renal phosphate wasting caused by excess fgf23 production . crysvita is approved in the united states for the treatment of xlh in adult and pediatric patients six months of age and older , and in canada for the treatment of xlh in adult and pediatric patients one year of age and older . in the european union , or the eu , and the united kingdom , crysvita is conditionally approved for the treatment of xlh with radiographic evidence of bone disease in children one year of age and older and adolescents with growing skeletons . the european medicine agency , or ema , has accepted the application submitted by our partner , kyowa kirin international , or kyowa kirin , to expand the label to include adults with xlh in the eu and the united kingdom . in brazil , crysvita is approved for treatment of xlh in adult and pediatric patients one year of age and older . we have submitted regulatory filings in various other latin american countries . we are collaborating with kyowa kirin co. , ltd. , or kkc ( formerly kyowa hakko kirin co. , ltd. , or khk ) , and kyowa kirin , a wholly owned subsidiary of kkc , on the development and commercialization of crysvita globally . crysvita is also being developed for the treatment of tumor-induced osteomalacia , or tio . tio results from typically benign tumors that produce excess levels of fgf23 , which can lead to severe hypophosphatemia , osteomalacia , fractures , fatigue , bone and muscle pain , and muscle weakness . we submitted a supplemental biologics license application to the u.s. food and drug administration , or fda , for crysvita in tio in december 2019. mepsevii is an intravenous , or iv , enzyme replacement therapy , developed for the treatment of mucopolysaccharidosis vii , also known as mps vii or sly syndrome , a rare lysosomal storage disease that often leads to multi-organ dysfunction , pervasive skeletal disease , and death . mepsevii is approved in the united states for the treatment of children and adults with mps vii . in the eu and the united kingdom , mepsevii is approved under exceptional circumstances for the treatment of non-neurological manifestations of mps vii for patients of all ages . in brazil , mepsevii is approved for the treatment of mps vii for patients of all ages . our small molecule pipeline includes ux007 , which is in clinical development for the treatment of long-chain fatty acid oxidation disorders , or lc-faod : ux007 is a synthetic triglyceride with a specifically designed chemical composition being studied for the treatment of lc-faod , which is a set of rare metabolic diseases that prevents the conversion of fat into energy and can cause low blood sugar , muscle rupture , and heart and liver disease . the fda has accepted our new drug application , or nda for the treatment of lc-faod , and has assigned a prescription drug user fee act , or pdufa , date of july 31 , 2020. we are also continuing discussions with eu regulatory authorities . 61 our gene therapy pipeline includes dtx301 and dtx401 in clinical development for the treatment of two diseases : dtx301 is an adeno-associated virus 8 , or aav8 gene therapy product candidate designed for the treatment of patients with ornithine transcarbamylase , or otc , deficiency . otc is part of the urea cycle , an enzymatic pathway in the liver that converts excess nitrogen , in the form of ammonia , to urea for excretion . story_separator_special_tag if the carrying value of the assets is not expected to be recovered , the assets are written down to their estimated fair values with the related impairment charge recognized in our consolidated statements of operations in the period in which the impairment occurs . if and when development is complete , which generally occurs when regulatory approval to market a product is obtained , the associated assets are deemed finite-lived and are amortized over a period that best reflects the economic benefits provided by these assets . if projects are not successfully developed , our sales and profitability may be adversely affected in future periods . additionally , the value of the acquired intangible assets , including ipr & d , may become impaired if the underlying projects do not progress as we initially estimated . we believe that the assumptions used in developing our estimates of intangible asset values were reasonable at the time of the acquisition . however , the underlying assumptions used to estimate expected project sales , development costs , profitability , or the events associated with such projects , such as clinical results , may not occur as we estimated at the acquisition date . accrued research and development , and research and development expenses as part of the process of preparing consolidated financial statements , we are required to estimate and accrue expenses , the largest of which is related to accrued research and development expenses . this process involves reviewing contracts and purchase orders , identifying services that have been performed on our behalf , and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual costs . we record accruals for estimated costs of research , preclinical and clinical studies , and manufacturing development . these costs are a significant component of our research and development expenses . a substantial portion of our ongoing research and development activities is conducted by third-party service providers . we accrue the costs incurred under our agreements with these third parties based on actual work completed in accordance with agreements established with these third parties . we determine the actual costs through discussions with internal personnel and external service providers as to the progress or stage of completion of the services and the agreed-upon fee to be paid for such services . we make significant judgments and estimates in determining the accrual balance in each reporting period . as actual costs become known , we adjust our accruals . although we do not expect our estimates to be materially different from amounts actually incurred , our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and could result in us reporting amounts that are too high or too low in any particular period . our accrual is dependent , in part , upon the receipt of timely and accurate reporting from clinical research organizations and other third-party vendors . research and development costs are expensed as incurred and consist of salaries and benefits , stock-based compensation , lab supplies , materials and facility costs , as well as fees paid to other nonemployees and entities that conduct certain research and development activities on our behalf . amounts incurred in connection with collaboration and license agreements are also included in research and development expense . payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received . to date , there have been no material differences from our accrued estimated expenses to the actual clinical trial expenses ; however , due to the nature of estimates , we can not assure you that we will not make changes to our estimates in the future as we become aware of additional information about the status or conduct of our clinical studies and other research activities . revenue recognition collaboration and license revenue we have certain license and collaboration agreements that are within the scope of accounting standards codification ( asc ) 808 , collaborative agreements , which provides guidance on the presentation and disclosure of collaborative arrangements . generally , the classification of transactions under collaborative arrangements is determined based on the nature of contractual terms of the arrangement , along with the nature of the operations of the participants . when our collaborative partner is the principal in the sale transaction with the customer , we record our share of the collaboration profit as collaboration revenue . funding received related to research and development services and commercialization costs are generally classified as a reduction of research and development expenses and selling , general and administrative expenses , respectively , in the consolidated statement of operations , because the provision of such services for collaborative partners is not considered to be part of our ongoing major or central operations . we also receive royalty revenues under certain of our license or collaboration agreements in exchange for license of intellectual property . if we do not have any future performance obligations for these license or collaboration agreements , royalty revenue is recorded as the underlying sales occur . in order to record collaboration revenue , we utilize certain information from our collaboration partners , including revenue from the sale of the product , associated reserves on revenue , and costs incurred for development and sales activities . for the periods covered in the financial statements presented , there have been no significant or material changes to prior period estimates of revenues and expenses . 63 the terms of our collaboration agreements may contain multiple performance obligations , which may include licenses and research and development activities . we evaluate these agreements under asc 606 , revenue from contract s with customers , to determine the distinct performance obligations . we analogize to asc 606 for the accounting for distinct performance obligations for which there is a customer relationship .
| results of operations comparison of years ended december 31 , 2019 and 2018 revenues ( dollars in thousands ) replace_table_token_3_th crysvita was approved in the eu and the united kingdom in november 2017 and in the u.s. in april 2018. for the year ended december 31 , 2019 , the company 's share of crysvita collaboration revenue in the profit-share territory increased by $ 59.5 million , as compared to the prior year . for the year ended december 31 , 2019 , the crysvita royalty revenue in the european territory increased by $ 5.2 million , as compared to the prior year . the increases primarily reflect the continuing increase in demand for crysvita in the u.s. and europe and having a full year of revenue in the u.s. in 2019 as compared to a partial year in 2018. in december 2019 , we sold the rights to the royalty payments in the european territory , including the united kingdom and switzerland , to royalty pharma . going forward , we will continue to record the royalty revenue in the european territory as non-cash royalties . collaboration and license revenue from our research arrangement with bayer for the year ended december 31 , 2019 decreased by $ 23.0 million compared to the same period in 2018. the decrease was primarily due to the completion of clinical manufacturing and regulatory support activities and transition of the clinical development to bayer as part of the research arrangement . product sales for the year ended december 31 , 2019 increased by $ 10.4 million compared to the same period in 2018. the increase was primarily due to an increase in volume as a result of continued increase in demand for our approved products and certain products under our named patient program in certain countries .
| 5,922 |
additionally , in connection with the term loan , the company entered into an exit fee agreement , whereby the company agreed to pay an exit fee in the amount of 3 % of the term loan , or the exit fee , upon any change of control transaction in story_separator_special_tag of operations you should read the following discussion and analysis of our financial condition and results of operations in conjunction with the section of this report entitled “ selected financial data ” and our financial statements and related notes included elsewhere in this report . this discussion and other parts of this report contain forward- looking statements that involve risk and uncertainties , such as statements of our plans , objectives , expectations and intentions . 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 section of this report entitled “ risk factors . ” these forward-looking statements speak only as of the date hereof . except as required by law , we assume no obligation to update or revise these forward-looking statements for any reason . unless the context requires otherwise , the terms “ ardelyx ” , “ company ” , “ we ” , “ us ” , and “ our ” refer to ardelyx , inc. overview we are a biopharmaceutical company focused on developing first-in-class medicines to improve treatment choices for people with cardiorenal diseases . this includes patients with end-stage renal disease , or esrd , suffering from elevated serum phosphorus , or hyperphosphatemia ; and patients with chronic kidney disease , or ckd , and or heart failure patients with elevated serum potassium , or hyperkalemia . our portfolio is led by the development of tenapanor , a first-in-class inhibitor of nhe3 . in our cardiorenal pipeline , tenapanor is being evaluated in a second phase 3 clinical trial , the phreedom trial , for the treatment of hyperphosphatemia in patients with esrd who are on dialysis , with topline results expected in the fourth quarter of 2019. this trial follows a successful first phase 3 clinical trial completed in 2017 , which achieved statistical significance for the primary endpoint . tenapanor , if successfully developed and approved , would be the first therapy for phosphate management that is not a phosphate binder . we are also evaluating tenapanor in combination with phosphate binders in a phase 3 clinical trial , the amplify trial , from which results are currently expected in the second half of 2019. if our amplify trial is successful , tenapanor would , if approved , be the first and only phosphate lowering therapy to be indicated as adjunctive therapy for use in combination with binders . we are also advancing a small molecule potassium secretagogue program , rdx013 , for the potential treatment of hyperkalemia . hyperkalemia is a common problem in patients with heart and kidney disease , particularly in patients taking common blood pressure medications known as raas inhibitors , which inhibit of the renin-angiotensin-aldosterone system . we believe that rdx013 has the potential to lower elevated potassium with a much lower pill burden than potassium binders and may provide significant advantages as a stand-alone agent or also in combination with potassium binders . in addition to the development of tenapanor for the treatment of hyperphosphatemia for esrd patients on dialysis , we have developed tenapanor for the treatment of patients with ibs-c. on september 12 , 2018 , we submitted a new drug application , or nda , to the u.s. food and drug administration , or fda , for the treatment of patients with irritable bowel syndrome with constipation , or ibs-c , and have been granted a target action date under the prescription drug user fee act , or pdufa , of september 12 , 2019. the nda submission was supported by a clinical package encompassing more than 3,100 patients and healthy volunteers who have participated in ardelyx clinical trials and extensive clinical and preclinical data supporting the safety profile . the data include results from the completed ibs-c registration t3mpo program , which consisted of two phase 3 trials , t3mpo-1 and t3mpo-2 , and a long-term safety extension trial , t3mpo-3 . both the t3mpo-1 and t3mpo-2 trials achieved statistical significance for their primary endpoint and demonstrated that tenapanor had a durable effect on reducing constipation and abdominal pain that patients with ibs-c experience . the favorable safety profile of tenapanor , which has been shown across all clinical trials , was further supported by the completed t3mpo-3 study . we have developed a proprietary drug discovery and design platform to discover targets found in the gi tract that regulate processes in the body and design products candidates that act upon those targets to take advantage of the gut 's ability to communicate with other organs . 63 since commencing operations in october 2007 , substantially all our efforts have been dedicated to our research and development activities , including developing our clinical product candidate tenapanor and developing our proprietary drug discovery and design platform . we have not generated any revenues from product sales and have no products approved for commercialization . as of december 31 , 2018 , we had an accumulated deficit of $ 365.5 million . on may 16 , 2018 , we entered into a loan and security agreement , or the loan agreement , with solar capital ltd. and western alliance bank . the loan agreement provides for a $ 50.0 million term loan facility with a maturity date of november 1 , 2022. the full amount of the loan was funded on may 16 , 2018. we received net proceeds from the loan of $ 49.3 million , after deducting the closing fee , legal expenses and issuance cost . on may 25 , 2018 , we completed an underwritten public offering of 12,500,000 shares of our common stock at a price to the public of $ 4.00 story_separator_special_tag research and development expenses consist of the following : · external research and development expenses incurred under agreements with consultants , third-party cros and investigative sites where a substantial portion of our clinical studies are conducted , and with contract manufacturing organizations where our clinical supplies are produced ; · expenses associated with supplies and materials consumed in connection with our research operations ; · employee-related expenses , which include salaries , bonuses , benefits , travel and stock-based compensation ; · other costs associated with regulatory , clinical and non-clinical development activities ; and · facilities and other allocated expenses , which include direct and allocated expenses for rent and maintenance of facilities , depreciation and amortization expense , information technology expense and other supplies . we expect to continue to make substantial investments in research and development activities as we progress the development of tenapanor , as well as our other product candidates , advance our research programs into the preclinical stage and continue our early stage research . the process of conducting preclinical studies and clinical trials necessary to obtain regulatory approval is costly and time consuming . we may never succeed in achieving marketing approval for any of our product candidates , including tenapanor . additionally , if marketing approval is received for tenapanor for the treatment of ibs-c , we may not be successful in securing one or more collaboration partners to commercialize tenapanor in the united states and other territories . the probability of success of each of the product candidates may be affected by numerous factors , including preclinical data , clinical data , market acceptance , sufficient third-party coverage or reimbursement , our ability to access capital on acceptable terms , competition , manufacturing capability and commercial viability . 65 we anticipate that we will make determinations as to which programs to pursue and how much funding to direct to each program on an ongoing basis in response to the scientific and clinical success of each product candidate , ongoing assessment as to each product candidate 's commercial potential , and our ability to access capital on acceptable terms . we will need to raise additional capital and will seek additional collaboration partnerships in order to complete the development and commercialization of tenapanor . if we are unable to access capital on a timely basis and on terms that are acceptable to us , we may be forced to restructure certain aspects of our business or identify and complete one or more strategic collaborations or other transactions in order to fund the development or commercialization of tenapanor or certain of our product candidates through the use of alternative structures . general and administrative general and administrative expenses consist primarily of salaries and related costs , including stock-based compensation . other general and administrative expenses include facility related costs and professional fees for legal , accounting , investor relations and other consulting services . we anticipate that our general and administrative expenses will increase in the future primarily because of ( i ) increased pre-commercial activities , personnel costs and professional fees for services to support the potential launch and commercialization of tenapanor for the treatment of hyperphosphatemia in esrd patients on dialysis and ( ii ) expenses related to costs of operating as a public company primarily preparing for future integrated audits . provision for income taxes the provision for income taxes was not material for year ending december 31 , 2018 , $ 1.2 million for year ending december 31 , 2017 and zero for year ending december 31 , 2016. we have a net loss for all three years ending december 31 , 2018. our deferred tax assets continue to be fully offset by a valuation allowance . the tax cuts and jobs act of 2017 , or tcja , makes broad and complex changes to the u.s. tax code , including , but not limited to , reducing the u.s. federal corporate tax rate from a top marginal rate of 35 % to a flat rate of 21 % , effective january 1 , 2018. the company is able to determine a reasonable estimate of certain effects of the tcja and has therefore recognized the provisional tax impacts related to the revaluation of deferred tax assets and liabilities . as a result , the company has recorded a decrease related to net deferred tax assets of $ 35.6 million , with an offsetting change in valuation allowance of $ 35.6 million for the year ended december 31 , 2017. the sec has provided accounting and reporting guidance that allows the company to report provisional amounts within a measurement period of up to one year from the date of enactment due to the complexities inherent in adopting the tcja . the company completed its analysis during the measurement period and there were no measurement period adjustments recognized during the reporting period . critical accounting polices and estimates a detailed discussion of our significant accounting policies can be found in note 1 of the notes to consolidated financial statements in part ii , item 8 , and the impact and risks associated with our accounting policies are discussed throughout this annual report on form 10‑k and in the footnotes to the financial statements . critical accounting policies are those that require significant judgment and or estimates by management at the time that financial statements are prepared such that materially different results might have been reported if other assumptions had been made . we consider certain accounting policies related to revenue recognition , accrued liabilities , and use of estimates to be critical policies . these estimates form the basis for making judgments about the carrying values of assets and liabilities . we base our estimates and judgments on historical experience and on various other assumptions that we believe to be reasonable under the circumstances . actual results could differ materially from these estimates .
| results of operations comparison of the years ended december 31 , 2018 and 2017 revenue replace_table_token_3_th total revenue was $ 2.6 million for the year ended december 31 , 2018 , a decrease of $ 39.4 million , or 94 % , compared to $ 42.0 million for the year ended december 31 , 2017. total revenue of $ 2.6 million in the year ended december 31 , 2018 included $ 2.3 million of licensing revenue related to the upfront payment from knight and $ 0.3 million of other revenue related to the manufacturing supply of tenapanor and other materials to khk , for khk 's product development and clinical trials in japan , in accordance with our license agreement with khk . total revenue of $ 42.0 million in the year ended december 31 , 2017 was comprised of licensing revenue related to upfront payments in accordance with our khk and fosun pharma license agreements . 69 cost of revenue replace_table_token_4_th cost of revenue was $ 0.5 million for the year ended december 31 , 2018 , a decrease of $ 7.9 million , or 94 % , compared to $ 8.4 million for the year ended december 31 , 2017. the cost of revenue in both periods represented license payments due to astrazeneca . astrazeneca , under the terms of a termination agreement entered into in 2015 , is entitled to ( i ) future royalties at a royalty rate of 10 % of net sales of tenapanor or other nhe3 products by us or our licensees , and ( ii ) 20 % of non-royalty revenue received from a new collaboration partner should we elect to license , or otherwise provide rights to develop and commercialize tenapanor or another nhe3 inhibitor , with the maximum amount due to astrazeneca for royalties and non-royalty revenue not to exceed $ 75.0 million in aggregate for ( i ) and ( ii ) .
| 5,923 |
property and equipment property and equipment is carried at cost and story_separator_special_tag story_separator_special_tag font style= '' font-family : inherit ; font-size:10pt ; '' > we utilize several financial measures and metrics to evaluate the performance and assess the future direction of our business . these key financial measures and metrics include net revenues , gross profit margin , end-of-period backlog , book-to-bill ratio , and inventory turnover . gross profit margin is computed as gross profit as a percentage of net revenues . gross profit is generally net revenues less costs of products sold , but could also include certain other period costs . gross profit margin is clearly a function of net revenues , but also reflects our cost-cutting programs and our ability to contain fixed costs . end-of-period backlog is one indicator of potential future sales . we include in our backlog only open orders that have been released by the customer for shipment in the next twelve months . if demand falls below customers ' forecasts , or if customers do not control their inventory effectively , they may cancel or reschedule the shipments that are included in our backlog , in many instances without the payment of any penalty . therefore , the backlog is not necessarily indicative of the results to be expected for future periods . another important indicator of demand in our industry is the book-to-bill ratio , which is the ratio of the amount of product ordered during a period compared with the product that we ship during that period . a book-to-bill ratio that is greater than one indicates that demand is higher than current revenues and manufacturing capacities , and it indicates that we may generate increasing revenues in future periods . conversely , a book-to-bill ratio that is less than one is an indicator of lower demand compared to existing revenues and current capacities and may foretell declining sales . - 26 - we focus on our inventory turnover as a measure of how well we are managing our inventory . we define inventory turnover for a financial reporting period as our costs of products sold for the four fiscal quarters ending on the last day of the reporting period divided by our average inventory ( computed using each quarter-end balance ) for this same period . a higher level of inventory turnover reflects more efficient use of our capital . the quarter-to-quarter trends in these financial metrics can also be an important indicator of the likely direction of our business . the following table shows net revenues , gross profit margin , the end-of-period backlog , the book-to-bill ratio , and the inventory turnover for our business as a whole during the five quarters beginning with the fourth quarter of 2012 and through the fourth quarter of 2013 . the first quarter 2013 data below were recast to reflect the purchase accounting adjustments , recorded in connection with the kelk acquisition valuation during the second quarter of 2013 ( dollars in thousands ) : replace_table_token_6_th see “ financial metrics by segment ” below for net revenues , gross profit margin , end-of-period backlog , book-to-bill ratio , and inventory turnover broken out by segment . net revenues during 2013 improved from the fourth quarter of 2012 , with the addition of kelk 's revenue in each of the quarters . kelk contributed $ 5.5 million , $ 10.5 million , $ 8.2 million and $ 6.9 million in revenues during each of the quarters of 2013 , respectively . second quarter 2013 net revenues reflected very strong orders for kelk . third quarter 2013 revenues were negatively impacted by the decline in revenues in our foil technology products segment mainly due to lower volume . inefficiencies associated with a previously announced enterprise resource planning ( “ erp ” ) implementation caused a slowdown in shipments during the third quarter of 2013 in three of our manufacturing facilities in the foil technology products segment , resulting in lower revenue for the segment . revenue also declined in our weighing and control systems segment compared to the strong second quarter of 2013. in the fourth quarter of 2013 we experienced revenue improvements in the foil technology products segment as the issues with the erp implementation were being addressed . we also had increases in revenues in the weighing and control system segment primarily due to the process weighing and on-board weighing business in europe . while the weighing and control systems segment gross profit margins have improved in 2013 , due to the kelk acquisition , this increase has been partially offset by the kelk acquisition purchase accounting adjustments ( see reconciliation table above ) . improved gross profit margins in the weighing and control systems segment have been offset by the decreased gross profit margins in the foil technology products and force sensors segments . the foil technology products segment was impacted by lower demand in japan during the first half of 2013 , and the effect of an erp implementation in the third quarter of 2013 , which caused manufacturing inefficiencies and a slowdown in shipments . however , we saw in the foil technology products segment , revenue improvements in the fourth quarter which resulted in higher gross margins for the fourth quarter of 2013 compared to the third quarter of 2013. the force sensors segment was impacted by lower volume in the second quarter of 2013 , and higher manufacturing costs in the third quarter of 2013 related to a new product launch . in the fourth quarter of 2013 , we experienced higher gross margins in the force sensors segment due to cost reduction savings and favorable foreign exchange rates . backlog increased from $ 38.9 million in the fourth quarter of 2012 to $ 60.6 million in the fourth quarter of 2013 and was mainly due to the inclusion of kelk . story_separator_special_tag however , these programs to improve our profitability also involve certain risks which could materially impact our future operating results , as further detailed in part i , item 1a “ risk factors ” of this annual report on form 10-k. the company recorded restructuring costs of $ 0.5 million during the year ended december 31 , 2013 , relating to two cost reduction programs implemented by the company . restructuring costs of $ 0.4 million were comprised of employee termination costs , including severance and a statutory retirement allowance , covering 16 technical , production and administrative employees at one of the company 's subsidiaries in japan . the restructuring was undertaken primarily in response to the declining business conditions in japan . the restructuring costs were fully paid during 2013. restructuring costs of $ 0.1 million were comprised of employee termination costs , including severance and a statutory retirement allowance at kelk and were incurred in connection with a cost reduction in one of the manufacturing areas . as of december 31 , 2013 , these costs are recorded within other accrued expenses on the accompanying consolidated balance sheet . the company anticipates that the payments will be made during the first quarter of 2014. we are presently executing plans to further reduce our costs by consolidating additional manufacturing operations . these plans will require us to incur restructuring and severance costs in future periods . however , after implementing these plans , we do not anticipate significant restructuring and severance costs for our business except in the context of acquisition integration . while streamlining and reducing fixed overhead , we are exercising caution so that we will not negatively impact our customer service , or our ability to further develop products and processes . foreign currency we are exposed to foreign currency exchange rate risks , particularly due to transactions in currencies other than the functional currencies of certain subsidiaries . u.s. gaap requires that entities identify the “ functional currency ” of each of their subsidiaries and measure all elements of the financial statements in that functional currency . a subsidiary 's functional currency is the currency of the primary economic environment in which it operates . in cases where a subsidiary is relatively self-contained within a particular country , the local currency is generally deemed to be the functional currency . however , a foreign subsidiary that is a direct and integral component or extension of the parent company 's operations generally would have the parent company 's currency as its functional currency . we have subsidiaries that fall into each of these categories . - 29 - foreign subsidiaries which use the local currency as the functional currency we finance our operations in europe , canada , and certain locations in asia using local currencies , and accordingly , these subsidiaries utilize the local currency as their functional currency . for those subsidiaries where the local currency is the functional currency , assets and liabilities in the consolidated balance sheets have been translated at the rate of exchange as of the balance sheet date . translation adjustments do not impact the results of operations and are reported as a separate component of equity . for those subsidiaries where the local currency is the functional currency , revenues and expenses are translated at the average exchange rate for the year . while the translation of revenues and expenses into u.s. dollars does not directly impact the consolidated statement of operations , the translation effectively increases or decreases the u.s. dollar equivalent of revenues generated and expenses incurred in those foreign currencies . foreign subsidiaries which use the u.s. dollar as the functional currency our operations in israel and certain locations in asia are largely financed in u.s. dollars , and accordingly , these subsidiaries utilize the u.s. dollar as their functional currency . for those foreign subsidiaries where the u.s. dollar is the functional currency , all foreign currency financial statement amounts are remeasured into u.s. dollars . exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in the results of operations . while these subsidiaries transact most business in u.s. dollars , they may have significant costs , particularly related to payroll , which are incurred in the local currency . for the year ended december 31 , 2013 , exchange rate impacts reduced net revenues by $ 2.1 million , and costs of products sold and selling , general , and administrative expenses by $ 0.6 million , when compared to the prior year . for the year ended december 31 , 2012 , exchange rate impacts reduced net revenues by $ 5.3 million , and costs of products sold and selling , general , and administrative expenses by $ 5.8 million , when compared to the prior year . for the year ended december 31 , 2011 , exchange rate impacts increased net revenues by $ 6.7 million , and costs of products sold and selling , general , and administrative expenses by $ 7.8 million , when compared to the prior year . off-balance sheet arrangements as of december 31 , 2013 and 2012 , we do not have any off-balance sheet arrangements . critical accounting policies and estimates our significant accounting policies are summarized in note 1 to our consolidated financial statements . we identify here a number of policies that entail significant judgments or estimates by management . revenue recognition we recognize revenue on product sales during the period when the sales process is complete . this generally occurs when products are shipped to the customer in accordance with terms of an agreement of sale , title and risk of loss have been transferred , collectability is reasonably assured , and pricing is fixed or determinable . for a small percentage of sales where title and risk of loss pass at the point of delivery , we recognize revenue upon delivery to the customer , assuming all other criteria for revenue recognition are met .
| overview vpg is an internationally recognized designer , manufacturer and marketer of components based on resistive foil technology , sensors and sensor-based systems specializing in the growing markets of stress , force , weight , pressure , and current measurements . we provide vertically integrated products and solutions that are primarily based upon our proprietary foil technology . these products are marketed under a variety of brand names that we believe are characterized as having a very high level of precision and quality . our global operations enable us to produce a wide variety of products in strategically effective geographical locations that also optimize our resources for specific technologies , sensors , assemblies and systems . the company 's products are precision foil resistors , foil strain gages , and sensors that convert mechanical inputs into an electronic signal for display , processing , interpretation , or control by our instrumentation and systems products . precision sensors are essential to the accurate measurement , resolution and display of force , weight , pressure , torque , tilt , motion or acceleration , especially in the legal-for-trade , commercial , and industrial marketplace in a wide variety of applications . our products are not typically used in the consumer market . the precision sensor market is being influenced by the significant increase in intelligent products across virtually all end markets , including medical , agricultural , transportation , industrial , avionics , military , and space applications . we believe that as original equipment manufacturers ( “ oems ” ) strive to make products “ smarter , ” they are generally integrating more sensors to link the mechanical/physical world with digital control and or response . we believe this offers a substantial growth opportunity for our products . until july 6 , 2010 , our business was part of vishay intertechnology , and our assets and liabilities consisted of those that vishay intertechnology attributed to its precision measurement and foil resistor businesses .
| 5,924 |
actual results may differ from our estimates . for additional information on our collaboration with genentech , please read note 20 , collaborative and other relationships , to these consolidated financial statements . f- 11 biogen inc. and subsidiaries notes to consolidated financial statements — ( continued ) royalty revenues we receive royalty revenues on sales by our licensees of other products covered under patents that we own . we do not have future performance obligations under these license arrangements . we record these revenues based on estimates of the sales that occurred during the relevant period as a component of other revenues . the relevant period estimates of sales are based on interim data provided by licensees and analysis of historical royalties that have been paid to us , adjusted for any changes in facts and circumstances , as appropriate . differences between actual and estimated royalty revenues are adjusted for in the period in which they become known , typically the following quarter . historically , adjustments have not been material when compared to actual amounts paid by licensees . multiple-element revenue arrangements we may enter into transactions that involve the sale of products and related services under multiple element arrangements . in accounting for these transactions , we assess the elements of story_separator_special_tag the following discussion should be read in conjunction with our consolidated financial statements and related notes beginning on page f-1 of this report . certain totals may not sum due to rounding . executive summary introduction biogen is a global biopharmaceutical company focused on discovering , developing and delivering worldwide innovative therapies for people living with serious neurological and neurodegenerative diseases , including in our core growth areas of ms and neuroimmunology , ad and dementia , movement disorders and neuromuscular disorders , including sma and als . we also plan to invest in emerging growth areas such as pain , ophthalmology , neuropsychiatry and acute neurology . in addition , we are employing innovative technologies to discover potential treatments for rare and genetic disorders , including new ways of treating diseases through gene therapy in the previously mentioned areas . we also manufacture and commercialize biosimilars of advanced biologics . our marketed products include tecfidera , avonex , plegridy , tysabri , zinbryta and fampyra for the treatment of ms , spinraza for the treatment of sma and fumaderm for the treatment of severe plaque psoriasis . we also have certain business and financial rights with respect to rituxan for the treatment of non-hodgkin 's lymphoma , cll and other conditions , gazyva for the treatment of cll and follicular lymphoma , ocrevus for the treatment of ppms and rms , and other potential anti-cd20 therapies under a collaboration agreement with genentech . our current revenues depend upon continued sales of our principal products and , unless we develop , acquire rights to and or commercialize new products and technologies , we may be substantially dependent on sales from our principal products for many years . in the longer term , our revenue growth will be dependent upon the successful clinical development , regulatory approval and launch of new commercial products as well as additional indications for our existing products , our ability to obtain and maintain patents and other rights related to our marketed products , assets originating from our research and development efforts and or successful execution of external business development opportunities . our innovative drug development and commercialization activities are complemented by our biosimilar therapies , which expand access to medicines and reduce the cost burden for healthcare systems . we are leveraging our manufacturing capabilities and know-how to develop , manufacture and market biosimilars through samsung bioepis , our joint venture with samsung biologics . under our commercial agreement , we market and sell benepali , an etanercept biosimilar referencing enbrel , and flixabi , an infliximab biosimilar referencing remicade , in the e.u . 2017 corporate strategy in july 2017 we announced an updated strategic framework to optimize the value of our ms business while investing for the future across our core growth areas of ms and neuroimmunology , ad and dementia , movement disorders , and neuromuscular diseases , including sma and als . we also plan to invest in emerging growth areas such as pain , ophthalmology , neuropsychiatry , and acute neurology . we expect the continued performance of our commercial assets and the expiration of the contingent payments related to tecfidera , discussed further in the “ contractual obligations and off-balance sheet arrangements ” section of this report , to enable us to invest in and build an industry leading neuroscience pipeline . we view investment in growth as our top priority , but also recognize the value of opportunistically returning excess capital to shareholders through share repurchases . in order to deliver positive results in the near term while investing in the next stages of our growth , we will focus on the following strategic priorities : maximizing the resilience of our ms core business ; accelerating efforts in sma as a significant new growth opportunity ; developing and expanding our neuroscience portfolio ; focusing our capital allocation efforts to drive investment for future growth ; and creating a leaner and simpler operating model to streamline our operations and reallocate resources towards prioritized research and development and commercial value creation opportunities . in october 2017 , in connection with creating a leaner and simpler operating model , we approved a corporate restructuring program intended to streamline our operations and reallocate resources . we expect to make total non-recurring operating and 53 capital expenditures of up to $ 170.0 million , primarily in 2018 , and our goal is to redirect resources of up to $ 400.0 million annually by 2020 to prioritized research and development and other value creation opportunities . tax reform the 2017 tax act has resulted in significant changes to the u.s. corporate income tax system . story_separator_special_tag sales of our products are dependent , in large part , on the availability and extent of coverage , pricing and reimbursement from government health administration authorities , private health insurers and other organizations . drug prices are under significant scrutiny in the markets in which our products are prescribed . drug pricing and other health care costs continue to be subject to intense political and societal pressures on a global basis . in addition , our sales and operations are subject to the risks of doing business internationally . for example , the effects of the implementation of the u.k. 's decision to voluntarily depart from the e.u. , known as brexit , remain unclear ; compliance with any resulting regulatory mandates may prove challenging and the macroeconomic impact on our sales and consolidated results of operations from these developments remains unknown . for additional information on our competition and pricing risks that could negatively impact our product sales , please read item 1a . risk factors and item 7a . quantitative and qualitative disclosures about market risk included in this report . 56 results of operations revenues revenues are summarized as follows : replace_table_token_7_th product revenues product revenues are summarized as follows : replace_table_token_8_th * interferon includes avonex and plegridy . * * percentage not meaningful . 57 multiple sclerosis ( ms ) tecfidera for 2017 compared to 2016 , the increase in u.s. tecfidera revenues was primarily due to price increases , partially offset by higher discounts and allowances and a decrease in unit sales volume of 3 % . for 2016 compared to 2015 , the increase in u.s. tecfidera revenues was primarily due to price increases , partially offset by higher discounts and allowances and a decrease in unit sales volume of 1 % . for 2017 compared to 2016 , the increase in rest of world tecfidera revenues was primarily due to increases in unit sales volume of 19 % primarily in the e.u. , partially offset by pricing reductions in certain european countries . for 2016 compared to 2015 , the increase in rest of world tecfidera revenues was primarily due to increases in unit sales volume of 32 % in existing markets and new markets where we continue to launch the product and expand our presence around the world . these increases were partially offset by pricing reductions in certain european countries . rest of world tecfidera revenues for 2016 , compared to 2015 , were also negatively impacted by a $ 50.2 million decrease in hedge gains recognized under our foreign currency hedging program in the comparative period . we anticipate a modest increase in tecfidera demand on a global basis in 2018 , compared to 2017 , with expected volume growth in our international markets partially offset by declines in the u.s. , due to increased competition from additional treatments for ms , including ocrevus . interferon avonex and plegridy for 2017 compared to 2016 , the decrease in u.s. interferon revenues was primarily due to an overall decrease in interferon unit sales volumes of 12 % , which was primarily attributable to patients transitioning to other ms therapies , partially offset by price increases . for 2016 compared to 2015 , the decrease in u.s. interferon revenues was primarily due to an overall decrease in interferon unit sales volume of 10 % , which was attributable to a decrease in avonex unit sales volume primarily due to patients transitioning to other oral ms therapies , as well as higher discounts and allowances . these decreases were partially offset by price increases . for 2017 compared to 2016 , the decrease in rest of world interferon revenues was primarily due to an overall decrease in avonex unit sales volume of 14 % primarily due to patients transitioning to other ms therapies in the e.u . for 2016 compared to 2015 , the decrease in rest of world interferon revenues was primarily due to pricing reductions in certain european countries and an overall decrease in avonex unit sales volume of 10 % due primarily to patients transitioning to other oral ms therapies , including tecfidera . rest of world interferon revenues for 2016 , compared to 2015 , were also negatively impacted by a $ 66.1 million decrease in hedge gains recognized under our hedging program in the comparative period . 58 we expect that overall interferon revenues will continue to decline compared to prior year periods as a result of increasing competition from our other products as well as other treatments for ms , including biosimilars . avonex for 2017 , 2016 and 2015 , u.s. avonex revenues totaled $ 1,593.6 million , $ 1,675.3 million and $ 1,790.2 million , respectively . for 2017 , 2016 and 2015 rest of world avonex revenues totaled $ 557.9 million , $ 638.2 million and $ 840.0 million , respectively . plegridy for 2017 , 2016 and 2015 , u.s. plegridy revenues totaled $ 295.5 million , $ 305.0 million and $ 227.1 million , respectively . for 2017 , 2016 and 2015 , rest of world plegridy revenues totaled $ 198.8 million , $ 176.7 million and $ 111.4 million , respectively . tysabri for 2017 compared to 2016 , the decrease in u.s. tysabri revenues was primarily due to higher discounts and allowances and a decrease in unit sales volume of 4 % , partially offset by price increases . for 2016 compared to 2015 , the increase in u.s. tysabri revenues was primarily due to an increase in unit sales volume of 4 % and increases in price , partially offset by higher discounts and allowances .
| financial highlights diluted earnings per share attributable to biogen inc. were $ 11.92 for 2017 , representing a decrease of 29.6 % versus the same period in 2016 . as described below under “ results of operations , ” our income from operations for the year ended december 31 , 2017 reflects the following : total revenues were $ 12,273.9 million for 2017 , representing an increase of 7.2 % over the same period in 2016 . product revenues , net totaled $ 10,354.7 million for 2017 , representing an increase of 5.5 % over the same period in 2016 . this increase was primarily driven by revenues from spinraza , tecfidera and benepali , partially offset by the elimination of worldwide alprolix and eloctate revenues resulting from the spin-off of our hemophilia business on february 1 , 2017 and a net decrease in total interferon sales . 54 revenues from anti-cd20 therapeutic programs totaled $ 1,559.2 million for 2017 , representing an increase of 18.6 % over the same period in 2016 . this increase was primarily driven by royalty revenues on sales of ocrevus and biogen 's share of pre-tax profits on rituxan . other revenues totaled $ 360.0 million for 2017 , representing an increase of 13.8 % from the same period in 2016 . this increase was primarily driven by an increase in other royalty and corporate revenues . total cost and expenses totaled $ 6,929.7 million for 2017 , representing an increase of 10.0 % , compared to the same period in 2016 .
| 5,925 |
general the following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying audited consolidated financial statements , information about our business practices , significant accounting policies , risk factors , and the transactions that underlie our financial results , which are included in various parts of this filing . our website address is www.callon.com . all of our filings with the sec are available free of charge through our website as soon as reasonably practicable after we file them with , or furnish them to , the sec . information on our website does not form part of this 2019 annual report on form 10-k. we are an independent oil and natural gas company incorporated in the state of delaware in 1994 , but our roots go back nearly 70 years to our company 's establishment in 1950. we are focused on the acquisition , exploration and development of high-quality assets in the leading oil plays of south and west texas . our activities are primarily focused on horizontal development in the midland and delaware basins , both of which are part of the larger permian basis in west texas . in 2019 , though our acquisition of carrizo , we doubled our core acreage position in the delaware basin and entered the eagle ford shale . our operating culture is centered on responsible development of hydrocarbon resources , safety and the environment , which we believe strengthens our operational performance . our drilling activity is predominantly focused on the horizontal development of several prospective intervals in the permian basin , including multiple levels of the wolfcamp formation and the lower spraberry shales , and more recently as a result of the carrizo acquisition , the eagle ford shale . we have assembled a multi-year inventory of potential horizontal well locations and intend to add to this inventory through delineation drilling of emerging zones on our existing acreage and acquisition of additional locations through working interest acquisitions , leasing programs , acreage purchases , joint ventures and asset swaps . overview significant accomplishments in 2019 on december 20 , 2019 , we completed the carrizo acquisition which increased our portfolio to : ( i ) over 116,000 net acres in the permian basin , which doubled our footprint in the southern delaware basin and ( ii ) expanded our portfolio to include over 76,000 net acres in the mature , high-margin , free cash flow generating eagle ford shale . in connection with the carrizo acquisition , we entered into the credit facility , which has a maximum credit amount of $ 5.0 billion . as of december 31 , 2019 , the borrowing base under the credit facility was $ 2.5 billion , with an elected commitment amount of $ 2.0 billion . during 2019 , we completed divestitures of non-core assets for aggregate net proceeds of $ 294.4 million . in addition , we could receive cash for settlements of our contingent consideration arrangement of up to $ 60.0 million if crude oil prices exceed specified thresholds for each of the years of 2019 through 2021. our total production in 2019 increased by 26 % to 15.1 mmboe ( 77 % oil ) as compared to 2018 . on july 18 , 2019 , we redeemed all of the outstanding preferred stock for $ 73.0 million . for the year ended december 31 , 2019 , we drilled 63 gross ( 55.7 net ) horizontal wells , completed 55 gross ( 47.1 net ) horizontal wells and had , as of december 31 , 2019 , 64 gross ( 57.7 net ) horizontal wells awaiting completion . estimated proved reserves as of december 31 , 2019 were 540.0 mmboe ( 64 % oil ) , with 43 % classified as proved developed . reserves growth as of december 31 , 2019 , our estimated proved reserves increased 126 % to 540.0 mmboe compared to 238.5 mmboe of estimated proved reserves at year-end 2018 . our significant growth in proved reserves was primarily attributable to the carrizo acquisition , along with our horizontal development efforts . our estimated proved reserves at year-end 2019 and 2018 were 64 % and 76 % oil , respectively . 43 story_separator_special_tag percentage of revenues from products sold at fixed rates established by federal , state or local taxing authorities . in the counties where our production is located , we are also subject to ad valorem taxes , which are generally based on the taxing jurisdictions ' valuation of our oil and gas properties . we benefit from tax credits and exemptions in our various taxing jurisdictions where available . for the year ended december 31 , 2019 , production taxes increased 19 % to $ 42.7 million compared to $ 35.8 million for the same period in 2018 , due to an increase in severance taxes based on higher production volumes as well as an increase in ad valorem taxes due to a higher valuation of our oil and gas properties by the taxing jurisdictions and previous acquisitions . on a per boe basis , production taxes for the year ended december 31 , 2019 decreased by 5 % compared to the same period of 2018 . also , production taxes as a percentage of total revenues for the year ended december 31 , 2019 increased to 6.4 % compared to 6.1 % for the same period of 2018 , due to higher ad valorem taxes as a result of higher valuations of our oil and gas properties during 2019 . depreciation , depletion and amortization ( “ dd & a ” ) . under the full cost accounting method , we capitalize costs within a cost center and then systematically amortize those costs on an equivalent unit-of-production method based on production and estimated proved gas reserve quantities . depreciation of other property and equipment is computed using the straight line method over their estimated useful lives , which range from three to twenty years . story_separator_special_tag as a result of the redemption of our preferred stock mentioned above , we recognized an $ 8.3 million loss due to the excess of the $ 73.0 million redemption price over the $ 64.7 million redemption date carrying value . see “ note 11 – stockholders ' equity ” of the notes to our consolidated financial statements for additional information . 47 liquidity and capital resources our primary uses of capital have historically been for the acquisition , development , and exploration of oil and natural gas properties . our capital program could vary depending upon factors , including , but not limited to , the availability of drilling rigs and completion crews , the cost of completion services , acquisitions and divestitures of oil and gas properties , land and industry partner issues , our available cash flow and financing , success of drilling programs , weather delays , commodity prices , market conditions , the acquisition of leases with drilling commitments and other factors . historically , our primary sources of capital have been cash flows from operations , borrowings under our revolving credit facility , proceeds from the issuance of debt securities and public equity offerings , and non-core asset dispositions . as we pursue reserves and production growth , we regularly consider which resources , including debt and equity financings , are available to meet our future financial obligations , planned capital expenditures and liquidity requirements . overview of cash flow activities . for the year ended december 31 , 2019 , cash and cash equivalents decreased $ 2.7 million to $ 13.3 million compared to $ 16.1 million at december 31 , 2018 . replace_table_token_19_th operating activities . net cash provided by operating activities was $ 476.3 million and $ 467.7 million for the years ended december 31 , 2019 and 2018 , respectively . the change in operating activities was predominantly attributable to the following : an increase in revenue due to higher production volumes , offset by a decrease in realized pricing ; an offsetting increase in operating expenses as a result of higher production volumes ; an offsetting increase in cash g & a expense due to increase personnel costs , and ; changes related to timing of working capital payments and receipts . production , realized prices , and operating expenses are discussed below in results of operations . see “ note 8 – derivative instruments and hedging activities ” and “ note 9 – fair value measurements ” of the notes to our consolidated financial statements for a reconciliation of the components of the company 's derivative contracts and disclosures related to derivative instruments including their composition and valuation . investing activities . net cash used in investing activities was $ 388.4 million and $ 1,324.1 million for the years ended december 31 , 2019 and 2018 , respectively . the change in investing activities was primarily attributable to the following : a $ 285.4 million increase in proceeds received from the sale of non-core assets as compared to the year ended december 31 , 2018. a $ 676.5 million decrease in acquisitions . a $ 29.4 million increase in capital expenditures due to increased activity from our 2019 development program , focused on multi-well pads , as well as additional investments in facilities and infrastructure . our investing activities , on a cash basis , include the following for the periods indicated : replace_table_token_20_th ( 1 ) includes activity from the carrizo acquisition subsequent to the december 20 , 2019 closing date . 48 on an accrual basis , which is the methodology used for establishing our annual capital budget , operational expenditures for the year ended december 31 , 2019 were $ 506.1 million . inclusive of seismic , leasehold and other , capitalized general and administrative , and capitalized interest costs , total capital expenditures for the year ended december 31 , 2019 were $ 629.7 million . general and administrative expenses and capitalized interest are discussed below in results of operations . see “ note 4 – acquisitions and divestitures ” and “ note 17 – commitments and contingencies ” of the notes to our consolidated financial statements for additional information on significant acquisitions and drilling rig leases . financing activities . we finance a portion of our capital expenditures , acquisitions and working capital requirements with borrowings under our credit facility , term debt and equity offerings . for the year ended december 31 , 2019 , net cash used in financing activities was $ 90.6 million compared to net cash provided by financing activities of $ 844.5 million during the same period of 2018 . the change in net cash provided by ( used in ) financing activities was primarily attributable to the following : repayment of carrizo 's credit facility and funded the redemption of preferred stock upon closing the carrizo acquisition . redemption of preferred stock for approximately $ 73.0 million in 2019. completed an underwritten public offering of 25.3 million shares of common stock for total estimated net proceeds of approximately $ 288.0 million in 2018. issuance of senior notes due 2026 , as defined below , for $ 394.0 million in net proceeds in 2018 in conjunction with the delaware asset acquisition . net cash provided by ( used in ) financing activities includes the following for the periods indicated : replace_table_token_21_th see “ note 7 – borrowings ” of the notes to our consolidated financial statements for additional information about the company 's debt . see “ note 11 – stockholders ' equity ” of the notes to our consolidated financial statements for additional information about the company 's equity offerings and the redemption of our preferred stock . senior secured credit facility . upon consummation of the merger on december 20 , 2019 , the company terminated the sixth amended and restated credit agreement to the credit facility ( the “ prior credit facility ” ) and entered into the credit agreement with a syndicate of lenders ( the “ credit facility ” ) .
| results of operations the following table sets forth certain operating information with respect to the company 's oil and natural gas operations for the periods indicated : replace_table_token_13_th ( 1 ) includes activity from the carrizo acquisition subsequent to the december 20 , 2019 closing date . ( 2 ) the production associated with reserves acquired in the carrizo acquisition are presented on a three-stream basis and include ngls , whereas , all other reserve volumes are on a two-stream basis . ( 3 ) excludes gathering and treating expense . ( 4 ) reflects calendar average daily spot market prices . 44 revenues the following table is intended to reconcile the change in oil , natural gas , ngls , and total revenue for the period presented by reflecting the effect of changes in volume and in the underlying commodity prices . replace_table_token_14_th ( 1 ) includes activity from the carrizo acquisition subsequent to the december 20 , 2019 closing date . ( 2 ) the revenues associated with production from reserves acquired in the carrizo acquisition are presented on a three-stream basis and include ngls , whereas , all other revenue is presented on a two-stream basis . commodity prices the prices for oil , natural gas , and ngls remain extremely volatile and sometimes experience large fluctuations as a result of relatively small changes in supply , weather conditions , economic conditions and actions by opec and other countries and government actions . prices of oil , natural gas , and ngls will affect the following aspects of our business : our revenues , cash flows and earnings ; the amount of oil and natural gas that we are economically able to produce ; our ability to attract capital to finance our operations and cost of the capital ; the amount we are allowed to borrow under the credit facility ; and the value of our oil and natural gas properties .
| 5,926 |
effective january 1 , 2018 , landen fredrick was promoted from senior vice president of global operations to chief global sales officer story_separator_special_tag the following discussion is intended to assist in the understanding of our consolidated financial position and our results of operations for each of the two years ended december 31 , 2019 and 2018 . this discussion should be read in conjunction with “ item 15 . – consolidated financial statements beginning on page f-1 of this report and with other financial information included elsewhere in this report . unless stated otherwise , all financial information presented below , throughout this report , and in the consolidated financial statements and related notes includes mannatech and all of our subsidiaries on a consolidated basis . refer to the non-gaap financial measure section herein for a description of how constant dollar ( “ constant dollar ” ) growth rate ( a non-gaap financial metric ) is determined . company overview mannatech is a global wellness solution provider , which was incorporated and began operations in november 1993. we develop and sell innovative , high quality , proprietary nutritional supplements , topical and skin care and anti-aging products , and weight-management products that target optimal health and wellness . we currently sell our products in three regions : ( i ) the americas ( the united states , canada , colombia and mexico ) ; ( ii ) europe/the middle east/africa ( “ emea ” ) ( austria , the czech republic , denmark , estonia , finland , germany , the republic of ireland , namibia , the netherlands , norway , south africa , spain , sweden and the united kingdom ) ; and ( iii ) asia/pacific ( australia , japan , new zealand , the republic of korea , singapore , taiwan , hong kong , and china ) . we conduct our business as a single reporting segment and primarily sell our products through a network of approximately 169,000 active associates and preferred customer positions held by individuals that had purchased our products and or packs or paid associate fees during the last 12 months , who we refer to as current associates and preferred customers . new pack sales and the receipt of new associate fees in connection with new positions in our network are leading indicators for the long-term success of our business . new associate or preferred customer positions are created in our network when associate fees are paid or packs and products are purchased for the first time under a new account . we operate as a seller of nutritional supplements , topical and skin care and anti-aging products , and weight-management products through our network marketing distribution channels operating in 25 countries and cross-border e-commerce retail in china . we review and analyze net sales by geographical location and by packs and products on a consolidated basis . each of our subsidiaries sells similar products and exhibits similar economic characteristics , such as selling prices and gross margins . because we sell our products through network marketing distribution channels , the opportunities and challenges that affect us most are : recruitment of new and retention of current associates and preferred customers that occupy sales or purchasing positions in our network ; entry into new markets and growth of existing markets ; niche market development ; new product introduction ; and investment in our infrastructure . our subsidiary in china , meitai , is currently operating under a cross-border e-commerce model . meitai can not legally conduct a direct selling business in china unless it acquires a direct selling license in china . 41 current economic conditions and recent developments overall net sales decreased $ 15.8 million , or 9.1 % , for 2019 , as compared to 2018 . our 2019 net sales declined $ 10.6 million , or 6.1 % , on a constant dollar basis ( see non-gaap financial measures , below ) , and unfavorable foreign exchange caused a $ 5.3 million decrease in gaap net sales as compared to 2018 . in december 2019 , a novel virus began in china with no material impact to our 2019 sales . please see note 16 subsequent events for additional information regarding recent developments of this virus . our operations outside of the americas accounted for approximately 69.6 % and 66.2 % of our consolidated net sales for 2019 and 2018 , respectively . the net sales comparisons for the year ended december 31 , 2019 and december 31 , 2018 were primarily affected by decreases in the overall number of active associates and preferred customers . associate fees are collected in all markets except korea and mexico , where packs are still sold . associate fees are paid annually in order for the associate to be entitled to earn commissions , benefits and incentives . the number of packs sold to , and associate fees paid by , new and continuing independent associates and preferred customers decreased 0.7 % during 2019 to approximately 96,000 as compared to 96,700 during 2018 . in addition , average pack value decreased by $ 2 , to $ 24 for the year ended december 31 , 2019 , as compared to $ 26 for the same period in 2018 . the number of product orders decreased 5.8 % during the year ended december 31 , 2019 to approximately 841,700 as compared to 893,500 during the same period in 2018 . the average product order value decreased 3.6 % during the year ended december 31 , 2019 to $ 190 , as compared to $ 197 for the same period in 2018 . revenue deferred through the loyalty program decreased 15.1 % during the year ended december 31 , 2019 as compared to the same period in 2018 . excluding the effects due to the translation of foreign currencies into u.s. dollars , net sales would have decreased $ 10.6 million for 2019 . these adjusted net sales expressed in constant dollars are a non-gaap financial measure discussed in further detail below . story_separator_special_tag this decrease was related to incentives in the americas and asia/pacific . selling and administrative expenses selling and administrative expenses include a combination of both fixed and variable expenses . these expenses consist of compensation and benefits for employees , temporary and contract labor and marketing-related expenses . for the year ended december 31 , 2019 , overall selling and administrative expenses decreased by $ 3.3 million , or 9.8 % , to $ 30.8 million , as compared to $ 34.2 million for the same period in 2018 . the decrease in selling and administrative expenses consisted of a $ 2.1 million decrease in marketing costs , of which $ 1.1 million was a vat refund that was originally recorded in marketing costs , a $ 0.6 million decrease in distribution costs , a $ 0.4 million decrease in stock based compensation expense and a $ 0.2 million decrease in contract labor costs . other operating costs other operating costs include accounting/legal/consulting fees , travel and entertainment expenses associated with corporate sponsored events , credit card processing fees , off-site storage fees , utilities , bad debt , and other miscellaneous operating expenses . for the year ended december 31 , 2019 , other operating costs decreased by $ 6.9 million , or 23.3 % , to $ 22.6 million , as compared to $ 29.4 million for the same period in 2018 . for the year ended december 31 , 2019 , other operating costs , as a percentage of net sales , were 14.3 % , as compared to 17.0 % for the same period in 2018 . the decrease was due to a $ 2.2 million decrease in travel and entertainment costs associated with management 's decision to conduct mannafest as a regional event instead of an international event , a $ 2.2 million decrease in office expenses due to the corporate office relocation during 2018 , a $ 1.4 million decrease in legal and consulting fees , a $ 0.5 million decrease in bad debt expense , a $ 0.4 million decrease in credit card fees and a $ 0.1 million decrease in charitable contributions . depreciation and amortization expense for both the years ended december 31 , 2019 and 2018 , depreciation and amortization expense was $ 2.1 million . other income ( expense ) , net primarily due to foreign exchange gains , other ( expense ) income was $ ( 0.7 ) million and $ 0.3 million for the years ending december 31 , 2019 and 2018 , respectively . 47 provision for income taxes provision for income taxes include current and deferred income taxes for both our domestic and foreign operations . our statutory income tax rates by jurisdiction are as follows , for the years ended december 31 : replace_table_token_13_th ( 1 ) on august 1 , 2016 , the company established a legal entity in russia called mannatech rus ltd. , but currently does not operate in russia . ( 2 ) on july 1 , 2019 , the company suspended operations in switzerland , but maintains the legal entity . ( 3 ) on march 21 , 2014 , the company suspended operations in the ukraine , but maintains the legal entity , mannatech ukraine llc . foreign tax income from our international operations is subject to taxation in the countries in which we operate . although we may receive foreign income tax credits that would reduce the total amount of income taxes owed in the united states , we may not be able to fully utilize our foreign income tax credits in the united states . u.s. tax on december 22 , 2017 , president trump signed into law h.r . 1/public law no . 115-97 , “ an act to provide for reconciliation pursuant to titles ii and v of the concurrent resolution on the budget for fiscal year 2018. ” pursuant to asc 740-10-25-47 , the effects of the new federal legislation are recognized upon enactment , which is the date the president signs a bill into law . on december 22 , 2017 , the sec staff issued staff accounting bulletin ( “ sab ” ) 118 , income tax accounting implications of the tax cuts and jobs act ( “ tcja ” ) ( “ sab 118 ” ) , which provides guidance on accounting for the impact of the act , in effect allowing an entity to use a methodology similar to the measurement period in a business combination . pursuant to the disclosure provisions of sab 118 , as of september 30 , 2018 , the company had completed its accounting for the tax effects of the act . 48 in financial accounting standards board ( “ fasb ” ) staff q & a topic 740 , no . 5 , accounting for global intangible low-taxed income , the fasb staff noted that asc 740 , income taxes ( “ topic 740 ” ) , was not clear with respect to the appropriate accounting for global intangible low-taxed income ( `` gilti '' ) , and accordingly , an entity may either : ( 1 ) elect to treat taxes on gilti as period costs similar to special deductions , or ( 2 ) recognize deferred tax assets and liabilities when basis differences exist that are expected to affect the amount of gilti inclusion upon reversal ( the deferred method ) . the company will account for gilti in the year the tax is incurred as a period cost . we use the recognition and measurement provisions of topic 740 to account for income taxes . the provisions of topic 740 require a company to record a valuation allowance when the “ more likely than not ” criterion for realizing net deferred tax assets can not be met . furthermore , the weight given to the potential effect of such evidence should be commensurate with the extent to which it can be objectively verified .
| results of operations year ended december 31 , 2019 compared to year ended december 31 , 2018 the tables below summarize our consolidated operating results in dollars and as a percentage of net sales for the years ended december 31 , 2019 and 2018 ( in thousands , except percentages ) . replace_table_token_7_th 43 non-gaap financial measures to supplement our financial results presented in accordance with generally accepted accounting principles in the united states ( `` gaap '' ) , we disclose operating results that have been adjusted to exclude the impact of changes due to the translation of foreign currencies into u.s. dollars , including changes in : net sales , gross profit , and income from operations . we refer to these adjusted financial measures as constant dollar items , which are non-gaap financial measures . we believe these measures provide investors an additional perspective on trends . to exclude the impact of changes due to the translation of foreign currencies into u.s. dollars , we calculate current year results and prior year results at a constant exchange rate , which is the prior year 's rate . currency impact is determined as the difference between actual growth rates and constant currency growth rates . replace_table_token_8_th net sales in dollars and as a percentage of consolidated net sales consolidated net sales by region for the years ended december 31 , 2019 and 2018 were as follows ( in millions , except percentages ) : replace_table_token_9_th net sales overall net sales decreased by $ 15.8 million , or 9.1 % , for 2019 , as compared to 2018 . for the year ended december 31 , 2019 , our operations outside of the americas accounted for approximately 69.6 % of our consolidated net sales , whereas in the same period in 2018 , our operations outside of the americas accounted for approximately 66.2 % of our consolidated net sales . sales for the americas decreased by $ 10.7
| 5,927 |
in addition , the audit effort involved the use of professionals with specialized skill and knowledge . addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements . these procedures included testing the effectiveness of controls relating to management 's quantitative goodwill impairment assessment , including controls over the determination of the fair value of the story_separator_special_tag basis of presentation we became an independent publicly-traded company in january 2017 following our separation from varian and subsequent distribution of shares of our common stock to varian stockholders . the following discussion and analysis contains forward-looking statements relating to future events or our future financial or operating performance that involve risks and uncertainties , as set forth above under `` forward-looking statements . '' our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors described in this annual report on form 10-k. our business varex imaging corporation is a leading innovator , designer and manufacturer of x-ray tubes , digital detectors , linear accelerators and other image software processing solutions , which are mission critical components of a variety of x-ray based diagnostic imaging equipment . these products are used in medical imaging as well as in industrial and security imaging applications such as general x-ray , computed tomography ( “ ct ” ) , c-arms , angiography , fluoroscopy , mammography , and dental . in addition , our components are also used in security and quality inspection systems , as well as for analysis and measurement applications in industrial manufacturing applications . global original equipment manufacturers ( “ oems ” ) incorporate our x-ray imaging components in their systems to detect , diagnose , protect and inspect . as of october 2 , 2020 , we had approximately 2,000 full-time equivalent employees , located at manufacturing and service center sites in north america , europe , and asia . our products are sold in three geographic regions : the americas , emea , and apac . the americas includes north america ( primarily the united states ) and latin america . emea includes europe , russia , the middle east , india and africa . apac includes asia and australia . revenues by region are based on the known final destination of products sold . our success depends , among other things , on our ability to anticipate and respond to changes in our markets , the direction of technological innovation and the demands of our customers . we continue to invest in research and development and employ approximately 500 individuals in product development . combining this focus on innovation and product performance with strong long-term customer relationships allows us to collaborate with our customers to bring industry-leading products to the x-ray imaging market . we continue to work to improve the life and quality of our imaging components and leverage our scale as one of the largest independent x-ray imaging component suppliers to provide cost-effective solutions for our customers . impact of covid-19 the unprecedented nature of the covid-19 pandemic and its impact on the global economy has created a disruption to our business that includes increased uncertainty in demand for certain products for medical and industrial applications , as well as increased variability in our supply chain and manufacturing productivity . the economic downturn triggered by covid-19 has led to significantly lower demand from our customers and delays in equipment installations . in conjunction with this reduced forecast and uncertainty beyond the forecast horizon , we evaluated our product offering and decided to discontinue certain low margin , low demand products . as a result , during the third quarter of fiscal year 2020 we took an approximately $ 15.8 million pre-tax non-cash charge for the write-down of associated inventory and restructuring activity , impaired $ 2.8 million of intangible assets and wrote off a $ 2.7 million cost investment in a privately-held company . the covid-19 pandemic has had a significant effect on hospitals , clinics and outpatient imaging centers as they have encountered declines in surgeries and other non-emergency procedures . in some cases , certain healthcare facilities have been closed and non-emergency procedures have been deferred . as a result , many hospitals , clinics and outpatient imaging centers have reduced their capital purchases of imaging equipment from oems which has led to lower demand for x-ray imaging components . in addition , reduced usage of certain x-ray equipment has resulted in less demand for replacement components that wear-out with use . additionally , equipment installations were delayed , due to reduced access to healthcare institutions . partially offsetting this has been increased demand for ct and certain radiographic diagnostic imaging equipment used to screen for or assist in the treatment of respiratory diseases ( such as covid-19 ) . while healthcare systems and economies around the world have begun to reopen , customer demand has not returned to pre-pandemic levels , and the adverse effects of covid-19 on our financial statements and results of operations have been significant . while we believe that the fundamentals driving long-term demand in both our medical and industrial segments remain intact , we believe that in the near-term , reduced demand in our industrial segment and for certain higher end medical products will continue to 42 depress our results of operations . while our manufacturing sites are currently up and running , covid-19 and associated economic disruptions have had an adverse impact on our manufacturing capacity , supply chains and distribution systems , including as a result of impacts associated with preventive and precautionary measures that we , other businesses and governments are taking . supply chain logistics have also become more challenging and while we have had success in localizing our supply chain through our “ local-for-local ” initiative , supply chain logistics could remain challenging . the actions taken to combat covid-19 have had , and we believe will continue to have , a negative impact on our operating results , cash flows and financial condition . story_separator_special_tag once our components are designed into our customer 's equipment , our customers will typically continue to use us to supply any replacement components and for service and support for that equipment . some of our products are also included in product registrations for our customer 's equipment that require regulatory approval to change . in addition to sales directly to oem customers , we also sell our products to independent service companies and distributors and directly to end-users for replacement purposes . we are one of the largest global manufacturers of x-ray components and each year we produce over 27,000 x-ray tubes and 20,000 x-ray detectors . we estimate that our worldwide installed base of products is over 150,000 x-ray tubes , 150,000 x-ray detectors , 300,000 connect and control components and 15,000 software instances . replacement and service of our existing installed base makes up a significant portion of our revenue . many of our components need to be replaced regularly . for example , ct x-ray tubes generally need to be replaced every 2 to 4 years . in china , the replacement cycle for ct x-ray tubes can be as frequent as every 6 to 12 months due to high utilization of imaging equipment . other products such as x-ray detectors have a useful life of as much as 7 years , but can require service and repairs during their useful life . in addition , our detector customers often elect to upgrade products to newer technology before the end of a current product 's useful life . x-ray imaging software is a relatively small part of our business with room to grow and includes consistent maintenance revenue on software licenses . in china , the government is broadening the availability of healthcare services . as a result , the number of diagnostic x-ray imaging systems , including ct imaging systems , has grown significantly . we are developing ct x-ray tubes and related subsystems for chinese oems as they introduce new systems in china . we presently have multi-year pricing agreements for ct tubes with 8 medical x-ray imaging oems in china . over the long-term , our objective is to become the partner of choice both for oems and in the replacement market as ct systems become more widely adopted throughout the chinese market . in china , despite a covid-19 related slowdown in the beginning of the year , demand for our products has returned , and full year fiscal 2020 results for china exceeded our pre-pandemic expectations . in recent years our growth in china has been impacted by the trade war with the united states . our business has been impacted in two principal ways : ( 1 ) imports of raw materials from china have become more expensive and ( 2 ) importing finished u.s. manufactured products into china has also become more difficult and more expensive . in order to mitigate the impact of tariffs on materials imported from china , we have implemented changes to secure more non-china sources of materials used to manufacture our x-ray imaging products . with respect to imports into china , the additional tariffs imposed by the chinese government have led to a decrease in sales of radiographic detectors manufactured outside of china . to help address these issues , as well as to be closer to our global customer base , we continue to expand manufacturing capabilities at our facilities in china , germany and the philippines and also implemented local sourcing strategies to lower our costs and offer local content . this local-for-local strategy has been well received by both our local customers as well as global oems , and acts as a natural hedge against trade wars and other potential supply chain disruptions . 44 industrial in our industrial segment , we design , develop , manufacture , sell and service x-ray imaging products for use in a number of markets , including security applications for cargo screening at ports and borders and also baggage screening at airports , and nondestructive testing and inspection applications used in a number of other vertical markets . our industrial products include linatron® x-ray linear accelerators , x-ray tubes , digital detectors and high voltage connectors . in addition , we license proprietary image-processing and detection software designed to work with other varex products to provide packaged sub-assembly solutions to our industrial customers . our industrial business benefits from the research and development investment as well as manufacturing economies of scale on the medical side of our business , as we continue to find new applications for our technology . along with more favorable pricing dynamics , this allows us to generally achieve higher gross profit for industrial products relative to our medical business . in addition , our industrial business benefits from our long-term service agreements for our linatron® products . the security market primarily consists of airport security for carry-on baggage , checked baggage and palletized cargo , as well as cargo security for the screening of trucks , trains and cargo containers at ports and borders . the end customers for border protection systems are typically government agencies , many of which are in oil-based economies and war zones where there has been significant year over year variation in buying patterns . non-destructive testing and inspection verticals utilize x-ray imaging to scan items for inspection of manufacturing defects and product integrity in a wide range of industries including the aerospace , automotive , electronics , oil and gas , food packaging , metal castings and 3d printing industries . in addition , new applications for x-ray sources are being developed , such as sterilization of food and its packaging . we provide x-ray sources , digital detectors , high voltage connectors and image processing software to oem customers , system integrators and manufacturers in a variety of these verticals . we believe that the non-destructive testing market represents a significant growth opportunity for our business and we are actively pursuing new potential applications for our products .
| fiscal year our fiscal year is the 52- or 53-week period ending on the friday nearest september 30. fiscal year 2020 was the 53-week period that ended october 2 , 2020 , fiscal year 2019 was the 52-week period that ended september 27 , 2019 , and fiscal year 2018 was the 52-week period ended september 28 , 2018. set forth below is a discussion of our results of operations for fiscal years 2020 , 2019 and 2018. comparison of results of operations for fiscal year 2020 and 2019 our annual report on form 10-k for the fiscal year ended september 27 , 2019 , filed december 20 , 2019 , includes a discussion and analysis of our year-over-year changes , financial condition , and results of operations for the fiscal years ended september 27 , 2019 and september 28 , 2018 in item 7 of part ii therein . revenues , net replace_table_token_3_th medical revenues decreased $ 12.3 million primarily due to decreased sales of x-ray tubes and digital detectors for oncology , dental , mammography and fluoroscopic applications , offset by increase in sales of oem x-ray tubes for ct applications and full year impact of revenues related to the acquisition of direct conversion in april of 2019 . 45 industrial revenues decreased $ 30.0 million due to decreased sales of x-ray tubes for airport security , digital detectors for inspection applications and were partially offset by the full year impact of revenues related to the acquisition of direct conversion in april of 2019. revenues by region replace_table_token_4_th the americas revenues decreased $ 27.6 million primarily due to decreased sales of x-ray tubes , lower sales of digital detectors and computer-aided detection software as a result of the covid-19 pandemic .
| 5,928 |
revenue on january 1 , 2018 , the company adopted asc 606 using the modified retrospective method as applied to customer contracts that were not completed as of the adoption date . as a result , financial information for story_separator_special_tag the following discussion should be read in conjunction with , and is qualified in its entirety by reference to , the consolidated financial statements and related notes appearing elsewhere in this report . overview centrus energy corp. , a delaware corporation ( “ centrus ” or the “ company ” ) , is a trusted supplier of nuclear fuel and services for the nuclear power industry . references to “ centrus ” , the “ company ” , or “ we ” include centrus energy corp. and its wholly owned subsidiaries as well as the predecessor to centrus , unless the context otherwise indicates . centrus operates two business segments : low-enriched uranium ( “ leu ” ) , which supplies various components of nuclear fuel to utilities , and contract services , which provides advanced engineering , design , and manufacturing services to government and private sector customers . our leu segment involves the sale of low-enriched uranium , its components , and natural uranium to utilities operating commercial nuclear power plants . leu is a critical component in the production of nuclear fuel for reactors that produce electricity . we supply leu to both domestic and international utilities for use in nuclear reactors worldwide . we provide leu from multiple sources including our inventory , medium- and long- term supply contracts and spot purchases . as a long-term supplier of leu to our customers , our objective is to provide value through the reliability and diversity of our supply sources . our long-term goal is to resume commercial enrichment production , and we are exploring approaches to that end . our contract services segment utilizes the unique technical expertise , operational experience and specialized facilities that we developed over nearly two decades as part of our uranium enrichment technology program . we are leveraging these capabilities to expand and diversify our business , offering new services to existing and new customers in complementary markets . with the specialized capabilities and workforce at our technology and manufacturing center in oak ridge , tennessee , we are performing technical , engineering and manufacturing services for a range of commercial and government customers and actively working to secure new customers . our experience developing , licensing and manufacturing advanced nuclear fuels and technologies positions us to provide critical design , engineering , manufacturing and other services to a broad range of potential clients , including those involving sensitive or classified technologies . this work includes design , engineering , manufacturing and licensing services support for advanced reactor and fuel fabrication projects . based on our experience at our uranium enrichment facilities , we are also performing decontamination and decommissioning ( “ d & d ” ) work for the u.s. government in oak ridge , tennessee . with several decades of experience in enrichment , we also continue to be a leader in the development of an advanced u.s. uranium enrichment technology , which we believe could play a critical role in supplying fuel for advanced reactors , meeting u.s. national and energy security needs , and achieving our nation 's nonproliferation objectives . to support u.s. energy and national security , we have been performing research and demonstration work on our advanced gas centrifuge uranium enrichment technology through contracts with ut-battelle , llc ( “ ut-battelle ” ) , the management and operating contractor of oak ridge national laboratory ( “ ornl ” ) for the united states department of energy ( “ doe ” ) . 37 on january 7 , 2019 , doe issued a notice of intent to contract with centrus to deploy a cascade of centrifuges to demonstrate the ability to produce high assay , low-enriched uranium ( “ haleu ” ) , suitable for a range of military and civilian applications . while existing reactors currently in operation typically operate on leu enriched so that the uranium-235 isotope concentration is just below 5 % , haleu has a uranium-235 concentration of up to 20 % . haleu is not commercially available today , but may be required in the future for a number of advanced reactor designs currently under development , for doe nonproliferation efforts , or for some advanced fuel designs that may be suitable in the future for existing reactors . there are no guarantees about whether or when government or commercial demand for haleu will materialize , and there are a number of technical , regulatory and economic hurdles that must be overcome for these fuels and reactors to come to the market . additionally , while centrus has begun contract discussions with doe about the proposed demonstration project , there is no assurance that a contract will be executed or that the project will go forward . the nuclear industry in general , and the nuclear fuel industry in particular , is in a period of significant change , which continues to affect the competitive landscape . in the seven years following the 2011 fukushima accident , the published market prices for uranium enrichment declined more than 75 percent . while the monthly price indicators have gradually increased starting in september 2018 , the uranium enrichment segment of the nuclear fuel market remains oversupplied and faces uncertainty about future demand for nuclear power generation . changes in the competitive landscape affect pricing trends , change customer spending patterns , and create uncertainty . to address these changes , we have taken steps to adjust our cost structure and may seek further adjustments to our cost structure and operations and to evaluate opportunities to grow our business organically or through acquisitions and other strategic transactions . story_separator_special_tag the following chart summarizes tradetech 's long-term and spot swu price indicators , the long-term price for natural uranium hexafluoride ( “ uf6 ” ) , as calculated by centrus using indicators published in nuclear market review , and tradetech 's spot price indicator for uf6 : 39 swu and uranium market price indicators * seven-year view two-year monthly view * source : nuclear market review , a tradetech publication , www.uranium.com 40 our contracts with customers are primarily denominated in u.s. dollars , and although revenue has not been directly affected by changes in the foreign exchange rate of the u.s. dollar , we may have a competitive price advantage or disadvantage obtaining new contracts in a competitive bidding process depending upon the weakness or strength of the u.s. dollar . costs of our primary competitors are denominated in other currencies . our contracts with suppliers have historically been denominated in u.s. dollars . in april 2018 , we entered into an agreement with orano cycle ( formerly , areva nc ) ( “ orano ” ) for the long-term supply of swu . we may elect to begin deliveries as early as 2021. purchases will be payable in a combination of u.s dollars and euros and we may be subject to exchange rate risk for the portion of purchases payable in euros . on occasion , we will accept payment in the form of uranium . revenue from the sale of swu under such contracts is recognized at the time leu is delivered and is based on the fair value of the uranium at contract inception , or as the quantity of uranium is finalized , if variable . cost of sales for swu and uranium is based on the amount of swu and uranium sold and delivered during the period and unit inventory costs . unit inventory costs are determined using the average cost method . changes in purchase costs have an effect on inventory costs and cost of sales over current and future periods . cost of sales includes costs for inventory management at off-site licensed locations . cost of sales also includes certain legacy costs related to former employees of the portsmouth and paducah gaseous diffusion plants . contract services our contract services segment reflects our technical , manufacturing , and engineering services offered to public and private sector customers , including the american centrifuge engineering and testing activities we have performed as a contractor for ut-battelle . with our private sector customers , we seek to leverage our domestic enrichment experience , engineering know-how , and precision manufacturing facility to assist customers with a range of engineering , design , and advanced manufacturing projects including the production of fuel for next-generation nuclear reactors and the development of related facilities . government contracting we have a long record as a global leader in advanced technology , manufacturing and engineering . our manufacturing , engineering and testing facilities and our highly-trained workforce are deeply engaged in advancing the next generation of uranium enrichment technology . we are exploring a number of options for returning to domestic production in the future . our government contracts with ut-battelle have provided for engineering and testing work on the american centrifuge technology at our facilities in oak ridge , tennessee . our recently completed contract with ut-battelle was for the period from october 1 , 2017 , through september 30 , 2018 , and generated total revenue of approximately $ 16.0 million upon completion of defined milestones . these contracts have been funded incrementally . funding for the american centrifuge program was provided to ut-battelle by the federal government . our previous contract with ut-battelle was for the period from october 1 , 2016 , through september 30 , 2017 , and generated revenue of approximately $ 25.0 million . although the most recent contract expired september 30 , 2018 , we continue to perform work towards the expected milestones as the parties work toward a successor agreement . however , we have no assurance that a successor agreement will be executed . on september 27 , 2018 , we leveraged our d & d experience and entered into an agreement with doe to d & d the k-1600 facility of doe located at the east tennessee technology park . under the terms of the agreement , pursuant to a work authorization under our lease with doe , we will remove and dispose of government owned materials and equipment in order to render the facility non-contaminated and unclassified . the work to be performed is expected to be completed by september 30 , 2019. the contract is a cost-plus fixed fee contract totaling approximately $ 15 million . the contract is incrementally funded and subject to appropriations by the federal government . 41 in addition , we have entered into other contracts with doe , other agencies and their contractors to provide engineering , design and manufacturing services . american centrifuge expenses that are outside of our work for ut-battelle are included in advanced technology license and decommissioning costs on the consolidated statement of operations , including ongoing costs for work related to the u.s. nuclear regulatory commission ( “ nrc ” ) license and the doe lease for the piketon facility . the lease expires on june 30 , 2019 , absent any mutual agreement between us and doe regarding other possible uses for the piketon facility such as deploying a demonstration cascade for haleu production . centrus commenced the d & d of the piketon demonstration facility in 2016 , and we believe the d & d work required under nrc license requirements has been completed . as of december 31 , 2018 , we have remaining accrued liabilities of $ 1.6 million for lease turnover obligations and $ 3.2 million for termination benefits related to the piketon facility . in addition , we anticipate incurring expenses of approximately $ 6 million in the first half of 2019 to continue to maintain the lease facilities in accordance with the lease .
| results of operations overview declining prices in the enrichment market - which reached a historic low in august - were the biggest driver in our losses for the year . a greater proportion of our sales in 2018 were made under contracts signed since market prices began to fall , both because of the natural evolution of our order book and because of the specific deliveries made during the year , but our cost of sales in 2018 - which is calculated on a rolling average - was still based on legacy prices that predated the fall . while spot market prices have risen more than 25 percent since august , our supply costs are lower starting in 2019 due to the price adjustment in our russian supply agreement as well as other low-cost supply we have secured . centrus anticipates a return to profitability in 2020 as the impact of lower supply costs become more fully reflected in our results . basis of presentation on january 1 , 2018 , we adopted several new accounting standards and certain prior period amounts have been recast to conform with the current presentation . for the adoption of the new revenue standard using the modified retrospective method , results for reporting periods beginning after january 1 , 2018 , are presented under the new guidance , while prior period amounts are not adjusted and continue to be reported in accordance with the previous guidance . refer to note 1 , summary of significant accounting policies , to the consolidated financial statements for further details .
| 5,929 |
we have operated in the transmission and distribution industry since 1891. we are one of the largest contractors servicing the t & d sector of the electric utility industry in the united states and provide t & d services in western canada . our t & d customers include many of the leading companies in the industry . we have operated in the commercial and industrial industry since 1912. we are one of the largest electrical contractors servicing the c & i industry 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 complex projects . we had revenues for the year ended december 31 , 2018 of $ 1.531 billion compared to $ 1.403 billion for the year ended december 31 , 2017. for the year ended december 31 , 2018 , net income attributable to myr group inc. was $ 31.1 million compared to $ 21.2 million for the year ended december 31 , 2017. 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 , 2018 , our t & d revenues were $ 893.1 million , or 58.3 % , of our revenue , compared to $ 879.4 million , or 62.7 % , of our revenue for the year ended december 31 , 2017 and $ 819.0 million , or 71.7 % , of our revenue for the year ended december 31 , 2016. revenues from transmission projects represented 62.6 % , 68.5 % , and 75.8 % of t & d segment revenue for the years ended december 31 , 2018 , 2017 and 2016 , respectively . our t & d segment also provides restoration services in response to hurricanes , ice storms or other storm related events , which typically account for less than 5 % of our annual revenues . 34 measured by revenues in our t & d segment , we provided 40.5 % , 31.4 % and 56.9 % of our t & d services under fixed-price contracts during the years ended december 31 , 2018 , 2017 and 2016 , 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 , 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 . the majority of c & i contracts cover electrical contracting services for airports , hospitals , data centers , hotels , stadiums , convention centers , manufacturing plants , processing facilities , waste-water treatment facilities , mining facilities and transportation control and management systems . for the year ended december 31 , 2018 , our c & i revenues were $ 638.1 million , or 41.7 % , of our revenue , compared to $ 523.9 million , or 37.3 % , of our revenue for the year ended december 31 , 2017 and $ 323.5 million , or 28.3 % , of our revenue for the year ended december 31 , 2016. measured by revenues in our c & i segment , we provided 71.0 % , 63.7 % and 73.4 % of our services under fixed-price contracts for the years ended december 31 , 2018 , 2017 and 2016 , respectively . overview-revenue and gross margins revenue recognition . on january 1 , 2018 , we adopted accounting standards update ( asu ) no . 2014-09 , revenue from contracts with customers ( topic 606 ) using the modified retrospective method for contracts that were not completed as of january 1 , 2018. results for reporting periods beginning after december 31 , 2017 are presented under this new pronouncement , while prior period amounts were not adjusted and continue to be reported under the accounting standard revenue recognition topic 605 , which was in effect for those periods . 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 during which we can perform electrical line service work due to peak electrical demands caused by warmer weather conditions . 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 , including but not limited to , difficult terrain , difficult site conditions and large urban centers where delivery of materials and availability of labor may be impacted and sites which may have been exposed to harsh and hazardous conditions . 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 . 36 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 improving 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 the general 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 . 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 . 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 generation . consequently , we believe we will continue to see significant bidding activity on large transmission projects over the next two years . the timing of multi-year transmission project awards and substantial construction activity is difficult to predict due to regulatory requirements and right-of-way permits needed to commence construction . significant construction on any large , multi-year projects awarded in 2019 will not likely occur until 2020. bidding and construction activity for small to medium-size transmission projects and upgrades remains strong , and we expect this trend to continue , primarily due to reliability and economic drivers . we also believe the need for distribution services will continue to grow . as a result of reduced spending by united states utilities on their distribution systems for several years , we believe there is a need for sustained investment by utilities on their distribution systems to properly maintain or meet reliability requirements . in 2018 , we saw increased bidding activity in some of our electric distribution markets , as economic conditions improved in those areas . we believe that continued recovery in the united states economy , and in the housing market in particular , over the next few years could provide additional stimulus for spending by our customers on their distribution systems . we also believe the increased hurricane activity over the past several years and recent destruction caused by wildfires will cause a push to strengthen utility distribution systems against catastrophic damage . several industry and market trends are also prompting customers in the electric utility industry to seek outsourcing partners rather than performing projects internally . these trends include an aging electric utility workforce , increasing costs and staffing constraints . we believe electric utility employee retirements could increase with further economic recovery , which may result in an increase in outsourcing opportunities . we expect to see an incremental increase in distribution opportunities in the united states in 2019 , and we believe these opportunities will continue to be bid in a competitive market .
| segment results the following table sets forth , for the periods indicated , statements of operations data by segment , segment net sales as a percentage of total net sales and segment operating income as a percentage of segment net sales : replace_table_token_9_th transmission & distribution revenues for our t & d segment for the year ended december 31 , 2018 were $ 893.1 million compared to $ 879.4 million for the year ended december 31 , 2017 , an increase of $ 13.7 million , or 1.6 % . the increase in revenue was primarily due to an increase in distribution revenues partially offset by lower revenue from large transmission projects . 42 revenues from transmission projects represented 62.6 % and 68.5 % of t & d segment revenue for the years ended december 31 , 2018 and 2017 , respectively . additionally , for the year ended december 31 , 2018 , measured by revenue in our t & d segment , we provided 40.5 % of our t & d services under fixed-price contracts , as compared to 31.4 % for the year ended december 31 , 2017. operating income for our t & d segment for the year ended december 31 , 2018 was $ 57.2 million compared to $ 39.6 million for the year ended december 31 , 2017 , an increase of $ 17.6 million , or 44.4 % . the increase in t & d operating income from the prior year was primarily due to improvements in efficiency , fleet utilization and organic expansion results . our prior year operating income was significantly impacted by write-downs on three projects . this improvement from the prior year was partially offset by changes in estimates of gross profit on certain projects . these estimate changes were primarily due to low productivity on three projects , of which two projects incurred significant startup costs with a new customer relationship and the other project suffered from inclement weather .
| 5,930 |
general mge energy is an investor-owned public utility holding company operating through subsidiaries in five business segments : · electric utility operations , conducted through mge , · 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 · all other , which includes corporate operations and services as well as certain construction 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 139,000 customers in dane county , wisconsin , including the city of madison , and purchases and distributes natural gas to approximately 143,000 customers in the wisconsin counties of columbia , crawford , dane , iowa , juneau , monroe , and vernon . our nonregulated energy operations own interests in new 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 partial ownership of a cogeneration project on the uw-madison campus and an undivided 8.33 % ownership interest in two 615 mw coal-fired generating units in oak creek , wisconsin , one of which entered commercial operation on february 2 , 2010 and the other of which entered commercial operation on january 12 , 2011. mge operates the cogeneration project , and a third party operates the units in oak creek . due to the nature of mge 's participation in these facilities , the results of our nonregulated operations are also consolidated into mge 's consolidated financial position and results of operations under applicable accounting standards . 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 shareholders . mge continues to face the challenge of providing its customers with reliable power at competitive prices . mge plans to meet this challenge by investing in more efficient generation projects , including renewable energy sources . in the future , mge will continue to focus on growing earnings while controlling operating and fuel costs . mge will continue to maintain 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 our 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 of electricity and gas , · economic conditions , including current business activity and employment and their impact on customer demand , · regulation and regulatory issues , · energy commodity prices , · equity price risk pertaining to pension related assets , · credit market conditions , including interest rates and our debt credit rating , · environmental laws and regulations , including pending environmental rule changes , and other factors listed in `` item 1a . risk factors . '' for the year ended december 31 , 2010 , mge energy 's earnings were $ 57.7 million or $ 2.50 per share compared to $ 51.0 million or $ 2.21 per share for the same period in the prior year . mge 's earnings for the year ended december 31 , 2010 , were $ 37.7 million compared to $ 35.9 million for the same period in the prior year . 26 mge energy 's income was derived from our business segments as follows : replace_table_token_12_th our net income during 2010 compared to 2009 primarily reflects the effects of the following factors : · a 10.0 % increase in retail electric revenues reflecting increased customer demand primarily as a result of warmer-than-normal summer weather , particularly when compared to the cooler-than-normal weather of the prior period . cooling degree days ( a measure for determining the impact of weather during the cooling season ) increased by 125 % compared to the prior period . · an 8.2 % decrease in gas sales reflecting lower customer demand due to a milder winter . heating degree days ( a measure for determining the impact of weather during the heating season ) decreased by 8 % compared to the prior period . in addition , the 2009 results reflect the receipt by the gas utility of the benefit of $ 1.9 million ( pretax ) from capacity release revenues and commodity savings as a result of gcim . · the electric and gas utilities received a one-time $ 2.6 million ( pretax ) gain on a sale of property to atc during march 2010 . · higher nonregulated energy revenues are attributable to elm road unit 1 entering commercial operation in february 2010. our net income during 2009 compared to 2008 primarily reflects the effects of the following factors : · a 3.9 % decrease in electric revenue , reflecting lower customer demand primarily as a result of cooler-than-normal summer weather . according to the national weather service , july 2009 was the coolest on record in madison , where mge 's primary service territory resides . cooling degree days ( a measure for determining the impact of weather during the cooling season ) for 2009 decreased by 32 % compared to 2008. reduced economic activity also contributed to the reduced demand for service . · retail gas sales were relatively flat compared to the prior year . story_separator_special_tag cost of gas sold for the year ended december 31 , 2010 , cost of gas sold decreased by $ 19.3 million , compared to the same period in the prior year . the volume of gas purchased decreased 7.9 % which resulted in $ 9.7 million of reduced expense . in addition , an 8.4 % decrease in the cost per therm of natural gas resulted in $ 9.6 million of reduced expense . gas operating and maintenance expenses gas operating and maintenance expenses increased $ 2.8 million for the year ended december 31 , 2010 , compared to the same period a year ago . the following changes contributed to the net change . ( in millions ) increased administrative and general costs $ 3.9 decreased production costs ( 0.2 ) decreased distribution costs ( 0.2 ) decreased customer accounts costs ( 0.3 ) decreased customer service costs ( 0.4 ) total $ 2.8 for the year ended december 31 , 2010 , increased administrative and general costs were primarily due to increased pension costs and the amortization of deferred pension expenses from 2009. the incremental pension costs were deferred in 2009 and rate recovery of these costs began in 2010. gas depreciation expense gas depreciation expense decreased $ 4.3 million for the year ended december 31 , 2010 , compared to the same period in the prior year . this decrease was a result of new depreciation rates becoming effective for 2010. other income ( deductions ) , net for the year ended december 31 , 2010 , other income , net for the electric and gas segments increased by $ 3.2 million , compared to the same period in the prior year . this increase is primarily due to a one-time $ 2.6 million pretax gain on a sale of property to atc during march 2010 and a one-time $ 0.5 million pretax gain on a sale of property during september 2010. nonregulated energy operations - mge energy and mge nonregulated energy operating revenues operating revenues from nonregulated energy operations increased $ 10.3 million for the year ended december 31 , 2010 , when compared to the same period in the prior year , reflecting the commencement of commercial operations at elm road unit 1 in february 2010 . 31 mge also received approval from the pscw to collect carrying costs expected to be incurred by mge power elm road during construction of the elm road units . mge estimates that the total carrying costs on the elm road units will be approximately $ 62.6 million . a portion of this amount is being recognized over the period recovered in rates and a portion is being deferred and will be recognized over the period in which the units are depreciated . see footnote 21 for additional information regarding these carrying charges . for the years ended december 31 , 2010 and 2009 , mge power elm road recognized $ 4.8 million and $ 8.1 million , respectively , related to carrying costs on the elm road units . nonregulated depreciation expense nonregulated depreciation expense increased $ 2.5 million for the year ended december 31 , 2010 , compared to the same period in the prior year . this additional depreciation is related to the commencement of commercial operations at elm road unit 1 in february 2010. nonregulated energy interest expense , net for the years ended december 31 , 2010 and 2009 , interest expense , net at the nonregulated energy operations segment was $ 2.7 million . interest expense at the nonregulated energy segment for both the years ended december 31 , 2010 and 2009 , includes interest expense incurred on $ 50 million of borrowings at mge power west campus , which were long-term and fixed-rate during both periods , and $ 50 million of borrowings at mge power elm road , which were long-term and fixed-rate during 2010. included in the nonregulated interest expense is interdepartmental interest expense and capitalized interest at mge power elm road . during the years ended december 31 , 2010 and 2009 , mge power elm road was charged $ 0.3 million and $ 3.4 million , respectively , in interest expense by corporate on funds borrowed for the elm road units . this expense is eliminated upon consolidation for mge energy only . the interest expense at mge power elm road is offset in capitalized interest . during the year ended december 31 , 2009 , mge power elm road recorded $ 0.1 million in net interest income on cash advanced to ers for construction of transmission equipment and work done by atc related to the elm road units . no interest income on cash advanced to ers was recorded during the year ended december 31 , 2010. transmission investment operations - mge energy and mge transmission investment other income for the years ended december 31 , 2010 and 2009 , other income at the transmission investment segment was $ 8.5 million and $ 8.2 million , respectively . the transmission investment segment holds our interest in atc , and its income reflects our equity in the earnings of atc . see footnote 4.b for additional information concerning atc and summarized financial information regarding atc . all other nonregulated operations - mge energy all other interest income , net all other interest income , net for the years ended december 31 , 2010 and 2009 , was less than $ 0.1 million and $ 2.8 million , respectively . interest income for the year ended december 31 , 2010 , represents $ 0.3 million in interdepartmental interest income from mge power elm road , offset by $ 0.3 million in interest expense on short-term debt . interest income for the year ended december 31 , 2009 , represents $ 3.4 million in interdepartmental interest income from mge power elm road , partially offset by $ 0.6 million in interest expense on short-term debt .
| results of operations year ended december 31 , 2010 , versus the year ended december 31 , 2009 electric utility operations - mge energy and mge electric sales and revenues the following table compares mge 's electric revenues and electric kwh sales by customer class for each of the periods indicated : replace_table_token_13_th 28 electric operating revenues increased $ 28.4 million or 8.5 % for the year ended december 31 , 2010 , due to the following : ( in millions ) volume $ 14.6 rate changes 13.4 fuel refund ( 2009 ) 5.5 adjustments to revenues 0.3 other revenues ( 5.4 ) total $ 28.4 · volume . during the year ended december 31 , 2010 , there was a 4.1 % increase in total retail sales volumes compared to the same period in the prior year , reflecting the warmer-than-normal weather experienced in the current period compared to the cooler-than-normal weather experienced in the prior period . · rates changes . rates charged to retail customers for the year ended december 31 , 2010 , were 3.9 % or $ 13.4 million higher than those charged during the same period in the prior year . in december 2009 , the pscw authorized mge to increase 2010 rates for retail electric customers by 3.3 % or $ 11.9 million . the increase in retail electric rates is driven by costs for mge 's share of the elm road units and transmission reliability enhancements . in may 2009 , mge implemented a credit of $ 0.00204 per kwh , due to a decrease in actual electric fuel costs . during the year ended december 31 , 2009 , $ 4.1 million had been credited to electric customers . · fuel refund . as a result of lower than expected fuel and purchased power costs in 2008 , a fuel refund was approved .
| 5,931 |
during the year 2014 , we focused our efforts on the design , manufacturing and sales of ev parts and experienced significant sales growth from this business line . for the year ended december 31 , 2014 , we achieved net revenue of $ 116,431,310 from selling ev parts , mostly to our jv company , an increase of $ 114,707,279 , or 6653.4 % , as compared to $ 1,724,031 for the year ended december 31 , 2013. we were in the early stage of ev parts manufacturing in 2014 , we have n't reached a scale production and the unit prices of related parts were relatively high , which resulted in less profitable gross margin for our ev parts manufacturing . we believe , as our production volumes pick up and raw materials and unit prices of parts continue to fall , our ev parts unit production cost will gradually decrease and our gross margin will gradually improve . pursuant to our joint venture agreement , we gradually transferred our ev production to the jv company in 2014 , which caused our sales volume of ev products to decrease in the year compared with year 2013. however , as we have a 50 % ownership interest in the jv company and accounted for our investments in the jv company under the equity method of accounting , we received 50 % of the jv company 's net profit for the year or $ 3,763,082 in the year ended december 31 , 2014 , compared to a loss of $ 1,510,378 in the year ended december 31 , 2013. as the jv company was established not too long ago and the business was still in the start-up phase , its earnings were not high but have great potential for growth . we believe our economic benefits from the jv company will greatly increase in the future as its business continues to steadily grow . we continued to produce off-road vehicles in 2014 and our revenues from this business line decreased by $ 26,373,733 from year-ago period , or 57.1 % , to $ 19,819,078 for the year ended december 31 , 2014. this decrease was mainly because we shifted our business strategy to put more resources and efforts on chinese ev industry to meet the increasing market demand for alternative energy vehicles . we believe this realignment of business focus is in the best interest of the company 's long-term strategy for business growth . in 2014 , we recorded $ 23,403,933 of gross profit , an increase of 7.6 % from 2013 , primarily due to the increase of revenue . we recorded a net profit of $ 12,271,338 in 2014 compared to a net loss of $ 21,140,723 in 2013.excluding the effects of stock award expenses , which were $ 8,455,422 and $ 9,658,320 for the years ended december 31 , 2014 and 2013 , respectively , and the change of the fair value of financial derivatives , which were a gain of $ 6,531,308 and a loss of $ 16,647,283 for the years ended december 31 , 2014 and 2013 , respectively , our net income ( non-gaap ) was $ 14,195,452for the year ended december 31 , 2014 as compared to net income ( non-gaap ) of $ 5,164,880 for the year ended december 31 , 2013 , an increase of $ 9,030,572 or 174.8 % . the increase in such net income was primarily attributable to the increase of revenue and gross profits during the year of 2014. the vehicle manufacturing industry is highly competitive in china . current and future factors impacting our industry include : ( i ) the exponential growth of electrical vehicle sales and dedicated platforms in the global market place , ( ii ) the consolidation of supply chains and costs of components , ( iii ) rapid technology developments ( including 3d printing technology ) and ( iv ) emerging strategic partnerships and joint ventures in the automotive industry generally . 30 our business strategy includes our efforts to provide our customers with high-quality products , to expand our footprint in new and existing markets , and to advance our profile and demand for our ev products through the ev sharing project . to further this initiative , we are working with our business partners to build a network of public ev sharing stations to provide energy-efficient , convenient travel options for local citizens and tourists . we anticipate that our pure ev business in china , through the operations of the jv company and with the support of new chinese subsidy policies , will continue to develop and grow in the future. story_separator_special_tag for the year ended december 31 , 2012. this increase was primarily due to the corresponding increased sales for the year ended december 31 , 2014. however , the increase in cost of goods sold outpaced the growth of our revenues , which was largely due to relatively less profitable raw material purchases in our newly-added ev parts product line , and the sale of ev parts accounted for 68.4 % of total revenue for the year ended december 31 , 2014. as a result , cost of goods sold for our ev parts product line comprised the majority , or 72.5 % , of the total cost of goods sold for the year ended december 31 , 2014. the battery sales accounted for the majority of our ev parts sales and their corresponding cost of goods sold accounted for 61.6 % of total cost of goods sold . for the year ended december 31 , 2014 , excluding the battery business mentioned above , our cost of raw materials declined by 2.2 % compared to the sales increase in the same period of time year over year . excluding the battery business mentioned above , total wages and salaries for the year ended december 31 , 2014 , increased by 1.8 % compared to the sale increase in the same period of time year over year . story_separator_special_tag excluding stock award costs , our net general and administrative expenses for the year ended december 31 , 2014 were $ 5,603,126 , a decrease of $ 794,661 , or 12.4 % , compared to $ 6,397,787 for the year ended december 31 , 2013. this decrease was primarily attributable to more costs related to the capital raise were expensed in 2013 than 2014. the costs related to issuance of the derivative instruments in the capital raises during 2014 , or $ 578,757 , were expensed upon issuance in 2014. additionally , the general and administrative expenses in 2012 also included $ 19,053 of stock-based compensation costs for the options issued to our executives and managerial level employees , while for the years ended december 31 , 2014 and 2013 , we did n't have such expenses . interest income ( expense ) , net net interest expense was $ 1,779,525 for the year ended december 31 , 2014 , compared to $ 2,878,876 for the year ended december 31 , 2013 and $ 117,787 for the year ended december 31 , 2012 , representing a decrease of $ 1,099,351 , or 38.2 % , from 2013 but an increase of $ 1,661,738 , or 1,410.8 % , from 2012. the decrease in net interest expense compared to last year was primarily attributable to an increase in interest income earned on loans made to third parties for the year ended december 31 , 2014. we recorded interest income of $ 1,701,121 for the year ended december 31 , 2014 , which included $ 1,573,421 earned on loans made to third parties , $ 39,849 earned on an entrusted loan lent to the jv company through bank of communications hangzhou zhongan branch as the agent bank , and $ 87,851 earned on bank deposits . we recorded interest expense of $ 3,480,646 for the year ended december 31 , 2014 , which included bank loan interest of $ 2,217,955 and bond interest of $ 1,262,691 . 35 change in fair value of financial instruments for the year ended december 31 , 2014 , the gain related to changes in the fair value of the derivative liability relating to the warrants issued to investors and placement agents was $ 6,531,308 , compared to a loss of $ 16,647,283 for the year ended december 31 , 2013 and a gain of $ 1,986,063 for the year ended december 31 , 2012 , an increase of $ 23,178,591from 2013 and an increase of $ 4,545,245 from 2012 , respectively . the gain on the changes in the fair value of derivative liability was due to the decrease in the fair value price of the derivative which was primarily attributable to two factors . first , it was caused by the decrease in our stock price of the common stock underlying the warrants issued on september 4 , 2014 , which decreased from $ 17.13 on the issuance date to $ 14.01 on december 31 , 2014. secondly , it was due to the passage of remaining life of outstanding warrants ( excluding the warrants issued in september 2014 ) , a significant portion of which warrants expired in january 2015. government grants government grants totaled $ 288,498 for the year ended december 31 , 2014 , representing an increase of $ 60,102 , or 26.3 % , from $ 228,396 in 2013 and an increase of $ 156,359 , or 118.3 % , from $ 132,139 in 2013. the increases were largely due to the subsidies we received from the chinese government for promoting local business and innovation . share of profit ( loss ) of associated company investment losses were $ 54,308 for the year ended december 31 , 2014 , compared to a loss of $ 69,056 for the year ended december 31 , 2013 and a loss of $ 69,429 for the year ended december 31 , 2012 , a decrease of $ 14,748 , or 21.4 % , from 2013 and a decrease of $ 15,121 , or 21.8 % , from 2012 , respectively . for the years ended december 31 , 2014 and 2013 , these losses were attributable to our 30 % equity ownership of jinhua service . in july 2014 , jinhua service ceased its operations and was dissolved . as a result , we wrote off the remaining investment in this entity and associated liabilities due to this entity . share of profit ( loss ) after tax of the jv company for the year ended december 31 , 2014 , the jv company 's net sales were $ 215,537,203 , gross income was $ 41,889,144 , and net income was $ 7,526,164. we accounted for our investments in the jv company under the equity method of accounting as we have a 50 % ownership interest in the jv company . as a result , we recorded 50 % of the jv company 's profit , or $ 3,763,082 for the year ended december 31 , 2014. after eliminating intra-entity profits and losses , our share of the after tax profit of the jv company was $ 4,490,266 for the year ended december 31 , 2014 , compared to a loss of $ 2,414,354 for the year ended december 31 , 2013 , representing an increase in income of $ 6,904,620. during the year of 2014 , the jv company 's revenues were primarily derived from the sales of ev products in the prc with a total of 10,935 units sold during the year . other income ( expense ) , net net other expense was ( $ 34,649 ) for the year ended december 31 , 2014 , compared to net other income of $ 676,257 for the year ended december 31 , 2013 and net other income of $ 332,936 for the year ended december 31 , 2012 , a decrease in net other income of $ 710,906 , or 105.1 % , from 2013 and a decrease in net other income of $ 367,585 , or 110.4 % from 2012 , respectively .
| results of operations comparison of years ended december 31 , 2014 , 2013 and 2012 the following table sets forth the amounts and the percentage relationship to revenues of certain items in our consolidated statements of income for the years ended december 31 , 2014 , 2013 and 2012 : replace_table_token_9_th revenues for the year ended december 31 , 2014 , we had net revenues of $ 170,229,006 compared to net revenues of $ 94,536,045 for the year ended december 31 , 2013 and $ 64,513,670 for the year ended december 31 , 2012 , representing an increase of $ 75,692,961 , or 80.1 % , from 2013 and an increase of $ 105,715,336 , or 163.9 % , from 2012 , respectively . our products include ev parts , ev products , and off-road vehicles , including atvs , utility vehicles ( utvs ) , go-karts , and others . for the year ended december 31 , 2014 , 2013 and 2012 , 95 % , 90 % and 86 % , respectively , of our revenues were derived from the sales of our products in the people 's republic of china ( the prc ) . 31 the following table summarizes our revenues as well as the number of units sold by product types for the years ended december 31 , 2014 , 2013 and 2012 : replace_table_token_10_th ev parts during the year ended december 31 , 2014 , our revenues from the sale of ev parts were $ 116,431,310 , representing an increase of $ 114,707,279 or 6,653.4 % from $ 1,724,031 for the year ended december 31 , 2013 and an increase of $ 112,914,073 or 3,210.3 % from $ 3,517,237 for the year ended december 31 , 2012 , respectively our revenue for the year ended december 31 , 2014 primarily consisted of the sales of battery packs , body parts , ev drive motors , ev controllers , air conditioning units and other auto parts to the jv company for manufacturing of ev products .
| 5,932 |
subsequent to the measurement period , changes in estimates of such contingencies will affect earnings and could have a material effect on the company 's results story_separator_special_tag forward-looking statements the following discussion and analysis of the financial condition and results of our operations should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this report . 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 the section titled “ risk factors ” included elsewhere in this report . overview we are a provider of radio frequency , or rf , high-performance analog , and mixed-signal communications systems-on-chip solutions for the connected home , wired and wireless infrastructure , and industrial and multi-market applications . our customers include electronics distributors , module makers , original equipment manufacturers , or oems , and original design manufacturers , or odms , who incorporate the company 's products in a wide range of electronic devices including cable docsis broadband modems and gateways ; wireline connectivity devices for in-home networking applications ; rf transceivers and modems for wireless carrier access and backhaul infrastructure ; fiber-optic modules for data center , metro , and long-haul transport networks ; video set-top boxes and gateways ; hybrid analog and digital televisions , direct broadcast satellite outdoor and indoor units ; and power management and interface products used in these and a range of other markets . we are a fabless integrated circuit design company whose products integrate all or substantial portions of a broadband communication system . our net revenue has grown from approximately $ 0.6 million in fiscal 2006 to $ 420.3 million in fiscal 2017 . in fiscal 2017 , our net revenue was derived primarily from sales of rf receivers and rf receiver systems-on-chip and connectivity solutions into broadband operator voice and data modems and gateways and connectivity adapters , global analog and digital rf receiver products for analog and digital pay-tv applications , radio and modem solutions into wireless carrier access and backhaul infrastructure platforms , high-speed optical interconnect solutions sold into optical modules for data-center , metro and long-haul networks , and high-performance interface and power management solutions into a broad range of communications , industrial , automotive and multi-market applications . our ability to achieve revenue growth in the future will depend , among other factors , on our ability to further penetrate existing markets ; our ability to expand our target addressable markets by developing new and innovative products ; and our ability to obtain design wins with device manufacturers , in particular manufacturers of set-top boxes , data modems , and gateways for the broadband service provider and pay-tv industries , manufacturers selling into the smartphone market , storage networking market , cable infrastructure market , industrial and automotive markets , and optical module and telecommunications infrastructure markets . products shipped to asia accounted for 89 % , 93 % and 91 % of net revenue during the years ended december 31 , 2017 , 2016 and 2015 , respectively . although a large percentage of our products is shipped to asia , we believe that a significant number of the systems designed by these customers and incorporating our semiconductor products are then sold outside asia . for example , we believe revenue generated from sales of our digital terrestrial set-top box products during the years ended december 31 , 2017 , 2016 and 2015 related principally to sales to asian set-top box manufacturers delivering products into europe , middle east , and africa , or emea markets . similarly , revenue generated from sales of our cable modem products during the years ended december 31 , 2017 , 2016 and 2015 related principally to sales to asian odms and contract manufacturers delivering products into european and north american markets . to date , most of our sales have been denominated in united states dollars . there is a growing portion of our business , related specifically to our high-speed optical interconnect products , that are shipped to , and are ultimately consumed in asian markets , with the majority of these products being purchased by end customers in china . a significant portion of our net revenue has historically been generated by a limited number of customers . in the year ended december 31 , 2017 , one of our customers , arris , accounted for 25 % of our net revenue , and our ten largest customers collectively accounted for 58 % of our net revenue . in the year ended december 31 , 2016 , two of our customers , arris and technicolor ( which includes cisco 's former connected devices business ) , accounted for 37 % of our net revenue , and our ten largest customers collectively accounted for 74 % of our net revenue . sales to arris as a percentage of revenue include sales to pace , which was acquired by arris in january 2016 , for the year ended december 31 , 2016. in the year ended december 31 , 2015 , two of our customers , arris , and technicolor ( which includes cisco 's former connected devices business ) , accounted for 41 % of our net revenue , and our ten largest customers collectively accounted for 76 % of our net revenue . in november 2015 , technicolor completed its purchase of cisco 's connected devices business . for the year ended december 31 , 2015 , the revenue percentage did not include the 1 % revenue percentage for technicolor . for certain customers , we sell multiple products into disparate end user applications such as cable modems , satellite set-top boxes and broadband gateways . 50 our business depends on winning competitive bid selection processes , known as design wins , to develop semiconductors for use in our customers ' products . story_separator_special_tag in addition , the conversion did not increase the total number of authorized shares of our common stock , 51 which prior to the conversion was , and remains , 550,000,000 shares . however , our total number of authorized shares of capital stock was reduced from 1,575,000,000 to 1,509,554,147 , to account for the retirement of the class a shares and class b shares that were outstanding at the time of the conversion . following the conversion , our authorized capital stock includes 441,123,947 class a shares and 493,430,200 class b shares , which represents class a shares and class b shares that were authorized but unissued at the time of the conversion . no additional class a shares or class b shares will be issued following the conversion . following the conversion , each share of our common stock is entitled to one vote per share and otherwise has the same designations , rights , powers and preferences as the class a common stock prior to the conversion . in addition , holders of our common stock vote as a single class of stock on any matter that is submitted to a vote of our stockholders . prior to the conversion , the holders of our class a and class b common stock had identical voting rights , except that holders of class a common stock were entitled to one vote per share and holders of class b common stock were entitled to ten votes per share with respect to transactions that would result in a change of control of our company or that relate to our equity incentive plans . in addition , holders of class b common stock had the exclusive right to elect two members of our board of directors , each referred to as a class b director . the shares of our class b common stock were not publicly traded . each share of our class b common stock was convertible at any time at the option of the holder into one share of class a common stock and in most instances automatically converted upon sale or other transfer . on april 4 , 2017 , we consummated the transactions contemplated by a share and asset acquisition agreement with marvell semiconductor inc. , or marvell , to purchase certain assets and assume certain liabilities of marvell 's g.hn business , including its spain legal entity , for aggregate cash consideration of $ 21.0 million . we also hired certain employees of the g.hn business outside of spain and assumed employment obligations of the spanish entity we acquired , which is now a subsidiary of maxlinear . the assets acquired include , among other things , patents and other intellectual property , a workforce-in-place and other intangible assets , as well as tangible assets that include but are not limited to production masks and other production related assets , inventory and other property and equipment . the liabilities assumed include , among other things , product warranty obligations and accrued vacation and severance obligations for employees who joined maxlinear and its subsidiaries as a result of the transaction . the acquired assets and assumed liabilities , together with the employees , represent a business as defined in asc 805 , business combinations . we are integrating the acquired assets and employees into our existing business . in april 2017 , our subsidiary in singapore began operating under certain tax incentives in singapore , which are generally effective through march 2022 and may be extended through march 2027. under these incentives , qualifying income derived from certain sales of our integrated circuits is taxed at a concessionary rate over the incentive period . we also receive a reduced withholding tax rate on certain intercompany royalty payments made by our singapore subsidiary during the incentive period . such incentives are conditional upon our meeting certain minimum employment and investment thresholds within singapore over time , and we may be required to return certain tax benefits in the event the company does not achieve compliance related to that incentive period . we currently believe that we will be able to satisfy these conditions without material risk . primarily because of our singapore net operating losses and our full valuation allowance in singapore , we do not believe the incentives will have a material impact on our income tax position in the year ending december 31 , 2018. on may 12 , 2017 , pursuant to the march 28 , 2017 agreement and plan of merger , eagle acquisition corporation , a delaware corporation and wholly-owned subsidiary of maxlinear merged with and into exar corporation , or exar , with exar surviving as a wholly owned subsidiary of maxlinear . under this agreement and plan of merger , we agreed to acquire exar 's outstanding common stock for $ 13.00 per share in cash . we also assumed certain of exar 's stock-based awards in the merger . we paid aggregate cash consideration of $ 688.1 million , including $ 12.7 million of cash paid to settle certain stock-based awards that were not assumed by us in the merger . we funded the transaction with cash from the balance sheet of the combined companies , including $ 235.8 million of cash from exar , and the net proceeds of approximately $ 416.8 million under a secured term loan facility in an aggregate principal amount of $ 425.0 million . the facility is available ( i ) to finance the merger , refinance certain existing indebtedness of exar and its subsidiaries , and fund all related transactions , ( ii ) to pay fees and expenses incurred in connection therewith and ( iii ) for working capital and general corporate purposes . the term loan facility has a seven-year term and the term loans bear interest at either an adjusted libor or an adjusted base rate , plus a fixed applicable margin . exar is a designer and developer of high-performance analog mixed-signal integrated circuits and sub-system solutions .
| results of operations the following describes the line items set forth in our consolidated statements of operations . net revenue . net revenue is generated from sales of radio-frequency , mixed-signal and high-performance analog integrated circuits for the connected home , wired and wireless infrastructure , and industrial and multi-market applications . a significant portion of our customers purchases products indirectly from us through distributors . cost of net revenue . cost of net revenue includes the cost of finished silicon wafers processed by third-party foundries ; costs associated with our outsourced packaging and assembly , test and shipping ; costs of personnel , including stock-based compensation , and equipment associated with manufacturing support , logistics and quality assurance ; amortization of acquired developed technology intangible assets and inventory step-ups to fair value ; amortization of certain production mask costs ; cost of production load boards and sockets ; and an allocated portion of our occupancy costs . research and development . research and development expense includes personnel-related expenses , including stock-based compensation , new product engineering mask costs , prototype integrated circuit packaging and test costs , computer-aided design software license costs , intellectual property license costs , reference design development costs , development testing and evaluation costs , depreciation expense and allocated occupancy costs . research and development activities include the design of new products , refinement of existing products and design of test methodologies to ensure compliance with required specifications . all research and development costs are expensed as incurred . selling , general and administrative . selling , general and administrative expense includes personnel-related expenses , including stock-based compensation , amortization of certain acquired intangible assets , third-party sales commissions , field application engineering support , travel costs , professional and consulting fees , legal fees , depreciation expense and allocated occupancy costs . ipr & d impairment losses . ipr & d impairment losses consist of charges resulting from the impairment of acquired in-process research and development technology intangible assets during the period . restructuring charges .
| 5,933 |
expect , ” and “ intend ” and other similar expressions constitute forward-looking statements . these forward-looking statements are subject to business and economic risks and uncertainties and our actual results of operations may differ materially from those contained in the forward-looking statements . factors that could cause or contribute to such differences include , but are not limited to , those discussed under item 1a risk factors as well as other risks and uncertainties referenced in this report . overview we are a leading provider of temporary mechanical circulatory support devices , and we offer a continuum of care to heart failure patients . we develop , manufacture and market proprietary products that are designed to enable the heart to rest , heal and recover by improving blood flow to the coronary arteries and end-organs and or temporarily assisting the pumping function of the heart . our products are used in the cardiac catheterization lab , or cath lab , by interventional cardiologists , the electrophysiology lab , the hybrid lab and in the heart surgery suite by cardiac surgeons . a physician may use our devices for patients who are in need of hemodynamic support prophylactically , urgently or emergently before , during or after angioplasty or heart surgery procedures . we believe that heart recovery is the optimal clinical outcome for a patient experiencing heart failure because it enhances the potential for the patient to go home with their own heart , facilitating the restoration of quality of life . in addition , we believe that , for the care of such patients , heart recovery is often the most cost-effective solution for the healthcare system . our strategic focus and the driver of our revenue growth is the market penetration of our family of impella® heart pumps . the impella device portfolio , which includes the impella 2.5® impella cp® , impella rp® , impella ld® and impella 5.0® devices , has supported numerous patients worldwide . all of our product and service revenue in the near future will be from our impella devices . in march 2015 , we received fda approval of a pma for use of the impella 2.5 device during elective and urgent high-risk percutaneous coronary intervention , or pci , procedures . in december 2016 , the fda expanded this pma approval in the u.s. to include the impella cp device . with these approved indications , the impella 2.5 and impella cp devices provide the only minimally invasive treatment options indicated for use during high-risk pci procedures in the u.s. in april 2016 , the fda approved a pma supplement for our impella 2.5 , impella cp , impella 5.0 and impella ld devices to provide treatment for ongoing cardiogenic shock that occurs following a heart attack or open heart surgery . the intent of our impella system therapy is to reduce ventricular work and to provide the circulatory support necessary to allow heart recovery and early assessment of residual myocardial function . in september 2017 , we received fda approval of a pma for the impella rp heart pump . the impella rp heart pump is indicated for providing temporary right ventricular support for up to 14 days in patients with a body surface area ≥1.5 m² , who develop acute right heart failure or decompensation following left ventricular assist device implantation , myocardial infarction , heart transplant , or open-heart surgery . with this approval , the impella rp heart pump is the only percutaneous temporary ventricular support device that is fda-approved as safe and effective for right heart failure as stated in the indication . in february 2018 , we received two expanded pma approvals from the fda for our impella heart pumps . the first expanded approval is for use of impella 2.5 , cp , 5.0 and ld heart pumps on patients with cardiogenic shock associated with cardiomyopathy , including peripartum and postpartum cardiomyopathy . the second expanded pma approval is for use of the impella 2.5 and impella cp heart pumps during elective and high-risk pci procedures . this expanded pma approval confirms impella support as appropriate in patients with severe coronary artery disease , complex anatomy and extensive comorbidities , with or without depressed ejection fraction . in april 2018 , we received fda approval for impella cp with smartassist and optical sensor which is intended to provide enhanced monitoring capability , reduce setup time and improve ease of use for physicians . the optical sensor technology is also approved under ce mark in the european union . in september 2016 , we received pmda approval from the japanese mhlw for our impella 2.5 and impella 5.0 heart pumps to provide treatment of drug-resistant acute heart failure in japan . in july 2017 , we received approval from the mhlw for reimbursement for the impella 2.5 and 5.0 heart pumps . reimbursement in japan for the impella 2.5 and 5.0 is equivalent to our average impella sales price in the u.s. we commenced commercialization in japan during the second quarter of fiscal 2018 and have begun a slow commercial launch of impella in japan . the first japanese patient was treated with the impella device in october 2017 . 37 our impella 2.5 , impella 5.0 , impella ld , impella cp and impella rp devices also have ce mark approval and health canada appro val , which allows us to market these devices in the european union and canada . in april 2018 , we announced that we have received ce mark approval in the european union for the impella 5.5 heart pump and the first patient was treated at university heart center in hamburg , germany . the impella 5.5 heart pump is not approved for use or sale in the u.s. in may 2017 , we announced the enrollment of the first patient in the fda approved prospective multi-center feasibility study , stemi door to unloading with impella cp system in acute myocardial infarction . story_separator_special_tag we consider whether a valuation allowance is needed on our deferred tax assets by evaluating all positive and negative evidence relative to our ability to recover deferred tax assets , including future reversals of existing taxable temporary differences , projected future taxable income , tax planning strategies and recent financial results . we recognize and measure uncertain tax positions using a two-step approach . the first step is to evaluate the tax position for recognition by determining if , based on the technical merits , it is more likely than not that the position will be sustained upon audit , including resolution of related appeals or litigation processes , if any . the second step is to measure the tax benefit at the largest amount that is more likely than not of being realized upon ultimate settlement . we reevaluate these uncertain tax positions on an ongoing basis , when applicable . this evaluation is based on factors including , but not limited to , changes in facts or circumstances , new information and technical insights , and changes in tax laws . any changes in these factors could result in the recognition of a tax benefit or an additional charge to the tax provision . when applicable , we accrue for the effects of uncertain tax positions and the related potential penalties and interest through income tax expense . effective april 1 , 2017 , we adopted the asu 2016-09 which simplifies several aspects of the accounting for share-based payment transactions , including income tax consequences , recognition of stock compensation award forfeitures , classification of awards as either equity or liabilities , the calculation of diluted shares outstanding and classification on the statement of cash flows . the effects of this impact will be hard to predict and variable moving forward as such effects are dependent upon actual stock option exercises . recent accounting pronouncements information regarding recent accounting pronouncements is included in note 2 . “ summary of significant accounting policies ” to our consolidated financial statements in this report . story_separator_special_tag contingencies—litigation , ” to our consolidated financial statements . we expect to continue to increase our expenditures on sales and marketing activities , with particular investments in field sales and clinical personnel with cath lab expertise to drive recovery awareness for acute heart failure patients . we also plan to increase our marketing , service and training investments as a result of recent pma approvals in the u.s. for our impella devices and as we continue our expansion in japan and other new markets outside of the u.s. we also expect to continue to incur significant legal expenses for the foreseeable future related to ongoing patent litigation and other legal matters discussed in “ note 11. commitment and contingencies – litigation , ” to our consolidated financial statements . income tax provision in the first quarter of fiscal 2018 , we adopted asu 2016-09 which requires that all excess tax benefits and tax deficiencies related share-based compensation arrangements be recognized as income tax benefit or expense , instead of in stockholders ' equity as previous guidance required . in addition , effective january 1 , 2018 , the tax reform act , among other items , reduced the u.s. federal statutory corporate income tax rate from 35 % to 21 % . the income tax provision increased by $ 9.1 million , or 23 % , to $ 48.3 million for fiscal 2018 , compared to $ 39.2 million for fiscal 2017. the increase in income tax provision for fiscal 2018 was due primarily to higher income before income taxes in fiscal 2018 due to higher impella product revenue . our effective income tax rate was 30.1 % and 43.0 % for the years ended march 31 , 2018 and 2017. the decrease in our effective tax rate was primarily due to the excess tax benefits associated with stock-based awards of $ 31.0 million as an income tax benefit for the year ended march 31 , 2018. these excess tax benefits were related to the adoption of the new accounting standard for stock-based compensation on april 1 , 2017 , which required restricted stock units that vested or stock options that were exercised during the year ended march 31 , 2018 to be recorded in the statement of operations . the decrease in the effective tax rate was offset by a $ 21.4 million income tax expense estimate from the re-measurement of our net deferred tax assets due to the tax reform act , as discussed in “ note 10. income taxes. ” net income for fiscal 2018 , we recognized net income of $ 112.2 million , or $ 2.54 per basic share and $ 2.45 per diluted share , compared to $ 52.1 million , or $ 1.21 per basic share and $ 1.17 per diluted share for fiscal 2017. the increase in our net income for fiscal 2018 was driven primarily to higher impella product revenue due to greater utilization of our impella devices in the u.s. and europe . further , the adoption of asu 2016-09 resulted in an increase of net income of $ 31.0 million , or $ 0.70 per basic and $ 0.68 per diluted share for the year ended march 31 , 2018. additionally , the enactment of the tax reform act resulted in a decrease in net income of $ 21.4 million , or $ 0.48 per basic and $ 0.47 per diluted share for the year ended march 31 , 2018. fiscal years ended march 31 , 2017 and march 31 , 2016 ( “ fiscal 2017 ” and “ fiscal 2016 ” ) revenue our revenue is comprised of the following : replace_table_token_7_th impella product revenue encompasses impella 2.5 , impella cp , impella 5.0 , impella ld , impella rp and impella aic device product sales . service and other revenue represents revenue earned on service maintenance contracts and preventative maintenance calls . other revenue includes ab5000 that we no longer sell .
| results of operations the following table sets forth certain consolidated statements of operations data for the periods indicated as a percentage of total revenues : replace_table_token_5_th 39 fiscal years ended march 31 , 2018 and march 31 , 2017 ( “ fiscal 2018 ” and “ fiscal 2017 ” ) revenue our revenue is comprised of the following : replace_table_token_6_th impella product revenue encompasses impella 2.5 , impella cp , impella 5.0 , impella ld , impella rp and impella aic product sales . service and other revenue represents revenue earned on service maintenance contracts and preventative maintenance calls . other revenue includes sales of the ab5000 that we no longer sell . total revenue for fiscal 2018 increased $ 148.4 million , or 33 % , to $ 593.7 million from $ 445.3 million for fiscal 2017. the increase in total revenue was primarily due to higher impella product revenue from increased utilization in the u.s and europe . impella product revenue for fiscal 2018 increased by $ 147.2 million , or 35 % , to $ 570.9 million from $ 423.7 million for fiscal 2017. most of the increase in impella product revenue was from greater device sales in the u.s. , as we focus on increasing utilization of our disposable catheter products through continued investment in our field organization and physician training programs . impella product revenue outside of the u.s. also increased primarily due to increased utilization in germany . we expect revenue from our impella devices to continue to increase with our recent pma approvals in the u.s. and our continued controlled launch of impella devices outside of the u.s. with a focus on germany and japan . service revenue for fiscal 2018 increased by $ 3.7 million , or 19 % , to $ 22.8 million from $ 19.1 million for fiscal 2017. the increase in service revenue was primarily due to an increase in preventative maintenance service contracts .
| 5,934 |
story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements , the accompanying notes , and other information included in this annual report . in particular , the risk factors contained in item 1a may reflect trends , demands , commitments , events , or uncertainties that could materially impact our results of operations and liquidity and capital resources . the following discussion contains forward-looking statements , such as statements regarding our future operating results and financial position , our business strategy and plans , our market growth and trends , and our objectives for future operations . see `` note regarding forward-looking statements '' for more information about relying on these forward-looking statements . the following discussion also contains information using industry publications . see `` note regarding industry and market data '' for more information about relying on these industry publications . when we use the term `` basis points '' in the following discussion , we refer to units of one‑hundredth of one percent . overview we help people buy and sell homes . our primary business is a residential real estate brokerage , representing customers in over 90 markets in the united states and canada . we pair our own agents with our own technology to create a service that is faster , better , and costs less . we meet customers through our listings-search website and mobile application . we use the same combination of technology and local service to originate mortgage loans and offer title and settlement services ; we also buy homes directly from homeowners who want an immediate sale , taking responsibility for selling the home while the original owner moves on . our mission is to redefine real estate in the consumer 's favor . key business metrics in addition to the measures presented in our consolidated financial statements , we use the following key metrics to evaluate our business , develop financial forecasts , and make strategic decisions . replace_table_token_2_th monthly average visitors 24 the number of , and growth in , visitors to our website and mobile application are important leading indicators of our business activity because these channels are the primary ways we meet customers . for a particular period , monthly average visitors refers to the average of the number of unique visitors to our website and mobile application for each of the months in that period . monthly average visitors are influenced by , among other things , market conditions that affect interest in buying or selling homes , the level and success of our marketing programs , seasonality , and how our website appears in search results . we believe we can continue to increase monthly visitors , which helps our growth . given the lengthy process to buy or sell a home , a visitor during one month may not convert to a revenue-generating customer until many months later , if at all . when we refer to `` monthly average visitors '' for a particular period , we are referring to the average number of unique visitors to our website and our mobile applications for each of the months in that period , as measured by google analytics , a product that provides digital marketing intelligence . google analytics tracks visitors using cookies , with a unique cookie being assigned to each browser or mobile application on a device . for any given month , google analytics counts all of the unique cookies that visited our website and mobile applications during that month . google analytics considers each unique cookie as a unique visitor . due to third-party technological limitations , user software settings , or user behavior , it is possible that google analytics may assign a unique cookie to different visits by the same person to our website or mobile application . in such instances , google analytics would count different visits by the same person as separate visits by unique visitors . accordingly , reliance on the number of unique cookies counted by google analytics may overstate the actual number of unique persons who visit our website or our mobile applications for a given month . real estate services transactions we record a brokerage real estate services transaction when one of our lead agents represented the homebuyer or home seller in the purchase or sale , respectively , of a home . we record a partner real estate services transaction ( i ) when one of our partner agents represented the homebuyer or home seller in the purchase or sale , respectively , of a home or ( ii ) since the third quarter of 2019 after we commenced a referral partnership with opendoor , when a redfin customer sold his or her home to a third-party institutional buyer following our introduction of that customer to the buyer . we include a single transaction twice when our lead agents or our partner agents serve both the homebuyer and the home seller of the transaction . additionally , when one of our lead agents represents redfinnow in its sale of a home , we include that transaction as a brokerage real estate services transaction . increasing the number of real estate services transactions is critical to increasing our revenue and , in turn , to achieving profitability . real estate services transaction volume is influenced by , among other things , the pricing and quality of our services as well as market conditions that affect home sales , such as local inventory levels and mortgage interest rates . real estate services transaction volume is also affected by seasonality and macroeconomic factors . real estate services revenue per transaction real estate services revenue per transaction , together with the number of real estate services transactions , is a factor in evaluating revenue growth . we also use this metric to evaluate pricing changes . story_separator_special_tag substantially all fees and revenue from other services are recognized when the service is provided . intercompany eliminations intercompany eliminations— revenue earned from transactions between operating segments are eliminated in consolidating our financial statements . intercompany transactions primarily consist of services performed from our real estate services segment for our properties segment . cost of revenue and gross margin cost of revenue consists primarily of personnel costs ( including base pay , benefits , and stock-based compensation ) , transaction bonuses , home-touring and field expenses , listing expenses , home costs related to our properties segment , office and occupancy expenses , and depreciation and amortization related to fixed assets and acquired intangible assets . home costs related to our properties segment include home purchase costs , capitalized improvements , selling expenses directly attributable to the transaction , and home maintenance expenses . gross profit is revenue less cost of revenue . gross margin is gross profit expressed as a percentage of revenue . our gross margin has and will continue to be affected by a number of factors , but the most important are the mix of revenue from our relatively higher-gross-margin real estate services segment and our relatively lower-gross-margin properties segment , real estate services revenue per transaction , agent and support-staff productivity , personnel costs and transaction bonuses , and , for properties , the home purchase costs . operating expenses technology and development our primary technology and development expenses are building software for our customers , lead agents , and support staff to work together on a transaction , and building a website and mobile application to meet customers looking to move . these expenses primarily include personnel costs ( including base pay , 27 benefits , and stock-based compensation ) , data licenses , software and equipment , and infrastructure such as for data centers and hosted services . the expenses also include amortization of capitalized internal-use software and website and mobile application development costs . we expense research and development costs as incurred and record them in technology and development expenses . our technology and development expense grew 41 % year-over-year for the three months ended december 31 , 2019 , and we expect approximately the same amount of growth in this expense for the first six months of 2020. marketing marketing expenses consist primarily of media costs for online and offline advertising , as well as personnel costs ( including base pay , benefits , and stock-based compensation ) . in 2019 , we incurred approximately $ 36 million in offline advertising media costs , compared to around $ 12 million for 2018. we expect approximately the same offline advertising media costs in 2020 as incurred in 2019. general and administrative general and administrative expenses consist primarily of personnel costs ( including base pay , benefits , and stock-based compensation ) , facilities costs and related expenses for our executive , finance , human resources , and legal organizations , depreciation related to our fixed assets , and fees for outside services . outside services are principally comprised of external legal , audit , and tax services . interest income interest income consists primarily of interest earned on our cash , cash equivalents and investments . interest expense interest expense consists primarily of interest payable and the amortization of debt discounts and issuance cost related to our convertible senior notes , which we issued in july 2018. interest is payable on the notes at the rate of 1.75 % semiannually in arrears on january 15 and july 15. beginning in august 2019 , interest expense also includes interest on borrowings and the amortization of debt issuance costs related to our secured revolving credit facility . interest for the facility is payable weekly at a rate of one-month libor ( subject to a floor of 0.50 % ) plus 2.65 % . story_separator_special_tag this was primarily attributable to a 210 basis-point increase in personnel costs , a 60 basis-point increase in transaction bonuses , a 60 basis-point increase in home-touring and field costs , a 30 basis-point increase in operating costs , and a 25 basis-point increase in listing expenses , each as a percentage of revenue . in 2018 , we decreased the number of customers introduced to our lead agents as compared with 2017 , but did not see improvement in customer close rate . that change resulted in us hiring more lead agents , which contributed significantly to the 210 basis-point increase in personnel costs and stock-based compensation from 2017 to 2018. in 2018 , properties gross margin decreased 460 basis points as compared with 2017. this was primarily attributable to a 280 basis-point increase in the home purchase costs and related capitalized 33 improvements , a 110 basis-point increase in personnel costs , and a 70 basis-point increase in transaction bonuses , each as a percentage of revenue . in 2018 , other gross margin increased 460 basis points as compared with 2017. this was primarily attributable to a 230 basis-point decrease in operating expenses , a 170 basis-point decrease in depreciation and amortization , and a 90 basis-point decrease in office and occupancy expenses , each as a percentage of revenue . this was partially offset by a 50 basis-point increase in personnel costs . operating expenses replace_table_token_12_th in 2018 , technology and development expenses increased by $ 11.3 million , or 26 % , as compared with 2017. the increase was primarily attributable to a $ 10.3 million increase in personnel costs due to increased headcount and a $ 1.4 million increase in outside services including cloud-based technology . these expenses were related to improving real estate services operations , and building new capabilities for redfin mortgage and properties . in 2018 , marketing expenses increased by $ 11.8 million , or 37 % , as compared with 2017. the increase was primarily attributable to an $ 11.1 million increase in marketing media costs as we expanded advertising .
| results of operations the following tables set forth our results of operations for the periods presented and as a percentage of our revenue for those periods . 28 replace_table_token_3_th ( 1 ) includes stock-based compensation as follows : replace_table_token_4_th replace_table_token_5_th 29 ( 1 ) includes stock-based compensation as follows : replace_table_token_6_th comparison of the years ended december 31 , 2019 and 2018 revenue replace_table_token_7_th in 2019 , revenue increased by $ 292.9 million , or 60 % , as compared with 2018. brokerage revenue represented $ 90.2 million , or 31 % , of the increase . brokerage revenue grew 22 % during the period , driven by a 24 % increase in brokerage real estate transactions and a 1 % decrease in real estate services revenue per brokerage transaction . the increase in brokerage transactions was attributable to higher levels of customer awareness of redfin and increasing customer demand for redfin services . properties revenue grew $ 195.5 million , or 435 % , as compared with 2018 , driven by greater market presence and consumer awareness of redfinnow , which resulted in a 407 % increase in the number of homes sold . other revenue increased $ 7.8 million , or 78 % , as compared with 2018 . 30 cost of revenue and gross margin replace_table_token_8_th in 2019 , total cost of revenue increased by $ 268.2 million , or 73 % , as compared with 2018. this increase in cost of revenue was primarily attributable to a $ 180.8 million increase in home purchase costs and related capitalized improvements , due to selling more homes by our properties business , a $ 50.3 million increase in personnel costs and transaction bonuses due to increased headcount and increased brokerage transactions , respectively , and a $ 13.7 million increase in home-touring and field costs .
| 5,935 |
as with other employees , officers sign notes when cash is issued to them as job or travel disbursement . 6. inventories inventories consisted of the following as of december 31 , 2010 and 2009 : replace_table_token_24_th 7. property , plant and equipment property , plant , and equipment consisted of the following as of december 31 , 2010 and 2009 : 12/31/2010 12/31/2009 at cost : buildings $ 48,612,643 $ 29,181,372 f-17 american lorain corporation notes to consolidated financial statements december 31 , 2010 and 2009 ( stated in us dollars ) replace_table_token_25_th construction in progress is mainly comprised of capital expenditures for construction of the company 's new corporate campus , including offices , factories , and staff dormitories located at junan hongrun . capital commitments for the construction are immaterial for the two years above . landscaping , plants , and trees accounts for the orchards that the company has developed for agricultural operations . these orchards as well as the young trees which were purchased as nursery stock are capitalized into fixed assets . the depreciation is then calculated on a 30-year straight-line method when production in commercial quantities begins . the orchards have begun production in small quantities and the company has accounted for depreciation commencing july 1 , 2010 . 8. land use rights , net story_separator_special_tag overview we are an integrated food manufacturing company headquartered in shandong province , china . we develop , manufacture and sell the following types of food products : chestnut products , convenience foods ( including ready-to-cook , or rtc , foods , ready-to-eat , or rte , foods and meals ready-to-eat , or mre ) ; and frozen food products . we conduct our production activities in china . our products are sold in 26 provinces and administrative regions in china and 42 foreign countries . we believe that we are the largest chestnut processor and manufacturer in china . we have developed brand equity for our chestnut products in china , japan and south korea over the past 10 to 15 years . we produced 57 high value-added processed chestnut products in 2010. we derive most of our revenues from sales in china , japan and south korea . in 2010 , our primary strategy was to expand our brand equity in the chinese market for our convenience food products while maintaining the steady growth and brand recognition for our chestnut products and frozen products , we will continue to execute in 2011. in addition , we are working to expand our marketing efforts in asia , europe and the middle east . we currently have limited sales and marketing activity in the united states , although our long-term plan is to significantly expand our activities there . production factors that affect our financial and operational condition our business depends on obtaining a reliable supply of various agricultural products , including chestnuts , vegetables , fruits , red meat , fish , eggs , rice , flour and packaging products . during 2010 , the cost of our raw materials increased from $ 81,501,168 to $ 102,751,348 , for an increase of approximately 26.1 % . we may have to increase the number of our suppliers of raw materials and expand our own agricultural operations in the future to meet growing production demands . despite our efforts to control our supply of raw materials and maintain good relationships with our suppliers , we could lose one or more of our suppliers at any time . the loss of several suppliers may be difficult to replace and could increase our reliance on higher cost or lower quality suppliers , which could negatively affect our profitability . in addition , if we have to increase the number of our suppliers of raw materials in the future to meet growing production demands , we may not be able to locate new suppliers who could provide us with sufficient materials to meet our needs . any interruptions to , or decline in , the amount or quality of our raw materials supply could materially disrupt our production and adversely affect our business and financial condition and financial prospects . the average price that we paid for chestnuts in 2010 and 2009 was approximately $ 1,286 per metric ton and $ 868 per metric ton , respectively , excluding value added taxes . in past few years and most notably last year , increasing inflation pressures weighed on the chinese economy , as well as on agricultural products . we do not have effective means and do not currently hedge against changes in our raw material prices . consequently , if the costs of our raw materials increase further and we are unable to offset these increases by raising the prices of our products , our profit margins and financial condition could be adversely affected . - 23 - uncertainties that affect our financial condition we spend a significant amount of cash on our operations , principally to procure raw materials for our products . many of our suppliers , including chestnut , vegetable and fruit farmers , and suppliers of packaging materials , require us to pay for their supplies in cash on the same day that such supplies are delivered to us . however , some of the suppliers with whom we have a long-standing business relationship allow us to pay on credit . we fund the majority of our working capital requirements out of cash flow generated from operations . if we fail to generate sufficient sales , or if our suppliers stop offering us credit terms , we may not have sufficient liquidity to fund our operating costs and our business could be adversely affected . we also funded approximately 43.9 % and 71.2 % of our working capital requirements in 2010 and 2009 , respectively , from the proceeds of short-term loans from chinese banks . we expect to continue to do so in the future . story_separator_special_tag we also secured a $ 15 million loan from deutsche investitions- und entwicklungsgesellshaft ( deg ) in may 2010 which we have drawn down $ 5 million as of december 2010. proceeds from the private placement transactions and cash drawn down from the deg loan , together with cash generated from operations and short-term bank loans , have been primarily used to fund our working capital needs , as well as addition to our construction in progress and purchase of fixed assets . at december 31 , 2010 and 2009 , cash and cash equivalents ( including restricted cash ) were $ 15.0 million $ 13.4 million , respectively . we expect to continue to finance our operations and working capital needs in 2011 from cash generated from operations and short-term bank loans . in addition , we currently plan to finance or refinance approximately $ 8.8 million in the form of short-term bank loans in 2011. we expect that anticipated cash flows from operations and short-term bank loans will be sufficient to fund our operations through at least the next twelve months . - 27 - if available liquidity is not sufficient to meet our operating and loan obligations as they come due , our plans include pursuing alternative financing arrangements or reducing expenditures as necessary to meet our cash requirements . however , there is no assurance that we will be able to raise additional capital or reduce discretionary spending to provide liquidity , if needed . currently , the capital markets for small capitalization companies are difficult . accordingly , we can not be sure of the availability or terms of any alternative financing arrangements . the following table provides detailed information about our net cash flow for all financial statements periods presented in this report . replace_table_token_9_th operating activities net cash provided by operating activities for 2010 was $ 24.4 million and net cash used in operating activities for 2009 was $ 10.8 million . the increase of approximately $ 35.3 million in net cash flows provided in operating activities resulted primarily from an increase in net income of $ 3.9 million , an additional decrease in prepayments of $ 25.9 million , and a lower decrease in accounts and other payables of $ 6.2 million , partially offset by additional increase in inventory of $ 1.2 million . investing activities during 2010 , our uses of cash for investment activities are primarily purchase of plant and equipment as well as addition to constructions in progress related to the production lines and employee dormitory in junan hongrun as well as the storage facility in dongguan lorain . net cash used in investing activities for 2010 and 2009 were $ 35.6 million and $ 7.3 million , respectively , with the increase of approximately $ 28.4 million resulted primarily from an increase of $ 15.7 million for the purchase of plant and equipment and an increase of $ 10.7 million for payments of construction in progress . financing activities net cash provided by financing activities for 2010 and 2009 were $ 7.8 million and $ 26.5 million , respectively . the decrease of approximately $ 18.7 million in net cash provided by financing activities resulted primarily from an increase of $ 38.1 million for repayment of bank borrowings , partially offset by an increase of approximately $ 11.9 million in proceeds from bank borrowings and $ 9.5 million additional increase in bank note financings . loan facilities as of december 31 , 2010 and 2009 , we carried $ 25.2 million and $ 35.5 million short term bank loans from chinese domestic banks . please refer to note 9 of the consolidated financial statements for details . critical accounting policies the preparation of financial statements in conformity with united states generally accepted accounting principles requires our management to make assumptions , estimates and judgments that affect the amounts reported in the financial statements , including the notes thereto , and related disclosures of commitments and contingencies , if any . we consider our critical accounting policies to be those that require the more significant judgments and estimates in the preparation of financial statements , including the following : method of accounting -- we maintain our general ledger and journals with the accrual method accounting for financial reporting purposes . the financial statements and notes are representations of management . accounting policies adopted by us conform to generally accepted accounting principles in the united states of america and have been consistently applied in the presentation of financial statements , which are compiled on the accrual basis of accounting . use of estimates -- the preparation of the financial statements in conformity with generally accepted accounting principles in the united states of america requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods . management makes these estimates using the best information available at the time the estimates are made ; however , actual results could differ materially from those estimates . - 28 - the use of estimates is critical to carrying value of asset accounts such as accounts receivable , inventory , fixed assets , and intangible assets . we use estimates to account for the related bad debt allowance , inventory impairment charges , depreciation and amortization of our assets . in the food processing industry these accounts have a significant impact on the valuation of our balance sheet and the results of our operations . principles of consolidation -- the consolidated financial statements are presented in us dollars and include the accounts of the company and its commonly controlled entity . all significant inter-company balances and transactions are eliminated in combination .
| results of operations the following tables set forth key components of our results of operations for the periods indicated , and the differences between the two periods expressed in dollars and percentages : - 24 - replace_table_token_4_th replace_table_token_5_th year ended december 31 , 2010 compared to year ended december 31 , 2009 revenue net revenues . net revenues increased by $ 37.4 million , or approximately 25.5 % , to $ 184.2 million in 2010 from $ 146.8 million in 2009. this increase was attributable to the increased revenues generated from sales of each of our product segments , as reflected in the following table : replace_table_token_6_th the greatest increase in volume sold in 2010 , as compared to 2009 , was in the domestic prc market . revenues from sales in the chinese domestic market increased by approximately $ 31.5 million , or approximately 30.5 % , in 2010. as a percentage of total revenues , revenues from sales in the domestic prc market increased to approximately 73.3 % from approximately 70.5 % in 2009 . - 25 - in addition , in 2010 , revenues from sales to malaysia , netherlands , united kingdom , and united states as well as other countries increased , in the aggregate , approximately $ 11.1 million , or 48.3 % , compared to 2009 , partially offset by a decrease of an aggregate of $ 5.2 million , or 25.4 % , of sales to belgium , saudi arabia , singapore , south korea as well as other countries compared to 2009. see note 16 to the financial statements contained elsewhere in this report for more information on the breakdown of our sales per geographic region . cost of revenues .
| 5,936 |
based on recent forward strip pricing , the company currently anticipates 2019 average oil , ngl and natural gas prices could be slightly higher than their corresponding average prices in 2018. the company 's proved oil , ngl and natural gas reserves increased in 2018 , compared to 2017 , by 5.0 bcfe , or 3 % . the increase was primarily due to purchases , additions and extensions partially offset by revisions and sales . as of september 30 , 2018 , the company owned an average 1.2 % net revenue interest in 69 wells that were drilling or testing . other than the lease of office space , the company had no off balance sheet arrangements during 2018 or prior years . the following table reflects certain operating data for the periods presented : replace_table_token_13_th ( 37 ) story_separator_special_tag roman ; font-weight : normal ; font-style : normal ; text-transform : none ; font-variant : normal ; '' > loe increased $ 777,309 or 6 % in 2018. loe costs per mcfe of production decreased from $ 1.14 in 2017 to $ 1.10 in 2018. loe related to field operating costs increased $ 225,954 or 3 % in 2018 , compared to 2017. field operating costs were $ 0.55 per mcfe in 2018 , compared to $ 0.58 per mcfe in 2017. this decrease in rate was principally the result of significant new low-cost production coming on line in late 2017 and the company selling some high operating cost wells in late 2017 and early 2018. the increase in loe related to field operating costs was coupled with an increase in handling fees ( primarily gathering , transportation and marketing costs ) of $ 551,355 in 2018 , primarily due to increased production in 2018. on a per mcfe basis , these handling fees were $ 0.55 in 2018 as compared to $ 0.56 in 2017. natural gas sales bear the large majority of the ( 39 ) handling fees . handling fees are charged either as a percent of sales or based on production volumes . production taxes production taxes increased $ 540,651 or 35 % in 2018 , as compared to 2017. the increase in amount was primarily the result of increased oil , ngl and natural gas sales of $ 8,449,423 during 2018. production taxes as a percentage of oil , ngl and natural gas sales increased from 3.9 % in 2017 to 4.3 % in 2018. the increase in tax rate was mainly due to a change in the oklahoma production tax laws that took effect july 1 , 2018. the discounted tax rate was increased from 2.2 % to 5.2 % for the first three years of production on horizontally drilled wells . there was no change in the ultimate rate of 7.2 % after the discounted period expires . the low overall production tax rate in both years was due to a large proportion of the company 's oil and natural gas revenues coming from horizontally drilled wells , which are eligible for reduced oklahoma and arkansas production tax rates in the first few years of production . depreciation , depletion and amortization ( dd & a ) dd & a decreased $ 2,508 in 2018. dd & a per mcfe was $ 1.50 in 2018 , compared to $ 1.66 in 2017. dd & a decreased $ 1,941,354 as the result of a $ 0.16 decrease in the dd & a rate per mcfe . this was mostly offset by an increase of $ 1,938,846 due to oil , ngl and natural gas production volumes increasing 11 % collectively in 2018 , compared to 2017. the rate decrease was principally due to higher oil and ngl prices utilized in the reserve calculations during 2018 , as compared to 2017 , lengthening the economic life of wells thus resulting in higher projected remaining reserves on a significant number of wells . the company had new high-volume wells with low finding costs begin producing in the later part 2017 and early 2018 , which also contributed to the rate decrease . provision for impairment provision for impairment decreased $ 662,990 in 2018 , as compared to 2017. no impairment was recorded during 2018. during 2017 , impairment of $ 46,279 was recorded on five fields , primarily in oklahoma and texas . another $ 616,711 of impairment was recorded on a group of wells that were held for sale at september 30 , 2017. interest expense interest expense increased $ 472,963 in 2018 , as compared to 2017. the increase was due to higher interest rates and a higher outstanding debt balance during 2018. provision ( benefit ) for income taxes income taxes changed $ 13,428,000 , from a $ 689,000 provision in 2017 to a $ 12,739,000 benefit in 2018. this was mainly the result of the new tax cuts and jobs act enacted in december 2017 that reduced the u.s. federal corporate tax rate from 35 % to 21 % . the tax effects of this law change on our existing deferred tax liabilities of $ 12,464,000 was made in 2018 and is directly affecting the effective tax rate noted for 2018. additionally , due to the company having a september 30 year end versus a calendar year end , we have calculated the ( 40 ) current year 's federal tax provision using a blended rate of 24.53 % to adjust for one quarter of our fiscal year being under the old rate of 35 % and the remaining three quarters being under the new rate of 21 % . the effective tax rate changed from a 16 % provision in 2017 to a 672 % benefit in 2018. when a provision for income taxes is expected for the year , federal and oklahoma excess percentage depletion decreases the effective tax rate , while the effect is to increase the effective tax rate when a benefit for income taxes is recorded . story_separator_special_tag production taxes production taxes increased $ 476,767 or 44 % in 2017 , as compared to 2016. the increase in amount was primarily the result of increased oil , ngl and natural gas sales of $ 8,524,559 during 2017. production taxes as a percentage of oil , ngl and natural gas sales increased from 3.4 % in 2016 to 3.9 % in 2017. the increase in tax rate was the result of the expiration of production tax discounts on some of the company 's horizontally drilled wells in oklahoma and arkansas . the low overall production tax rate in both years was due to a large proportion of the company 's oil and natural gas revenues coming from horizontally drilled wells , which are eligible for reduced oklahoma and arkansas production tax rates in the first few years of production . depreciation , depletion and amortization ( dd & a ) dd & a decreased $ 6,090,017 in 2017. dd & a per mcfe was $ 1.66 in 2017 , compared to $ 2.13 in 2016. dd & a decreased $ 5,249,692 as the result of a $ 0.47 decrease in the dd & a rate per mcfe . this was coupled by a decrease of $ 840,325 due to oil , ngl and natural gas production volumes decreasing 3 % collectively in 2017 , compared to 2016. the rate decrease was principally due to higher oil , ngl and natural gas prices utilized in the reserve calculations during 2017 , as compared to 2016 , lengthening the economic life of wells thus resulting in higher projected remaining reserves on a significant number of wells . the company had new high-volume wells with low finding costs begin producing in the 2017 , which also contributed to the rate decrease . provision for impairment provision for impairment decreased $ 11,338,281 in 2017 , as compared to 2016. during 2017 , impairment of $ 46,279 was recorded on five fields , primarily in oklahoma and texas . another $ 616,711 of impairment was recorded on a group of wells that were held for sale at september 30 , 2017. during 2016 , impairment of $ 12,001,271 was recorded on 44 fields , primarily in oklahoma , kansas and texas . two fields in western oklahoma and the texas panhandle accounted for $ 7,548,533 or 63 % of the impairment due mainly to declining oil , ngl and natural gas prices . loss ( gain ) on asset sales and other loss ( gain ) on asset sales and other was a net loss of $ 105,830 in 2017 , as compared to a net gain of $ 2,576,237 in 2016. the net loss in 2017 was mainly due to the company selling some high operating cost wells at a loss during the year . the net gain in 2016 was largely due to the gain on sale of assets from two of the company 's partnerships . ( 43 ) interest expense interest expense decreased $ 69,481 in 2017 , as compared to 2016. the decrease was due to a lower outstanding debt balance during 2017. general and administrative costs ( g & a ) g & a increased $ 301,514 in 2017 , as compared to 2016. this increase was primarily the result of higher legal and technical consulting fees in 2017. the legal fee increase was mainly due to additional work done around the company filing its first shelf registration . the technical consulting fee increase was due to additional work performed to analyze possible acquisitions . provision ( benefit ) for income taxes the 2017 provision for income taxes of $ 689,000 was based on a pre-tax income of $ 4,220,933 , as compared to a benefit for income taxes of $ 7,711,000 in 2016 , based on a pre-tax loss of $ 17,997,884. the effective tax rate for 2017 and 2016 was a 16 % provision and a 43 % benefit , respectively . when a provision for income taxes is recorded , federal and oklahoma excess percentage depletion decreases the effective tax rate , while the effect is to increase the effective tax rate when a benefit for income taxes is recorded , as was the case in 2016. the effective tax rate for 2017 was also impacted by excess tax benefits from stock-based compensation recorded to income tax expense ( benefit ) during 2017. liquidity and capital resources at september 30 , 2018 , the company had positive working capital of $ 2,509,050 , as compared to positive working capital of $ 6,451,356 at september 30 , 2017. liquidity cash and cash equivalents were $ 532,502 as of september 30 , 2018 , compared to $ 557,791 at september 30 , 2017 , a decrease of $ 25,289. cash flows for the 12 months ended september 30 are summarized as follows : replace_table_token_16_th ( 44 ) operating activities : net cash provided by operating activities increased $ 6,185,702 during 2018 , as compared to 2017 , mainly the result of the following : receipts of oil , ngl and natural gas sales ( net of production taxes and gathering , transportation and marketing costs ) and other increased $ 10,734,247. decreased lease bonus receipts of $ 3,630,065. decreased income tax payments of $ 952,854. decreased net receipts on derivative contracts of $ 1,307,303. increased payments for interest expense of $ 517,583. investing activities : net cash used in investing activities decreased $ 3,278,745 during 2018 , as compared to 2017 , due to : lower drilling and completion activity during 2018 decreased capital expenditures by $ 14,217,762. higher acquisition activity increased expenditures by $ 11,327,371. higher proceeds from sale of assets of $ 361,437. financing activities : net cash used by financing activities increased $ 9,576,314 during 2018 , as compared to 2017 , the result of the following : net borrowings decreased $ 1,222,000 during 2018. net borrowings increased $ 7,722,000 during 2017. capital resources capital expenditures to drill and complete wells decreased $ 14,217,762 ( 55 % ) in 2018 , as compared to 2017. the company received 98
| results of operations fiscal year 2018 compared to fiscal year 2017 overview the company recorded net income of $ 14,635,669 , or $ 0.86 per share , in 2018 , compared to net income of $ 3,531,933 , or $ 0.21 per share , in 2017. revenues decreased in 2018 primarily due to decreased lease bonuses received and losses on derivative contracts , largely offset by higher oil , ngl and natural gas sales . expenses increased in 2018 mainly from increases in loe , production taxes and interest expenses partially offset by a lower provision for impairment . oil , ngl and natural gas sales oil , ngl and natural gas sales increased $ 8,449,423 , or 21 % , for 2018 , as compared to 2017. the increase was due to increased oil and ngl prices of 33 % and 16 % , respectively , combined with higher oil , ngl and natural gas volumes of 8 % , 47 % and 6 % , respectively , partially offset with decreased natural gas prices of 8 % in 2018. in the first quarter of 2018 , we continued to see the results of the 2017 drilling program after four eagle ford wells were completed with first sales in november 2017. in the second quarter we experienced the relatively steep early decline rates from new high working interest wells placed on production in the second half of 2017 and early 2018 , as wells stopped flowing efficiently due to loading . volumes then leveled off with the installation of lift equipment on the new wells as they transitioned from flowing efficiently up the production casing to requiring downhole equipment modifications to resume efficient flow . continued normal declines were then offset by first sales from drilling activity in the anadarko basin ( stack/cana/scoop ) , southeastern oklahoma and the permian basin .
| 5,937 |
oncolytic immunotherapy is an emerging class of cancer treatment that exploits the ability of certain viruses to selectively replicate in and directly kill tumors , as well as induce a potent , patient-specific , anti-tumor immune response . such oncolytic , or `` cancer killing , '' viruses have the potential to generate an immune response targeted to an individual patient 's particular set of tumor antigens , including neo-antigens that are uniquely present in tumors . our product candidates incorporate multiple mechanisms of action into a practical `` off-the-shelf '' approach that is intended to maximize the immune response against a patient 's cancer and to offer significant advantages over personalized vaccine approaches . we believe that the bundling of multiple approaches for the treatment of cancer into single therapies will simplify the development path of our product candidates , while also improving patient outcomes at a lower cost to the healthcare system than the use of multiple different drugs . the foundation of our immulytic platform consists of a proprietary , engineered strain of hsv-1 that has been `` armed '' with a fusogenic protein intended to substantially increase anti-tumor activity . our platform enables us to incorporate various genes whose expression is intended to augment the inherent properties of hsv-1 to both directly destroy tumor cells and induce an anti-tumor immune response . we believe rp1 will be effective at killing tumors and inducing immunogenic , or immune-stimulating , tumor cell death and that it will be highly synergistic with immune checkpoint blockade therapies . we are currently conducting a phase 1/2 clinical trial with rp1 in approximately 150 patients . we have completed enrollment of the phase 1 dose rising part of this clinical trial in which we are assessing the safety and tolerability of rp1 administered alone in 22 patients with mixed advanced solid tumor types , and following the review of the data by the src , have determined the dose regimen to be administered in the phase 2 part of this clinical trial . we are completing enrollment of a phase 1 expansion cohort of approximately 12 patients in which we are assessing the safety and tolerability of rp1 administered in combination with an anti-pd1 therapy at the determined phase 2 dose level . one patient with msi-h/dmmr remains to be enrolled in the expansion cohort . the phase 2 part of this clinical trial is designed to assess the safety and efficacy of rp1 in combination with an anti-pd1 therapy in four cohorts of approximately 30 patients with melanoma , non-melanoma skin cancers , bladder cancer and msi-h/dmmr . following src review of the phase 1 data to date , including data from the expansion cohort receiving rp1 with anti-pd1 therapy , we have opened enrollment in the united states and the united kingdom of the melanoma , bladder cancer , and non-melanoma skin cancer phase 2 cohorts , and will open enrollment of the msi-h-dmmr phase 2 cohort after a final evaluable msi-h/dmmr patient has been enrolled in the phase 1 expansion cohort without safety concerns . in the phase 2 part of the clinical trial we are also evaluating efficacy under the clinical trial protocol , primarily on the basis of the proportion of patients who have a response within each tumor type cohort . responses are either defined as a partial response ( a 30 % or greater reduction in tumor size ) or a complete response ( a complete eradication of the disease ) . we 87 then intend to analyze each cohort 's data to determine the indications that merit progressing into further clinical development . we have entered into a collaboration agreement with bms , under which it has granted us a non-exclusive , royalty-free license to , and is supplying at no cost , its anti-pd-1 therapy , nivolumab , for use in combination with rp1 in this clinical trial . bms has no further development-related obligations under this collaboration . we have also entered into a collaboration agreement with regeneron under which we intend to conduct clinical development of our product candidates in combination with cemiplimab . for each clinical trial conducted under this collaboration , regeneron will fund one-half of the clinical trial costs , supply cemiplimab at no cost , and grant us a non-exclusive , royalty-free license to cemiplimab for use in the clinical trial . the first planned clinical trial under this collaboration is a randomized , controlled phase 2 clinical trial of rp1 in combination with cemiplimab , versus cemiplimab alone , in approximately 240 patients with cscc . initial study site activation is currently underway in the united states and australia , with study initiation expected in august 2019. if compelling clinical data are generated demonstrating the benefits of the combined treatment , we believe the data from this phase 2 clinical trial could support a filing with regulatory authorities for marketing approval . we are also developing additional product candidates , rp2 and rp3 , built on our immulytic platform , that are further engineered to enhance anti-tumor immune responses and intended to address additional tumor types . rp2 has been engineered to express an antibody-like molecule that blocks the activity of ctla-4 , a protein that inhibits the immune response to tumors . rp3 is engineered with the intent of not only blocking the activity of ctla-4 , but also to further stimulate an anti-tumor response through activation of the immune co-stimulatory pathways through expression of the ligands for cd40 and 4-1bb . we began operations as replimune limited , an english limited company that was incorporated in 2015. on july 5 , 2017 , replimune group , inc. , a delaware corporation , was incorporated and , on july 10 , 2017 , the shareholders of replimune limited effected a share-for-share exchange pursuant to which they exchanged their outstanding shares in replimune limited for shares in replimune group , inc. , on a one-for-one basis . story_separator_special_tag if we fail to raise capital or enter into such agreements as , and when , needed , we may have to significantly delay , scale back , or discontinue the development and commercialization of one or more of our product candidates . because of the numerous risks and uncertainties associated with pharmaceutical product development , we are unable to accurately predict the timing or amount of increased expenses or when , or if , we will be able to achieve or maintain profitability . even if we are able to generate product sales , we may not become profitable . if we fail to become profitable or are unable to sustain profitability on a continuing basis , then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations . as of march 31 , 2019 , we had cash and cash equivalents and short-term investments of $ 134.8 million . we believe that our existing cash and cash equivalents and short-term investments will enable us to fund our operating expenses and capital expenditure requirements through at least 12 months from the issuance of the consolidated financial statements included in this annual report on form 10-k. see `` liquidity and capital resources '' and `` risk factorsrisks related to our financial position and need for additional capital . '' components of our results of operations revenue to date , we have not generated any revenue from product sales as we do not have any approved products and do not expect to generate any revenue from the sale of products in the near future . if our development efforts for rp1 or any other product candidates that we may develop in the future are successful and result in regulatory approval , or if we enter into collaboration or license agreements with third parties , we may generate revenue in the future from a combination of product sales or payments from those collaborations or license agreements . operating expenses our expenses since inception have consisted solely of research and development costs and general and administrative costs . research and development expenses research and development expenses consist primarily of costs incurred for our research activities , including our discovery efforts and the development of rp1 and our other product candidates , and include : expenses incurred under agreements with third parties , including clinical research organizations , or cros , that conduct research , preclinical activities and clinical trials on our behalf as well as contract manufacturing organizations , or cmos , that manufacture our product candidates for use in our preclinical and clinical trials ; salaries , benefits and other related costs , including stock-based compensation expense , for personnel engaged in research and development functions ; 90 costs of outside consultants , including their fees , stock-based compensation and related travel expenses ; the costs of laboratory supplies and acquiring , developing and manufacturing preclinical study and clinical trial materials ; costs related to compliance with regulatory requirements in connection with the development of rp1 and our other product candidates ; and facility-related expenses , which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs . we expense research and development costs as incurred . we recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our service providers . payments for these activities are based on the terms of the individual agreements , which may differ from the pattern of costs incurred , and are reflected in our consolidated financial statements as prepaid or accrued research and development expenses . our direct external research and development expenses are tracked on a program-by-program basis and consist of costs , such as fees paid to consultants , contractors , cmos , and cros in connection with our preclinical and clinical development activities . to date , we have not allocated expenses to our earlier-stage programs for rp2 and rp3 . in addition , we do not allocate employee costs , costs associated with our discovery efforts , laboratory supplies , and facilities , including depreciation or other indirect costs , to specific product development programs because these costs are deployed across multiple product development programs and , as such , are not separately classified . the table below summarizes our research and development expenses by product candidate or development program for each of the periods presented : replace_table_token_3_th 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 . we expect that our research and development expenses will continue to increase for the foreseeable future as we initiate additional clinical trials of rp1 , complete preclinical development and pursue initial stages of clinical development of rp2 and rp3 and continue to discover and develop additional product candidates . the successful development and commercialization of our product candidates is highly uncertain . this is due to the numerous risks and uncertainties associated with product development and commercialization , including the following : the scope , rate of progress , expense and results of our ongoing clinical trials of rp1 , as well as of any future clinical trials of rp2 and rp3 or other product candidates and other research and development activities that we may conduct ; the number and scope of preclinical and clinical programs we decide to pursue ; our ability to maintain our current research and development programs and to establish new ones ; uncertainties in clinical trial design and patient enrollment rates ; 91 the successful completion of clinical trials with safety , tolerability , and efficacy profiles that are satisfactory to the fda or any comparable foreign regulatory authority ; the receipt of regulatory approvals from applicable regulatory authorities ; our success in establishing , equipping , and operating a manufacturing facility , or
| results of operations comparison of the years ended march 31 , 2019 and 2018 the following table summarizes our results of operations for the years ended march 31 , 2019 and 2018 : replace_table_token_4_th research and development expenses replace_table_token_5_th research and development expenses for the year ended march 31 , 2019 were $ 22.2 million , compared to $ 13.5 million for the year ended march 31 , 2018. the increase of $ 8.7 million was due primarily to an increase of approximately $ 2.4 million in direct research costs associated with rp1 and an approximately $ 6.2 million increase in our unallocated research and development costs . the increase in rp1 costs was due primarily to an increase in clinical trial costs in the year ended march 31 , 2019 associated with our ongoing phase 1/2 clinical trial , which commenced in the united kingdom in october 2017. the increase in unallocated research and development expenses reflected an increase of $ 3.4 million in personnel-related costs , including stock-based compensation , and an increase of $ 2.8 million in other costs . the increase in personnel-related costs largely reflected the hiring of additional personnel in our research and development functions as we began work on our planned phase 2 clinical trial of rp1 in patients with cscc . personnel-related costs for the years ended march 31 , 2019 and 2018 included stock-based compensation expense of $ 2.7 million and $ 0.8 million , 94 respectively . other costs increased primarily due to purchases of supplies used across all of our product candidates .
| 5,938 |
for the years ended december 31 , 2016 , 2017 and 2018 , the company reported unrealized losses , net of realized amounts , of $ ( 5,000 ) , $ ( 103,000 ) and $ ( 98,000 ) , respectively , on available for sale securities in total comprehensive loss . realized gains and losses from the sale of available for sale securities are determined on a specific-identification basis . the company has classified as short-term those securities that mature within one year . all other securities are classified as long-term . the following table summarizes the estimated story_separator_special_tag the following discussion is intended to assist you in understanding our financial condition and results of operations and should be read in conjunction with the financial statements and related notes included elsewhere in this annual report on form 10-k. many of the amounts and percentages in this section have been rounded for convenience of presentation , but actual recorded amounts have been used in computations . accordingly , some information may appear not to compute accurately . overview i.d . systems , inc. ( “ ids ” , and together with its subsidiaries , “ i.d . systems , ” the “ company , ” “ we , ” “ our , ” or “ us ” ) develops , markets and sells wireless machine-to-machine solutions for managing and securing high-value enterprise assets . these assets include industrial vehicles , such as forklifts and airport ground support equipment ; rental vehicles ; and transportation assets , such as dry van trailers , refrigerated trailers , railcars and containers . our patented wireless asset management systems utilize radio frequency identification ( rfid ) , wi-fi , satellite or cellular communications , and sensor technology to address the needs of organizations to control , track , monitor and analyze their assets . our solutions enable our customers to achieve tangible economic benefits by making timely , informed decisions that increase the safety , security , revenue , productivity and efficiency of their operations . we have focused our business activities on three primary business solutions : ( i ) industrial truck management solutions , ( ii ) logistics visibility solutions , and ( iii ) connected vehicle solutions . our solution for industrial truck management allows our customers to reduce operating risks including unsafe activity , facility equipment and goods damage , operational costs and capital expenditures and to comply with certain safety regulations by accurately and reliably measuring and controlling fleet activity . this solution also enhances security at industrial facilities and areas of critical infrastructure , such as airports , by controlling access to , and restricting the use of , vehicles and equipment . our solution for logistics visibility allows our customers to increase revenue per asset deployed , reduce fleet size , and improve the monitoring and control of sensitive cargo . our solutions for connected vehicles include unique internet-of-things ( “ iot ” ) projects similar to projects we have delivered to avis budget group inc. ( “ avis ” ) . these engineering programs help our customers transform their operations . for avis , our rental fleet management platform assists rental car companies in generating higher revenue by more accurately tracking vehicle data , such as fuel consumption and odometer readings , and improving customer service by expediting the rental and return processes . in addition , our wireless solution for “ car sharing ” enables rental car companies to establish a network of vehicles positioned strategically around cities or on corporate campuses , control vehicles remotely , manage member reservations by smart phone or internet , and charge members for vehicle use by the hour . we sell our solutions to both executive , division and site-level management within the enterprise . we also utilize channel partners such as independent dealers and original equipment manufacturers ( oems ) who may opt for us to white label our product . typically , our initial system deployment serves as a basis for potential expansion across the customer 's organization . we work closely with customers to help maximize the utilization and benefits of our system and demonstrate the value of enterprise-wide deployments . post-implementation , we consult with our customers to further extend and customize the benefits to the enterprise by delivering enhanced analytics capabilities . we market and sell our solutions to a wide range of customers in the commercial and government sectors . our customers operate in diverse markets , such as automotive manufacturing , heavy industry , retail and wholesale distribution , transportation , aviation , aerospace and defense , homeland security and vehicle rental . we incurred net losses of approximately $ 6.4 million , $ 3.9 million and $ 5.8 million for the years ended december 31 , 2016 , 2017 and 2018 , respectively , and have incurred additional net losses since inception . as of december 31 , 2018 , we had cash ( including restricted cash ) , cash equivalents and marketable securities of $ 15.0 million , working capital of $ 15.8 million , and an accumulated deficit of $ 101.2 million . our primary sources of cash are cash flows from operating activities and our holdings of cash , cash equivalents and investments from the sale of common stock . to date , we have not generated sufficient cash flow solely from operating activities to fund our operations . during the year ended december 31 , 2018 , we generated revenues of $ 53.1 million with avis and wal-mart stores , inc. accounting for 18 % and 10 % of our revenues , respectively . during the year ended december 31 , 2017 , we generated revenues of $ 41.0 million with wal-mart stores , inc. accounting for 16 % of our revenues . during the year ended december 31 , 2016 , we generated revenues of $ 36.8 million with wal-mart stores , inc. accounting for 18 % of our revenues . story_separator_special_tag some of these key customers , as well as other customers of the company , operate in markets that have suffered business downturns in the past few years or may so suffer in the future , particularly in light of the current global economic downturn , and any material adverse change in the financial condition of such customers could materially and adversely affect our financial condition and results of operations . if we are unable to replace such revenue from existing or new customers , the market price of our common stock could decline significantly . we expect that many customers who utilize our solutions will do so as part of a large-scale deployment of these solutions across multiple or all divisions of their organizations . a customer 's decision to deploy our solutions throughout its organization will involve a significant commitment of its resources . accordingly , initial implementations may precede any decision to deploy our solutions enterprise-wide . throughout this sales cycle , we may spend considerable time and expense educating and providing information to prospective customers about the benefits of our solutions . the timing of the deployment of our solutions may vary widely and will depend on the specific deployment plan of each customer , the complexity of the customer 's organization and the difficulty of such deployment . customers with substantial or complex organizations may deploy our solutions in large increments on a periodic basis . accordingly , we may receive purchase orders for significant dollar amounts on an irregular and unpredictable basis . because of our limited operating history and the nature of our business , we can not predict the timing or size of these sales and deployment cycles . long sales cycles , as well as our expectation that customers will tend to place large orders sporadically with short lead times , may cause our revenues and results of operations to vary significantly and unexpectedly from quarter to quarter . our ability to increase our revenues and generate net income will depend on a number of factors , including our ability to : ● increase sales of products and services to our existing customers ; ● convert our initial programs into larger or enterprise-wide purchases by our customers ; ● increase market acceptance and penetration of our products ; and ● develop and commercialize new products and technologies . critical accounting policies and estimates we have adopted various accounting policies that govern the application of accounting principles generally accepted in the united states in the preparation of our financial statements . our significant accounting policies are described in note 2 to our consolidated financial statements included in this annual report on form 10-k. certain accounting policies involve significant judgments and assumptions by our management that can have a material impact on the carrying value of certain assets and liabilities . we consider such accounting policies to be our critical accounting policies . the judgments and assumptions used by our management in these critical accounting policies are based on historical experience and other factors that our management believes to be reasonable under the circumstances . because of the nature of these judgments and assumptions , actual results could differ significantly from these judgments and estimates , which could have a material impact on the carrying values of our assets and liabilities and our results of operations . our critical accounting policies are described below . 42 revenue recognition we derive revenue from : ( i ) sales of our wireless asset management systems and spare parts ; ( ii ) remotely hosted saas agreements and post-contract maintenance and support agreements ; ( iii ) services , which includes training and technical support ; and ( iv ) periodically , leasing arrangements . amounts invoiced to customers which are not recognized as revenue are classified as deferred revenue and classified as short-term or long-term based upon the terms of future services to be delivered . revenue is recognized when obligations under the terms of a contract with our customer are satisfied ; generally this occurs with the transfer of control of our wireless asset management systems , spare parts , or services . revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services . sales , value add , and other taxes we collect concurrent with revenue-producing activities are excluded from revenue . incidental items that are immaterial in the context of the contract are recognized as expense . the expected costs associated with our base warranties continue to be recognized as expense when the products are sold . we recognize revenue for remotely hosted saas agreements and post-contract maintenance and support agreements beyond our standard warranties over the life of the contract . our industrial truck and connected vehicle wireless asset management systems consist of on-asset hardware , communication infrastructure , saas , and hosting infrastructure . the company 's system is typically implemented by the customer or a third party and , as a result , revenue related to the on-asset hardware is recognized when control of the hardware is transferred to the customer , which usually is upon delivery of the system and contractual obligations have been satisfied . revenue related to the saas and hosting infrastructure performance obligation is recognized over time as access to the saas and hosting infrastructure is provided to the customer . in some instances , we are also responsible for providing installation services , training and technical support services which are short-term in nature and revenue for these services are recognized at the time of performance or right to invoice . our logistics visibility solutions systems ( formerly “ transportation asset management ” ) consist of on-asset hardware , communications and saas services . the logistics visibility solutions system does not have stand-alone value to the customer separate from the saas services provided and , therefore , we consider both hardware and saas services a bundled performance obligation .
| results of operations the following table sets forth certain items related to our statement of operations as a percentage of revenues for the periods indicated and should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report on form 10-k. our results reflect the operations of keytroller from july 31 , 2017 , the effective date of the keytroller acquisition . a detailed discussion of the material changes in our operating results is set forth below . replace_table_token_4_th 46 year ended december 31 , 2018 compared to year ended december 31 , 2017 the following table sets forth our revenues by product line for the periods indicated : replace_table_token_5_th revenues . revenues increased by approximately $ 12.1 million , or 29.6 % , to $ 53.1 million in 2018 from $ 41.0 million in 2017. the increase in revenue is attributable to an increase in total industrial truck management revenue of approximately $ 6.3 million to $ 30.0 million in 2018 from $ 23.7 million in 2017 and connected vehicles revenue of approximately $ 6.6 million to $ 9.6 million in 2018 from $ 3.0 million in 2017 , partially offset by a decrease in total logistics visibility revenue of approximately $ 0.8 million to $ 13.5 million in 2018 from $ 14.3 million in 2017. revenues from products increased by approximately $ 13.3 million , or 56.7 % , to $ 36.9 million in 2018 from $ 23.6 million in 2017. industrial truck management product revenue increased by approximately $ 5.2 million to $ 22.7 million in 2018 from $ 17.5 million in 2017. the increase in industrial truck management product revenue resulted principally from increased product sales of approximately $ 4.6 million from keytroller .
| 5,939 |
our platform provides an ecosystem where consumers can access their tax-advantaged healthcare savings , compare treatment options and pricing , evaluate and pay healthcare bills , receive personalized benefit and clinical information , earn wellness incentives , and make educated investment choices to grow their tax-advantaged healthcare savings . the core of our ecosystem is the hsa , a financial account through which consumers spend and save long-term for healthcare on a tax-advantaged basis . we are the integrated hsa platform for 141 health plan and administrator partners and over 45,000 employer clients . our health plan and administrator partners and employer partners constitute our network partners . since our inception in 2002 , we have been committed to developing technology solutions that empower healthcare consumers . we have a proprietary cloud-based technology platform , developed and refined during more than a decade of operations , which we believe is highly differentiated in the marketplace . key platform differentiators include purpose-built technology that offers greater functionality and flexibility than the technologies used by our competitors , more than 3,000 data integrations with our network partner and other benefits provider systems , and configurability solutions with more than 1,700 uniquely tailored configurations serving our network partners . we work closely with our network partners to educate and provide personalized guidance regarding the benefits of hsas and our other products . we earn revenue primarily from three sources : service revenue , custodial revenue and interchange revenue . we earn service revenue by providing monthly account services on our platform , primarily through contracts with our network partners , and custodial agreements with individual members . we earn custodial revenue from custodial cash assets deposited with our federally-insured custodial depository partners and with our insurance company partner , and recordkeeping fees we earn in respect of mutual funds in which our members invest . we also earn interchange revenue from interchange fees that we earn on payments that our members make using our physical and virtual payment cards . key factors affecting our performance we believe that our performance and future success are driven by a number of factors , including those identified below . each of these factors presents both significant opportunities and significant risks to our future performance . see the section entitled “ risk factors ” included in part 1 , item 1a of this annual report on form 10-k. structural change in u.s. private health insurance substantially all of our revenue is derived from healthcare-related saving and spending by consumers in the united states , which is impacted by changes affecting the broader healthcare industry in the u.s. the healthcare industry has changed significantly in recent years , and we expect that significant changes will continue to occur that will result in increased participation in hdhps and other consumer-centric health plans . in particular , we believe that continued growth in healthcare costs , and related factors will spur hdhp and hsa growth ; however , the timing and impact of these and other developments in the healthcare industry are difficult to predict , and changes in u.s. healthcare policy could adversely affect our business . attracting and penetrating network partners we created our business model to take advantage of the changing dynamics of the u.s. private health insurance market . our model is based on a b2b2c distribution strategy , meaning that we rely on our employer partners and health plan and administrator partners to reach potential members to increase the number of our hsa members . our success depends in large part on our ability to further penetrate our existing network partners by adding new hsa members from these partners and adding new network partners . - 29 - our innovative technology platform we believe that innovations incorporated in our technology that enable consumers to make healthcare saving and spending decisions differentiate us from our competitors and drive our growth in revenue , hsa members , network partners and custodial assets . similarly , these innovations underpin our ability to provide a differentiated consumer experience in a cost-effective manner . for example , we are currently undertaking a significant update of our proprietary platform 's architecture , which will allow us to improve our transaction processing capabilities and related platform infrastructure to support continued account and transaction growth . we intend to continue to invest in our technology development to enhance our platform 's capabilities and infrastructure . our “ deep purple ” culture the new healthcare consumer needs education and guidance delivered by people as well as technology . we believe that our `` deep purple '' culture which we define as driving excellence , ethics , and process while providing remarkable service , is a significant factor in our ability to attract and retain customers and to address nimbly opportunities in the rapidly changing healthcare sector . we make significant efforts to promote and foster deep purple within our workforce . we invest in and intend to continue to invest in human capital through technology-enabled training , career development and advancement opportunities . interest rates as a non-bank custodian , we contract with federally-insured custodial depository partners and an insurance company partner to hold custodial cash assets on behalf of our members , and we earn a significant portion of our total revenue from interest rates offered to us by these partners . the contract terms range from three to five years and have either fixed or variable interest rates . as our custodial assets increase and existing agreements expire , we seek to enter into new contracts with federally-insured custodial depository partners , the terms of which are impacted by the then-prevailing interest rate environment . the diversification of deposits among partners and varied contract terms substantially reduces our exposure to short-term fluctuations in prevailing interest rates and mitigates the short-term impact of a sustained increase or decline in prevailing interest rates on our custodial revenue . story_separator_special_tag the number of our active hsa members increased by approximately 378,000 , or 13 % , from january 31 , 2018 to january 31 , 2019 , and by approximately 485,000 , or 20 % , from january 31 , 2017 to january 31 , 2018 . custodial assets the following table sets forth our custodial assets for the periods indicated : replace_table_token_3_th - 31 - our custodial assets , which are our hsa members ' assets for which we are the custodian , consist of the following components : ( i ) custodial cash deposits , which are deposits with our federally-insured custodial depository partners , ( ii ) custodial cash deposits invested in an annuity contract with our insurance company partner , and ( iii ) investments in mutual funds through our custodial investment fund partner . measuring our custodial assets is important because our custodial revenue is directly affected by average daily custodial balances . our total custodial assets increased by $ 1.3 billion , or 19 % , from january 31 , 2018 to january 31 , 2019 . our total custodial assets increased by $ 1.7 billion , or 35 % , from january 31 , 2017 to january 31 , 2018 . the increase in total custodial assets in these periods was driven by additional custodial assets from our existing hsa members and new custodial assets from new hsa members added during the fiscal year . importantly , our custodial investment assets increased by $ 381.2 million , or 30 % , from january 31 , 2018 to january 31 , 2019 , and by $ 630.1 million , or 96 % , from january 31 , 2017 to january 31 , 2018 , reflecting our strategy to help our hsa members build wealth and invest for retirement . during the years ended january 31 , 2019 , 2018 and 2017 , we acquired the rights to be custodian of hsa portfolios consisting of approximately $ 12.0 million , $ 164.0 million , and $ 63.0 million of custodial assets , respectively . adjusted ebitda we define adjusted ebitda , which is a non-gaap financial metric , as adjusted earnings before interest , taxes , depreciation and amortization , stock-based compensation expense , and certain other non-operating items . we believe that adjusted ebitda provides useful information to investors and analysts in understanding and evaluating our operating results in the same manner as our management and our board of directors because it reflects operating profitability before consideration of non-operating expenses and non-cash expenses , and serves as a basis for comparison against other companies in our industry . the following table presents a reconciliation of net income , the most comparable gaap financial measure , to adjusted ebitda for each of the periods indicated : replace_table_token_4_th ( 1 ) for the years ended january 31 , 2019 , 2018 and 2017 , other consisted of non-income based taxes of $ 487 , $ 439 and $ 358 , acquisition-related costs of $ 2,121 , $ 2,197 and $ 631 , amortization of incremental costs to obtain a contract of $ 1,470 , $ 0 and $ 0 , loss on disposal of previously capitalized software development of $ 676 , $ 0 and $ 0 , and other costs of $ 244 , $ 53 and $ 359 , respectively . the following table sets forth our adjusted ebitda : replace_table_token_5_th our adjusted ebitda increased by $ 33.7 million , or 40 % , from $ 84.7 million for the year ended january 31 , 2018 to $ 118.4 million for the year ended january 31 , 2019 . the increase in adjusted ebitda was driven by the overall growth of our business , including a $ 23.3 million , or 43 % , increase in income from operations . our adjusted ebitda increased by $ 21.9 million , or 35 % , from $ 62.8 million for the year ended january 31 , 2017 to $ 84.7 million for the year ended january 31 , 2018 . the increase in adjusted ebitda was driven by the overall growth of our business , including a $ 13.2 million , or 32 % , increase in income from operations . our use of adjusted ebitda has limitations as an analytical tool , and it should not be considered in isolation or as a substitute for analysis of our results as reported under gaap . - 32 - key components of our results of operations revenue the following table sets forth our revenue for the periods indicated : replace_table_token_6_th we earn revenue from three primary sources : service revenue , custodial revenue and interchange revenue . service revenue . we earn service revenue from the fees we charge our network partners , employer clients and individual members for the administration services we provide in connection with the hsas and ras we offer . with respect to our network partners , our fees are generally based on a fixed tiered structure for the duration of our agreement with the relevant network partner and are paid to us on a monthly basis . we recognize revenue on a monthly basis as services are rendered under our written service agreements . custodial revenue . we earn custodial revenue , an increasing component of our overall revenue , from our custodial cash assets deposited with our federally-insured custodial depository partners and with our insurance company partner , and recordkeeping fees we earn in respect of mutual funds in which our members invest . as a non-bank custodian , we deposit our custodial cash with our various depository partners pursuant to contracts that ( i ) have terms up to five years , ( ii ) provide for a fixed or variable interest rate payable on the average daily cash balances deposited with the relevant depository partner , and ( iii ) have minimum and maximum required deposit balances . we earn custodial revenue on our custodial cash that is based on the interest rates offered to us by these depository partners .
| results of operations service revenue the $ 8.9 million , or 10 % , increase in service revenue from the year ended january 31 , 2018 to the year ended january 31 , 2019 was primarily due to an increase in the number of our hsa members , partially offset by the lower service revenue per hsa member described below . the $ 14.4 million , or 19 % , increase in service revenue from the year ended january 31 , 2017 to the year ended january 31 , 2018 was also primarily due to an increase in the number of our hsa members , partially offset by the lower service revenue per hsa member described below . the number of our hsa members increased by approximately 592,000 , or 17 % , from january 31 , 2018 to january 31 , 2019 , and by approximately 657,000 , or 24 % , from january 31 , 2017 to january 31 , 2018 . service revenue as a percentage of our total revenue continues to decrease primarily due to the higher growth rate of custodial revenue . service revenue per hsa member decreased by approximately 10 % from the year ended january 31 , 2018 to the year ended january 31 , 2019 , and 6 % from the year ended january 31 , 2017 to the year ended january 31 , 2018 . our service fee tier structure incentivizes our network partners to add hsa members by charging a lower rate for more hsa members . as network partners add more hsa members , the account fee per hsa member will continue to decrease .
| 5,940 |
the new revenue recognition standard requires entities to recognize revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods story_separator_special_tag the discussion below focuses on the factors affecting our consolidated results of operations for the years ended december 31 , 2016 , 2015 and 2014 and financial condition at december 31 , 2016 and 2015 and , where appropriate , factors that may affect our future financial performance , unless stated otherwise . this discussion should be read in conjunction with the consolidated financial statements , notes to the consolidated financial statements and selected consolidated financial data . the acronyms and abbreviations identified below are used in the `` management 's discussion and analysis of financial condition and results of operations '' as well as in item 8 . `` financial statements and supplementary data . '' the following is provided to aid the reader and provide a reference point when reviewing the consolidated financial statements . 2013 credit agreement amended and restated credit agreement entered into on january 18 , 2013 by and among the company and certain of our subsidiaries , as borrowers , and wex card holdings australia pty ltd , as specified designated borrower , with a lending syndicate 2014 amendment agreement amendment and restatement agreement entered into on august 22 , 2014 , among the company , the lenders party thereto , and bank of america , n.a. , as administrative agent 2014 credit agreement second amended and restated credit agreement entered into on august 22 , 2014 , by and among the company and certain of its subsidiaries , as borrowers , wex card holding australia pty ltd. , as designated borrower , and bank of america , n.a. , as administrative agent on behalf of consenting lenders . 2016 credit agreement credit agreement entered into on july 1 , 2016 by and among the company and certain of its subsidiaries , as borrowers , wex card holding australia pty ltd. , as designated borrower , and bank of america , n.a. , as administrative agent on behalf of the lenders adjusted net income or ani a non-gaap measure that adjusts net earnings attributable to shareholders to exclude acquisition and divestiture related items , debt restructuring and debt issuance cost amortization , stock-based compensation , restructuring and other costs , a vendor settlement , unrealized gains and losses on derivatives , net foreign currency remeasurement gains and losses , non-cash adjustments related to tax receivable agreement , reserves for regulatory penalties , similar adjustments attributed to our non-controlling interest and certain tax related items . asu 2014-09 accounting standards update no . 2014-09 revenue from contracts with customers ( topic 606 ) asu 2015-03 accounting standards update no . 2015-03 interest—imputation of interest ( subtopic 835-30 ) : simplifying the presentation of debt issuance costs asu 2015-16 accounting standards update no . 2015-16 business combinations ( topic 805 ) : simplifying the accounting for measurement-period adjustments asu 2016-01 accounting standards update no . 2016-01 financial instruments - overall ( subtopic 825-10 ) : recognition and measurement of financial assets and financial liabilities asu 2016-02 accounting standards update no . 2016-02 leases ( topic 842 ) asu 2016-09 accounting standards update no . 2016-09 compensation-stock compensation ( topic 718 ) : improvements to employee share-based payment accounting asu 2016-13 accounting standards update no . 2016-13 financial instruments-credit losses ( topic 326 ) : measurement of credit losses on financial instruments asu 2016-15 accounting standards update no . 2016-15 statement of cash flows ( topic 230 ) : classification of certain cash receipts and cash payments australian securitization subsidiary southern cross wex 2015-1 trust , a bankruptcy-remote subsidiary consolidated by the company average expenditure per payment processing transaction average total dollars of spend in a funded fuel transaction benaissance benaissance , a leading provider of integrated saas technologies and services for healthcare premium billing , payment and workflow management , acquired by the company on november 18 , 2015. company wex inc. and all entities included in the consolidated financial statements efs electronic funds source , llc , a provider of customized corporate payment solutions for fleet and corporate customers with a focus on the large and mid-sized over-the-road fleets . on july 1 , 2016 , the company acquired wp mustang topco llc , the indirect parent of electronic funds source , llc and warburg pincus private equity xi ( lexington ) , llc , an affiliated entity , from investment funds affiliated with warburg pincus llc . 32 esso portfolio in europe european commercial fleet card portfolio acquired from exxonmobil european securitization subsidiary gorham trade finance b.v. , a bankruptcy-remote subsidiary consolidated by the company evolution1 eb holdings corp. and its subsidiaries which includes evolution1 , inc. , acquired by the company on july 16 , 2014 evolution1 plan evolution1 401 ( k ) plan sponsored by evolution1 inc. fasb financial accounting standards board fdic federal deposit insurance corporation fx foreign exchange gaap generally accepted accounting principles in the united states higher one higher one , inc. a technology and payment services company focused on higher education indenture the notes were issued pursuant to an indenture dated as of january 30 , 2013 among the company , the guarantors listed therein , and the bank of new york mellon trust company , n.a. , as trustee nci non-controlling interest nol net operating loss notes $ 400 million notes with a 4.75 % fixed rate , issued on january 30 , 2013 now deposits negotiable order of withdrawal deposits over-the-road typically heavy trucks traveling long distances pacific pride pacific pride services , llc , previously a wholly-owned subsidiary , sold on july 29 , 2014 payment solutions purchase volume total amount paid by customers for transactions payment processing transactions funded payment transactions where the company maintains the receivable for total purchase ppg price per gallon of fuel rapid ! paycard rapid ! story_separator_special_tag our effective tax rate was 34.0 percent for 2016 as compared to 40.7 percent for 2015. the change in our tax rate reflects a shift in jurisdictional profitability between 2015 and 2016. increased profits in 2016 within tax jurisdictions with tax rates lower than the united states resulted in a reduction to our effective tax rate . our 2016 tax rate reflects the release of certain historical foreign reserve positions in australia , primarily driven by a lapse of statute , as well as a reduction in our domestic production activities deduction as a result of lower taxable income in the united states . future tax rates may fluctuate due to changes in the mix of earnings among different tax jurisdictions . our tax rate fluctuates due to the impacts that rate and mix changes have on our net deferred tax assets . we anticipate that our future gaap effective tax rate should be within the range of our historical rates , excluding discrete items . segments beginning in the fourth quarter of 2015 , wex began to operate in three reportable segments : fleet solutions , travel and corporate solutions , and health and employee benefit solutions . previously , the company had reported two business segments , fleet payment solutions and other payment solutions . the fleet solutions segment provides payment , transaction processing and information management services specifically designed for the needs of commercial and government fleets . the travel and corporate solutions segment focuses on the complex payment environment of business-to-business payments , providing customers with payment processing solutions for their corporate payment and transaction monitoring needs . the health and employee benefit solutions segment provides software as a service platform consumer directed healthcare payments , as well as payroll related benefits to customers in brazil . 35 results of operations year ended december 31 , 2016 , as compared to the year ended december 31 , 2015 fleet solutions segment the following table reflects comparative operating results and key operating statistics within our fleet solutions segment : replace_table_token_3_th nm - not meaningful ( a ) as of july 1 , 2016 , these key operating statistics include our domestic efs acquisition . revenues payment processing revenue decreased $ 8.0 million for 2016 , as compared to 2015 , due primarily to the impact of a 13 % decrease in the average domestic price per gallon of fuel in the 2016 as compared to 2015 and the unfavorable impact of fx rates . these unfavorable factors were partly offset by a higher payment processing volume related to the acquisition of efs , a large customer portfolio converting from a transaction processing relationship to a payment processing relationship in the beginning of 2016 and organic growth . account servicing revenue increased $ 26.3 million for 2016 , as compared to 2015 , resulting from the acquisition of efs and organic growth from an increase in fees to certain customers as part of our price modernization efforts . other revenues increased $ 34.9 million in 2016 , as compared to 2015 , primarily due to the acquisition of efs . 36 finance fee revenue is comprised of the following components : replace_table_token_4_th late fee revenue is primarily fees charged for payments not made within the terms of the customer agreement based upon the outstanding customer receivable balance . late fee revenue is earned when a customer 's receivable balance becomes delinquent and is calculated using the greater of a minimum charge or a stated late fee rate multiplied by the outstanding balance that is subject to a late fee charge . changes in the absolute amount of such outstanding balances can be attributed to changes in ( i ) fuel prices ; ( ii ) customer specific transaction volume ; and ( iii ) customer specific delinquencies . late fee revenue can also be impacted by changes in ( i ) late fee rates and ( ii ) increases or decreases in customer overdue balances . late fee rates are determined and set based primarily on the risk associated with our customers , coupled with a strategic view of standard rates within our industry . from time-to-time , we assess the market rates associated within our industry to determine what late fee rates are appropriate . we consider factors such as the company 's overall financial model and strategic plan , the cost to our business from customers failing to pay timely and the impact such late payments have on our financial results . these assessments are typically conducted at least annually but may occur more often depending on macro-economic factors . late fees increased $ 35.5 million in 2016 , as compared to 2015 . the increase in late fees was primarily due to $ 39.1 million due to rate increases , partly offset by a decrease of $ 3.6 million due to the change in overdue balances . during the first half of 2015 , late fee rates ranged from 0 to 3.75 percent monthly with a minimum late fee charge of $ 50. for the second half of 2015 , late fee rate ranges and minimum charges were 0 to 5.50 percent monthly and $ 75 , respectively . during the second quarter of 2016 , late fee ranges were changed to 0 to 6.99 percent monthly , while minimum charges remained at $ 75. the weighted average late fee rate was 4.9 % and 2.9 % for 2016 and 2015 , respectively . concessions to certain customers experiencing financial difficulties may be granted and are limited to extending the time to pay , placing a customer on a payment plan or granting waivers of late fees . there were no material concessions to customers experiencing financial difficulties during both the years ended december 31 , 2016 and 2015. the primary source of factoring fee revenue is calculated as a negotiated percentage fee of the receivable balance that we purchase .
| 2015 highlights during 2015 , cash provided by operating activities was primarily provided by a decrease in accounts receivable , net of the accounts receivable balances acquired with our acquisitions , net income , and depreciation and amortization expense . accounts receivable decreased in 2015 over 2014 as a result of decreases in fuel prices . on november 18 , 2015 , we acquired benaissance for approximately $ 80.7 million . the transaction was financed through the company 's cash on hand and existing credit facility . on august 31 , 2015 , we acquired the remaining 49 percent ownership in unik , that we did not previously own for approximately $ 46 million . the transaction was financed through the company 's cash on hand and existing credit facility . on january 7 , 2015 , we sold our operations of rapid ! paycard for $ 20.0 million , which resulted in a pre-tax gain of $ 1.2 million . during 2015 , we incurred restructuring charges of $ 9.0 million , of which approximately $ 1.4 million was paid during the year . these expenses consist of employee termination benefits and third party service fees and are expected to be paid out through 2016 and into 2017. during 2015 , we had approximately $ 63 million of capital expenditures . a significant portion of our capital expenditures are for the development of internal-use computer software primarily to enhance product features and functionality in the united states and the development of our global fleet platform . our capital spending is financed primarily through internally generated funds . 50 2014 highlights during 2014 , our increase in accounts receivable , net of the account receivable balances acquired with our acquisitions , was primarily funded by operating activities . accounts receivable increased in 2014 over 2013 as a result of increased customer spend levels . on july 16 , 2014 , we acquired evolution1 for approximately $ 532.2 million in cash .
| 5,941 |
it professionals have become increasingly specialized , and rely on our network of over 150 websites , each of which focuses on a specific it sector such as storage , security or networking , for key decision support information tailored to their specific areas of responsibility . we work with our advertising customers to develop customized marketing programs , often providing them with multiple offerings in order to target their desired audience of it professionals more effectively . our service offerings address the lead generation , project opportunity information , and branding objectives of our advertising customers . in the year ended december 31 , 2014 , lead generation and branding remained our primary sources of revenue , while project opportunity information , driven by growth in our it deal alert products , contributed approximately 17 % of online revenue as compared with approximately 5 % for the same period in 2013. we enable it professionals to navigate the complex and rapidly-changing it landscape where purchasing decisions can have significant financial and operational consequences . our content strategy includes three primary sources which it professionals use to assist them in their pre-purchase research : independent content provided by our professionals , vendor-generated content provided by our customers and user-generated , or peer-to-peer , content . in addition to utilizing our independent content , registered members are able to conduct their pre-purchase research by accessing extensive vendor content across our network of websites . our network of websites also allows users to seamlessly interact and contribute content , which is highly valued by it professionals during their research process . we have approximately 15.3 million registered members as of december 31 , 2014. the targeted nature of our user base enables it vendors to reach a specialized audience efficiently because our content is highly segmented and aligned with the it vendors ' specific products . since our founding in 1999 , we have developed a broad customer base . during 2014 , we delivered advertising campaigns for approximately 1,300 customers . no customer represented 10 % or more of total revenue during 2014. executive summary our revenue for the year ended december 31 , 2014 grew approximately 20 % , to $ 106.2 million , when compared with the same period in 2013. this growth was primarily driven by two factors : continued growth of international revenue from our online products and further adoption of our new it deal alert offering . both of these factors remain key areas of focus for our management team , and we believe they may contribute to our continued revenue growth . it deal alert is a suite of services that leverages our proprietary audience activity data to enable us to identify purchase intent among our audience of it professionals . at the same time , our international business is benefitting from the continued shift in adoption of online tools from traditional print sources by it professionals in overseas markets . during 2014 , we made further progress on our strategy to grow our business and increase the reach of our offerings by continuing to execute on our strategic plans for the roll-out of it deal alert and the continued expansion of our direct international capabilities . we ended 2014 with adjusted ebitda of $ 21.5 million , which is up 124 % from 2013. this growth is primarily driven by the increased revenue as described above . adjusted ebitda , a non-gaap financial measure , is described further in item 6 , selected financial data . 33 sources of revenues we sell advertising programs to it vendors targeting a specific audience within a particular it sector or sub-sector . we maintain multiple points of contact with our customers to provide support throughout their organizations and their customers ' it sales cycles . as a result , our customers often run multiple advertising programs with us in order to target their desired audience of it professionals more effectively . there are multiple factors that can impact our customers ' advertising objectives and spending with us , including but not limited to , it product launches , increases or decreases to their advertising budgets , the timing of key industry marketing events , responses to competitor activities and efforts to address specific marketing objectives such as creating brand awareness or generating sales leads . our services are generally delivered under short-term contracts that run for the length of a given advertising program , typically less than six months . in the year ended december 31 , 2014 , lead generation and branding remained our primary sources of revenue , while project opportunity information , driven by growth in our it deal alert products , contributed approximately 16 % of total revenue as compared with approximately 4 % for the same period in 2013. the majority of our revenue is derived from the delivery of our online offerings . online revenue represented 92 % , 90 % and 88 % of total revenues for the years ended december 31 , 2014 , 2013 and 2012 , respectively . we use both online and event offerings to provide it vendors with numerous touch points to reach key it decision makers and to provide it professionals with highly specialized content across multiple forms of media . we are experienced in assisting advertisers to develop custom advertising programs that maximize branding and roi . the following is a description of the services we offer : online offerings core online . our network of websites forms the core of our content platform . our websites provide it professionals with comprehensive decision support information tailored to their specific areas of responsibility and purchasing decisions . through our websites , we offer a variety of online media offerings to connect it vendors to it professionals . lead generation . our lead generation offerings allow it vendors to maximize roi by capturing qualified sales leads from the distribution and promotion of content to our audience of it professionals . story_separator_special_tag multi-day conferences provide independent content provided by our professionals to our attendees and allow vendors to purchase exhibit space and other sponsorship offerings that enable interaction with the attendees . we also hold single-day seminars on various topics in major cities . these seminars provide independent content provided by our professionals on key sub-topics in the sectors we serve , are free to qualified attendees , and offer multiple vendors the ability to interact with specific , targeted audiences actively focused on buying decisions . our custom events differ from our seminars in that they are exclusively sponsored by a single it vendor and the content is driven primarily by the sole sponsor . our key strategic initiatives include : geographic during 2014 approximately 30 % of our total revenues were derived from international geo-targeted campaigns ( international ) , where our target audience is outside north america . international revenue ( which also includes international it deal alert revenue of $ 2.5 million as discussed below ) increased by approximately 30 % in the year ended december 31 , 2014 as compared to the same period a year ago . we continue to execute very well internationally as we continue to deepen our relatively new relationships with our customers in the united kingdom , france , germany , australia , singapore , china and latin america . 35 product it deal alert revenues were approximately $ 16.8 million in the year ended december 31 , 2014 , up from approximately $ 3.9 million in the same period in 2013. this includes international it deal alert revenue of $ 2.5 million , which is also included in international revenues discussed above . in the fourth quarter of 2014 we had over 190 active customers utilizing our it deal alert service ; this is up from 175 customers in the third quarter of 2014. we expect it deal alert to continue to be a meaningful growth driver into 2015. revenue growth for the three and twelve month periods ended december 31 , 2014 as compared to the same periods in 2013 was as follows : replace_table_token_8_th cost of revenues , operating expenses and other expenses consist of cost of online and event revenues , selling and marketing , product development , general and administrative , depreciation , amortization and net interest and other expenses . personnel-related costs are a significant component of each of these expense categories except for depreciation , amortization , and net interest and other related expenses . cost of online revenue . cost of online revenues consist primarily of : salaries and related personnel costs ; member acquisition expenses ( primarily keyword purchases from leading internet search sites ) ; freelance writer expenses ; website hosting costs ; vendor expenses associated with the delivery of webcast , podcast , videocast and similar content , and list rental offerings ; stock-based compensation expenses ; facility expenses and other related overhead . cost of events revenue . cost of events revenues consist primarily of : direct expenses , including site , food and beverages for the event attendees and event speaker expenses ; salaries and related personnel costs ; travel-related expenses ; stock-based compensation expenses ; facilities expenses and other related overhead . 36 selling and marketing . selling and marketing expenses consist primarily of : salaries and related personnel costs ; sales commissions ; travel-related expenses ; stock-based compensation expenses ; facility expenses and other related overhead . sales commissions are recorded as expense when earned by the employee , based on recorded revenue . product development . product development includes the creation and maintenance of our network of websites , advertiser offerings and technical infrastructure . product development expense consists primarily of salaries and related personnel costs ; stock-based compensation expenses ; facility expenses and other related overhead . general and administrative . general and administrative expenses consist primarily of : salaries and related personnel costs ; facility expenses and related overhead ; accounting , legal and other professional fees ; and stock-based compensation expenses . depreciation . depreciation expense consists of the depreciation of our property and equipment . depreciation of property and equipment is calculated using the straight-line method over their estimated useful lives , ranging from two to ten years . amortization of intangible assets . amortization of intangible assets expense consists of the amortization of intangible assets recorded in connection with our acquisitions . separable intangible assets that are not deemed to have an indefinite life are amortized over their estimated useful lives , which range from three to ten years , using methods that are expected to reflect the estimated pattern of economic use . interest and other income ( expense ) , net . interest income ( expense ) , net consists primarily of interest income earned on cash , cash equivalents and short and long-term investments less any interest expense incurred . we historically have invested our cash in money market accounts , municipal bonds and government agency bonds . other income ( expense ) , net consists of non-operating gains or losses , primarily related to foreign currency exchange . application of critical accounting policies and use of estimates the discussion 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 . the preparation of these financial statements requires us to make estimates , judgments and assumptions that affect the reported amount of assets , liabilities , revenues and expenses and related disclosure of contingent assets and liabilities . on an ongoing basis , we evaluate our estimates , including those related to revenue , long-lived assets , goodwill , allowance for doubtful accounts , stock-based compensation , contingent liabilities , self-insurance accruals and income taxes . we based our estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that we believe to be reasonable .
| selected quarterly results of operations the following table presents our unaudited quarterly consolidated results of operations for the eight quarters ended december 31 , 2014. the unaudited quarterly consolidated information has been prepared on the same basis as our audited consolidated financial statements . you should read the following table presenting our quarterly consolidated results of operations in conjunction with our audited consolidated financial statements and the related notes included elsewhere in this annual report . the operating results for any quarter are not necessarily indicative of the operating results for any future period . replace_table_token_17_th seasonality the timing of our revenues is affected by seasonal factors . our revenues are seasonal primarily as a result of the annual budget approval process of many of our customers , the normal timing at which our customers have their new product introductions , and the historical decrease in advertising and events activity in summer months . events revenue may vary depending on which quarters we produce the event , which may vary when compared to previous periods . the timing of revenues in relation to our expenses , much of which does not vary directly with revenue , has an impact on the cost of online revenues , selling and marketing , product development , and general and administrative expenses as a percentage of revenue in each calendar quarter during the year . the majority of our expenses are personnel-related and include salaries , stock-based compensation , benefits and incentive-based compensation plan expenses . as a result , we have not experienced significant seasonal fluctuations in the timing of our expenses period to period . 45 liquidity and capital resources resources at december 31 , 2014 , we had $ 36.9 million of working capital , and our cash and cash equivalents totaled $ 19.3 million .
| 5,942 |
as of september 30 , 2013 , we were in compliance with all such covenants and had $ 150 million of available borrowings under the secured revolving credit facility . we have elected to cash collateralize all letters of credit ; however , as of september 30 , 2013 , we have pledged approximately $ story_separator_special_tag executive overview and outlook : our primary objective for fiscal 2013 was to improve our operational performance to drive our return to profitability . throughout fiscal 2013 , we made progress toward this goal , culminating in recognizing net income of $ 11.9 million for the quarter ended september 30 , 2013 and positioning us for profitability in fiscal 2014. there are four strategies that comprise our multi-year path-to-profitability plan : ( 1 ) drive sales per community per month , ( 2 ) generate higher gross margins , ( 3 ) leverage our fixed costs , including both overheads and interest expense and ( 4 ) gradually expand our community count . during fiscal 2013 , we showed significant progress on three of these four components and laid the foundation for improvement on the fourth . improving our gross margins while still achieving greater sales per community per month was our top priority for fiscal 2013. we improved our homebuilding gross margins ( excluding interest , impairments and abandonments ) by 230 basis points to 20.0 % for 22 the year and increased our absorption rate to 2.9 sales per community per month versus 2.3 for fiscal 2012 , both on a trailing 4 quarter basis . during fiscal 2013 , we also achieved improved overhead leverage . our general & administrative expenses declined from 10.9 % of total revenue in fiscal 2012 to 9.4 % in fiscal 2013 . finally , in an effort to grow our future community count , we undertook an aggressive land purchase campaign during fiscal 2013 , spending $ 475.2 million on land and land development for the year , compared with only $ 185.5 million in the prior year . a significant majority of the land that we purchased during fiscal 2013 requires development and will become active in either fiscal 2014 or fiscal 2015. also helping our future community count metrics will be the $ 24.5 million of land , located in arizona and california , that we moved from land held for future development to active development during fiscal 2013. we expect to continue our focus on our four path-to-profitability strategies during fiscal 2014 , and based on our current expectations of the housing market and general economic conditions , we believe that fiscal 2014 will be the company 's first full year of profitability since fiscal 2006. critical accounting policies : some of our critical accounting policies require the use of judgment in their application or require estimates of inherently uncertain matters . although our accounting policies are in compliance with accounting principles generally accepted in the united states of america ( gaap ) , a change in the facts and circumstances of the underlying transactions could significantly change the application of the accounting policies and the resulting financial statement impact . listed below are those policies that we believe are critical and require the use of complex judgment in their application . inventory valuation - held for development our homebuilding inventories that are accounted for as held for development include land and home construction assets grouped together as communities . homebuilding inventories held for development are stated at cost ( including direct construction costs , capitalized indirect costs , capitalized interest and real estate taxes ) unless facts and circumstances indicate that the carrying value of the assets may not be recoverable . we assess these assets no less than quarterly for recoverability . generally , upon the commencement of land development activities , it may take three to five years ( depending on , among other things , the size of the community and its sales pace ) to fully develop , sell , construct and close all the homes in a typical community . however , the impact of the recent downturn in our business has significantly lengthened the estimated life of many communities . recoverability of assets is measured by comparing the carrying amount of an asset to future undiscounted cash flows expected to be generated by the asset . if the expected undiscounted cash flows generated are expected to be less than its carrying amount , an impairment charge is recorded to write down the carrying amount of such asset to its estimated fair value based on discounted cash flows . when conducting our community level review for the recoverability of our homebuilding inventories held for development , we establish a quarterly “ watch list ” of communities with more than 10 homes remaining that carry profit margins in backlog or in our forecast that are below a minimum threshold of profitability . in our experience , this threshold represents a level of profitability that may be an indicator of conditions which would require an asset impairment but does not guarantee that such impairment will definitively be appropriate . as such , assets on the quarterly watch list are subject to substantial additional financial and operational analyses and review that consider the competitive environment and other factors contributing to profit margins below our watch list threshold . for communities where the current competitive and market dynamics indicate that these factors may be other than temporary , which may call into question the recoverability of our investment , a formal impairment analysis is performed . the formal impairment analysis consists of both qualitative competitive market analyses and a quantitative analysis reflecting market and asset specific information . our qualitative competitive market analyses include site visits to competitor new home communities and written community level competitive assessments . story_separator_special_tag we evaluate the potential development plans of each community in land held for future development if changes in facts and circumstances occur which would give rise to a more detailed analysis for a change in the status of a community to active status or held for development . asset valuation - land held for sale we record assets held for sale at the lower of the carrying value or fair value less costs to sell . the following criteria are used to determine if land is held for sale : management has the authority and commits to a plan to sell the land ; the land is available for immediate sale in its present condition ; there is an active program to locate a buyer and the plan to sell the property has been initiated ; the sale of the land is probable within one year ; 24 the property is being actively marketed at a reasonable sale price relative to its current fair value ; and it is unlikely that the plan to sell will be withdrawn or that significant changes to the plan will be made . additionally , in certain circumstances , management will re-evaluate the best use of an asset that is currently being accounted for as held for development . in such instances , management will review , among other things , the current and projected competitive circumstances of the community , including the level of supply of new and used inventory , the level of sales absorptions by us and our competition , the level of sales incentives required and the number of owned lots remaining in the community . if , based on this review and the foregoing criteria have been met at the end of the applicable reporting period , we believe that the best use of the asset is the sale of all or a portion of the asset in its current condition , then all or portions of the community are accounted for as held for sale . in determining the fair value of the assets less cost to sell , we consider factors including current sales prices for comparable assets in the area , recent market analysis studies , appraisals , any recent legitimate offers , and listing prices of similar properties . if the estimated fair value less cost to sell of an asset is less than its current carrying value , the asset is written down to its estimated fair value less cost to sell . due to uncertainties in the estimation process , it is reasonably possible that actual results could differ from the estimates used in our historical analyses . our assumptions about land sales prices require significant judgment because the current market is highly sensitive to changes in economic conditions . we calculated the estimated fair values of land held for sale based on current market conditions and assumptions made by management , which may differ materially from actual results and may result in additional impairments if market conditions deteriorate . homebuilding revenues and costs revenue from the sale of a home is generally recognized when the closing has occurred and the risk of ownership is transferred to the buyer . all associated homebuilding costs are charged to cost of sales in the period when the revenues from home closings are recognized . homebuilding costs include land and land development costs ( based upon an allocation of such costs , including costs to complete the development , or specific lot costs ) , home construction costs ( including an estimate of costs , if any , to complete home construction ) , previously capitalized indirect costs ( principally for construction supervision ) , capitalized interest and estimated warranty costs . sales commissions are recognized as expense when the closing has occurred . all other costs are expensed as incurred . warranty reserves we currently provide a limited warranty ( ranging from one to two years ) covering workmanship and materials per our defined performance quality standards . in addition , we provide a limited warranty ( generally ranging from a minimum of five years up to the period covered by the applicable statute of repose ) covering only certain defined construction defects . we also provide a defined structural warranty with single-family homes and townhomes in certain states . since we subcontract our homebuilding work to subcontractors whose contracts generally include an indemnity obligation and a requirement that certain minimum insurance requirements be met , including providing us with a certificate of insurance prior to receiving payments for their work , claims relating to workmanship and materials are generally the primary responsibility of our subcontractors . warranty reserves are included in other liabilities in the consolidated balance sheets . we record reserves covering our anticipated warranty expense for each home closed . management reviews the adequacy of warranty reserves each reporting period , based on historical experience and management 's estimate of the costs to remediate the claims , and adjusts these provisions accordingly . our review includes a quarterly analysis of the historical data and trends in warranty expense by operating segment . an analysis by operating segment allows us to consider market specific factors such as our warranty experience , the number of home closings , the prices of homes , product mix and other data in estimating our warranty reserves . in addition , our analysis also contemplates the existence of any non-recurring or community-specific warranty related matters that might not be contemplated in our historical data and trends . as a result of our analyses , we adjust our estimated warranty liabilities . based on historical results , we believe that our existing estimation process is accurate and do not anticipate the process to materially change in the future . our estimation process for such accruals is discussed in note 9 to the consolidated financial statements .
| results of continuing operations : replace_table_token_9_th homebuilding operations data replace_table_token_10_th our sales per active community per month increased 26 % to 2.9 for the fiscal year ended september 30 , 2013 from 2.3 for the fiscal year ended september 30 , 2012 , generating an increase in net new orders as compared to the prior fiscal year . this was despite a 15 % decrease in our active community count as of september 30 , 2013 compared to the prior year . we anticipate that our active community count will increase in fiscal 2014 as recently purchased land and communities under development become active . 28 replace_table_token_11_th backlog above reflects the number of homes for which the company has entered into a sales contract with a customer but has not yet delivered the home . our backlog may be impacted in the short-term due to our reduced number of active communities or by increased cycle times due to labor and or supply shortages . during the housing downturn , many skilled workers left construction for other industries , and in certain of our markets , the smaller workforce and higher demand for trade labor has created shortages of certain skilled workers , driving up costs and or extending land development and home construction schedules . our ending backlog as of september 30 , 2013 was impacted by our decrease in active communities . we expect new orders and backlog to increase over time as our active communities increase . homebuilding revenues , average selling price ( asp ) and closings replace_table_token_12_th replace_table_token_13_th improved operational strategies and market conditions in our markets enhanced our ability to generate additional traffic , sales and higher asp . we have been able to increase prices in response to market conditions in the majority of our markets in our west segment and select markets or communities in our east and southeast segments .
| 5,943 |
revenue contract costs the company has determined there are no material costs that meet the capitalization criteria for costs to obtain or fulfill a contract . 54 ball corporation notes to the consolidated financial statements revenue recognition practical expedients for contracts that have an original duration of one year or less , the company has elected the practical expedient applicable to such contracts and has not disclosed the transaction price for future performance obligations as of the end of each reporting period or when the company expects to recognize sales . the company has also elected the story_separator_special_tag management 's discussion and analysis should be read in conjunction with the consolidated financial statements and accompanying notes included in item 8 of this annual report on form 10-k ( annual report ) , which include additional information about our accounting policies , practices and the transactions underlying our financial results . the preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the united states of america ( u.s. gaap ) requires us to make estimates and assumptions that affect the reported amounts in our consolidated financial statements and the accompanying notes , including various claims and contingencies related to lawsuits , taxes , environmental and other matters arising during the normal course of business . we apply our best judgment , our knowledge of existing facts and circumstances and actions that we may undertake in the future in determining the estimates that affect our consolidated financial statements . we evaluate our estimates on an ongoing basis using our historical experience , as well as other factors we believe appropriate under the circumstances , such as current economic conditions , and adjust or revise our estimates as circumstances change . as future events and their effects can not be determined with precision , actual results may differ from these estimates . ball corporation and its subsidiaries are referred to collectively as “ ball corporation , ” “ ball , ” “ the company , ” “ we ” or “ our ” in the following discussion and analysis . overview business overview and industry trends ball corporation is one of the world 's leading aluminum packaging suppliers . our packaging products are produced for a variety of end uses , are manufactured in facilities around the world and are competitive with other substrates , such as plastics and glass . in the aluminum packaging industry , sales and earnings can be increased by reducing costs , increasing prices , developing new products , expanding volumes and making strategic acquisitions . we also provide aerospace and other technologies and services to governmental and commercial customers , including national defense hardware , antenna and video tactical solutions , civil and operational space hardware and system engineering services . we sell our aluminum packaging products mainly to large , multinational beverage , personal care and household products companies with which we have developed long-term relationships . this is evidenced by our high customer retention and our large number of long-term supply contracts . while we have a diversified customer base , we sell a significant portion of our packaging products to major companies and brands , as well as to numerous regional customers . the overall global aluminum beverage and aerosol container industries are growing and are expected to continue to grow in the medium to long term . the primary customers for the products and services provided by our aerospace segment are u.s. government agencies or their prime contractors . we purchase our raw materials from relatively few suppliers . we also have exposure to inflation , in particular the rising costs of raw materials , as well as other direct cost inputs . we mitigate our exposure to the changes in the costs of aluminum through the inclusion of provisions in contracts covering the majority of our volumes to pass through aluminum price changes , as well as through the use of derivative instruments . the pass-through provisions generally result in proportional increases or decreases in sales and costs with a greatly reduced impact , if any , on net earnings . because of our customer and supplier concentration , our business , financial condition and results of operations could be adversely affected by the loss , insolvency or bankruptcy of a major customer or supplier or a change in a supply agreement with a major customer or supplier , although our contract provisions generally mitigate the risk of customer loss , and our long-term relationships represent a known , stable customer base . the majority of our aerospace business involves work under contracts , generally from one to five years in duration , as a prime contractor or subcontractor for various u.s. government agencies . intense competition and long operating cycles are key characteristics of the company 's aerospace and defense industry where it is common for work on major programs to be shared among a number of companies . a company competing to be a prime contractor may , upon ultimate award of the contract to a competitor , become a subcontractor for the ultimate prime contracting company . 25 corporate strategy our drive for 10 vision encompasses five strategic levers that are key to growing our business and achieving long-term success . story_separator_special_tag cost of sales ( excluding depreciation and amortization ) cost of sales , excluding depreciation and amortization , was $ 9,323 million in 2020 compared to $ 9,203 million in 2019. these amounts represented 79 percent and 80 percent of consolidated net sales for the years ended 2020 and 2019 , respectively . depreciation and amortization depreciation and amortization expense was $ 668 million in 2020 compared to $ 678 million in 2019. these amounts represented 6 percent of consolidated net sales for the years ended 2020 and 2019. amortization expense in 2020 and 2019 included $ 150 million and $ 155 million , respectively , for the amortization of acquired rexam intangibles . 27 selling , general and administrative selling , general and administrative ( sg & a ) expenses were $ 525 million in 2020 compared to $ 417 million in 2019. these amounts represented 4 percent of consolidated net sales for both years . personnel and other costs increased year over year to support growth investments . business consolidation costs and other activities business consolidation costs and other activities were $ 262 million in 2020 compared to $ 244 million in 2019. these amounts represented 2 percent of consolidated net sales for both years . interest expense total interest expense was $ 316 million in 2020 compared to $ 324 million in 2019. interest expense , excluding the effect of debt refinancing and other costs , as a percentage of average borrowings decreased by approximately 85 basis points from 4.4 percent in 2019 to 3.5 percent in 2020 due to the drop in global interest rates . tax provision the company 's effective tax rate is affected by recurring items such as income earned in foreign jurisdictions with tax rates that differ from the u.s. tax rate and by discrete items that may occur in any given year but are not consistent from year to year . the 2020 effective income tax rate was 14.4 percent compared to 11.7 percent for 2019. as compared with the statutory u.s. federal income tax rate of 21 percent , the 2020 effective rate was reduced by 6.8 percent for equity compensation benefits , by 5.7 percent for the impact of the u.s. r & d credit and by 2 percent for various uncertain tax positions . these reductions were partially offset by an increase of 3.4 percent for the impact of foreign exchange fluctuations on certain deferred tax assets . while these items are expected to recur , the potential magnitude of each item is uncertain . the 2020 effective income tax rate was also increased by 2.6 percent for enacted changes to tax rates in the uk and by 2.3 percent for the impact of non-deductible goodwill . these items are not expected to recur . further details of taxes on income are included in note 16 to the consolidated financial statements within item 8 of this annual report . results of business segments story_separator_special_tag > financial condition , liquidity and capital resources cash flows and capital expenditures our primary sources of liquidity are cash provided by operating activities and external borrowings . we believe that cash flows from operating activities and cash provided by short-term , long-term and committed revolver borrowings , when necessary , will be sufficient to meet our ongoing operating requirements , scheduled principal and interest payments on debt , dividend payments , anticipated share repurchases and anticipated capital expenditures . we have no debt maturities until 2022 , our senior credit facilities are in place until 2024 and we are focused in the near term on maintaining liquidity and flexibility in the current economic environment . the following table summarizes our cash flows : replace_table_token_9_th cash flows provided by operating activities were $ 116 million lower in 2020 compared to 2019 , primarily due to higher working capital outflows of $ 106 million in 2020 compared to inflows of $ 236 million in 2019 , partially offset by lower pension contributions . the higher working capital outflows in 2020 resulted from seasonal working capital build which was more sizeable than typical due largely to the timing of aluminum payments in the first quarter , increased personnel costs to support growth and a proportionally larger increase in days sales outstanding as compared to days payable outstanding . in comparison to the same period of 2019 , our working capital movements reflect an increase of days sales outstanding from 38 days in 2019 to 42 days in 2020 and an increase of inventory days on hand from 48 days in 2019 to 50 days in 2020 , partially offset by an increase of days payable outstanding from 118 days in 2019 to 128 days in 2020 . cash outflows from investing activities increased by $ 759 million from $ 422 million in 2019 to $ 1,181 million in 2020. this predominantly reflected a $ 515 million increase in capital expenditures for large growth projects , a $ 160 million inflow from the 2019 sale of the steel food and steel aerosol business and a $ 69 million outflow for the 2020 acquisition of the brazil aluminum aerosol packaging business . 32 cash outflows from financing activities increased by $ 556 million from $ 46 million in 2019 to $ 602 million in 2020 , primarily related to total debt activity changing from net borrowings of $ 1.1 billion in 2019 to net repayments of $ 262 million in 2020 , partially offset by a reduction in net share repurchases from $ 945 million in 2019 to $ 75 million in 2020 . we have entered into several regional committed and uncommitted accounts receivable factoring programs with various financial institutions for certain of our accounts receivable .
| segment results ball 's operations are organized and reviewed by management along its product lines and geographical areas , and its operating results are presented in the four reportable segments discussed below . effective january 1 , 2020 , ball implemented changes to its management and internal reporting structure for cost reduction and operational efficiency purposes . as a result of these changes , the company 's plants in cairo , egypt , and manisa , turkey , are now included in the beverage packaging , europe , middle east and africa ( beverage packaging , emea ) , segment . in addition , the company 's operations in india and saudi arabia are now combined with the former non-reportable beverage packaging , asia pacific , operating segment as a new non-reportable beverage packaging , other , operating segment . the company 's segment results and disclosures for the years ended december 31 , 2019 and 2018 , have been retrospectively adjusted to conform to the current year presentation . 28 beverage packaging , north and central america replace_table_token_3_th ( a ) further details of these items are included in note 6 to the consolidated financial statements within item 8 of this annual report . segment sales in 2020 were $ 318 million higher compared to 2019. the increase in 2020 was primarily due to higher volumes , higher specialty mix and improved customer contractual terms , partially offset by lower aluminum prices . we can not predict the impact on sales that will result from future changes in aluminum input prices . comparable operating earnings in 2020 were $ 128 million higher compared to 2019 primarily due to higher sales volumes , higher specialty mix , benefits from improved customer contractual terms and improved operating performance , partially offset by increased capacity expansion and labor costs .
| 5,944 |
throughout the following sections , the “ company ” refers to 1 st constitution bancorp and , as the context requires , its wholly-owned subsidiary , 1 st constitution bank ( the “ bank ” ) and the bank 's wholly-owned subsidiaries , 1 st constitution investment company of delaware , inc. , 1 st constitution investment company of new jersey , inc. , fcb assets holdings , inc. , 1 st constitution title agency , llc , 204 south newman street corp. and 249 new york avenue , llc . 1 st constitution capital trust ii ( “ trust ii ” ) , a subsidiary of the company , is not included in the company 's consolidated financial statements as it is a variable interest entity and the company is not the primary beneficiary . the purpose of this discussion and analysis is to assist in the understanding and evaluation of the company 's financial condition , changes in financial condition and results of operations . critical accounting policies and estimates “ management 's discussion and analysis of financial condition and results of operation ” 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 the company to make estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses . note 1 to the company 's consolidated financial statements for the year ended december 31 , 2011 contains a summary of the company 's significant accounting policies . management believes the company 's policies with respect to the methodologies for the determination of the allowance for loan losses and for determining other-than-temporary security impairment involve a higher degree of complexity and requires management to make difficult and subjective judgments which often require assumptions or estimates about highly uncertain matters . changes in these judgments , assumptions or estimates could materially impact results of operations . these critical policies and their application are periodically reviewed with the audit committee and the board of directors . the provision for loan losses is based upon management 's evaluation of the adequacy of the allowance , including an assessment of known and inherent risks in the portfolio , giving consideration to the size and composition of the loan portfolio , actual loan loss experience , level of delinquencies , detailed analysis of individual loans for which full collectibility may not be assured , the existence and estimated net realizable value of any underlying collateral and guarantees securing the loans , and current economic and market conditions . although management uses the best information available to it , the level of the allowance for loan losses remains an estimate which is subject to significant judgment and short-term change . various regulatory agencies , as an integral part of their examination process , periodically review the company 's allowance for loan losses . such agencies may require the company to make additional provisions for loan losses based upon information available to them at the time of their examination . furthermore , the majority of the company 's loans are secured by real estate in the state of new jersey . accordingly , the collectibility of a substantial portion of the carrying value of the company 's loan portfolio is susceptible to changes in local market conditions and may be adversely affected should real estate values decline or should the central new jersey area experience an adverse economic shock . future adjustments to the allowance for loan losses may be necessary due to economic , operating , regulatory and other conditions beyond the company 's control . real estate acquired through foreclosure , or a deed-in-lieu of foreclosure , is recorded at fair value less estimated selling costs at the date of acquisition or transfer , and subsequently at the lower of its new cost or fair value less estimated selling costs . adjustments to the carrying value at the date of acquisition or transfer are charged to the allowance for loan losses . the carrying value of the individual properties is subsequently adjusted to the extent it exceeds estimated fair value less estimated selling costs , at which time a provision for losses on such real estate is charged to operations . appraisals are critical in determining the fair value of the other real estate owned amount . assumptions for appraisals are instrumental in determining the value of properties . overly optimistic assumptions or negative changes to assumptions could significantly affect the valuation of a property . the assumptions supporting such appraisals are carefully reviewed by management to determine that the resulting values reasonably reflect amounts realizable . 23 management utilizes various inputs to determine the fair value of its investment portfolio . to the extent they exist , unadjusted quoted market prices in active markets ( level 1 ) or quoted prices on similar assets ( level 2 ) are utilized to determine the fair value of each investment in the portfolio . in the absence of quoted prices , valuation techniques would be used to determine fair value of any investments that require inputs that are both significant to the fair value measurement and unobservable ( level 3 ) . valuation techniques are based on various assumptions , including , but not limited to cash flows , discount rates , rate of return , adjustments for nonperformance and liquidity , and liquidation values . a significant degree of judgment is involved in valuing investments using level 3 inputs . the use of different assumptions could have a positive or negative effect on consolidated financial condition or results of operations . management must periodically evaluate if unrealized losses ( as determined based on the securities valuation methodologies discussed above ) on individual securities classified as held to maturity or available for sale in the investment portfolio are considered to be other-than-temporary . story_separator_special_tag % , while the yield on that portfolio decreased 132 basis points for the year ended december 31 , 2010 compared to the year ended december 31 , 2009. overall , the yield on interest earning assets decreased 47 basis points to 4.66 % in the year ended december 31 , 2010 from 5.13 % in the year ended december 31 , 2009 . 27 interest expense decreased by $ 2,032,134 , or 23.0 % , to $ 6,787,364 for the year ended december 31 , 2011 , from $ 8,819,498 for the year ended december 31 , 2010. this decrease in interest expense was principally attributable to higher levels of interest-bearing liabilities priced at a significantly lower market interest rate level . money market and now accounts , increased on average by $ 50,940,546 in 2011 , or 41.8 % , as compared to 2010 , contributing to the funding of investment portfolio growth . the cost on these deposits decreased 41 basis points in 2011 as compared to 2010. average interest bearing liabilities rose 5.4 % in 2011 from 2010. the cost of total interest-bearing liabilities decreased 46 basis points to 1.25 % in 2011 from 1.71 % in 2010. interest expense decreased by $ 3,435,850 , or 28 % , to $ 8,819,498 for the year ended december 31 , 2010 , from $ 12,255,348 for the year ended december 31 , 2009. this decrease in interest expense was principally attributable to higher levels of interest-bearing liabilities priced at a significantly lower market interest rate level . savings accounts , helped by higher fdic deposit insurance limits , increased on average by $ 23,344,079 in 2010 , or 15.1 % , as compared to 2009 , contributing to the funding of loan portfolio growth . the cost on these deposits decreased 81 basis points in 2010 as compared to 2009. average interest bearing liabilities rose 6.0 % in 2010 from 2009. the cost of total interest-bearing liabilities decreased 81 basis points to 1.71 % in 2010 from 2.52 % in 2009. average non-interest bearing demand deposits increased by $ 30,394,152 , or 34.7 % , to $ 117,876,295 for the year ended december 31 , 2011 from $ 87,482,143 for the year ended december 31 , 2010. the primary reason for this increase in 2011 was the requirement for customers of the warehouse line of credit to maintain deposit relationships with the bank that , on average , represent 10 % to 15 % of the loan balances . provision for loan losses management considers a complete review of the following specific factors in determining the provisions for loan losses : historical losses by loan category , non-accrual loans , and problem loans as identified through internal classifications , collateral values , and the growth and size of the loan portfolio . in addition to these factors , management takes into consideration current economic conditions and local real estate market conditions . using this evaluation process , the company 's provision for loan losses was $ 2,558,328 for the year ended december 31 , 2011 and $ 2,325,000 for the year ended december 31 , 2010. the increased provision for 2011 was the result of the $ 63,444,432 , or 15.4 % , increase in the loan portfolio and the need to replenish the allowance as a result of the $ 2,786,590 in the net loan charge-offs during 2011. non-interest income non-interest income increased by $ 278,819 , or 6.6 % , to $ 4,516,250 for the year ended december 31 , 2011 from $ 4,237,431 for the year ended december 31 , 2010. a significant portion of the increase in total non-interest income and its major components when compared with non-interest income for the prior year was attributable to the march 2011 acquisition . service charges on deposit accounts increased by $ 160,255 to $ 891,499 for the year ended december 31 , 2011 compared to $ 731,244 for the year ended december 31 , 2010. this component of non-interest income represented 19.7 % and 17.3 % of the total non-interest income for the years ended december 31 , 2011 and 2010 , respectively . the increase was primarily due to the increase in the number of deposit accounts subject to service charges that resulted from the march 2011 acquisition . gains on sales of loans held for sale increased by $ 140,251 , or 8.6 % , to $ 1,776,154 for the year ended december 31 , 2011 from $ 1,635,903 for the year ended december 31 , 2010. the bank sells both residential mortgage loans and small business administration loans in the secondary market . during the second quarter of 2011 , the bank revised its pricing on mortgage loan sales and now requires a 160 basis point return on sale transactions compared to the 110 basis point return requirement that existed in the year ended december 31 , 2010. there were no sale of securities for the years ended december 31 , 2011 and 2010. non-interest income also includes income from bank-owned life insurance ( “ boli ” ) which amounted to $ 404,338 for the year ended december 31 , 2011 compared to $ 405,588 for the year ended december 31 , 2010. the bank purchased tax-free boli assets to partially offset the cost of employee benefit plans and reduce the company 's overall effective tax rate . 28 the bank also generates non-interest income from a variety of fee-based services . these include safe deposit rentals , wire transfer service fees and automated teller machine fees for non-bank customers .
| results of operations the company reported net income for the year ended december 31 , 2011 of $ 3,931,443 , an increase of 18.9 % from the $ 3,307,791 reported for the year ended december 31 , 2010. the increase was due primarily to an increase in net interest income , partially offset by increases in non-interest expenses and income taxes during the year ended december 31 , 2011 compared to the prior year . net income available to common shareholders increased by 72.0 % to $ 3,931,443 for the year ended december 31 , 2011 from $ 2,286,053 for the year ended december 31 , 2010 , primarily due to the redemption of the preferred stock in 2010 , as the 2011 amount did not include dividends and discount accretion on preferred stock while the 2010 amount did include such dividends and discount accretion . diluted net income per common share was $ 0.77 for the year ended december 31 , 2011 compared to $ 0.45 reported for the year ended december 31 , 2010. basic net income per common share for the year ended december 31 , 2011 was $ 0.78 as compared to $ 0.46 reported for the year ended december 31 , 2010. as a result of the redemption of the preferred stock in 2010 , no preferred stock dividends or discount accretion was recorded in 2011. the recording of preferred stock dividends and discount accretion during the year ended december 31 , 2010 served to reduce diluted earnings per share by $ 0.21. all share information has been restated for the effect of a 5 % stock dividend declared on december 15 , 2011 and paid on february 2 , 2012 to shareholders of record on january 17 , 2012. return on average assets ( “ roa ” ) and return on average equity ( “ roe ” ) were 0.54 % and 7.60 % , respectively , for the year ended december 31 , 2011 , compared to 0.50 % and 5.78 % ,
| 5,945 |
risk factors ” of this form 10-k. executive overview schlumberger revenue in 2013 reached a new high of $ 45.3 billion – an increase of 8 % over 2012. international revenue grew by $ 3.2 billion , or 11 % , on higher exploration and development activity – both offshore and in key land markets . in north america , we demonstrated continued resilience to the challenging land market by growing the business by close to $ 400 million , or 3 % , aided by our strong position in the offshore market – particularly in the us gulf of mexico . yearly growth in global oil demand has been stabilizing at close to 1 million barrels per day for the past three years . this has been driven by the emerging economies , notably in asia and in the middle east , while consumption in the oecd countries has levelled after declining for three consecutive years as a result of energy efficiency gains . in terms of supply , markets are well balanced , with north america benefiting from the activity-intensive development of tight oil resources that almost single-handedly drove the increase in global crude oil production in 2013. output from other areas , both opec and non-opec , remained stable . in terms of price , geopolitical and security tensions in the middle east , and major outages in libya supported oil prices , with spot brent prices averaging $ 109- per barrel in 2013 , only slightly below the $ 112 per barrel of 2012. international gas markets remained tight during the year , driven by strong demand in japan and in the emerging economies in asia . relatively limited additional liquefied natural gas and interregional pipeline capacity contributed to support prices at oil-parity in the asian spot markets . in north america , after having reached a 10-year low in 2012 , natural gas spot prices rallied by 35 % in 2013 from progressive rebalancing of supply and demand as well as from relatively cold temperatures in the final months of the year . steady production levels – particularly from the continuing development of the marcellus shale gas play – together with strong competition with coal in the power sector prevented prices from rising further . against this background , schlumberger 's international performance during the year was led by the middle east & asia area , which grew by 23 % from an expanding portfolio of projects and activities in key land markets in the middle east , increased exploration and development work across asia , and sustained activity in australasia and china . within the europe/cis/africa area , year-on-year revenue grew by 8 % , led by the russia and central asia region on strong land activity in west siberia , and robust offshore projects in sakhalin . the latin america area grew by 3 % over the year , mainly due to good progress on the shushufindi production management project in ecuador , and strong integrated project management activity in argentina . in north america , revenue strengthened by 3 % driven by higher offshore drilling and exploration activity . all three product groups benefited from the growth in activity . reservoir characterization revenue grew by 10 % over the year from market share gains and higher exploration activity in offshore and key international land markets . drilling group revenue , up 9 % , increased on robust demand for services as offshore drilling activity strengthened in the us gulf of mexico , sub-saharan africa , russia and in the middle east & asia area . drilling group revenue also increased in key international land markets in saudi arabia , china and australia on higher rig count . production group revenue grew by 8 % , mostly from activity in the international geomarkets . during the first half of the year , the onesubsea joint venture with cameron was finalized , combining schlumberger 's deep understanding of the reservoir and our industry-leading well completions , subsea processing and integration capabilities with the design capability , manufacturing excellence , and installation record of cameron . onesubsea was formed to offer best-in-class subsea solutions by optimizing complete subsea production systems that help customers improve subsea development production and recovery . looking ahead to 2014 , economic fundamentals are expected to further improve in the us while europe seems set for stronger growth . these positive effects should overcome lower growth in some developing economies and support a continuing rebound in the world economy . within this scenario , oil demand forecasts in 2014 have now been revised upwards to the highest growth rate in several years . oil supply is expected to keep pace with demand – with the market therefore remaining well balanced . natural gas prices internationally should be supported by demand in asia and europe , while in the us no change in fundamentals is expected , with any meaningful recovery in dry gas drilling activity still some way out in the future . with exploration and production spending expected to grow further in 2014 , led by international activity and continuing strength in deepwater us gulf of mexico , schlumberger remains positive and optimistic about the year ahead on the back of a well-balanced business portfolio , wide geographical footprint , and strengthening operational , organizational , and executional capability . 14 the following discussion and analysis of results of operations should be read in conjunction with the consolidated financial statements . story_separator_special_tag style= '' text-align : justify ; margin-bottom:0pt ; margin-top:6pt ; margin-left:0 % ; margin-right:0 % ; text-indent:0 % ; font-family : ; '' > fourth-quarter revenue of $ 4.22 billion increased 5 % sequentially . pretax operating income of $ 730 million was 3 % higher sequentially . the increase in revenue resulted primarily from stronger completions and artificial lift product year-end sales coupled with new technology uptake and business expansion . well intervention services declined mainly in north america land , while well services revenue grew primarily from higher activity in international markets . story_separator_special_tag oilfield services full-year 2012 revenue of $ 41.73 billion increased 14 % versus the same period last year with north america area 9 % higher and international activity 16 % higher . internationally , higher exploration and development activities in a number of geomarkets both offshore and in key land markets contributed to the increase . the increase was led by the europe/cis/africa area which increased 18 % , mainly in russia and in the nigeria & gulf of guinea , angola , the east africa and north sea geomarkets . latin america was higher by 17 % , mainly in the mexico & central america ; venezuela , trinidad & tobago ; and ecuador geomarkets driven by strong ipm activity on land and robust offshore activity for wireline and drilling group services and products . middle east & asia increased 14 % on strong results in the saudi arabia & bahrain ; australasia ; brunei , malaysia & philippines ; and china geomarkets . the increase in north america was due to strong growth in north america offshore driven by robust deepwater and exploration activity that benefited the reservoir characterization and drilling groups technologies . there was also an improvement in activity in north america land for the production group technologies although the increase slowed in the second half of the year due to the weakness in the hydraulic fracturing market . full-year 2012 pretax operating income of $ 8.1 billion increased 15 % year-on-year as international pretax operating income of $ 5.6 billion increased 32 % while north america pretax operating income of $ 2.7 billion declined by 10 % year-on-year . pretax operating margin was essentially flat at 19.5 % as international pretax operating margin expanded 238 bps to 20.0 % while north america pretax operating margin declined 441 bps to 20.2 % . europe/cis/africa posted a 435 bps improvement to reach 19.6 % and latin america increased 175 bps to 18.4 % and middle east & asia reported a 48 bps increase to 21.9 % . north america margin decline was due to well services production technologies , as a result of pricing pressure and cost inflation . reservoir characterization group full-year revenue of $ 11.16 billion was 15 % higher than the same period last year led by wireline , testing services , westerngeco and sis technologies driven by improved offshore exploration activities across all areas . pretax operating margin increased 340 bps to 27.5 % largely due to the higher-margin exploration activities that benefited wireline and testing services , higher sis software sales , higher westerngeco marine vessel utilization and improved uniq land seismic productivity . 20 drilling group full-year revenue of $ 15.89 billion was 15 % higher than the previous year primarily due to the significantly improved exploration and development activities of m-i swaco , drilling & measurements , and the other drilling group technologies in north america offshore and in the international markets . pretax operating margin increased 145 bps to 17.6 % primarily due to the increase in higher-margin activities of drilling & measurements , m-i swaco and drilling tools & remedial technologies - all of which benefited from exploration activities in north america offshore and in the international markets - mainly in the europe/cis/africa area . production group full-year revenue of $ 14.80 billion increased 14 % year-on-year , both in north america and the international markets . well intervention , artificial lift and completions technologies posted strong growth across all areas . well services grew both in north america and internationally , with international growth led by latin america and europe/cis/africa . pretax operating margin decreased 388 bps to 15.7 % mainly due to a decline in margins for well services production technologies , primarily in north america , as a result of pricing pressure and cost inflation . this was mitigated by margin expansion for the other production group technologies led by well intervention services and completions . interest and other income interest and other income consisted of the following : replace_table_token_10_th interest expense interest expense of $ 391 million in 2013 increased by $ 51 million compared to 2012 primarily due to an increase in the weighted average debt balance of approximately $ 1.2 billion combined with a 0.1 % increase in the weighted average borrowing rates from 3.1 % in 2012 to 3.2 % in 2013. interest expense of $ 340 million in 2012 increased by $ 42 million compared to 2011 primarily due to the $ 1 billion of 1.25 % senior notes due 2017 and $ 1 billion of 2.40 % senior notes due 2022 that schlumberger issued during 2012. other research & engineering and general & administrative expenses , as a percentage of revenue , were as follows : replace_table_token_11_th income taxes the schlumberger effective tax rate was 21.3 % in 2013 , 24.4 % in 2012 , and 24.8 % in 2011. the schlumberger effective tax rate is sensitive to the geographic mix of earnings . when the percentage of pretax earnings generated outside of north america increases , the schlumberger effective tax rate will generally decrease . conversely , when the percentage of pretax earnings generated outside of north america decreases , the schlumberger effective tax rate will generally increase . the effective tax rate for 2013 was significantly impacted by the charges and credits described in note 3 to the consolidated financial statements . these charges and credits reduced the effective tax rate in 2013 by approximately two percentage points . the decrease in the effective tax rate , excluding the impact of the charges and credits , from 2012 to 2013 was primarily attributable to the fact that schlumberger generated a smaller proportion of its pretax earnings in north america in 2013 as compared to 2012 . 21 charges and credits schlumberger recorded significant charges and credits in continuing operations during 2013 , 2012 and 2011. these charges and credits , which are summarized below , are more fully described in note 3 to the consolidated financial statements .
| fourth quarter 2013 results product groups replace_table_token_4_th geographic areas replace_table_token_5_th ( 1 ) comprised principally of certain corporate expenses not allocated to the segments , interest on postretirement medical benefits , stock-based compensation costs , amortization expense associated with certain intangible assets and other nonoperating items . ( 2 ) excludes interest income included in the segments ' income ( fourth quarter 2013 : $ 4 million ; third quarter 2013 : $ 3 million ) . ( 3 ) excludes interest expense included in the segments ' income ( fourth quarter 2013 : $ 6 million ; third quarter 2013 : $ 6 million ) . ( 4 ) charges and credits are described in detail in note 3 to the consolidated financial statements . oilfield services fourth-quarter revenue of $ 11.91 billion increased $ 298 million or 3 % sequentially . approximately 75 % of the sequential revenue increase came from the year-end surge in product and software sales , and 25 % came from higher multiclient seismic sales . 15 international revenue of $ 8.15 billion grew $ 235 million or 3 % sequentially , while north america area revenue of $ 3.65 billion increased $ 47 million or 1 % sequentially . sequentially , reservoir characterization group revenue grew 1 % to $ 3.25 billion , while drilling group revenue of $ 4.50 billion was 2 % higher . production group revenue increased 5 % sequentially to $ 4.22 billion . the increase in reservoir characterization group revenue resulted mainly from robust international end-of-year sis software sales and an increase in westerngeco multiclient sales . this increase , however , was largely offset by a sharp seasonal decline in westerngeco marine revenue on lower vessel utilization following completion of surveys in norway and canada . wireline also declined sequentially on the conclusion of exploration projects in eastern canada and east africa together with the seasonal slowdown in russia .
| 5,946 |
due to substantial increase in the amount of default loans in the loan guarantees business , the amount of underlying loans we guaranteed has been reduced by 63.1 % as of december 31 , 2014 compared to as of december 31 , 2013. as the rate of fees and commissions generated from the guarantee business has been decreasing , the company has declined that the revenue does not justify the default risks involved , and therefore expects to further reduce the traditional guarantee business and hold off on pursuing the guarantee business to be provided via the kaixindai financing services jiangsu co. ltd ( “ kaixindai ” ) platform as previously planned . management may actively resume the guarantee business if economic conditions improve in the future . on september 5 , 2013 , our wholly owned subsidiary , ccc international investment holding ltd. ( “ ccc hk ” ) , established pride financial leasing ( suzhou ) co. ltd. ( “ pfl ” ) in jiangsu province , china . pfl was expected to offer financial leasing of machinery and equipment , transportation vehicles , and medical devices to municipal government agencies , hospitals and smes in jiangsu province and beyond . during the twelve months ended december 31 , 2014 , pfl had on financial leasing transaction . as of the date of this quarterly report , pfl entered into two financial leasing agreements for an aggregate lease receivable of $ 5.61million ( one with a monthly principle and interest income of $ 81,354and the other with a quarterly principle and interest income of $ 341,686. we do not currently have further funds to deploy in the financial leasing business . on april 11 , 2015 , wfoe delivered a notice of termination to pride information technology co. ltd. ( “ pride online ” ) , a domestic entity established on february 19 , 2014 and 100 % owned by mr. qin . as a result , the contractual arrangements by and among the company and mr. qin and pride online will terminate as of may 11 , 2015 and wfoe will no longer control pride online . story_separator_special_tag style= '' text-align : center ; width : 100 % '' > net commission and fees on guarantee business the company also generated net income by charging fees for financial guarantee services provided to our customers to help them obtain loans from other banks . we generally charge a one-time fee of 1.8 % - 3.6 % multiplied by the amount of loans being guaranteed , based on the nature of the guarantee and whether the customer is new or existing . the commissions and fees generated from our financial guarantee services decreased from $ 1,407,699 for the year ended december 31 , 2013 to $ 559,571 for the year ended december 31 , 2014 , representing a decrease of $ 848,128 , or 60 % .the reduction was due to the decreased number of guarantee transactions as management reduced the guarantee portfolio to control the default risk . as of december 31 , 2014 , we have provided guarantees for a total of $ 21.8 million underlying loans to approximately 22 borrowers , a reduction of 63.5 % compared to december 31 , 2013. provision on financial guarantee services the provision on financial guarantee services increased from an over provision of $ 316,039 for the year ended december 31 , 2013 , to an under provision of $ 4,960,867for the year ended december 31 , 2014 , representing an increase of $ 5,276,906. the methodology the company used to estimate the liability for probable guarantee loss considers the guarantee contract amount and a variety of factors , which include , dependence on the counterparty , latest financial position and performance of the customers , actual defaults , estimated future defaults , historical loss experience , estimated value of collaterals or guarantees the costumers or third parties offered , and other economic conditions such as the economic trend of the area and the country . the estimates are based upon currently available information . we accrued specific provision on the balance of repayment on behalf of defaulted customers according to “ five-tier ” principal . the specific reserve is based on the level of loss of each loan after categorizing the loan according to their risk . according to the “ five-tier principle ” set forth in the provision guidance , the guarantees are categorized as “ special-mention ” , “ substandard ” , “ doubtful ” or “ loss ” . normally , the provision rate is 2 % for “ special-mention ” , 25 % for “ substandard ” , 50 % for “ doubtful ” and 100 % for “ loss ” . as explained above , since the beginning of 2014 , people 's bank of china continued to withdraw a significant amount of liquidity from the market , which has made it even harder for smes to gain access to capital . the bank lenders usually require an old loan be paid in full upon maturity before they approve a new loan to the same borrower . during the twelve months ended december 31 , 2014 , the banks denied to extend new loans to many smes even after they made the full repayment for the loans due and satisfied other conditions . as a result , some of the sme borrowers for which we provided the guarantees decided to default on the bank loans . therefore the amount of repayment we made to the bank lenders substantially increased during the year ended december 31 , 2014. we are in the process of negotiating and possibly litigating against both the borrowers and their counter-guarantors . story_separator_special_tag we do not grant concession to borrowers as the principal of the loan remains the same and interest rate is fixed at the current interest rate at the time of extension . we use a comprehensive methodology to monitor credit quality and prudently manage credit concentration within our portfolio of loans . currently our loan portfolio concentrates in the textile industry and during the year ended december 31,2014 , both the domestic and international demand for textile products have been decreasing . to maintain our loan portfolio quality , we have modified our loan policy to accept only textile companies with real estate as collateral or guaranteed by guarantee companies . 57 in addition , we plan to diversify our risks by concentrating in smaller amount loans that are below $ 490,000 ( or approximately rmb 3.0 million ) . currently , the banking industry encourages smes to apply for loans as individual with recourse so that when it is past due , both the sme and the responsible individual are both liable for the past due amount and the individual borrower carries personal liability . as of december 31 , 2014 , our business loan balance decreased by $ 4.4 million as compared to that as of december 31 , 2013 while personal loan decreased by $ 3.7 million . the following table sets forth the classification of loans receivable as of december 31 , 2014 and december 31 , 2013 , respectively : replace_table_token_5_th nonaccrual loans totaled $ 33.3 million , or 40.58 % of total assets as of december 31,2014 , up from $ 2.8 million , or 2.49 % of total assets , as of december 31 , 2013. the allowance for loan losses was $ 24.49 million , representing 29.84 % of loans receivable and 73.53 % of non-accrual loans as of december 31 , 2014. as of december 31 , 2013 , the allowance for loan losses was $ 1.38 million , representing 1.53 % of loans receivable and 48.87 % of non-accrual loans . the following table sets forth information concerning our nonaccrual loans as of december 31 , 2014 and december 31 , 2013 , respectively : replace_table_token_6_th since the beginning of 2014 , the economic conditions in eastern part of china , especially the yangtze river delta region , has been challenging due to the downturn of the general economic situation in china . wujiang , which is in the heart of this region , has been significantly affected . the textile industry , which is the pillar industry in wujiang area , as well as other industries , have been facing downward pressure . as the local smes ' profitability and repayment ability deteriorates , “ special mentioned ” , “ substandard ” and “ doubtful ' bank loans drastically increased . as such , our provision for loan losses substantially increased during this quarter . 58 cash flows and capital resources we have financed our operations primarily through shareholder contributions , cash flow from operations and bank loans , and from public offerings of securities . as a result of our total cash activities , net cash decreased from $ 9,405,865 as of december 31 , 2013 to $ 4,132,782 as of december 31 , 2014. we require cash for working capital , making loans , repayment of debt and guarantee , salaries , commissions and related benefits and other operating expenses and income taxes . we expect that without the needs of future business expansion , our current working capital is sufficient to support our routine operations for the next twelve months . however , as a micro-credit company regulated by the chinese banking regulatory commission , we are prohibited from providing saving or checking services to our customers ; our borrowing capacity from other financial institutions is also limited to 50 % of our registered capital . in order to meet the capital needs for our continued operations , we may take the following actions : ( 1 ) continue to improve our collection of loan receivable and interest receivable ; ( 2 ) if necessary , raise additional capital through the sale of equity ; and or ( 3 ) enter into new , or refinance existing , short- and or long term commercial loans . we can not assure you that financing will be available in the amounts we need or on terms acceptable to us , if at all . on may 13 , 2014 , the company closed its second public offering ( “ follow-on offering ” ) offering of 1,750,000 shares of common stock and 1,750,000 warrants to purchase 875,000 shares of common stock . the public offering price of the shares sold in the follow-on offering was $ 3.99 per share and the offering pricing for the warrants was $ 0.01 per warrant . 1,650,386 shares of common stock were newly issued by the company and 99,614 shares of common stock were registered and sold by existing shareholders . the aggregate gross proceeds in the follow-on offering were $ 6.6 million . after deducting underwriting discounts and commissions and offering expenses payable by the company and the proceeds to the selling shareholders , the aggregate net proceeds received by the company totaled approximately $ 5.7 million . the sale of additional equity securities , including convertible debt securities , would dilute our current shareholders . the incurrence of debt could result in operating and financial covenants that would restrict our operations and our ability to pay dividends to our shareholders . if we are unable to obtain additional equity or debt financing as required , our business , operations and prospects may be adversely affected . in march 2014 , approximately $ 5.7 million ( rmb 30 million ) of the net proceeds raised in our ipo was transferred and have already been contributed to wujiangluxiang and approved as an increase of the registered capital of wujiangluxiang .
| key factors affecting our results of operation our business and operating results are affected by china 's overall economic growth local , economic condition , market interest rate and the borrowers repayment ability . unfavorable changes could affect the demand for the services that we provide and could materially and adversely affect our results of operations . our results of operations are also affected by the regulations and industry policies related to the microcredit industry in the prc . due to changes in the applicable microcredit lending regulations in jiangsu province , starting august 2012 we elected to charge no more than three times the pboc benchmark rate . prior to august 2012 , we were allowed to charge up to four times the pboc benchmark rate . the decrease in the pboc benchmark rate and the revised restriction on the allowable points above pboc benchmark rate have slowed our growth in net interest income . our results of operations are also affected by the provision for loan losses and provision for financial guarantee loss which are noncash items and represents an assessment of the risk of future loan losses . increases in the allowance for loan losses are achieved through provision for loan losses that are charged against net interest income . although we have generally benefited from china 's economic growth and the policies to encourage lending to farmers and smes , we are also affected by the complexity , uncertainties and changes in the prc regulations governing the micro lending industry . due to prc legal restrictions on foreign equity ownership of and investment in the micro lending sector in china , we rely on contractual arrangements with wujiangluxiang , and its shareholders to conduct most of our current business in china .
| 5,947 |
the extension , which is subject to appropriations by the state of california 's legislature , began july 1 , 2011 and expires june 30 , story_separator_special_tag the following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report . this discussion contains forward-looking statements that involve risks and uncertainties . our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors , including , but not limited to , those described under risk factors and included in other portions of this report . overview we currently operate 66 facilities , including 46 facilities that we own , with a total design capacity of approximately 91,000 beds in 20 states and the district of columbia . we also own two additional correctional facilities that we lease to third-party operators . we are also constructing an additional correctional facility in millen , georgia , under a contract awarded by the georgia department of corrections . the jenkins correctional center , which we will own , is expected to house approximately 1,150 inmates and be completed during the first quarter of 2012. we are the nation 's largest owner and operator of privatized correctional and detention facilities and one of the largest prison operators in the united states behind only the federal government and three states . our size and experience provide us with significant credibility with our current and prospective customers , and enable us to generate economies of scale in purchasing power for food services , health care and other supplies and services we offer to our government partners . we are compensated for operating and managing prisons and correctional facilities at an inmate per diem rate based upon actual or minimum guaranteed occupancy levels . the significant expansion of the prison population in the united states has led to overcrowding in the federal and state prison systems , providing us with opportunities for growth . federal , state , and local governments are constantly under budgetary constraints putting pressure on governments to control correctional budgets , including per diem rates our customers pay to us as well as pressure on appropriations for building new prison capacity . these pressures have been compounded by the recent economic downturn . economic conditions remain very challenging , putting continued pressure on government budgets . all of our state partners have balanced budget requirements , which may force them to further reduce their expenses if their tax revenues , which typically lag the overall economy , do not meet their expectations . actions to control their expenses could include reductions in inmate populations through early release programs , alternative sentencing , or inmate transfers from facilities managed by private operators to facilities operated by the state or other local jurisdictions . further , certain government partners have requested , and additional government partners could request , reductions in per diem rates or request that we forego prospective rate increases in the future as methods of addressing the budget shortfalls they may be experiencing . we believe we have been successful in working with our government partners to help them manage their correctional costs while minimizing the financial impact to us , and will continue to provide unique solutions to their correctional needs . we believe the long-term growth opportunities of our business remain very attractive as certain states consider efficiency and savings opportunities we can provide . further , we expect insufficient bed development by our partners to result in a return to the supply and demand imbalance that has benefited the private corrections industry . 40 governments continue to experience many significant spending demands which have constrained correctional budgets limiting their ability to expand existing facilities or construct new facilities . we believe the outsourcing of prison management services to private operators allows governments to manage increasing inmate populations while simultaneously controlling correctional costs and improving correctional services . we believe our customers discover that partnering with private operators to provide residential services to their inmates introduces competition to their prison system , resulting in improvements to the quality and cost of corrections services throughout their correctional system . further , the use of facilities owned and managed by private operators allows governments to expand correctional capacity without incurring large capital commitments and allows them to avoid long-term pension obligations for their employees . we also believe that having beds immediately available to our partners provides us with a distinct competitive advantage when bidding on new contracts . while we have been successful in winning contract awards to provide management services for facilities we do not own , and will continue to pursue such management contracts , we believe the most significant opportunities for growth are in providing our government partners with available beds within facilities we currently own or that we develop . we also believe that owning the facilities in which we provide management services enables us to more rapidly replace business lost compared with managed-only facilities , since we can offer the same beds to new and existing customers and , with customer consent , may have more flexibility in moving our existing inmate populations to facilities with available capacity . our management contracts generally provide our customers with the right to terminate our management contracts at any time without cause . as of december 31 , 2011 , we had approximately 12,300 unoccupied beds in inventory at facilities that had availability of 100 or more beds , and an additional 1,124 beds under development committed to the state of georgia . we have staff throughout the organization actively engaged in marketing this available capacity to existing and prospective customers . historically , we have been successful in substantially filling our inventory of available beds and the beds that we have constructed . filling these available beds would provide substantial growth in revenues , cash flow , and earnings per share . story_separator_special_tag further , a substantial increase in the number of available beds at other facilities we own could lead to a deterioration in market conditions and cash flows that we might be able to obtain under a new management contract at our idle facilities . we have historically secured contracts with customers at existing facilities that were already operational , allowing us to move the existing population to other idle facilities . although they are not frequently received , an unsolicited offer to purchase any of our idle facilities , or facilities under construction in the case of the trousdale project , at amounts that are less than the carrying value could also cause us to reconsider the assumptions used in our most recent impairment analysis . we have identified recent prospects to utilize each of the currently idled facilities and do not see any catalysts that would result in an impairment in the near term . however , we can provide no assurance that we will be able to secure management contracts to utilize our idle facilities , or that we will not incur impairment charges in the future . the estimates of recoverability are initially based on projected undiscounted cash flows that are comparable to historical cash flows from management contracts at similar facilities to the idled facilities and sensitivity analyses that consider reductions to such cash flows . our sensitivity analyses included reductions in projected cash flows by as much as half of the historical cash flows generated by the respective facility as well as prolonged periods of vacancies . in all cases except for our shelby training center , the projected undiscounted cash flows in our analyses as of december 31 , 2011 , exceeded the carrying amounts of each facility by material amounts . the shelby training center is a facility much smaller in size than almost all of our other facilities , and was designed as a non-secure juvenile detention facility , which is atypical for our portfolio . in the case of the shelby training center , our estimate of fair value took into consideration proposed purchase prices where third parties have expressed an interest in purchasing this facility , and estimates of the replacement cost of the facility based on our extensive experience in designing and constructing prison facilities . our estimate of the fair value exceeded the carrying value of this facility . in the case of the construction project in trousdale county , tennessee , we temporarily suspended the construction until we have greater clarity around the timing of future bed absorption by our customers . the $ 29.0 million carrying amount includes $ 0.6 million in equipment and $ 15.2 million of pre-fabricated concrete cells that are constructed and being stored on this site but are transferable to other potential development projects we may commence in the future should we identify a more immediate use . we continually monitor and perform any routine maintenance on these pre-fabricated concrete cells to ensure they maintain their value . we incurred operating expenses of $ 0.1 million primarily for property insurance , property taxes , and repairs and maintenance for this project during 2011. our impairment analysis of this project considers both the costs to complete the facility and an estimate of cash flows based on historical cash flows from management contracts at similar facilities . we continue to pursue prospects which would indicate the need for the ultimate completion of construction of the trousdale county facility , and will continue to monitor developments that may impact our most recent assumptions . although we are not currently considering a decision to abandon this site , a decision to transfer the pre-fabricated cells to another development project and to abandon the trousdale county project site would cause us to reconsider our assumptions related to the recoverability of the land and site development costs incurred compared to a prospective sales price we might be able to obtain for the land . 43 our evaluations also take into consideration our historical experience in securing new management contracts to utilize facilities that had been previously idled for periods comparable to or in excess of the periods our currently idle facilities have been idle . such previously idle facilities are currently being operated under contracts that generate cash flows resulting in the recoverability of the net book value of the previously idled facilities by substantial amounts . due to a variety of factors , the lead time to negotiate contracts with our federal and state partners to utilize idle bed capacity is generally lengthy which has historically resulted in periods of idleness similar to the ones we are currently experiencing at these facilities . as a result of our analyses , we determined each of these assets to have recoverable values in excess of the corresponding carrying values . by their nature , these estimates contain uncertainties with respect to the extent and timing of the respective cash flows due to potential delays or material changes to historical terms and conditions in contracts with prospective customers that could impact the estimate of cash flows . notwithstanding the effects the current economy has had on our customers ' demand for prison beds in the short term which has led to our decision to idle certain facilities , we believe the long-term trends favor an increase in the utilization of our correctional facilities and management services . this belief is also based on our experience in operating in recessionary environments and based on our experience in working with governmental agencies faced with significant budgetary challenges which is a primary contributing factor to the lack of appropriated funding to build new bed capacity by the federal and state governments with which we partner . goodwill impairments . as of december 31 , 2011 , we had $ 12.0 million of goodwill related to certain of our managed-only facilities .
| summary of debt as of december 31 , 2011 , the interest rates on all our outstanding indebtedness are fixed , with the exception of the interest rate applicable to $ 265.0 million outstanding under our then outstanding revolving credit facility , with a total weighted average effective interest rate of 6.4 % , while our total weighted average maturity was 2.8 years . the january 2012 refinancing lowered our total weighted average interest rate from 6.4 % to 5.3 % and extended our weighted average debt maturity from 2.8 years to 4.7 years . although we increased our exposure to variable rate debt , we believe we have the ability to fix the interest rate on some or all of this debt through the issuance of new debt securities or otherwise enter into swap arrangements when we determine that market conditions for such transactions are favorable . on june 3 , 2011 , moody 's raised our senior unsecured debt rating to `` ba1 '' from `` ba2 '' and revised the outlook on our debt rating from positive to stable . standard & poor 's ratings services currently rates our unsecured debt and corporate credit as bb . on february 7 , 2012 , fitch ratings assigned a rating of `` bbb- '' to our revolving credit facility and `` bb+ '' ratings to our unsecured debt and corporate credit . 66 we have the ability to fund our capital expenditure requirements , including the aforementioned construction projects , as well as our facility maintenance and information technology expenditures , working capital , debt service requirements , and the stock repurchase program , with cash on hand , net cash provided by operations , and borrowings available under our amended and restated revolving credit facility . operating activities our net cash provided by operating activities for the year ended december 31 , 2011 was $ 351.1 million compared with $ 255.5 million in 2010 and $ 314.7 million in 2009.
| 5,948 |
the following tables present the credit risk profile of ctbi 's commercial loan portfolio based on rating category and payment activity , segregated by class of loans , as of december 31 , 2013 and 2012 : replace_table_token_45_th the following tables present the credit risk profile of ctbi 's residential real estate and consumer loan portfolios based on performing or nonperforming status , segregated by class , as of december 31 , 2013 and 2012 : replace_table_token_46_th ( 1 ) a 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 community trust bancorp , inc. , our operations , and our present business environment . the md & a is provided as a supplement to—and should be read in conjunction with—our consolidated financial statements and the accompanying notes thereto contained in item 8 of this annual report . the md & a includes the following sections : v our business v financial goals and performance v results of operations and financial condition v contractual obligations and commitments v liquidity and market risk v interest rate risk v capital resources v impact of inflation , changing prices , and economic conditions v stock repurchase program v critical accounting policies and estimates our business community trust bancorp , inc. ( “ ctbi ” ) is a bank holding company headquartered in pikeville , kentucky . currently , we own one commercial bank and one trust company . through our subsidiaries , we have eighty-one banking locations in eastern , northeastern , central , and south central kentucky , southern west virginia , and northeastern tennessee , four trust offices across kentucky , and one trust office in northeastern tennessee . at december 31 , 2013 , we had total consolidated assets of $ 3.6 billion and total consolidated deposits , including repurchase agreements , of $ 3.1 billion , making us the largest bank holding company headquartered in the commonwealth of kentucky . total shareholders ' equity at december 31 , 2013 was $ 412.5 million . through our subsidiaries , we engage in a wide range of commercial and personal banking and trust and wealth management activities , which include accepting time and demand deposits ; making secured and unsecured loans to corporations , individuals and others ; providing cash management services to corporate and individual customers ; issuing letters of credit ; renting safe deposit boxes ; and providing funds transfer services . the lending activities of our bank include making commercial , construction , mortgage , and personal loans . lease-financing , lines of credit , revolving lines of credit , term loans , and other specialized loans , including asset-based financing , are also available . our corporate subsidiaries act as trustees of personal trusts , as executors of estates , as trustees for employee benefit trusts , as registrars , transfer agents , and paying agents for bond and stock issues , as depositories for securities , and as providers of full service brokerage services . for further information , see item 1 of this annual report . financial goals and performance the following table shows the primary measurements used by management to assess annual performance . the goals in the table below should not be viewed as a forecast of our performance for 2014. rather , the goals represent a range of target performance for 2014. there is no assurance that any or all of these goals will be achieved . see “ cautionary statement regarding forward looking statements. ” replace_table_token_19_th results of operations and financial condition for the year ended december 31 , 2013 , we reported earnings of $ 45.2 million , or $ 2.90 per basic share , compared to $ 44.9 million , or $ 2.90 per basic share for the year ended december 31 , 2012. earnings for the year ended december 31 , 2011 were $ 38.8 million or $ 2.54 per basic share . on november 15 , 2013 , ctbi reported , in a current report on form 8-k , that the completion of a federal reserve investigation was expected to result in an accrual against our earnings in the fourth quarter of 2013. the federal reserve has informed us that they have identified an error in the manner in which we process certain non-pin based point-of-sale transactions . as a result , we will be required to modify our processing of overdraft transactions , revise our disclosures related to these transactions , and provide restitution to accountholders charged these fees from june 28 , 2010 to the date our methodology is revised . we understand that such determination will likely result in impediments to ctbi 's merger and acquisition activity for an unspecified period of time . while the final determination of costs , including customer refunds , has not occurred , management has developed an estimated range of outcomes , including a maximum and minimum exposure and has accrued $ 6.2 million , the amount within this range that was considered the most likely cost . story_separator_special_tag past due category . loans 30-89 days past due at $ 16.0 million is a decrease of $ 11.1 million from december 31 , 2012. our loan portfolio management processes focus on the immediate identification , management , and resolution of problem loans to maximize recovery and minimize loss . our loan risk management processes include weekly delinquent loan review meetings at the market levels and monthly delinquent loan review meetings involving senior corporate management to review all nonaccrual loans and loans 30 days or more past due . any activity regarding a criticized/classified loan ( i.e . problem loan ) must be approved by ctb 's watch list asset committee ( i.e . problem loan committee ) . ctb 's watch list asset committee also meets on a quarterly basis and reviews every criticized/classified loan of $ 100,000 or greater . story_separator_special_tag at december 31 , 2013 , the aggregate contractual obligations and commitments are : replace_table_token_24_th * the amounts provided as interest on advances from federal home loan bank and interest on long-term debt assume the liabilities will not be prepaid and interest is calculated to their individual maturities . the interest on $ 61.3 million in long-term debt is calculated based on the three-month libor plus 1.59 % until its maturity of june 1 , 2037. the three-month libor rate is projected using the most likely rate forecast from assumptions incorporated in the interest rate risk model and is determined two business days prior to the interest payment date . these assumptions are uncertain , and as a result , the actual payments will differ from the projection due to changes in economic conditions . replace_table_token_25_th commitments to extend credit and standby letters of credit do not necessarily represent future cash requirements in that these commitments often expire without being drawn upon . refer to note 17 to the consolidated financial statements for additional information regarding other commitments . liquidity and market risk the objective of ctbi 's asset/liability management function is to maintain consistent growth in net interest income within our policy limits . this objective is accomplished through management of our consolidated balance sheet composition , liquidity , and interest rate risk exposures arising from changing economic conditions , interest rates , and customer preferences . the goal of liquidity management is to provide adequate funds to meet changes in loan and lease demand or deposit withdrawals . this is accomplished by maintaining liquid assets in the form of cash and cash equivalents and investment securities , sufficient unused borrowing capacity , and growth in core deposits . as of december 31 , 2013 , we had approximately $ 106.6 million in cash and cash equivalents and approximately $ 609.4 million in securities valued at estimated fair value designated as available-for-sale and available to meet liquidity needs on a continuing basis compared to $ 207.6 million and $ 603.3 million at december 31 , 2012. additional asset-driven liquidity is provided by the remainder of the securities portfolio and the repayment of loans . in addition to core deposit funding , we also have a variety of other short-term and long-term funding sources available . we also rely on federal home loan bank advances for both liquidity and management of our asset/liability position . federal home loan bank advances were $ 1.3 million at december 31 , 2013 compared to $ 1.4 million at december 31 , 2012. as of december 31 , 2013 , we had a $ 342.6 million available borrowing position with the federal home loan bank compared to $ 320.9 million at december 31 , 2012. we generally rely upon net inflows of cash from financing activities , supplemented by net inflows of cash from operating activities , to provide cash for our investing activities . as is typical of many financial institutions , significant financing activities include deposit gathering , use of short-term borrowing facilities such as repurchase agreements and federal funds purchased , and issuance of long-term debt . at december 31 , 2013 and december 31 , 2012 , we had $ 44 million in lines of credit with various correspondent banks available to meet any future cash needs . our primary investing activities include purchases of securities and loan originations . we do not rely on any one source of liquidity and manage availability in response to changing consolidated balance sheet needs . at december 31 , 2013 , federal funds sold were $ 8.6 million compared to $ 6.7 million at december 31 , 2012 , and deposits with the federal reserve were $ 28.5 million compared to $ 123.9 million at december 31 , 2012. additionally , we project cash flows from our investment portfolio to generate additional liquidity over the next 90 days . the investment portfolio consists of investment grade short-term issues suitable for bank investments . the majority of the investment portfolio is in u.s. government and government sponsored agency issuances . the average life of the portfolio is 4.83 years . at the end of 2013 , available-for-sale ( “ afs ” ) securities comprised approximately 99.7 % of the total investment portfolio , and the afs portfolio was approximately 148 % of equity capital . eighty-four percent of the pledge eligible portfolio was pledged . interest rate risk we consider interest rate risk one of our most significant market risks . interest rate risk is the exposure to adverse changes in net interest income due to changes in interest rates . consistency of our net interest revenue is largely dependent upon the effective management of interest rate risk . we employ a variety of measurement techniques to identify and manage our interest rate risk including the use of an earnings simulation model to analyze net interest income sensitivity to changing interest rates . the model is based on actual cash flows and repricing characteristics for on and off-balance sheet instruments and incorporates market-based assumptions regarding the effect of changing interest rates on the prepayment rates of certain assets and liabilities . assumptions based on the historical behavior of deposit rates and balances in relation to changes in interest rates are also incorporated into the model . these assumptions are inherently uncertain , and as a result , the model can not precisely measure net interest income or precisely predict the impact of fluctuations in interest rates on net interest income . actual results will differ from simulated results due to timing , magnitude , and frequency of interest rate changes as well as changes in market conditions and management strategies . ctbi 's asset/liability management committee ( alco ) , which includes executive and senior management representatives and reports to the board of directors , monitors and manages interest rate risk within board-approved policy limits . our current exposure to interest rate risks is determined by measuring the anticipated change in net interest income spread evenly over the twelve-month period .
| 2013 highlights v basic earnings per share for the year remained flat to prior year . v net interest income for the year ended december 31 , 2013 increased 1.9 % from prior year . v our nonperforming loans at $ 43.6 million increased $ 7.6 million from december 31 , 2012. nonperforming assets at $ 82.7 million were a $ 0.3 million decrease from prior year . v net loan charge-offs for the year 2013 were $ 7.8 million , or 0.30 % of average loans , compared to $ 9.4 million , or 0.37 % of average loans , for the year 2012. v our loan loss provision for the year 2013 of $ 8.6 million was $ 0.9 million less than 2012. v our loan loss reserve as a percentage of total loans outstanding remained at 1.30 % from december 31 , 2012 to december 31 , 2013. our reserve coverage ( allowance for loan and lease loss reserve to nonperforming loans ) at december 31 , 2013 was 78.1 % compared to 92.3 % at december 31 , 2012. v noninterest income for the year ended december 31 , 2013 increased 7.3 % . the increase year over year included increases in gains on sales of loans , deposit service charges , trust and wealth management revenue , loan related fees , net gains on other real estate owned , and bank owned life insurance income , offset slightly by a decrease in securities gains . v noninterest expense for the year ended december 31 , 2013 increased 6.5 % from prior year . noninterest expense was impacted by increased personnel expense , increased data processing expense , and $ 6.2 million in accrued expenses related to the federal reserve investigation discussed above . v our loan portfolio increased $ 64.8 million from december 31 , 2012. v our investment portfolio increased $ 6.1 million from december 31 , 2012. v deposits , including repurchase agreements , declined $ 50.8
| 5,949 |
you should review the risk factors section of this annual report beginning on page 100 for a discussion of important factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis . overview we are a research-based , biopharmaceutical company focused on the discovery , development and commercialization of novel therapeutics to treat serious unmet medical needs . we have capitalized on our extensive experience in fibrosis and hypoxia-inducible factor , or hif , biology to generate multiple programs targeting various therapeutic areas . roxadustat , or fg-4592 , is an oral small molecule inhibitor of hif prolyl hydroxylases , or hif-phs , in phase 3 clinical development for the treatment of anemia in chronic kidney disease , or ckd . fg-3019 is our monoclonal antibody in phase 2 clinical development for the treatment of idiopathic pulmonary fibrosis , or ipf , pancreatic cancer and liver fibrosis . we have taken a global approach with respect to our product candidates , and this includes development and commercialization of product candidates in the people 's republic of china , or china . roxadustat , the first hif-ph inhibitor to enter phase 3 clinical development , acts by stimulating the body 's natural pathway of erythropoiesis , or red blood cell production . roxadustat represents a new paradigm for the treatment of anemia in ckd patients , and has the potential to offer a safer , more effective , more convenient and more accessible therapy than the current therapies available for anemia in ckd , such as injectable erythropoiesis stimulating agents , or esas , used in approximately 80 % of u.s. dd-ckd patients and up to 15 % of u.s. ndd-ckd patients under the care of nephrologists at initiation of dialysis as of 2012. we , along with our collaboration partners astellas pharma inc. , or astellas , and astrazeneca ab , or astrazeneca , have designed a global phase 3 program to support regulatory approval of roxadustat in both ndd-ckd and dd-ckd patients in multiple geographies . fg-3019 is our fully-human monoclonal antibody that inhibits the activity of connective tissue growth factor , or ctgf , a critical common element in the progression of fibrosis and associated serious diseases . we are currently conducting an open-label phase 2 trial in ipf ; a randomized , double-blind placebo-controlled phase 2 trial in ipf ; an open-label phase 2 trial in pancreatic cancer ; and a randomized , double-blind , placebo-controlled phase 2 trial in liver fibrosis . to date , we have retained exclusive worldwide rights for fg-3019 . we are also currently pursuing our corneal implant fg-5200 for treatment of corneal blindness resulting from partial thickness corneal damage in china . to date , our operations have been primarily funded by net proceeds from the sale of convertible preferred stock and common stock of fibrogen , inc. and sales of preferred stock in our majority-owned subsidiaries as well as equity investments from our collaboration partners and upfront payments , milestone payments and net research and development payments from our collaboration partners . on november 10 , 2014 , we effected a 1-for-2.5 reverse split of our common stock . upon the effectiveness of the reverse stock split , ( i ) every 2.5 shares of outstanding common stock were combined into one share of common stock , ( ii ) the number of shares of common stock for which each outstanding option or warrant to purchase 151 common stock is exercisable was proportionally decreased on a 1-for-2.5 basis , ( iii ) the exercise price of each outstanding option or warrant to purchase common stock was proportionately increased on a 1-for-2.5 basis , ( iv ) the exchange ratio for each share of outstanding fibrogen europe share of stock which is exchangeable into our common stock was proportionately reduced on a 1-for-2.5 basis , and ( v ) the conversion ratio for each share of outstanding preferred stock which is convertible into our common stock was proportionately reduced on a 1-for-2.5 basis . all of the share numbers , share prices , and exercise prices have been adjusted , on a retroactive basis , to reflect this 1-for-2.5 reverse stock split . we paid cash in lieu of any fractional shares to which a holder of common stock would otherwise be entitled as a result of the reverse stock split . the par value per share and the authorized number of shares of common stock and preferred stock were not adjusted as a result of the reverse stock split . on november 19 , 2014 , we closed the initial public offering of our common stock . in our initial public offering , we sold 9,315,000 shares of our common stock at a public offering price of $ 18.00 per share . net proceeds from our initial public offering and concurrent private placement were approximately $ 171.8 million , after deducting underwriting discounts and commissions of $ 11.7 million and offering expenses of $ 4.1 million . astrazeneca , one of our collaboration partners , agreed to purchase from us concurrently with the closing of our initial public offering in a private placement shares of our common stock with an aggregate purchase price of $ 20.0 million at a price per share equal to the initial public offering price . upon the closing of our initial public offering , all outstanding shares of our convertible preferred stock automatically converted into 33,919,954 shares of common stock . upon the closing of our initial public offering , 958,996 shares of fibrogen europe convertible preferred stock were converted into shares of our common stock . our proceeds from the sale of the common stock sold in the concurrent private placement were $ 20.0 million . since inception and through december 31 , 2014 , we have incurred a total of $ 918.4 million in research and development expenses , a majority of which relates to the development of roxadustat , fg-3019 and other hif-ph inhibitors . story_separator_special_tag total cash consideration received through december 31 , 2014 and potential cash consideration , other than development cost reimbursement , transfer price payments , royalties and profit share , pursuant to our existing collaboration agreements are as follows : replace_table_token_15_th these collaboration agreements also provide for reimbursement of certain fully burdened research and development costs as well as direct out of pocket expenses . research and development expenses research and development expenses consist of third party research and development costs and the fully-burdened amount of costs associated with work performed under collaboration agreements . research and development costs include employee-related expenses for research and development functions , expenses incurred under agreements with clinical research organizations , or cros , other clinical and preclinical costs and allocated direct and indirect overhead costs , such as facilities costs , information technology costs and other overhead . research and development costs are expensed as incurred . costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and our clinical sites . 154 the following table summarizes our research and development expenses incurred during the years ended december 31 , 2014 , 2013 and 2012 : replace_table_token_16_th the program-specific expenses summarized in the table above include costs we directly attribute to our product candidates . we allocate research and development salaries , benefits , stock-based compensation and other indirect costs to our product candidates on a program-specific basis , and we include these costs in the program-specific expenses . the largest component of our total operating expenses has historically been our investment in research and development activities , including the clinical development of our product candidates . since inception and through december 31 , 2014 , we have incurred a total of $ 918.4 million in research and development expenses , a majority of which relates to the development of roxadustat , fg-3019 and other hif-ph inhibitors . we expect our research and development expenses to continue to increase in the future as we advance our product candidates through clinical trials and expand our product candidate portfolio . the process of conducting the necessary clinical research to obtain regulatory approval is costly and time consuming . we consider the active management and development of our clinical pipeline to be crucial to our long-term success . the actual probability of success for each product candidate and clinical program may be affected by a variety of factors , including the safety and efficacy data of the product candidate , investment in the program , competition , manufacturing capability and commercial viability . furthermore , we have entered into collaborations with third parties to participate in the development and commercialization of our product candidates , and we may enter into additional collaborations in the future . in situations in which third parties have control over the preclinical development or clinical study process for a product candidate , the estimated completion dates are largely outside of our control . we are unable to forecast with any degree of certainty which of our product candidates , if any , will be subject to collaborations in the future or how such arrangements would affect our development plans or capital requirements . as a result of the uncertainties discussed above , we are unable to determine the duration and completion costs of our research and development projects , or when and to what extent we will generate revenue from the commercialization and sale of any of our product candidates . the duration , costs and timing of clinical studies and development of our product candidates will depend on a variety of factors . for example , if the fda , ema or another regulatory authority were to require us to conduct clinical studies beyond those that we currently anticipate will be required , or if we experience significant delays in enrollment in any of our clinical studies , we could be required to expend significant additional financial resources and the time to the completion of clinical development would be extended . we intend to identify additional partnerships to further develop product candidates other than roxadustat , which may offset a portion of our research and development expenses through reimbursement from potential partners . because of the numerous risks and uncertainties associated with drug development , we are unable to predict the timing or amount of expenses incurred or when , or if , we will be able to achieve sustained profitability . general and administrative expenses general and administrative expenses consist primarily of employee-related expenses for executive , operational , finance , legal , compliance and human resource functions . other general and administrative expenses include 155 facility-related costs and professional fees , accounting and legal services , other outside services , recruiting fees and expenses associated with obtaining and maintaining patents . for the years ended december 31 , 2014 , 2013 and 2012 , we incurred $ 36.9 million , $ 24.4 million and $ 18.9 million , respectively , in general and administrative expenses . we anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research and development and potential commercialization of our product candidates . we also anticipate increased expenses , including exchange listing and securities and exchange commission requirements , director and officer insurance premiums , legal , audit and tax fees , regulatory compliance programs and investor relations costs associated with being a public company . additionally , if and when we believe the first regulatory approval of one of our product candidates appears likely , we anticipate an increase in payroll and related expenses as a result of our preparation for commercial operations , especially as it relates to the sales and marketing of our product candidates .
| results of operations replace_table_token_17_th comparison of the years ended december 31 , 2014 and 2013 revenue replace_table_token_18_th total revenue increased by $ 35.4 million , or 35 % , for the year ended december 31 , 2014 compared to the year ended december 31 , 2013 for the reasons as more fully discussed in the sections below . license and milestone revenue replace_table_token_19_th license and milestone revenue increased by $ 22.2 million for the year ended december 31 , 2014 compared to the year ended december 31 , 2013. this increase was primarily driven by license revenue recognized in 157 connection with our collaboration agreements signed in july 2013 with astrazeneca , partially offset by the decrease in milestone revenue recognized in connection with our collaboration agreement with astellas during the year ended december 31 , 2014. the amount of license revenue recognized for each of the years ended december 31 , 2014 and december 31 , 2013 was comprised principally of the receipt of a $ 110.0 million time-based payment in june 2014 and up-front payments of $ 98.2 million in july 2013 , respectively , and the application of the relative selling price method to each of the deliverables underlying the astrazeneca agreement . as a result of applying the relative selling price method and assessing the timing of the provision of various deliverables ( as more fully discussed in the notes to the consolidated financial statements ) , at december 31 , 2014 and december 31 , 2013 approximately $ 16.4 million and $ 18.3 million , respectively ( which relate to the co-development , information sharing and committee services unit of accounting ) , and $ 14.9 million and $ 13.3 million , respectively ( which relate to the china unit of accounting ) , of these payments were deferred .
| 5,950 |
in light of this shift , the company evaluated its space needs and determined that a portion of the company 's leased office spaces in richardson , texas and san jose , california would no longer be utilized . as a result , the right-of-use assets related to these leases were written down , resulting in a charge of $ 3.5 million for the year ended december 31 , 2020. in addition , the company wrote off assets with net book value of $ 0.3 million and accrued common areas maintenance fees and property taxes related to the unused office space totaling story_separator_special_tag the management 's discussion and analysis of financial condition and results of operations contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the securities act of 1933 ( the “ securities act ” ) and the securities exchange act of 1934 ( the “ exchange act ” ) . all statements other than statements of historical facts are statements that could be deemed forward-looking statements . these statements are based on current expectations , estimates , forecasts and projections about the industry in which we operate and the beliefs and assumptions of our management . in some cases , forward-looking statements can be identified by the use of words such as “ believe , ” “ could , ” “ expect , ” “ may , ” “ estimate , ” “ continue , ” “ anticipate , ” “ intend , ” “ should , ” “ plan , ” “ predict , ” “ will , ” “ would , ” “ project , ” “ potential , ” or the negative thereof or other comparable terminology . in addition , any statements that refer to projections of our future financial performance , our anticipated growth and trends in our business and industry and other characterizations of future events or circumstances are forward-looking statements . readers are cautioned that these forward-looking statements are only predictions and are subject to risks , uncertainties and assumptions that are difficult to predict , including those identified in the risk factors discussed in item 1a , in the discussion below , as well as in other sections of this annual report on form 10-k. therefore , actual results may differ materially and adversely from those expressed in any forward-looking statements . all forward-looking statements and reasons why results may differ included in this report are made as of the date hereof , and we assume no obligation to update these forward-looking statements or reasons why actual results might differ . overview we are the leading global provider of cloud and software platforms , systems and services that focus on the access network , the portion of the network that governs available bandwidth and determines the range and quality of services that can be offered to subscribers . these cloud and software platforms enable csps of all types and sizes to innovate and transform their businesses . our csp customers are empowered to utilize real-time data and insights from calix platforms to simplify their businesses and deliver experiences that excite their subscribers . these insights enable csps to grow their businesses through increased subscriber acquisition , loyalty and revenue , thereby increasing the value of their businesses and contributions to their communities . we market our cloud and software platforms , systems and services to csps globally through our direct sales force as well as select resellers . our customers range from smaller , regional csps to some of the world 's largest csps . we have enabled approximately 1,600 csp customers purchasing directly and through partners to deploy passive optical , active ethernet and point-to-point ethernet fiber access networks . in the third quarter of 2020 , we completed an underwritten public offering of 3,220,000 shares of our common stock at $ 20.00 per share , including a full exercise by the underwriters of their option to purchase an additional 420,000 shares of common stock , for net proceeds of $ 60.1 million after deducting the underwriting discount and estimated expenses payable by us . beginning in 2018 , the united states enacted a series of tariffs on certain goods manufactured in china . as a result of these tariffs , we incurred u.s. tariff and tariff-related costs of $ 2.8 million in 2020 , $ 6.2 million in 2019 and $ 3.2 million in 2018. in order to mitigate the impact of the tariffs enacted by the united states , we undertook a broad plan to realign our global supply chain by moving substantially all of our production outside of china in addition to other supply chain improvements in the first half of 2019. as a result of the tariffs imposed on a broader list of products in september 2019 , we expanded the scope of our global supply chain realignment plan , which was substantially completed in 2020. our revenue increased to $ 541.2 million in 2020 from $ 424.3 million in 2019 and $ 441.3 million in 2018. our revenue and potential revenue growth will depend on our ability to sell and license our cloud and software platforms , systems and services to strategically aligned customers of all types such as wireless internet service providers , fiber overbuilders , cable msos , municipalities and electric cooperatives in the united states and internationally . revenue fluctuations result from many factors , including , but not limited to : increases or decreases in customer orders for our products and services , market , financial or other factors that may delay or materially impact customer purchasing decisions , non-availability of products due to supply chain challenges , including disruptions as a result of the covid-19 pandemic , contractual terms with customers that result in delayed revenue recognition and varying budget cycles and seasonal buying patterns of our customers . story_separator_special_tag these actions resulted in a charge of $ 1.8 million related to our reduction and consolidation of legacy product lines and severance-related charges of $ 1.2 million . critical accounting policies and estimates our financial statements are prepared in accordance with u.s. generally accepted accounting principles . these accounting principles require us to make certain estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the financial statements , as well as the reported amounts of revenue and expenses during the periods presented . we base our estimates , assumptions and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances . to the extent there are material differences between these estimates and actual results , our financial statements may be affected . we evaluate our estimates , assumptions and judgments on an ongoing basis . 29 we believe the following critical accounting policies affect our significant judgments and estimates used in the preparation of our financial statements . revenue recognition we derive revenue from contracts with customers primarily from the following and categorize our revenue as follows : systems include revenue from the sale of access and premises systems , software platform licenses and cloud-based software subscriptions . services include revenue from professional services , customer support , software- and cloud-based maintenance , extended warranty subscriptions , training and managed services . revenue is recognized when a performance obligation is satisfied , which occurs when control of the promised goods or services is transferred to the customer , in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services . specifically , revenue from software platform licenses , which provides the customer with a right to use the software as it exists , is generally recognized upfront when product is made available to the customer . revenue from cloud-based software subscriptions , customer support , maintenance , extended warranty subscriptions and managed services is generally recognized ratably over the contract term . revenue from professional services and training is recognized as the services are delivered . a performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account . a contract 's transaction price is allocated to each distinct performance obligation and recognized as revenue when , or as , the performance obligation is satisfied . our hardware products contain both software and non-software components that function together to deliver the products ' essential functionality and therefore constitutes a single performance obligation as the promise to transfer the individual software and non-software components is not separately identifiable and , therefore , not distinct . our contracts may include multiple performance obligations . for such arrangements , we allocate the contract 's transaction price to each performance obligation using the relative stand-alone selling price of each distinct good or service in the contract . we generally determine stand-alone selling prices based on the prices charged to customers or our best estimate of stand-alone selling price . our estimate of stand-alone selling price is established considering multiple factors including , but not limited to , geographies , market conditions , competitive landscape , internal costs , gross margin objectives , characteristics of targeted customers and pricing practices . the determination of estimated stand-alone selling price is made through consultation with and formal approval by management , taking into consideration the go-to-market strategy . for certain revenue arrangements involving delivery of both systems and professional services , each is considered a distinct performance obligation . systems revenue is recognized at a point in time when management has determined that control over systems has transferred to the customer , which is generally when legal title has transferred to the customer . for the same revenue arrangements , management believes that the output of the associated professional services is transferred to the customer over time . as such , professional services revenue is recognized over the period in which the services are provided using a cost input measure . we recognize revenue when control of the systems and services has been transferred to the customer , which may be earlier than system installation or customer acceptance , in accordance with the agreed-upon specifications in the contract . inventory valuation inventory , which primarily consists of finished goods purchased from cms or odms , is stated at the lower of cost ( determined by the first-in , first-out method ) and net realizable value . inbound shipping costs and tariffs are included in the cost of inventory . in addition , we , from time to time , procure component inventory primarily as a result of manufacturing discontinuation of critical components by suppliers . we regularly monitor inventory quantities on-hand and record write-downs for excess and obsolete inventory based on our estimate of demand for our products , potential obsolescence of technology , product life cycle and whether pricing trends or forecasts indicate that the carrying value of inventory exceeds our estimated selling price . these factors are impacted by market and economic conditions , technology changes and new product introductions and require estimates that may include elements that are uncertain . actual demand may differ from forecasted demand and may have a material effect on gross profit . if inventory is written down , a new cost basis is established that can not be increased in future periods . the sale of previously reserved inventory has not had a material impact on our gross margin . recent accounting pronouncements not yet adopted there have been no additional accounting pronouncements or changes in accounting pronouncements that are significant or potentially significant to us . 30 results of operations for years ended december 31 , 2020 and 2019 revenue the following table sets forth our revenue ( dollars in thousands ) : replace_table_token_3_th our revenue is principally derived in the united states .
| general and administrative expenses general and administrative expenses consist primarily of personnel costs related to our executive , finance , human resources , information technology and legal organizations , outside consulting services , insurance , allocated facilities and fees for professional services . professional services consist of outside audit , legal , accounting and tax services . the following table sets forth our general and administrative expenses ( dollars in thousands ) : replace_table_token_8_th 32 the increase in general and administrative expenses of $ 7.3 million during 2020 compared with 2019 was primarily due to increased amortization and subscription expenses of $ 4.1 million , primarily related to our cloud-based erp system that went live in january of 2020 , personnel expenses of $ 2.8 million , primarily related to the capitalization of internal resources related to our cloud-based erp implementation that lowered personnel expenses in 2019 as well as an increase in incentive compensation expense in 2020 , stock-based compensation of $ 1.0 million and bad debt allowance of $ 0.8 million . these increases were partially offset by lower professional services fees of $ 1.4 million . restructuring charges responding to changes caused by the covid-19 pandemic , we initiated a restructuring plan in june 2020 to accelerate our all-platform future and to align with a work-from-anywhere culture . we incurred restructuring charges of $ 6.3 million , consisting of facilities-related charges and severance and other termination related benefits . see note 4 , “ balance sheet details ” of the notes to consolidated financial statements included in this annual report on form 10-k. loss on asset retirement during 2019 , we recognized a charge of $ 2.5 million relating to the retirement of an asset consisting of licensed software .
| 5,951 |
the company provides natural and synthetic color systems for use in foods , beverages , pharmaceuticals and nutraceuticals ; colors , inks , and other ingredients for cosmetics , pharmaceuticals , nutraceuticals and digital printing ; and technical colors for industrial applications . the company 's three reportable segments are the flavors & fragrances group and the color group , which are managed on a product basis , and the asia pacific group , which is managed on a geographic basis . the company 's corporate expenses , restructuring , divestiture , share-based compensation , and other costs are included in the “ corporate & other ” category . in july 2018 , the company completed the acquisition of sensient natural extraction inc . this business was included in corporate & other in 2018. beginning in the first quarter of 2019 , the results of operations of this business are now reported in the color segment . the results for 2018 have been restated to reflect this change . in 2019 , the company 's business was impacted by a number of adverse market factors . sensient experienced uncertainty and higher costs tied to raw material availability , tariffs , and trade disruptions . sensient was also impacted by changing consumer trends for food and cosmetic products . in 2019 , sensient 's color segment experienced strong demand for natural colors and pharmaceuticals and each of these product lines delivered positive volume growth . the ability to convert this volume growth to profit growth was limited , in part by raw material cost increases . revenue growth in food colors and pharmaceuticals was offset by lower sales of color cosmetic ingredients and lower sales of inks . after several years of strong consumer demand for color cosmetics , consumer demand for these products has softened , which resulted in destocking throughout the supply chain and lower sales for sensient 's color cosmetic ingredients . sensient 's inks product line has experienced intense competition , which has resulted in lower sales and profits in this product line . within the flavors & fragrances segment , sensient 's finished flavor product lines delivered favorable volume growth in 2019 , however , the segment was impacted by lower demand in other flavor ingredient product lines , particularly those that are used in yogurt and certain prepared food categories . the company implemented a number of actions in response to these challenges , including cost reductions in each of its segments . furthermore , in october 2019 , the company announced its intent to divest its inks , certain parts of its fragrances product line , and fruit preparation product line . these product lines represent approximately 10 % of the company 's consolidated revenue and 1 % of the company 's consolidated operating income . the company anticipates that it will complete sales and exit activities of those product lines in 2020 . 19 index the company 's diluted earnings per share were $ 1.94 in 2019 and $ 3.70 in 2018. included in the 2019 results were $ 45.9 million ( $ 43.2 million after tax , $ 1.02 per share ) of divestiture & other related costs . included in the 2018 results was $ 6.6 million of a benefit related to the enactment of the tax cuts and jobs act ( 2017 tax legislation ) , equating to an impact of a 16 cents per share benefit . adjusted diluted earnings per share , which exclude the divestiture & other related costs as well as the impact of the 2017 tax legislation , were $ 2.96 in 2019 and $ 3.55 in 2018 ( see discussion below regarding non-gaap financial measures and the company 's divestiture related costs and the impact of the 2017 tax legislation ) . since 1962 , the company has paid , without interruption , a quarterly cash dividend . in the fourth quarter of 2019 , the company increased the quarterly dividend by 3 cents per share from 36 cents to 39 cents per share , or $ 1.56 per share on an annualized basis . in addition , the company repurchased $ 76.7 million of company stock in 2018. additional information on the results is included below . story_separator_special_tag value . this estimate will be finalized and adjusted as necessary upon the closing of the sales or as assumptions change . also in the fourth quarter of 2019 , the company recorded a non-cash charge of $ 9.8 million and disposal costs of $ 0.8 million , in cost of products sold , related to the fruit preparation divestiture . the charge reduced the carrying value of certain inventories , as they were determined to be excess as of december 31 , 2019. the company also incurred $ 1.3 million of additional costs , primarily related to severance , in the fourth quarter of 2019 , in selling and administrative expenses , related to the anticipated divestitures and other exit activities . non-gaap financial measures within the following tables , the company reports certain non-gaap financial measures , including : ( 1 ) adjusted operating income , adjusted net earnings , and adjusted diluted eps ( which exclude divestiture & other related costs as well as the impact of the 2017 tax legislation ) and ( 2 ) percentage changes in revenue , operating income , diluted eps , adjusted operating income , and adjusted diluted eps on a local currency basis ( which eliminate the effects that result from translating its international operations into u.s. dollars ) . the company has included each of these non-gaap measures in order to provide additional information regarding our underlying operating results and comparable year-over-year performance . such information is supplemental to information presented in accordance with gaap and is not intended to represent a presentation in accordance with gaap . these non-gaap measures should not be considered in isolation . rather , they should be considered together with gaap measures and the rest of the information included in this report . story_separator_special_tag segment operating income for the asia pacific segment was $ 19.4 million in 2019 and $ 20.9 million in 2018 , a decrease of approximately 7 % compared to the prior year . foreign exchange rates increased segment operating income by approximately 3 % . the decrease in segment operating income was a result of lower volumes and higher manufacturing and other costs , partially offset by higher selling prices and favorable exchange rates . segment operating income as a percent of revenue was 16.4 % in 2019 and 16.9 % in 2018 , respectively . corporate & other the corporate & other operating loss was $ 74.4 million in 2019 and $ 27.2 million in 2018. the higher operating loss was primarily a result of the divestiture & other related costs in 2019 of $ 45.9 million . see divestitures above for further information . there were no divestiture & other related costs incurred in 2018 . 23 index results of operations 2018 vs. 2017 revenue sensient 's revenue was approximately $ 1.4 billion in 2018 and 2017. gross profit the company 's gross margin was 33.6 % in 2018 and 34.9 % in 2017. included in the cost of products sold are $ 2.9 million of restructuring costs for 2017. the decrease in gross margin is primarily a result of higher raw material costs and the unfavorable impact of product mix , partially offset by higher selling prices . restructuring costs reduced gross margin by 20 basis points in 2017. selling and administrative expenses selling and administrative expense as a percent of revenue was 18.9 % in 2018 and 22.6 % in 2017 , respectively . restructuring and other costs of $ 45.2 million in 2017 were included in selling and administrative expense . selling and administrative expense as a percent of revenue was lower in 2018 than in 2017 primarily as a result of the 2017 restructuring and other costs and lower performance-based executive compensation in 2018. restructuring and other costs increased selling and administrative expense as a percent of revenue by 330 basis points in 2017. operating income operating income was $ 203.4 million in 2018 and $ 167.8 million in 2017. operating margins were 14.7 % in 2018 and 12.3 % in 2017. restructuring and other costs reduced operating margins by 350 basis points in 2017. additional information on segment results can be found in the segment information section . interest expense interest expense was $ 21.9 million in 2018 and $ 19.4 million in 2017. the increase in expense was primarily due to the increase in average debt outstanding . income taxes the effective income tax rate was 13.3 % in 2018 and 39.6 % in 2017. the effective tax rates in both 2018 and 2017 were impacted by changes in estimates associated with the finalization of prior year foreign and domestic tax items , audit settlements , adjustments to valuation allowances and mix of foreign earnings . the effective tax rate in 2018 was also favorably impacted by u.s. tax accounting method changes that were filed with the irs in the second quarter of 2018 and generation of foreign tax credits during 2018. the 2017 effective tax rate was impacted by the limited tax deductibility of losses , the result of the cumulative foreign currency effect related to certain repatriation transactions , and restructuring and other activities . on december 22 , 2017 , the u.s. enacted the 2017 tax legislation . the 2017 tax legislation significantly changed u.s. corporate income tax laws by reducing the u.s. corporate income tax rate to 21 % beginning in 2018 and creating a territorial tax system with a one-time mandatory tax on previously deferred foreign earnings of u.s. subsidiaries . as a result , the company recorded a provisional net tax expense of $ 18.4 million during the fourth quarter of 2017. this amount consists of reevaluating the u.s. deferred tax assets and liabilities based on the lower corporate income tax rate , adjustments to the company 's foreign tax credit carryover , and the one-time mandatory tax on previously deferred foreign earnings of u.s. subsidiaries . in 2018 , the company finalized its provisional estimates related to the 2017 tax legislation resulting in an income tax benefit of $ 6.6 million . sensient considers $ 11.8 million to be the final net tax expense related to the 2017 tax legislation . replace_table_token_6_th acquisitions on march 9 , 2018 , the company completed the acquisition of certain net assets and the natural color business of globenatural , a company based in lima , peru . the company paid $ 10.8 million of cash for this acquisition . the assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date . the company acquired net assets of $ 1.4 million and identified intangible assets , principally customer relationships of $ 2.0 million , and allocated the remaining $ 7.4 million to goodwill . these operations are included in the color segment . 24 index on july 10 , 2018 , the company completed the acquisition of sensient natural extraction inc . , a botanical extraction business with patented solvent-free extraction processes , located in vancouver , canada . the company paid $ 19.8 million of cash for this acquisition . the assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date . the company acquired net assets of $ 4.0 million and identified intangible assets , principally technological know-how , of $ 6.9 million . the remaining $ 8.9 million was allocated to goodwill . this business was included in corporate & other in 2018. beginning in the first quarter of 2019 , the results of operations of this business are now reported in the color segment . the results for 2018 have been restated to reflect this change . restructuring between march 2014 and 2017 , the company executed a restructuring plan ( 2014 restructuring plan ) to eliminate underperforming operations , consolidate manufacturing facilities , and improve efficiencies within the company .
| results of operations 2019 vs. 2018 revenue sensient 's revenue was approximately $ 1.3 billion and $ 1.4 billion in 2019 and 2018 , respectively . gross profit the company 's gross margin was 31.4 % in 2019 and 33.6 % in 2018. the decrease in gross margin is primarily a result of unfavorable volume and the impact of a $ 10.6 million inventory adjustment related to the divesting of the fruit preparation product line , partially offset by higher selling prices . see divestitures below for further information on the inventory adjustment . selling and administrative expenses selling and administrative expense as a percent of revenue was 22.2 % in 2019 and 18.9 % in 2018 , respectively . divestiture & other related costs of $ 35.3 million in 2019 were included in selling and administrative expense and increased selling and administrative expense as a percent of revenue by approximately 270 basis points in 2019. see divestitures below for further information . operating income operating income was $ 121.1 million in 2019 and $ 203.4 million in 2018. operating margins were 9.2 % in 2019 and 14.7 % in 2018. divestiture & other related costs reduced operating margins by approximately 350 basis points in 2019. additional information on segment results can be found in the segment information section . interest expense interest expense was $ 20.1 million in 2019 and $ 21.9 million in 2018. the decrease in expense was primarily due to the decrease in average debt outstanding . income taxes the effective income tax rate was 18.8 % in 2019 and 13.3 % in 2018. the effective tax rates in both 2019 and 2018 were impacted by changes in estimates associated with the finalization of prior year foreign and domestic tax items , audit settlements , and mix of foreign earnings .
| 5,952 |
factors that could cause or contribute to our actual results differing materially from those anticipated include those discussed in risk factors and elsewhere in this annual report on form 10-k. overview we provide management , technology , and policy consulting and implementation services to government , commercial , and international clients . we help our clients conceive , develop , implement , and improve solutions that address complex economic , social , and national security issues . our services primarily address three key markets : energy , environment , and transportation ; health , education , and social programs ; and homeland security and defense . we believe that demand for our services will continue to grow as government , industry , and other stakeholders seek to address critical long-term societal and natural resource issues in these market areas due to heightened concerns about clean energy and energy efficiency ; health promotion , treatment , and cost control ; and ever-present homeland security threats . our clients utilize our services because we combine diverse institutional knowledge and experience in their activities with the deep subject-matter expertise of our highly educated staff , which we deploy in multi-disciplinary teams . our federal government clients have included every cabinet-level department , including hhs , dod , dos , epa , dhs , usda , hud , department of transportation ( dot ) , department of interior ( doi ) , doj , doe , national science foundation ( nsf ) , and department of education ( ed ) . u.s. federal government clients generated approximately 66 % , 71 % , and 60 % of our revenue in 2011 , 2010 , and 2009 , respectively . state and local government clients generated approximately 10 % , 10 % , and 19 % of our revenue in 2011 , 2010 , and 2009 , respectively . the road home contract with the state of louisiana , which accounted for the majority of our state and local revenue for its three-year duration , ended as scheduled on june 11 , 2009. we also serve domestic commercial and international clients , primarily in the air transportation and energy sectors , including airlines , airports , electric and gas utilities , oil companies , and law firms . our domestic commercial and international clients , including government clients outside the united states , generated approximately 24 % , 19 % , and 21 % of our revenue in 2011 , 2010 , and 2009 , respectively . we have successfully worked with many of our clients for decades , with the result that we have a unique and knowledgeable perspective on their needs . we report operating results and financial data as a single segment based on the information used by our chief operating decision-makers in evaluating the performance of our business and allocating resources . our single segment represents our core businessprofessional services for government and commercial clients . although we describe our multiple service offerings to three markets to provide a better understanding of our business , we do not manage our business or allocate our resources based on those service offerings or markets . critical accounting estimates the preparation of our financial statements in accordance with accounting principles generally accepted in the united states of america requires that we make estimates and judgments that affect the reported amount of assets , liabilities , revenue , and expenses , as well as the disclosure of contingent assets and liabilities . if any of these estimates or judgments prove to be incorrect , our reported results could be materially affected . actual results may differ significantly from our estimates under different assumptions or conditions . we believe that the estimates , assumptions , and judgments involved in the accounting practices described below have the greatest potential impact on our financial statements and therefore consider them to be critical accounting policies . 32 revenue recognition we recognize revenue when persuasive evidence of an arrangement exists , services have been rendered , the contract price is fixed or determinable , and collectability is reasonably assured . we enter into contracts that are time-and-materials contracts , cost-based contracts , fixed-price contracts , or a combination of these . this mix of contract types requires the application of various accounting rules and increases the complexity of our revenue recognition process . revenue recognition requires us to use judgment relative to assessing risks , estimating contract revenue and costs or other variables , and making assumptions for schedule and technical issues . due to the size and nature of many of our contracts , the estimation of revenue and estimates at completion can be complicated and are subject to many variables . contract costs include labor , subcontracting costs , and other direct costs , as well as allocation of allowable indirect costs . we must also make assumptions regarding the length of time to complete the contract because costs include expected increases in wages , prices for subcontractors , and other direct costs . from time to time , facts develop that require us to revise our estimated total costs or hours and thus the associated revenue on a contract . to the extent that a revised estimate affects contract profit or revenue previously recognized , we record the cumulative effect of the revision in the period in which the facts requiring the revision become known . provision for the full amount of an anticipated loss on any type of contract is recognized in the period in which it becomes probable and can be reasonably estimated . as a result , operating results could be affected by revisions to prior accounting estimates . we may proceed with work based upon written client direction prior to the completion and signing of formal contract documents . we have a formal review process for approving any such work . revenue associated with such work is recognized only when it can reliably be estimated and realization is probable . story_separator_special_tag to the extent that our actual labor and non-labor costs under a time-and-materials contract vary significantly from our expected costs or the negotiated hourly rates , we can generate more or less than the targeted amount of profit or , perhaps , incur a loss . fixed-price contracts . under fixed-price contracts , we perform specific tasks for a pre-determined price . compared to time-and-materials and cost-based contracts , fixed-price contracts involve greater financial risk because we bear the full impact of labor and non-labor costs that exceed our estimates , in terms of costs per hour , number of hours , and all other costs of performance , in return for the full benefit of any cost savings . we therefore may generate more or less than the targeted amount of profit or , perhaps , incur a loss . cost-based contracts . under cost-based contracts , we are paid based on the allowable costs we incur , and usually receive a fee . all of our cost-based contracts reimburse us for our direct labor and fringe-benefit costs that are allowable under the contract ; however , certain contracts limit the amount of overhead and general and administrative costs we can recover , which may be less than our actual overhead and general and administrative costs . in addition , our fees are constrained by fee ceilings and , in certain cases , such as with grants and cooperative agreements , we may receive no fee . because of these limitations , our cost-based contracts , on average , are our least profitable type of contract , and we may generate less than the expected return or , perhaps , incur a loss . cost-based fixed-fee contracts specify the fee to be paid . cost-based incentive-fee and cost-based award-fee contracts provide for increases or decreases in the contract fee , within specified limits , based upon actual results as compared to contractual targets for factors such as cost , quality , schedule , and performance . direct costs direct costs consist primarily of costs incurred to provide services to clients , the most significant of which are subcontractors and employee salaries and wages , plus associated fringe benefits , relating to specific client engagements . direct costs also include the costs of third-party materials and any other related direct costs , such as travel expenses . 35 we generally expect the ratio of direct costs as a percentage of revenue to decline when our own labor increases relative to subcontracted labor or outside consultants . conversely , as our labor decreases relative to subcontracted labor or outside consultants , we expect the ratio to increase . changes in the mix of services and other direct costs provided under our contracts can result in variability in our direct costs as a percentage of revenue . for example , when we perform work in the area of implementation , we expect that more of our services will be performed in client-provided facilities and or with dedicated staff . such work generally has a higher proportion of direct costs than much of our current advisory work , and we anticipate that higher utilization of such staff will decrease indirect expenses . in addition , to the extent we are successful in winning larger contracts , our own labor services component could decrease because larger contracts typically are broader in scope and require more diverse capabilities , potentially resulting in more subcontracted labor , more other direct costs , and lower margins . although these factors could lead to a higher ratio of direct costs as a percentage of revenue , the economics of these larger jobs are nonetheless generally favorable because they increase income , broaden our revenue base , and have a favorable return on invested capital . operating expenses our operating expenses consist of indirect and selling expenses , including non-cash compensation , and depreciation and amortization . indirect and selling expenses indirect and selling expenses include our management , facilities , and infrastructure costs for all employees , as well as salaries and wages , plus associated fringe benefits , not directly related to client engagements . among the functions covered by these expenses are marketing , business and corporate development , bids and proposals , facilities , information technology and systems , contracts administration , accounting , treasury , human resources , legal , corporate governance , and executive and senior management . we include all of our cash incentive compensation in this item , as well as all our non-cash compensation , such as stock-based compensation provided to employees , whose compensation and other benefit costs are included in both direct costs and indirect and selling expenses . stock incentive plans and non-cash compensation on june 4 , 2010 , our stockholders ratified the icf international , inc. 2010 omnibus incentive plan ( the omnibus plan ) , which was adopted by us on march 8 , 2010. the omnibus plan replaced the 2006 long-term equity incentive plan ( the 2006 plan ) , which we had used for equity and incentive awards since becoming a publicly traded company in 2006. the omnibus plan provides for the granting of options , stock appreciation rights , restricted stock , rsus , performance shares , performance units , cash-based awards , and other stock-based awards to all officers , key employees , and non-employee directors . the omnibus plan allowed for us to grant an additional 1.8 million shares in addition to the remaining shares from the 2006 plan , for a total of approximately 2.7 million shares . shares awarded that are not stock options or stock appreciation rights are counted as 1.9 shares deducted from the omnibus plan for every one share delivered under those awards . shares awarded that are stock options or stock appreciation rights are counted as a single share deducted from the omnibus plan for every one share delivered under those awards . as of december 31 , 2011 , the company had 1.8 million shares available to grant under the omnibus plan .
| results of operations the following table sets forth certain items from our consolidated statements of operations as an approximate percentage of revenue for the periods indicated . consolidated statement of earnings years ended december 31 , 2011 , 2010 , and 2009 ( dollars in thousands ) replace_table_token_10_th 40 year ended december 31 , 2011 , compared to year ended december 31 , 2010 gross revenue . revenue for the year ended december 31 , 2011 , was $ 840.8 million , compared to $ 764.7 million for the year ended december 31 , 2010 , representing an increase of $ 76.0 million , or 9.9 % . the increase was primarily due to growth in the domestic commercial market of $ 57.2 million and growth in the u.s. government market of $ 14.5 million . direct costs . direct costs for the year ended december 31 , 2011 , were $ 520.5 million , compared to $ 476.2 million for the year ended december 31 , 2010 , an increase of $ 44.3 million , or 9.3 % . the increase in direct costs was primarily attributable to an increase in subcontractor expense and direct labor expense . direct costs as a percent of revenue were 61.9 % for the year ended december 31 , 2011 , compared to 62.3 % for the year ended december 31 , 2010. indirect and selling expenses . indirect and selling expenses for the year ended december 31 , 2011 , were $ 241.1 million , or 28.7 % of revenue , compared to $ 218.5 million , or 28.6 % of revenue for the year ended december 31 , 2010. the increase in indirect and selling expenses of $ 22.5 million is primarily attributable to an increase in indirect labor and general and administrative expense . depreciation and amortization . depreciation and amortization was $ 10.8 million for each of the years ended december 31 , 2011 and 2010. amortization of intangible assets . amortization of intangible assets for the year ended december 31 , 2011 , was $ 9.6
| 5,953 |
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 include , but are not limited to , those discussed in item 1a , “ risk factors ” , of this report on form 10-k. 39 adapthealth corp. overview adapthealth is a leading provider of home healthcare equipment , supplies and related services in the united states . the company focuses primarily on providing ( i ) sleep therapy equipment , supplies and related services ( including cpap and bi pap services ) to individuals suffering from obstructive sleep apnea , ( ii ) home medical equipment to patients discharged from acute care and other facilities , ( iii ) oxygen and related chronic therapy services in the home and ( iv ) other hme medical devices and supplies on behalf of chronically ill patients with diabetes care , wound care , urological , ostomy and nutritional supply needs . the company services beneficiaries of medicare , medicaid and commercial insurance payors . as of december 31 , 2019 , adapthealth serviced approximately 1.2 million patients annually in 49 states through its network of 173 locations in 35 states . following its acquisition of pcs from mckesson corporation in january 2020 , adapthealth services over approximately 1.4 million patients annually in all 50 states through its network of 187 locations in 38 states . the company 's principal executive offices are located at 220 west germantown pike , suite 250 , plymouth meeting , pennsylvania 19462. trends and factors affecting adapthealth 's future performance significant trends and factors that adapthealth believes may affect its future performance include : · home medical equipment growth . according to cms , the hme industry has grown from $ 40 billion in 2010 to $ 56 billion in 2018 ( representing a 4.3 % cagr ) , of which adapthealth 's total addressable market for its sleep therapy , oxygen services , mobility products and hospice hme business lines comprised approximately $ 12 billion to $ 15 billion in 2018. during that time medicaid data shows a continued shift of long-term services and supports ( ltss ) spending into the home , with 57 % of that spending going to home and community-based services in 2016. according to cms , the hme market is projected to continue to grow at a 6.1 % cagr over the next nine years . as a result of the acquisition of the diabetic , wound care , ostomy and urological supplies business of pcs in january 2020 , the company believes it has more than doubled its addressable market to more than $ 25 billion . · aging u.s. population . the population of adults aged 65 and older in the u.s. , a significant group of end users of adapthealth 's products and services , is expected to continue to grow and thus grow adapthealth 's market opportunity . according to cms , in the u.s. , the population of adults between the ages of 65 and 84 is expected to grow at a 2.5 % cagr through 2030 , while the population of adults over 85 is projected to grow at a 2.9 % cagr during that same time period . not only is the elderly population expected to grow , but they are also expected to make up a larger percentage of the total u.s. population . according to the u.s. census bureau , the u.s. geriatric population was approximately 15 % of the total population in 2014 and is expected to grow to approximately 24 % of the total population by 2060 . · increasing prevalence of chronic conditions . hme is necessary to help treat significant health issues affecting millions of americans , such as chronic obstructive pulmonary disease , congestive heart failure , obstructive sleep apnea and diabetes . · increasing prevalence of and preference for in-home treatments . the number of conditions that can be treated in the home continues to grow , with recent additions including chronic wound care , sleep testing , dialysis and chemotherapy . in home care is also increasingly becoming the preferred method of treatment , particularly for the elderly population . according to the aarp public policy institute , 90 % of patients over age 55 have indicated a preference to receive care in the home rather than in an institutional setting . · home care is the lowest cost setting . not only is in-home care typically just as effective as care delivered in an inpatient setting , but it has also proven to be more cost effective . this is especially important within the context of government pressures to lower the cost of care , pushing clinicians to seek care settings that are less costly than hospitals and inpatient facilities . on a daily basis , home healthcare has been estimated by cain brothers & company , llc to be approximately seven times less expensive than care provided in skilled nursing facilities , the closest acuity site of care . in-home care offers a significant cost reduction opportunity relative to facility based care without sacrificing quality . 40 certain additional items may impact the comparability of the historical results presented below with adapthealth 's future performance , such as the cost of being a public company . to operate as a public company , adapthealth will be required to continue to implement changes in certain aspects of its business and develop , manage , and train management level and other employees to comply with ongoing public company requirements , including compliance with section 404 and the evaluation of the effectiveness of internal controls over financial reporting . adapthealth will also incur new expenses as a public company , including expenses associated with public reporting obligations , proxy statements and stockholder meetings , stock exchange fees , transfer agent fees , sec and financial industry regulatory authority filing fees and offering expenses . key components of operating results net revenue . story_separator_special_tag ” on march 20 , 2019 , adapthealth entered into a note and unit purchase agreement with certain affiliates of bluemountain capital management , llc . in connection with the agreement , membership interests in adapthealth holdings were purchased for $ 20 million , and adapthealth also signed a promissory note agreement with a principal amount of $ 100 million ( the “ bm note ” ) . the outstanding principal amount under the bm note was due on the tenth anniversary of the agreement and bore interest at the following rates ( a ) for the period starting on the closing date and ending on the seventh anniversary , a rate of 12 % per annum , with 6 % payable in cash and 6 % payment in kind , and ( b ) for the period starting on the day after the seventh anniversary of the closing date and ending on the maturity date , a rate equal to the greater of ( i ) 15 % per annum or ( ii ) the twelve-month libor plus 12 % per annum . the transactions consummated with respect to the third amended and restated credit and guaranty agreement and the note and unit purchase agreement are hereinafter referred to as the “ 2019 recapitalization. ” in connection with the closing of the business combination , the company amended its credit facility primarily to ( i ) increase the amount available under the delayed draw loan from $ 50 million to $ 100 million , and ( ii ) revise the consolidated total leverage ratio thresholds and lower the applicable margin to determine the variable quarterly interest rate under the credit facility . in addition , the company repaid $ 50.0 million under the credit facility term loan using the proceeds received from the transactions completed as part of the business combination ; such repayment was applied to the principal payments required to be paid through september 2023. in addition , the company repaid $ 31.5 million that was outstanding under the new revolver . further , in connection with the closing of the business combination , the bm note was replaced with a new amended and restated promissory note with a principal amount of $ 100 million . in addition , certain affiliates of bluemountain capital management , llc converted certain of its members ' equity interests to a $ 43.5 million promissory note . the new $ 100 million promissory note , together with the $ 43.5 million promissory note , are collectively referred to herein as the new promissory note . the outstanding principal amount under the new promissory note is due on november 8 , 2029 and bears interest at the following rates ( a ) for the period starting on the closing date and ending on the seventh anniversary , a rate of 12 % per annum , with 6 % payable in cash and 6 % payment in kind ( “ pik ” ) , and ( b ) for the period starting on the day after the seventh anniversary of the closing date and ending on the maturity date , a rate equal to the greater of ( i ) 15 % per annum or ( ii ) the twelve-month libor plus 12 % per annum . the company has the option to pay the pik interest in cash . 42 seasonality adapthealth 's business is somewhat sensitive to seasonal fluctuations . its patients are generally responsible for a greater percentage of the cost of their treatment or therapy during the early months of the year due to co-insurance , co-payments and deductibles , and therefore may defer treatment and services of certain therapies until meeting their annual deductibles . in addition , changes to employer insurance coverage often go into effect at the beginning of each calendar year which may impact eligibility requirements and delay or defer treatment . these factors may lead to lower net revenue and cash flow in the early part of the year versus the latter half of the year . additionally , the increased incidence of respiratory infections during the winter season may result in initiation of additional respiratory services such as oxygen therapy for certain patient populations . adapthealth 's quarterly operating results may fluctuate significantly in the future depending on these and other factors . key business metrics adapthealth focuses on net revenue , ebitda , adjusted ebitda and adjusted ebitda less patient equipment capex as it reviews its performance . total net revenue is comprised of net sales revenue and net revenue from fixed monthly equipment reimbursements less a provision for doubtful accounts and implicit price concessions . net sales revenue consists of revenue recognized at a point in time for the sale of supplies and disposables . net revenue from fixed monthly equipment reimbursements consists of revenue recognized over the service period for equipment ( including , but not limited to , cpap machines , hospital beds , wheelchairs and other equipment ) . replace_table_token_3_th 43 replace_table_token_4_th story_separator_special_tag 30pt 0pt ; '' > cash flow hedges . accordingly , subsequent to august 22 , 2019 , changes in the fair value of its interest rate swaps are recorded as a component of other comprehensive income in equity rather than interest expense . loss on extinguishment of debt . loss on extinguishment of debt for the year ended december 31 , 2019 was $ 2.1 million which was a result of the write-off of deferred financing costs related to the 2019 recapitalization . loss on extinguishment of debt for the year ended december 31 , 2018 was $ 1.4 million which was the result of the write-off of deferred financing costs and prepayment penalties incurred related to a debt restructuring that occurred in february 2018 offset by gain on debt extinguishment . income tax expense .
| results of operations comparison of year ended december 31 , 2019 and year ended december 31 , 2018. the following table summarizes adapthealth 's consolidated results of operations for the years ended december 31 , 2019 and december 31 , 2018 : replace_table_token_5_th 44 ( 1 ) the company adopted asc 606 effective january 1 , 2019 , the effects of which have not been reflected in prior periods . the company 's adoption of asc 606 primarily impacts the presentation of revenues due to the inclusion of variable consideration in the form of implicit price concessions contained in certain of its contracts with customers . under asc 606 , amounts estimated to be uncollectible are generally considered implicit price concessions that are a direct reduction to net revenue . prior to adoption of asc 606 , such amounts were classified as provision for doubtful accounts . for the year ended december 31 , 2019 , the company recorded approximately $ 27.5 million of implicit price concessions as a direct reduction of net revenue that would have been recorded as provision for doubtful accounts prior to the adoption of asc 606 . net revenue . net revenue for the year ended december 31 , 2019 was $ 529.6 million compared to $ 345.3 million for the year ended december 31 , 2018 , an increase of $ 184.4 million or 53.4 % . the increase in net revenue was driven primarily by acquisitions , which increased revenue by approximately $ 156.3 million . the remaining increase in net revenue was attributable to organic growth resulting from demographic growth in core markets and cpap resupply sales and marketing initiatives .
| 5,954 |
if the employment of dr. story_separator_special_tag the following discussion should be read together with our consolidated financial statements and the notes related to those statements , as well as the other financial information included in this form 10-k. some of our discussion is forward-looking and involves risks and uncertainties . for information regarding risk factors that could have a material adverse effect on our business , refer to item 1a of this form 10-k , risk factors . the company neoprobe corporation is a biomedical technology company that provides innovative surgical and diagnostic oncology products that enhance patient care and improve patient treatment . we currently market a line of medical devices , our neoprobe ® gds gamma detection systems . in addition to our medical device products , we have two radiopharmaceutical products , lymphoseek ® and rigscan tm cr , in advanced phases of clinical development . we are also exploring the development of our activated cellular therapy ( act ) technology for patient-specific disease treatment through our majority-owned subsidiary , cira biosciences , inc. ( cira bio ) . 29 executive summary this overview section contains a number of forward-looking statements , all of which are based on current expectations . actual results may differ materially . our financial performance is highly dependent on our ability to continue to generate income and cash flow from our medical device product lines . we can not assure you that we will achieve the volume of sales anticipated , or if achieved , that the margin on such sales will be adequate to produce positive operating cash flow . we believe that the future prospects for neoprobe continue to improve as we make progress in all of our key growth and development areas , especially related to our lymphoseek initiative . our gamma detection device line continues to provide a solid revenue base producing cash flow to cover our public company overhead and contribute to funding our research and development efforts . we expect our overall research and development expenditures to rise in 2011 over 2010 as we have expanded our clinical and regulatory staffing to support the commercialization of lymphoseek and further development of rigscan and as we take steps to expand our product pipeline . the level to which the expenditures rise will depend on the extent to which we are able to execute on each of these strategic initiatives , but we are confident we will have the resources necessary to execute on these initiatives . we expect to continue to incur modest development expenses to support our device product lines as well as we work to expand our product offerings in the gamma detection device arena . our primary development efforts over the last few years have been focused on our oncology drug development initiatives : lymphoseek and rigscan . we continue to make progress with both initiatives ; however , neither lymphoseek nor rigscan is anticipated to generate any significant revenue for us during 2011. in august 2009 , the company 's board of directors decided to discontinue the operations of cardiosonix and to attempt to sell our cardiosonix subsidiary . this decision was based on the determination that the blood flow measurement device segment was no longer considered a strategic initiative of the company , due in large part to positive events in our other device product and drug development initiatives . to this point , we have not had significant interest expressed in cardiosonix , and as such , we continue to wind down our activities in this area . until a final shutdown of operations or a sale of the business unit is completed , we expect to continue to generate modest revenues and incur minimal expenses related to our blood flow measurement device business . our efforts in 2010 resulted in the following milestone achievements : · completed a successful meeting with the united states food and drug administration ( fda ) to review the phase 3 ( neo3-05 ) clinical study results and development plan discussion to support a new drug application ( nda ) submission for lymphoseek as a lymphatic tissue tracing agent ; · completed a successful pre-nda dialogue with fda on lymphoseek pre-clinical data ; · completed a successful pre-nda dialogue with fda on lymphoseek chemistry , manufacturing and control data ; · initiated a third lymphoseek phase 3 clinical study in subjects with breast cancer or melanoma ( neo3-09 ) to support the nda filing with the potential to expand lymphoseek 's product labeling ; · completed a pre-nda meeting for lymphoseek clarifying the regulatory pathway for lymphoseek approval ; · elected two new directors to neoprobe 's board , bringing significant drug industry and corporate development expertise to the company 's leadership ; · completed transactions that converted all of the company 's outstanding debt to equity ; · received notice of grant awards of over $ 1.2 million to support future lymphoseek development through non-dilutive funding ; 30 · filed a shelf registration on form s-3 to allow the company to raise capital as necessary through the sale of up to $ 20 million in a primary offering of securities to provide us with additional financial planning flexibility and to support the diversification of our share ownership to new institutions ; · completed an offering and sale of common stock and warrants under the shelf registration statement resulting in approximately $ 5.5 million in net proceeds to the company and the potential for an additional $ 7.0 million in proceeds from the cash-only exercise of the warrants included in the placement ; · completed preliminary rigs ® development activities including transfer of the biologic license application ( bla ) from the center for biologics evaluation and research ( cber ) to the division of medical imaging products in the center for drug evaluation and research ( cder ) at fda and preparation of an investigational new drug ( ind ) request for the biologic product ; and · filed a complete response to the open bla for rigscan . story_separator_special_tag 33 accounts receivable increased to $ 2.0 million at december 31 , 2010 from $ 1.3 million at december 31 , 2009. the increase was primarily a result of fluctuations in timing of purchases and payments by our primary customers . we expect overall receivable levels will continue to fluctuate during 2011 depending on the timing of purchases and payments by our customers . inventory levels increased to $ 1.5 million at december 31 , 2010 from $ 1.1 million at december 31 , 2009. gamma detection device materials and finished goods inventory levels increased as we have increased our product safety stock levels to ensure efficient and uninterrupted supply of our products to our distribution partners . during 2010 , we capitalized $ 741,000 of pharmaceutical materials related to our lymphoseek product ; however , also during 2010 , we expensed $ 634,000 of previously capitalized pharmaceutical materials to research and development as they were no longer considered to be usable in the production of future saleable drug product inventory . we expect inventory levels to increase over 2011 as we produce additional drug inventory in anticipation of the lymphoseek product launch . accounts payable increased to $ 1.5 million at december 31 , 2010 from $ 764,000 at december 31 , 2009. the increase was primarily due to increased manufacturing , regulatory , and clinical activities related to advancing our lymphoseek and rigscan initiatives . our payables balances will continue to fluctuate but will likely increase overall as we increase our level of development activity related to rigscan . investing activities . investing activities used $ 399,000 of cash during 2010 compared to providing $ 327,000 during 2009. available-for-sale securities of $ 494,000 matured during 2009. capital expenditures of $ 367,000 during 2010 were primarily for equipment to be used in the production of lymphoseek , office furniture , software , and computers . capital expenditures of $ 96,000 during 2009 were primarily for computers , production and laboratory equipment , and software . we do not expect to incur significant additional costs for lymphoseek production equipment . as such , we expect our overall capital expenditures for 2011 will be lower than 2010. payments for patent and trademark costs decreased to $ 32,000 during 2010 compared to $ 71,000 during 2009. financing activities . financing activities provided $ 6.3 million of cash during 2010 compared to $ 3.2 million provided during 2009. the $ 6.3 million provided by financing activities in 2010 consisted primarily of proceeds from the issuance of common stock of $ 7.1 million , offset by payments of stock offering costs of $ 611,000 , payments of preferred stock dividends of $ 111,000 , payments of capital leases of $ 12,000 , and payments of notes payable of $ 9,000. the $ 3.2 million provided by financing activities in 2009 consisted primarily of proceeds from the issuance of common stock of $ 3.6 million , offset by payments of stock offering costs of $ 238,000 , payments of notes payable of $ 138,000 , payments of debt issuance costs of $ 20,000 , and payments of capital leases of $ 9,000. we do not rely to any material extent on short-term borrowings for working capital or to fund our operations . in december 2006 , we entered into a common stock purchase agreement with fusion capital fund ii , llc ( fusion capital ) , an illinois limited liability company , to sell $ 6.0 million of our common stock to fusion capital over a 24-month period which ended on november 21 , 2008. upon execution of the agreement , we issued to fusion capital 720,000 shares of our common stock as a commitment fee . through november 2008 , we sold to fusion capital under the agreement 7,568,671 shares for proceeds of $ 1.9 million . as sales of our common stock were made under the original agreement , we issued an additional 234,000 shares of our common stock to fusion capital as an additional commitment fee . in december 2008 , we entered into an amendment to the agreement which gave us a right to sell an additional $ 6.0 million of our common stock to fusion capital before march 1 , 2011 , along with the $ 4.1 million of the unsold balance of the $ 6.0 million we originally had the right to sell to fusion capital under the original agreement . as consideration for fusion capital 's agreement to enter into the amendment , we issued fusion capital an additional 360,000 shares . also , we agreed to issue to fusion capital an additional 486,000 shares of our common stock as a commitment fee pro rata as we sold the first $ 4.1 million of our common stock under the amended agreement . in march 2010 , we sold to fusion capital under the amended agreement 540,541 shares for proceeds of $ 1.0 million and issued an additional 120,000 shares of our common stock to fusion capital as an additional commitment fee related to the sale . the agreement with fusion capital expired as planned on march 1 , 2011 , and as a result , fusion capital may liquidate any commitment fee shares issued to it during the term of the agreement . 34 in july 2007 , david c. bupp , our president and ceo , and certain members of his family ( the bupp investors ) purchased a $ 1.0 million convertible note ( the bupp note ) and warrants . the bupp note bore interest at 10 % per annum , had an original term of one year and was repayable in whole or in part with no penalty . the note was convertible , at the option of the bupp investors , into shares of our common stock at a price of $ 0.31 per share .
| results of operations revenue for 2010 increased to $ 10.7 million from $ 9.5 million in the prior year . the increase was primarily due to recognition of $ 617,000 in revenue from grants awarded during 2010 as well as increased unit sales and unit prices of our control units , increased unit sales of our wireless probes , and increased unit prices of our 14mm corded probes , offset by decreased unit sales of our high-energy and 14mm corded probes and decreased unit sales of our wireless probes . gross margins for 2010 increased to 70 % as compared to 67 % in 2009. the increase in gross margins was primarily due to recognition of grant revenue and overall increased sales prices of our gamma detection devices . in june 2010 , neoprobe was notified that ohio 's third frontier commission voted to award a grant of $ 1 million to fund ongoing development of the company 's lymphoseek initiative . the grant is being used to accelerate the application of lymphoseek in head and neck cancer treatment and involves a collaboration of several ohio-based companies as well as leading cancer centers in the us . neoprobe and its collaborators will be required to contribute an additional $ 1.1 million in matching funds over the course of the project . we recognized approximately $ 358,000 in ohio third frontier grant revenue during 2010 , and expect to recognize the remaining $ 642,000 as revenue during 2011 and 2012. in october 2010 , neoprobe was awarded a grant of approximately $ 244,000 under the qualifying therapeutic discovery project ( qtdp ) program established under section 48d of the internal revenue code . the qtdp grant was a reimbursement of previous expenditures and there is no requirement for future matching funds from neoprobe .
| 5,955 |
replace_table_token_33_th 3. acquisitions vantage acquisition on october 19 , 2016 , the company completed the vantage acquisition pursuant to the terms of the purchase and sale agreement ( the “ vantage purchase agreement ” ) dated september 26 , 2016 by the company , vantage energy investment llc , vantage energy investment ii llc and vantage . pursuant to the terms of the vantage purchase agreement , rice energy operating acquired vantage from the vantage sellers for approximately $ 2.7 billion , which consisted of approximately $ 1.0 billion in cash , the assumption of net debt of approximately $ 707.0 million and the issuance of 40.0 million units in rice energy operating that were immediately exchangeable into 40.0 million shares of common stock of the company , valued at approximately $ 1.0 billion . in connection with executing the story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this annual report . the following discussion contains “ forward-looking statements ” that reflect our future plans , estimates , beliefs and expected performance . we caution that assumptions , expectations , projections , intentions , or beliefs about future events may , and often do , vary from actual results and the differences can be material . in light of these risks , uncertainties and assumptions , the forward-looking events discussed may not occur . see “ cautionary statement regarding forward-looking statements. ” also , see the risk factors and other cautionary statements described in “ item 1a . risk factors ” included elsewhere in this annual report . we do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law . overview of our business rice energy is an independent natural gas and oil company focused on the acquisition , exploration and development of natural gas , oil and ngl properties in the appalachian basin . as a result of changes to our operations and organizational structure in 2016 , we now manage our business in three operating segments - the exploration and production segment , the rice midstream holdings segment and the rice midstream partners segment . these segments are managed separately due to their distinct operational differences . the exploration and production segment is responsible for the acquisition , exploration and development of natural gas , oil and ngls . the rice midstream holdings segment is engaged in the gathering and compression of natural gas , oil and ngl production for us and third parties in belmont and monroe counties , ohio . the rice midstream partners segment is engaged in the gathering and compression of natural gas , oil and ngl production in washington and greene counties , pennsylvania , and in the provision of water services to support the well completion services of us and third parties in washington and greene counties , pennsylvania and belmont county , ohio . as a result of certain reorganizations and transactions that occurred during 2014 , 2015 and 2016 , our historical financial condition and results of operations for the periods presented in this annual report may not be comparable , either from period to period or going forward . for example , information for the period from january 1 , 2014 until january 29 , 2014 , as contained within the year ended december 31 , 2014 pertains to the historical financial statements and results of operations of rice drilling b llc , our accounting predecessor . such periods reflect only our 50 % equity investment in our marcellus joint venture . from and after our acquisition of the remaining 50 % interest from alpha holdings on january 29 , 2014 , the results of operations of our marcellus joint venture are consolidated into our results of operations . in connection with the rmp ipo in december 2014 , we contributed to rmp all of our gas gathering and compression assets in washington and greene counties , pennsylvania in exchange for , among other things , common and subordinated units representing a 50 % limited partner interest and all of the incentive distribution rights in rmp . indirectly , through midstream holdings , we own and control the general partner of rmp , and , as such , the results of operations of rmp are consolidated into our results of operations . however , while our results of operations consolidate the results of operations of rmp for periods subsequent to december 22 , 2014 , they give effect to the noncontrolling interest in rmp held by its public unitholders . also in connection with the rmp ipo , we entered into various gas gathering and compression agreements and water distribution services agreements , both intercompany and , in the case of certain gas gathering and compression services in pennsylvania , with rmp . prior to december 22 , 2014 , with certain limited exceptions , the rice midstream holdings segment and the rice midstream partners segment did not charge fees for providing such services to our exploration and production segment . from december 22 , 2014 through october 31 , 2015 , the rice midstream holdings segment charged the exploration and production segment water services fees according to the water services agreements entered into in connection with the rmp ipo . beginning on november 1 , 2015 , as a result of the closing of the acquisition of pa water and oh water by rmp , the rice midstream partners segment charges the exploration and production segment water services fees according to certain water services agreements entered in connection with the acquisition . these gathering and water services fees are eliminated through consolidation . following completion of the vantage acquisition , we operate vantage through rice energy operating . as part of the consideration for the vantage acquisition , the vantage sellers were issued common units in rice energy operating . story_separator_special_tag please see “ note 16— stock-based compensation ” in the notes of the consolidated financial statements under item 8 of this annual report . depreciation , depletion and amortization . depreciation , depletion and amortization ( “ dd & a ” ) includes the systematic expensing of the capitalized costs incurred to acquire , explore and develop natural gas . as a “ successful efforts ” company , we capitalize all costs associated with our acquisition and development efforts and all successful exploration efforts and allocate these costs to each unit of production using the units of production method . interest expense . we have financed a portion of our working capital requirements and property acquisitions with borrowings under our revolving credit facilities and our notes . as a result , we incur interest expense that is affected by the level of drilling , completion and acquisition activities , as well as fluctuations in interest rates and our financing decisions . we will likely continue to incur significant interest expense as we continue to grow . to date , we have not entered into any interest rate hedging arrangements to mitigate the effects of interest rate changes . gain on derivative instruments . we utilize commodity derivative contracts to reduce our exposure to fluctuations in the price of natural gas . we recognize gains and losses associated with our open commodity derivative contracts as commodity prices and the associated fair value of our commodity derivative contracts change . the commodity derivative contracts we have in place are not designated as hedges for accounting purposes . consequently , these commodity derivative contracts are recorded at fair value at each balance sheet date with changes in fair value recognized as a gain or loss in our results of operations . cash flow is only impacted to the extent the actual settlements under the contracts result in making a payment to or receiving a payment from the counterparty . income tax expense . we are a corporation under the internal revenue code , subject to federal income taxes at a statutory rate of 35 % of pretax earnings . the reorganization of our business into a corporation in connection with the closing of our ipo required the recognition of a deferred tax asset or liability for the initial temporary differences at the time of our ipo . the resulting deferred tax liability of approximately $ 162.3 million was recorded in equity at the date of our ipo . based on our deductions primarily related to intangible drilling costs ( “ idcs ” ) , we could potentially generate significant net operating loss assets and deferred tax liabilities . we may report and pay state income or franchise taxes in periods where our idc deductions do not exceed our taxable income or where state income or franchise taxes are determined on another basis . 55 how we evaluate our operations in evaluating our financial results , we focus on production , revenues , per unit cash production costs and general and administrative ( “ g & a ” ) expenses . we also evaluate our rates of return on invested capital in our wells , and we measure the expected return of our wells based on eur and the related costs of acquisition , development and production . we believe the quality of our assets combined with our technical and managerial expertise can generate attractive rates of return as we develop our core acreage position in the marcellus and utica shales . additionally , by focusing on concentrated acreage positions , we can build and own centralized midstream infrastructure , including low- and high-pressure gathering lines , compression facilities and water pipeline systems , which enable us to reduce reliance on third-party operators , minimize costs and increase our returns . story_separator_special_tag style= '' font-family : inherit ; font-size:10pt ; '' > impairment expense in 2016 was primarily related to a $ 20.3 million impairment for pipeline assets that were decommissioned . general and administrative expense . for the year ended december 31 , 2016 , general and administrative expense ( before stock compensation expense ) increased $ 10.3 million , or 12 % , primarily due to the additions of personnel to support our growth activities and related salary and employee benefits . at december 31 , 2016 , we had 467 employees , a 26 % increase compared to december 31 , 2015 . additionally , general and administrative expenses increased year-over-year due to an increase in rent expense primarily related to our office leases . on a per unit basis , general and administrative expense ( before stock compensation expense ) 59 decreased by 26 % , from $ 0.43 per mcfe during the year ended december 31 , 2015 to $ 0.32 per mcfe during the year ended december 31 , 2016 , primarily due to a 51 % increase in production . slightly offsetting the increase in general and administrative expenses was an increase in allocated employee time to capital projects due to increased production . included in general and administrative expense is stock compensation expense of $ 21.3 million and $ 16.5 million for the years ended december 31 , 2016 and december 31 , 2015 , respectively . the increase is primarily attributable to increased compensation expense associated with restricted stock unit and performance stock unit awards . please see “ note 16—stock-based compensation ” in the notes to the consolidated financial statements in item 8 of this annual report for further information on these awards . dd & a .
| consolidated results of operations below are some highlights of our consolidated financial and operating results for the years ended december 31 , 2016 , 2015 and 2014 : our natural gas , oil and ngl sales were $ 653.4 million , $ 446.5 million and $ 359.2 million in the years ended december 31 , 2016 , 2015 and 2014 , respectively . our production volumes were 304.4 bcfe , 201.3 bcfe and 97.7 bcfe in the years ended december 31 , 2016 , 2015 and 2014 , respectively . our gathering , compression and water services revenues were $ 101.1 million , $ 49.2 million and $ 5.5 million for the years ended december 31 , 2016 , 2015 and 2014 , respectively . our per unit cash production costs were $ 0.63 per mcfe , $ 0.68 per mcfe and $ 0.67 per mcfe in the years ended december 31 , 2016 , 2015 and 2014 , respectively . 56 the following tables set forth selected operating and financial data for the year ended december 31 , 2016 compared to the year ended december 31 , 2015 and the year ended december 31 , 2015 compared to the year ended december 31 , 2014 : replace_table_token_17_th ( 1 ) the effect of hedges includes realized gains and losses on commodity derivative transactions . 57 replace_table_token_18_th 58 year ended december 31 , 2016 compared to year ended december 31 , 2015 total operating revenues . the $ 276.8 million increase in total operating revenues was mainly a result of a 51 % increase in natural gas , oil and ngl production from 201.3 bcfe in 2015 to 304.4 bcfe in 2016. during 2016 , we turned 70 gross ( 63 net ) wells into sales , of which 14 gross ( 14 net ) wells were acquired in the vantage acquisition . the increase in operating revenues was slightly offset by a decrease in realized prices .
| 5,956 |
certain defined terms used herein have the meaning ascribed to them in the financial statements . executive overview mack-cali realty corporation together with its subsidiaries , ( the “ company ” ) is one of the largest real estate investment trusts ( reits ) in the united states . the company has been involved in all aspects of commercial real estate development , management and ownership for over 50 years and has been a publicly-traded reit since 1994. the company owns or has interests in 278 properties ( collectively , the “ properties ” ) , primarily class a office and office/flex buildings , totaling approximately 32.4 million square feet , leased to over 2,000 tenants . the properties are located primarily in suburban markets of the northeast , some with adjacent , company-controlled developable land sites able to accommodate up to 12.3 million square feet of additional commercial space . the company 's strategy is to be a significant real estate owner and operator in its core , high-barriers-to-entry markets , primarily in the northeast . as an owner of real estate , almost all of the company 's earnings and cash flow is derived from rental revenue received pursuant to leased space at the properties . key factors that affect the company 's business and financial results include the following : · the general economic climate ; · the occupancy rates of the properties ; · rental rates on new or renewed leases ; · tenant improvement and leasing costs incurred to obtain and retain tenants ; · the extent of early lease terminations ; · operating expenses ; · cost of capital ; and · the extent of acquisitions , development and sales of real estate . any negative effects of the above key factors could potentially cause a deterioration in the company 's revenue and or earnings . such negative effects could include : ( 1 ) failure to renew or execute new leases as current leases expire ; ( 2 ) failure to renew or execute new leases with rental terms at or above the terms of in-place leases ; and ( 3 ) tenant defaults . a failure to renew or execute new leases as current leases expire or to execute new leases with rental terms at or above the terms of in-place leases may be affected by several factors such as : ( 1 ) the local economic climate , which may be adversely impacted by business layoffs or downsizing , industry slowdowns , changing demographics and other factors ; and ( 2 ) local real estate conditions , such as oversupply of office and office/flex space or competition within the market . the company 's core markets continue to be weak . the percentage leased in the company 's consolidated portfolio of stabilized operating properties was 88.3 percent at december 31 , 2011 as compared to 89.1 percent at december 31 , 2010 and 90.1 percent at december 31 , 2009. percentage leased includes all leases in effect as of the period end date , some of which have commencement dates in the future and leases that expire at the period end date . leases that expired as of december 31 , 2011 , 2010 and 2009 aggregate 193,213 , 187,058 and 64,672 square feet , respectively , or 0.6 , 0.6 and 0.2 percentage of the net rentable square footage , respectively . the company believes that vacancy rates may continue to increase and rental rates may continue to decline in some of its markets through 2012 and possibly beyond . as a result , the company 's future earnings and cash flow may continue to be negatively impacted by current market conditions . 43 the company expects that the impact of the current state of the economy , including high unemployment will continue to have a negative effect on the fundamentals of its business , including lower occupancy , reduced effective rents , and increases in defaults and past due accounts . these conditions would negatively affect the company 's future net income and cash flows and could have a material adverse effect on the company 's financial condition . the remaining portion of this management 's discussion and analysis of financial condition and results of operations should help the reader understand our : · transactions ; · critical accounting policies and estimates ; · results of operations for the year ended december 31 , 2011 as compared to the year ended december 31 , 2010 ; · results of operations for the year ended december 31 , 2010 as compared to the year ended december 31 , 2009 ; · liquidity and capital resources . summary of transactions on february 18 , 2011 , the company completed a public offering of 7,187,500 shares of common stock and used the net proceeds , which totaled approximately $ 227.4 million ( after offering costs ) primarily to repay borrowings under its unsecured revolving credit facility . on may 1 , 2011 , the company placed in service 55 corporate drive , a 204,057 square-foot office building located in bridgewater , new jersey . the company incurred total costs on the project of approximately $ 48.1 million through december 31 , 2011. in august 2011 , the company commenced construction of a 203,000 square foot office building which is pre-leased for 15 years and 3 months , subject to two extension options of between five and 10 years each , to wyndham worldwide . wyndham currently leases space in neighboring buildings in the mack-cali business campus in parsippany , new jersey . the new building is expected to be delivered to the tenant in the first quarter of 2013 at a total estimated cost of approximately $ 53.5 million . story_separator_special_tag above-market and below-market lease values for acquired properties are initially recorded based on the present value ( using a discount rate which reflects the risks associated with the leases acquired ) of the difference between ( i ) the contractual amounts to be paid pursuant to each in-place lease and ( ii ) management 's estimate of fair market lease rates for each corresponding in-place lease , measured over a period equal to the remaining term of the lease for above-market leases and the remaining initial term plus the term of any below-market fixed rate renewal options for below-market leases . the capitalized above-market lease values are amortized as a reduction of base rental revenue over the remaining term of the respective leases , and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases . 45 other intangible assets acquired include amounts for in-place lease values and tenant relationship values which are based on management 's evaluation of the specific characteristics of each tenant 's lease and the company 's overall relationship with the respective tenant . factors to be considered by management in its analysis of in-place lease values include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions , and costs to execute similar leases . in estimating carrying costs , management includes real estate taxes , insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods , depending on local market conditions . in estimating costs to execute similar leases , management considers leasing commissions , legal and other related expenses . characteristics considered by management in valuing tenant relationships include the nature and extent of the company 's existing business relationships with the tenant , growth prospects for developing new business with the tenant , the tenant 's credit quality and expectations of lease renewals . the value of in-place leases are amortized to expense over the remaining initial terms of the respective leases . the value of tenant relationship intangibles will be amortized to expense over the anticipated life of the relationships . on a periodic basis , management assesses whether there are any indicators that the value of the company 's rental properties may be impaired . in addition to identifying any specific circumstances which may affect a property or properties , management considers other criteria for determining which properties may require assessment for potential impairment . the criteria considered by management include reviewing low leased percentages , significant near-term lease expirations , recently acquired properties , current and historical operating and or cash flow losses , near-term mortgage debt maturities or other factors that might impact the company 's intent and ability to hold the property . a property 's value is impaired only if management 's estimate of the aggregate future cash flows ( undiscounted and without interest charges ) to be generated by the property is less than the carrying value of the property . to the extent impairment has occurred , the loss shall be measured as the excess of the carrying amount of the property over the fair value of the property . the company 's estimates of aggregate future cash flows expected to be generated by each property are based on a number of assumptions . these assumptions are generally based on management 's experience in its local real estate markets and the effects of current market conditions . the assumptions are subject to economic and market uncertainties including , among others , demand for space , competition for tenants , changes in market rental rates , and costs to operate each property . as these factors are difficult to predict and are subject to future events that may alter management 's assumptions , the future cash flows estimated by management in its impairment analyses may not be achieved , and actual losses or impairments may be realized in the future . rental property held for sale and discontinued operations : when assets are identified by management as held for sale , the company discontinues depreciating the assets and estimates the sales price , net of selling costs , of such assets . if , in management 's opinion , the net sales price of the assets which have been identified as held for sale is less than the net book value of the assets , a valuation allowance is established . properties identified as held for sale and or sold are presented in discontinued operations for all periods presented . if circumstances arise that previously were considered unlikely and , as a result , the company decides not to sell a property previously classified as held for sale , the property is reclassified as held and used . a property that is reclassified is measured and recorded individually at the lower of ( a ) its carrying amount before the property was classified as held for sale , adjusted for any depreciation ( amortization ) expense that would have been recognized had the property been continuously classified as held and used , or ( b ) the fair value at the date of the subsequent decision not to sell . investments in unconsolidated joint ventures : the company accounts for its investments in unconsolidated joint ventures under the equity method of accounting . the company applies the equity method by initially recording these investments at cost , as investments in unconsolidated joint ventures , subsequently adjusted for equity in earnings and cash contributions and distributions . 46 accounting standards codification ( “ asc ” ) 810 , consolidation , provides guidance on the identification of entities for which control is achieved through means other than voting rights ( “ variable interest entities ” or “ vies ” ) and the determination of which business enterprise , if any , should consolidate the vies ( the “ primary beneficiary ” ) .
| results from operations the following comparisons for the year ended december 31 , 2011 ( “ 2011 ” ) , as compared to the year ended december 31 , 2010 ( “ 2010 ” ) , and for 2010 as compared to the year ended december 31 , 2009 ( “ 2009 ” ) , make reference to the following : ( i ) the effect of the “ same-store properties , ” which represent all in-service properties owned by the company at december 31 , 2009 , ( for the 2011 versus 2010 comparison ) and which represent all in-service properties owned by the company at december 31 , 2008 , ( for the 2010 versus 2009 comparison ) , excluding properties sold or held for sale through december 31 , 2011 ; and ( ii ) the effect of the “ acquired properties , ” which represent all properties acquired by the company , commencing initial operations or initially consolidated by the company from january 1 , 2010 through december 31 , 2011 ( for the 2011 versus 2010 comparison ) and which represent all properties acquired by the company or commencing initial operation from january 1 , 2009 through december 31 , 2010 ( for the 2010 versus 2009 comparison ) .
| 5,957 |
the company early adopted asu 2018-02 , effective january 1 , 2018 , and recorded a reclassification related to the stranded tax effects that increased accumulated other comprehensive income and increased accumulated deficit by $ 5.0 million in the consolidated balance sheets as of january 1 , 2018. see note 17 – accumulated other comprehensive income for further story_separator_special_tag the following discussion relates to the consolidated audited financial statements of amc entertainment holdings , inc. ( “ amc ” ) included elsewhere in this annual report on form 10-k. this discussion contains forward-looking statements . please see “ forward-looking statements ” for a discussion of the risks , uncertainties and assumptions relating to these statements . overview amc is the world 's largest theatrical exhibition company and an industry leader in innovation and operational excellence . we operate theatres in 15 countries and are the market leader in nine of those . in the united states , amc has the # 1 market share in the top two markets , new york and los angeles . our theatrical exhibition revenues are generated primarily from box office admissions and theatre food and beverage sales . the balance of our revenues are generated from ancillary sources , including on-screen advertising , fees earned from our amc stubs ® customer frequency membership program , rental of theatre auditoriums , income from gift card and exchange ticket sales , on-line ticketing fees and arcade games located in theatre lobbies . as of december 31 , 2018 , we owned , operated or had interests in 1,006 theatres and 11,091 screens . film content box office admissions are our largest source of revenue . we predominantly license “ first-run ” films from distributors owned by major film production companies and from independent distributors on a film-by-film and theatre-by-theatre basis . film exhibition costs are accrued based on the applicable admissions revenues and estimates of the final settlement pursuant to our film licenses . licenses that we enter into typically state that rental fees are based on aggregate terms established prior to the opening of the picture . in certain circumstances and less frequently , our rental fees are based on a mutually agreed settlement upon the conclusion of the picture . under an aggregate terms formula , we pay the 41 distributor a specified percentage of box office gross or pay based on a scale of percentages tied to different amounts of box office gross . the settlement process allows for negotiation based upon how a film actually performs . during the 2018 calendar year , films licensed from our seven largest distributors based on revenues accounted for approximately 90 % of our u.s. admissions revenues . our revenues attributable to individual distributors may vary significantly from year to year depending upon the commercial success of each distributor 's films in any given year . our revenues are dependent upon the timing and popularity of film releases by distributors . the most marketable films have historically been released during the summer and the calendar year-end holiday seasons . our results of operations may vary significantly from quarter to quarter and from year to year based on the timing and popularity of film releases . amc movie screens during the year ended december 31 , 2018 , we opened 11 new theatres with a total of 89 screens , acquired 4 theatres with 39 screens , permanently closed 211 screens , temporarily closed 514 screens and reopened 519 screens to implement our strategy to install consumer experience upgrades . as of december 31 , 2018 , we had 5,411 3d enabled screens , including 216 imax ® , and 112 other premium large format ( “ plf ” ) screens ; approximately 49 % of our screens were 3d enabled screens , including imax ® 3d enabled screens , and approximately 2 % of our screens were imax ® 3d enabled screens . the following table identifies the upgrades to our theatre circuit during the periods indicated : replace_table_token_10_th as of december 31 , 2018 , amc is the largest imax ® exhibitor in the u.s. with a 51 % market share , and each of our imax ® local installations is protected by geographic exclusivity . as of december 31 , 2018 , our imax® screen count is 99 % greater than our closest competitor . we believe that we have had considerable success with our imax® partnership . as of december 31 , 2018 , we have 127 fully operational dolby cinema at amc screens in the u.s. in august 2016 , we announced the acceleration of our dolby cinema at amc deployment . we expect to have 140 dolby cinema at amc screens operational by the end of 2019. we believe there is considerable opportunity to add a private label plf format in many of our locations , with superior sight and sound technology and enhanced seating as contrasted with our traditional auditoriums . these plf formats ( whose branding varies market to market ) give amc the capability to add a premium screen in theatres where an imax ® and or dolby cinema at amc might not be feasible , or where an additional premium format could complement existing premium format screens . guest amenities we continually upgrade the quality of our theatre circuit through substantial renovations featuring our seating concepts , acquisitions , new builds ( including expansions ) , expansion of food and beverage offerings ( including dine-in theatres ) , and by disposing of older screens through closures and sales . we believe we are an industry leader in the development and operation of theatres . typically , our theatres have 12 or more screens and offer amenities to enhance 42 the movie-going experience , such as stadium seating providing unobstructed viewing , digital sound and premium seat design . recliner seating is the key feature of theatre renovations . we believe that maximizing comfort and convenience for our customers will be increasingly necessary to maintain and improve our relevance . story_separator_special_tag points are forfeited upon expiration and recognized as admissions or food and beverage revenues . for the paid tier of the program ( amc stubs premiere tm ) , the program 's annual membership fee is deferred , net of estimated refunds , and is recognized ratably over the one-year membership period . significant events ncm . in march 2018 , we recorded in the line item , equity in loss of non-consolidated entities , a lower of carrying value or fair value impairment charge of $ 16.0 million , to reduce the carrying value of our held-for-sale interests in ncm common units and ncm , inc. common shares to level 1 fair value as of march 31 , 2018. the impairment charge reflects recording our held-for-sale units and shares at the publicly quoted per share price on march 31 , 2018 of $ 5.19. on june 18 , 2018 , the company entered into two unit purchase agreements ( the “ agreements ” ) with each of regal and cinemark pursuant to which regal and cinemark each separately agreed to purchase 10,738,740 common units of ncm at a sales price of $ 7.30 per unit and aggregate consideration of approximately $ 156.8 million ( the “ sales ” ) . the sales closed on july 5 , 2018. following the closing of the sales , the company no longer owns any shares of common stock in ncm , inc. or common units in ncm . ncm consented to the sales and waived its rights under the memorandum of understanding that provided the company would not reduce its combined ownership of ncm and ncm , inc. below 4.5 % . we recorded a gain on sale of $ 28.9 million during the year ended december 31 , 2018. screenvision merger . on may 30 , 2018 , screenvision entered into an agreement and plan of merger which resulted in a change of control in screenvision . we received distributions and merger consideration of $ 45.9 million on july 2 , 2018 upon consummation of the merger and retain a 18.4 % common membership interest in screenvision on a fully diluted basis . we reduced the carrying value of our investment in screenvision to $ 0 and recorded equity in earnings for the excess distribution of $ 30.1 million during the year ended december 31 , 2018. sale and leaseback transaction : on june 18 , 2018 , we completed the sale and leaseback of the real estate assets associated with one theatre for proceeds , net of closing costs , of $ 50.1 million . the gain on the sale of approximately $ 27.4 million has been deferred and will be amortized over the remaining lease term . fifth amendment to credit agreement : on august 14 , 2018 , we entered into the fifth amendment to credit agreement with citicorp north america , inc , as administrative agent and the other lenders party thereto , amending the credit agreement dated as of april 30 , 2013. the fifth amendment made certain changes to certain covenants and related definitions . these amendments to the senior secured credit agreement were executed in order to facilitate an internal reorganization due to recent tax changes and to make modifications which clarified certain ambiguities in the senior secured credit agreement . senior unsecured convertible notes due 2024 : on september 14 , 2018 , we issued $ 600.0 million aggregate principal amount of our 2.95 % senior unsecured convertible notes due 2024. the convertible notes due 2024 mature on september 15 , 2024 , subject to earlier conversion by the holders thereof , repurchase by amc at the option of the holders or redemption by amc upon the occurrence of certain contingencies , as discussed below . upon maturity , the $ 600.0 million principal amount of the convertible notes due 2024 will be payable in cash . we will pay interest in cash 44 on the convertible notes due 2024 at 2.95 % per annum , semi-annually in arrears on september 15th and march 15th , commencing on march 15 , 2019. we used the net proceeds from the sale of the convertible notes due 2024 to repurchase and retire 24,057,143 shares of class b common stock held by wanda for $ 17.50 per share or approximately $ 421.0 million , associated legal fees of $ 2.6 million , and to pay a special dividend of $ 1.55 per share of class a common stock and class b common stock , or approximately $ 160.5 million on september 28 , 2018 to shareholders of record on september 25 , 2018. see note 8 – corporate borrowings and capital and financing lease obligations in the notes to consolidated financial statements under part ii , item 8 , hereof for further information on the terms of the convertible notes due 2024. amc shares repurchased from wanda : using proceeds from the convertible notes due 2024 , we repurchased 24,057,143 shares at a price of $ 17.50 per share or $ 421.0 million and associated legal fees of $ 2.6 million . as of december 31 , 2018 , wanda owns 50.01 % of amc through its 51,769,784 shares of class b common stock . with the 3 to 1 voting rights of class b common shares , wanda retains voting control of amc . disposition of open road . on august 4 , 2017 , amc and regal entertainment group consummated a transaction for the sale of all the issued and outstanding ownership interests in open road for total proceeds of $ 28.8 million of which we received $ 14.0 million in net proceeds after transaction expenses for our 50 % investment and for collection of amounts due from open road and recognized a gain on sale of $ 17.2 million . sale leaseback transaction . on september 14 , 2017 , we completed the sale and leaseback of the real estate assets associated with seven theatres for proceeds net of closing costs of $ 128.4 million .
| consolidated results of operations revenues . total revenues increased 7.5 % or $ 381.6 million during the year ended december 31 , 2018 compared to the year ended december 31 , 2017. admissions revenues increased 4.8 % , or $ 155.5 million during the year ended december 31 , 2018 compared to the year ended december 31 , 2017 , primarily due to a 3.5 % increase in attendance , and a 1.3 % increase in average ticket price . the increase in attendance was primarily due to the popularity of films ( for u.s. markets ) released as compared to the same period a year ago and the acquisition of nordic on march 28 , 2017 ( for international markets ) , partially offset by a lack of popular film product , temporary screen closures for theatre refurbishments and increased competition in international markets . the increase in average ticket price was primarily due to strategic pricing initiatives put in place over the last year , improvements in attendance and popularity of imax and other plf premium content and declines in gbp foreign currency translation rates . food and beverage revenues increased 8.0 % , or $ 123.1 million , during the year ended december 31 , 2018 compared to the year ended december 31 , 2017 , primarily due to a 4.3 % increase in food and beverage revenues per patron and the increase in attendance . food and beverage revenues per patron increased as a result of our food and beverage initiatives including our feature fare menu that was introduced in 2017 and is available in 418 of our u.s. theatres , offering our guests a broader selection of items to choose from , price increases and declines in gbp foreign currency translation rates .
| 5,958 |
the guidance will be effective in 2018 , and we do not expect it to have a material impact on our consolidated financial statements . in february 2016 , the fasb issued guidance that primarily requires lessees to recognize most leases on their balance sheets but record expenses on their income statements in a manner similar to current accounting . for lessors , the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases . the guidance is effective in 2019 with early adoption permitted . we are currently in the process of evaluating the impact story_separator_special_tag the following discussion and analysis is intended to facilitate an understanding of our results of operations and financial condition and should be read in conjunction with our consolidated financial statements and the accompanying notes included elsewhere in this annual report . the following discussion and analysis of our financial condition and results of operations contains forward-looking statements about our business , operations and industry that involve risks and uncertainties , such as statements regarding our plans , objectives , expectations and intentions . actual results and the timing of events may differ materially from those expressed or implied in such forward-looking statements due to a number of factors , including those set forth under risk factors and elsewhere in this annual report . see risk factors and special note regarding forward-looking statements. overview we are a global learning company , specializing in education solutions across a variety of media , delivering content , services and technology to both educational institutions and consumers , reaching over 50 million students in more than 150 countries worldwide . in the united states , we are a leading provider of k-12 educational content by market share . we believe our long-standing reputation and trusted brand enable us to capitalize on consumer and digital trends in the education market through our existing and developing channels . furthermore , our trade and reference materials , including adult and children 's fiction and non-fiction books , have won industry awards such as the pulitzer prize , newbery and caldecott medals and national book award . corporate history houghton mifflin harcourt company was incorporated as a delaware corporation on march 5 , 2010 , and was established as the holding company of the current operating group . houghton mifflin harcourt was formed in december 2007 with the acquisition of harcourt education group , then the second-largest k-12 u.s. publisher , by houghton mifflin group . we are headquartered in boston , massachusetts . acquisition on april 23 , 2015 , we entered into a stock and asset purchase agreement with scholastic corporation ( scholastic ) to acquire certain assets ( including the stock of two of scholastic 's subsidiaries ) comprising its educational technology and services ( edtech ) business . on may 29 , 2015 , we completed the acquisition and paid an aggregate purchase price of $ 574.8 million in cash to scholastic , including adjustments for working capital . the edtech acquisition provided us with a leading position in intervention curriculum and services and extended our product offerings in other areas , including educational technology , early learning , and education services , creating a more comprehensive offering for students , teachers and schools . key aspects and trends of our operations business segments we are organized along two business segments : education and trade publishing . our education segment is our largest segment and represented approximately 87 % of our total net sales for the year ended december 31 , 2017 and 88 % of our total net sales for each of the years ended december 31 , 2016 and 2015. our trade publishing segment represented approximately 13 % of our total net sales for the year ended december 31 , 2017 and 12 % of our total net sales for each of the years ended december 31 , 2016 and 2015. the corporate and other category represents certain general overhead costs not fully allocated to the business segments , such as legal , accounting , treasury , human resources and executive functions . net sales we derive revenue primarily from the sale of print and digital content and instructional materials , trade books , reference materials , multimedia instructional programs , license fees for book rights , content , software and 30 services , test scoring , consulting and training . we primarily sell to customers in the united states . our net sales are driven primarily as a function of volume and , to a certain extent , changes in price . our net sales consist of our billings for products and services , less revenue that will be deferred until future recognition along with a provision for product returns . deferred revenues primarily derive from online interactive digital content , digital and online learning components along with undelivered work-texts , workbooks and services . the work-texts , workbooks and services are deferred until delivered , which often extends over the life of the contract and our hosted online and digital content is typically recognized ratably over the life of the contract . the digitalization of education content and delivery is driving a shift in the education market . as the k-12 educational market transitions to purchasing more digital , personalized education solutions , we believe our ability now or in the future to offer embedded assessments , adaptive learning , real-time interaction and student specific personalization of educational content in a platform- and device-agnostic manner will provide new opportunities for growth . an increasing number of schools are utilizing digital content in their classrooms and implementing online or blended learning environments , which is altering the historical mix of print and digital educational materials in the classroom . as a result , our business model has shifted to more digital and online learning components to address the needs of the education marketplace ; thus , often resulting in an increase in our billings being deferred compared to historical levels . story_separator_special_tag for example , florida adopted social studies materials in 2016 , for purchase in 2017 , and adopted science in 2017 for purchase in 2018. texas school districts purchased social studies and high school math materials in 2015 and purchased materials for languages other than english and career and technical education in 32 2017. the next major adoption in texas is expected to be reading/english language arts , currently scheduled for adoption in 2018 and purchase in 2019. california adopted english language arts materials in 2015 , with purchases beginning in 2016 and continuing through 2018 , and adopted history social science materials in 2017 for purchase in 2018 and continuing through 2020. both florida and texas , along with several other adoption states , provide dedicated state funding for instructional materials and classroom technology , with funding typically appropriated by the legislature in the first half of the year in which materials are to be purchased . texas has a two-year budget cycle , and in the 2017 legislative session appropriated funds for purchases in 2017 and 2018. california funds instructional materials in part with a dedicated portion of state lottery proceeds and in part out of general formula funds , with the minimum overall level of school funding determined according to the proposition 98 funding guarantee . we do not currently have contracts with these states for future instructional materials adoptions and there is no guarantee that our programs will be accepted by the state ( for example , our k-8 social science materials were not adopted in california in 2017 ) . long-term growth in the u.s. k-12 market is positively correlated with student enrollments , which is a driver of growth in the educational publishing industry . although economic cycles may affect short-term buying patterns , school enrollments are highly predictable and are expected to trend upward over the longer term . from 2013-2014 to 2025-2026 , total public school enrollment , a major long-term driver of growth in the k-12 education market , is projected to increase by 3 % to 51.4 million students , according to the national center for education statistics . the digitalization of education content and delivery is also driving a shift in the education market . as the k-12 educational market transitions to purchasing more digital solutions , we believe our ability to offer embedded assessments , adaptive learning , real-time interaction and student specific personalized learning and educational content in a platform- and device-agnostic manner will provide new opportunities for growth . our trade publishing segment is heavily influenced by the u.s. and broader global economy , consumer confidence and consumer spending . as the economy continues to recover , both consumer confidence and consumer spending have increased . while print remains the primary format in which trade books are produced and distributed , the market for trade titles in digital format , primarily e-books , has developed over the past several years , as the industry evolved to embrace new technologies for developing , producing , marketing and distributing trade works . we continue to focus on the development of innovative new digital products which capitalize on our strong content , our digital expertise and the consumer demand for these products . in the trade publishing segment , annual results can be driven by bestselling trade titles . furthermore , backlist titles can experience resurgence in sales when made into films or series . in the past years , a number of our backlist titles such as the hobbit , the lord of the rings , life of pi , the handmaid 's tale , the polar express , the giver and the time traveler 's wife have benefited in popularity due to movie or series releases and have subsequently resulted in increased trade sales . we employ several pricing models to serve various customer segments , including institutions , consumers , government agencies and other third parties . in addition to traditional pricing models where a customer receives a product in return for a payment at the time of product receipt , we currently use the following pricing models : pay-up-front : customer makes a fixed payment at time of purchase and we provide a specific product/service in return ; pre-pay subscription : customer makes a one-time payment at time of purchase , but receives a stream of goods/services over a defined time horizon ; for example , we currently provide customers the option to purchase a multi-year subscription to textbooks where for a one-time charge , a new copy of the work text is delivered to the customer each year for a defined time period . pre-pay subscriptions to online textbooks are another example where the customer receives access to an online book for a specific period of time ; and 33 pay-as-you-go subscription : similar to the pre-pay subscription , except that the customer makes periodic payments in a pre-described manner . with the exception of our professional services business , this pricing model is the least prevalent of the three models . cost of sales , excluding publishing rights and pre-publication amortization cost of sales , excluding publishing rights and pre-publication amortization , include expenses directly attributable to the production of our products and services , including the non-capitalizable costs associated with our content and platform development group . the expenses within cost of sales include variable costs such as paper , printing and binding costs of our print materials , royalty expenses paid to our authors , gratis costs or products provided at no charge as part of the sales transaction , and inventory obsolescence . also included in cost of sales are labor costs related to professional services and the non-capitalized costs associated with our content and platform development group . we also include amortization expense associated with our customer-facing software platforms . certain products such as trade books and products associated with our renowned authors carry higher royalty costs ; conversely , digital offerings usually have a lower cost of sales due to lower costs associated with their production .
| segment operating results results of operationscomparing years ended december 31 , 2017 , 2016 and 2015 education replace_table_token_8_th nm = not meaningful our education segment net sales for the year ended december 31 , 2017 increased $ 15.9 million , or 1.3 % , from $ 1,207.1 million for the same period in 2016 to $ 1,223.0 million . the net sales increase was primarily due to greater sales from our extension businesses , which primarily consist of heinemann , intervention , supplemental and assessment products as well as professional services . extension businesses net sales for the current period increased $ 22.0 million from $ 565.0 million in the 2016 period to $ 587.0 million primarily driven by higher heinemann and supplemental net sales . the primary drivers of the increase in our heinemann net sales were sales of our classroom libraries offering along with the introduction of our fountas & pinnell classroom 41 product . the primary drivers of the increase in our supplemental net sales for the year ended december 31 , 2017 , were sales of custom book bundles . also within our extension businesses , our assessment and intervention net sales declined year over year , offsetting a portion of the above increases . partially offsetting the increase in our extension businesses net sales were lower core solutions sales , inclusive of international sales , which declined by $ 6.0 million from $ 642.0 million in the 2016 period to $ 636.0 million .
| 5,959 |
the stock price was determined by an average of the fair market value of the company 's common stock over a seven day period prior to the conversion date . f-12 note 9. reverse stock split on june 18 , 2009 , the directors adopted , and the stockholders approved , proposals to amend the company 's certificate of incorporation to effect a 10-to-1 reverse stock split , and to amend the company 's certificate of incorporation to decrease the company 's total number of authorized shares from 999,999,000 shares to 400,000,000 shares , all of which shall be common stock , par value $ .00001 per share . the new symbol for the company is sfaz . as a result of the 10-to-1 reverse stock split , all share and per share information has been revised to give retroactive effect to the stock split . note 10. purchase commitments a non-cancelable purchase commitment which commenced in april 2009 relates to contracted services with our data center . the contract is for a period of 24 months with a commitment for 2010 of approximately $ 30,000 . charges in connection with the contract during 2009 of $ 19,000 , is reflected in cost of operations . note 11. equity based compensation the company 's compensatory stock plan , which became effective on july 20 , 2009 , provides for the grant of stock options , restricted stock grants and stock awards . the plan is designed for select employees , officers , directors and key consultants to the company and is intended to advance the best interests of the company by providing personnel who have substantial responsibility for the management and growth of the company with additional incentive by increasing their proprietary interest in the success of the company , thereby encouraging them to remain in the employ of the company . the plan is administered by the board of directors of the company , and authorizes the issuance of awards and grants not to exceed a total of 10,000,000 shares . stock options expire ten years from the date the option is granted and the board in its discretion may provide that the option shall be exercisable throughout the ten year period or during any lesser period of time commencing on the date of grant . the specific terms of any awards under the plan are determined by the board of directors , provided that no options may be granted at less than the fair market value of the stock as of the date of the grant . the plan terminates on the tenth anniversary of the effective date . on august 25 , 2009 , the company issued 1,000,000 shares of restricted common stock to its president , who fills that position as an independent contractor . the shares were valued at $ 14,520 as stock-based compensation . the valuation , charged to operations , was based on 110 % of the average bid/ask prices of the company 's common stock during the 10 day period prior to the issuance . the company also issued to its president , 4,000,000 common stock purchase options , valued at $ 87,394 . the options vest 1,000,000 per year over 4 years at an exercise price of $ 0.015. the valuation of $ 7,283 , which was charged to operations , was calculated per the black-scholes pricing model . on december 21 , 2009 , the company issued to an officer , 2,000,000 common stock purchase options valued at $ 59,293 . the options vest 500,000 per year over 4 years at an exercise price of $ 0.025 per share , which is 110 % of the average bid/ask prices of the company 's common stock during the seven day period prior to issuance . the valuation of $ 406 which was charged to operations was calculated per the black-scholes pricing model . as of december 31 , 2009 , option awards that have been issued to key personnel under the plan are as follows : replace_table_token_7_th no options have been granted or outstanding prior to january 1 , 2009. the options issued were valued based on the black sholes pricing model with the following assumptions for grants : dividend rate of 0 % ; risk-free interest rates of between 3.18 % and 3.10 % based on the u.s. treasury yield curve in effect at the time of the grant ; expected lives of 7year under simplified method and average volatility rates of 185 % to 196 % based upon the company 's stock price volatility . none of the options issued above are either exercisable or vested at the year ended december 31 , 2009. the charge to operations during 2009 in connection with the stock-based compensation issues was $ 7,689 . f-13 story_separator_special_tag results of operations overview our business activities until late 2009 consisted of ( a ) the website hosting operations of internet associates international , inc. , ( iai ) our sole active wholly owned subsidiary , and ( b ) the development of new business lines within the company related to it solutions , including a full suite of application hosting , monitoring and remote solution services . we believe this , along with our focus on providing a superior service to our customers will differentiate us from our competitors and enable us to gain market share in today 's constrained spending environment . 4 story_separator_special_tag display : block ; margin-left : 0pt ; margin-right : 0pt '' > the company had cumulative net operating loss carry-forwards for income tax purposes at december 31 , 2009 of approximately $ 7,400,000 , expiring through december 31 , 2023. the company has established a 100 % valuation allowance against this deferred tax asset , as the company has no history of profitable operations . going concern we are the subject of a `` going concern '' audit opinion . such qualification was issued because we have incurred continuing story_separator_special_tag the stock price was determined by an average of the fair market value of the company 's common stock over a seven day period prior to the conversion date . f-12 note 9. reverse stock split on june 18 , 2009 , the directors adopted , and the stockholders approved , proposals to amend the company 's certificate of incorporation to effect a 10-to-1 reverse stock split , and to amend the company 's certificate of incorporation to decrease the company 's total number of authorized shares from 999,999,000 shares to 400,000,000 shares , all of which shall be common stock , par value $ .00001 per share . the new symbol for the company is sfaz . as a result of the 10-to-1 reverse stock split , all share and per share information has been revised to give retroactive effect to the stock split . note 10. purchase commitments a non-cancelable purchase commitment which commenced in april 2009 relates to contracted services with our data center . the contract is for a period of 24 months with a commitment for 2010 of approximately $ 30,000 . charges in connection with the contract during 2009 of $ 19,000 , is reflected in cost of operations . note 11. equity based compensation the company 's compensatory stock plan , which became effective on july 20 , 2009 , provides for the grant of stock options , restricted stock grants and stock awards . the plan is designed for select employees , officers , directors and key consultants to the company and is intended to advance the best interests of the company by providing personnel who have substantial responsibility for the management and growth of the company with additional incentive by increasing their proprietary interest in the success of the company , thereby encouraging them to remain in the employ of the company . the plan is administered by the board of directors of the company , and authorizes the issuance of awards and grants not to exceed a total of 10,000,000 shares . stock options expire ten years from the date the option is granted and the board in its discretion may provide that the option shall be exercisable throughout the ten year period or during any lesser period of time commencing on the date of grant . the specific terms of any awards under the plan are determined by the board of directors , provided that no options may be granted at less than the fair market value of the stock as of the date of the grant . the plan terminates on the tenth anniversary of the effective date . on august 25 , 2009 , the company issued 1,000,000 shares of restricted common stock to its president , who fills that position as an independent contractor . the shares were valued at $ 14,520 as stock-based compensation . the valuation , charged to operations , was based on 110 % of the average bid/ask prices of the company 's common stock during the 10 day period prior to the issuance . the company also issued to its president , 4,000,000 common stock purchase options , valued at $ 87,394 . the options vest 1,000,000 per year over 4 years at an exercise price of $ 0.015. the valuation of $ 7,283 , which was charged to operations , was calculated per the black-scholes pricing model . on december 21 , 2009 , the company issued to an officer , 2,000,000 common stock purchase options valued at $ 59,293 . the options vest 500,000 per year over 4 years at an exercise price of $ 0.025 per share , which is 110 % of the average bid/ask prices of the company 's common stock during the seven day period prior to issuance . the valuation of $ 406 which was charged to operations was calculated per the black-scholes pricing model . as of december 31 , 2009 , option awards that have been issued to key personnel under the plan are as follows : replace_table_token_7_th no options have been granted or outstanding prior to january 1 , 2009. the options issued were valued based on the black sholes pricing model with the following assumptions for grants : dividend rate of 0 % ; risk-free interest rates of between 3.18 % and 3.10 % based on the u.s. treasury yield curve in effect at the time of the grant ; expected lives of 7year under simplified method and average volatility rates of 185 % to 196 % based upon the company 's stock price volatility . none of the options issued above are either exercisable or vested at the year ended december 31 , 2009. the charge to operations during 2009 in connection with the stock-based compensation issues was $ 7,689 . f-13 story_separator_special_tag results of operations overview our business activities until late 2009 consisted of ( a ) the website hosting operations of internet associates international , inc. , ( iai ) our sole active wholly owned subsidiary , and ( b ) the development of new business lines within the company related to it solutions , including a full suite of application hosting , monitoring and remote solution services . we believe this , along with our focus on providing a superior service to our customers will differentiate us from our competitors and enable us to gain market share in today 's constrained spending environment . 4 story_separator_special_tag display : block ; margin-left : 0pt ; margin-right : 0pt '' > the company had cumulative net operating loss carry-forwards for income tax purposes at december 31 , 2009 of approximately $ 7,400,000 , expiring through december 31 , 2023. the company has established a 100 % valuation allowance against this deferred tax asset , as the company has no history of profitable operations . going concern we are the subject of a `` going concern '' audit opinion . such qualification was issued because we have incurred continuing
| results of operations revenue for the year ended december 31 , 2009 was $ 18,507 as compared to $ 8,914 for 2008. fourth quarter 2009 revenues were $ 11,550 and $ 1,697 for 2009 and 2008 , respectively . the sales growth resulted primarily from the commencement of it service offerings provided by the company . the continued development of the company 's website , and the related introduction and promotion of the company 's new business activities , has contributed to these initial results . costs of operations were $ 28,801 and $ 13,200 for the years ended december 31 , 2009 and 2008 , respectively . these costs consist primarily of one-time charges , equipment , data storage costs , fee based technical support costs , and costs of content , subscriptions , and maintenance incurred as we increased our technological capacities in anticipation of new lines of business . in so doing , the company is poised for future growth without a compromise to its service level commitment . the one time and minimum volume costs are currently being fully expensed until such time as revenues are consistent and the nature of the costs are appropriate to amortize over fully achieved base volumes . general and administrative expenses are comprised primarily of the valuations of certain stock and stock options issued , the non employee ( contractual ) services of the company 's officers , professional legal and accounting fees , transfer agent and public reporting fees and software and website development costs . for the year ended december 31 , 2009 the company incurred stock compensation charges of $ 22,209 resulting from the issuance of common stock and common stock options under our 2009 compensatory stock plan . there were no options issued in 2008. legal fees were $ 75,704 and $ 8,125 for the years ended december 31 , 2009 and 2008 , respectively .
| 5,960 |
of the total loans purchased in the table above , $ 78.1 million , or 61 % , are interest-only for the first 10 years and will re-price in less than five years at one month libor plus a weighted average margin of 1.6 % ; a floor rate also is included in the terms . the remainders of the loan pools are scheduled to make principal and interest payments and will re-price in less than five years at one month libor plus a weighted average margin of 1.9 % , also with a floor rate included in the terms . the properties securing the loans are located ( by state ) as follows : 62.5 % in new york , 22.2 % in massachusetts , and 15.3 % in other states . the multifamily loans purchased in 2015 had a weighted average interest rate of 3.37 % , a weighted average loan-to-value ratio of 41.1 % , and an amortization term of 10 to 15 years at time of purchase . the loans are secured by properties located in new york state . purchased credit-impaired ( pci ) loans totaled $ 30.5 million at december 31 , 2016 , as compared to $ 33.1 million at december 31 , 2015 , and included $ 4.8 million of pci loans acquired as part of the hopewell valley acquisition . the remaining $ 25.7 million of pci loans were primarily acquired as part of a transaction with the federal deposit insurance corporation . the company accreted interest income of $ 5.2 million for the year ended december 31 , 2016 , as compared to $ 4.5 million for the year ended december 31 , 2015 . cash and cash equivalents increase d by $ 44.2 million , or 85.3 % , to $ 96.1 million at december 31 , 2016 , from $ 51.9 million at december 31 , 2015 , due in part to $ 55.5 million of cash and cash equivalents acquired in the hopewell transaction . balances fluctuate based on the timing of receipt of security and loan repayments and the redeployment of cash into higher-yielding assets , or the funding of deposit or borrowing obligations . 54 the securities available-for-sale portfolio totaled $ 498.9 million at december 31 , 2016 , compared to $ 541.6 million at december 31 , 2015 . at december 31 , 2016 , $ 448.8 million of the portfolio consisted of residential mortgage-backed securities issued or guaranteed by fannie mae , freddie mac , or ginnie mae . in addition , the company held $ 45.2 million in corporate bonds , all of which were considered investment grade at december 31 , 2016 , and other securities of $ 4.9 million ( including $ 1.2 million of equity investments in mutual funds ) . the effective duration of the securities portfolio at december 31 , 2016 was 3.96 years . bank owned life insurance increased $ 15.3 million , or 11.5 % , to $ 148.0 million at december 31 , 2016 , from $ 132.8 million at december 31 , 2015 . the increase was primarily due to $ 11.3 million of bank owned life insurance acquired from hopewell valley , as well as income earned on bank owned life insurance for the year ended december 31 , 2016 . goodwill increased $ 22.3 million , or 137.7 % , to $ 38.4 million at december 31 , 2016 , from $ 16.2 million at december 31 , 2015 , due to goodwill arising on the hopewell valley acquisition . total liabilities increase d $ 586.1 million , or 22.2 % , to $ 3.23 billion at december 31 , 2016 , from $ 2.64 billion at december 31 , 2015 . the increase was primarily attributable to an increase in deposits of $ 660.7 million , partially offset by decrease s in securities sold under agreements to repurchase of $ 55.0 million and other borrowings of $ 29.9 million due to a shift in our balance sheet funding strategy . the increase in deposits was primarily due to $ 456.2 million of deposits acquired from hopewell valley . deposits increase d $ 660.7 million , or 32.2 % , to $ 2.71 billion at december 31 , 2016 , from $ 2.05 billion at december 31 , 2015 . the increase was attributable to increase s of $ 377.0 million in transaction accounts , $ 270.5 million in money market accounts , and $ 36.2 million in certificate of deposit accounts , partially offset by a decrease in savings accounts of $ 23.1 million . borrowings , consisting primarily of fhlb advances and repurchase agreements , decreased by $ 84.9 million , or 15.2 % , to $ 473.2 million at december 31 , 2016 , from $ 558.1 million at december 31 , 2015 . management utilizes borrowings to mitigate interest rate risk , for short-term liquidity to fund loan growth , and to a lesser extent as part of leverage strategies . the growth in deposits enabled the company to reduce its borrowings in 2016. total stockholders ' equity increase d by $ 61.4 million to $ 621.2 million at december 31 , 2016 , from $ 559.8 million at december 31 , 2015 . this increase was primarily due to common stock issued in conjunction with the hopewell valley transaction , which resulted in a $ 41.7 million increase in equity , and net income of $ 26.1 million , partially offset by dividends payments of $ 14.1 million . to a lesser extent , the recognition of stock compensation expense associated with equity awards and the exercise of stock options , partially offset by an increase in unrealized losses on our securities-available-for sale portfolio , also contributed to the increase in equity . comparison of operating results for the years ended december 31 , 2016 and 2015 net income . net income was $ 26.1 million story_separator_special_tag of the total loans purchased in the table above , $ 78.1 million , or 61 % , are interest-only for the first 10 years and will re-price in less than five years at one month libor plus a weighted average margin of 1.6 % ; a floor rate also is included in the terms . the remainders of the loan pools are scheduled to make principal and interest payments and will re-price in less than five years at one month libor plus a weighted average margin of 1.9 % , also with a floor rate included in the terms . the properties securing the loans are located ( by state ) as follows : 62.5 % in new york , 22.2 % in massachusetts , and 15.3 % in other states . the multifamily loans purchased in 2015 had a weighted average interest rate of 3.37 % , a weighted average loan-to-value ratio of 41.1 % , and an amortization term of 10 to 15 years at time of purchase . the loans are secured by properties located in new york state . purchased credit-impaired ( pci ) loans totaled $ 30.5 million at december 31 , 2016 , as compared to $ 33.1 million at december 31 , 2015 , and included $ 4.8 million of pci loans acquired as part of the hopewell valley acquisition . the remaining $ 25.7 million of pci loans were primarily acquired as part of a transaction with the federal deposit insurance corporation . the company accreted interest income of $ 5.2 million for the year ended december 31 , 2016 , as compared to $ 4.5 million for the year ended december 31 , 2015 . cash and cash equivalents increase d by $ 44.2 million , or 85.3 % , to $ 96.1 million at december 31 , 2016 , from $ 51.9 million at december 31 , 2015 , due in part to $ 55.5 million of cash and cash equivalents acquired in the hopewell transaction . balances fluctuate based on the timing of receipt of security and loan repayments and the redeployment of cash into higher-yielding assets , or the funding of deposit or borrowing obligations . 54 the securities available-for-sale portfolio totaled $ 498.9 million at december 31 , 2016 , compared to $ 541.6 million at december 31 , 2015 . at december 31 , 2016 , $ 448.8 million of the portfolio consisted of residential mortgage-backed securities issued or guaranteed by fannie mae , freddie mac , or ginnie mae . in addition , the company held $ 45.2 million in corporate bonds , all of which were considered investment grade at december 31 , 2016 , and other securities of $ 4.9 million ( including $ 1.2 million of equity investments in mutual funds ) . the effective duration of the securities portfolio at december 31 , 2016 was 3.96 years . bank owned life insurance increased $ 15.3 million , or 11.5 % , to $ 148.0 million at december 31 , 2016 , from $ 132.8 million at december 31 , 2015 . the increase was primarily due to $ 11.3 million of bank owned life insurance acquired from hopewell valley , as well as income earned on bank owned life insurance for the year ended december 31 , 2016 . goodwill increased $ 22.3 million , or 137.7 % , to $ 38.4 million at december 31 , 2016 , from $ 16.2 million at december 31 , 2015 , due to goodwill arising on the hopewell valley acquisition . total liabilities increase d $ 586.1 million , or 22.2 % , to $ 3.23 billion at december 31 , 2016 , from $ 2.64 billion at december 31 , 2015 . the increase was primarily attributable to an increase in deposits of $ 660.7 million , partially offset by decrease s in securities sold under agreements to repurchase of $ 55.0 million and other borrowings of $ 29.9 million due to a shift in our balance sheet funding strategy . the increase in deposits was primarily due to $ 456.2 million of deposits acquired from hopewell valley . deposits increase d $ 660.7 million , or 32.2 % , to $ 2.71 billion at december 31 , 2016 , from $ 2.05 billion at december 31 , 2015 . the increase was attributable to increase s of $ 377.0 million in transaction accounts , $ 270.5 million in money market accounts , and $ 36.2 million in certificate of deposit accounts , partially offset by a decrease in savings accounts of $ 23.1 million . borrowings , consisting primarily of fhlb advances and repurchase agreements , decreased by $ 84.9 million , or 15.2 % , to $ 473.2 million at december 31 , 2016 , from $ 558.1 million at december 31 , 2015 . management utilizes borrowings to mitigate interest rate risk , for short-term liquidity to fund loan growth , and to a lesser extent as part of leverage strategies . the growth in deposits enabled the company to reduce its borrowings in 2016. total stockholders ' equity increase d by $ 61.4 million to $ 621.2 million at december 31 , 2016 , from $ 559.8 million at december 31 , 2015 . this increase was primarily due to common stock issued in conjunction with the hopewell valley transaction , which resulted in a $ 41.7 million increase in equity , and net income of $ 26.1 million , partially offset by dividends payments of $ 14.1 million . to a lesser extent , the recognition of stock compensation expense associated with equity awards and the exercise of stock options , partially offset by an increase in unrealized losses on our securities-available-for sale portfolio , also contributed to the increase in equity . comparison of operating results for the years ended december 31 , 2016 and 2015 net income . net income was $ 26.1 million
| overview on january 8 , 2016 , the company completed its acquisition of hopewell valley community bank ( “ hopewell valley ” ) , which , after purchase accounting adjustments , added $ 508.5 million to total assets , $ 342.6 million to loans , and $ 456.2 million to deposits , and nine branch offices in the hunterdon and mercer counties of new jersey . total consideration paid for hopewell valley was $ 55.4 million , consisting of $ 13.7 million in cash and 2,707,381 shares of common stock valued at $ 41.7 million based upon the $ 15.41 per share closing price of northfield bancorp , inc. 's common stock on january 8 , 2016. net income was $ 26.1 million , or $ 0.57 per diluted common share , and $ 19.5 million , or $ 0.45 per diluted common share , for the years ended december 31 , 2016 and 2015 , respectively . net income for the year ended december 31 , 2016 , included merger-related expenses of $ 4.0 million ( $ 2.4 million , after tax ) associated with the hopewell valley acquisition . net income for the year ended december 31 , 2015 , included merger-related expenses of $ 672,000 ( $ 574,000 , after tax ) associated with the hopewell valley acquisition and a tax charge of $ 795,000 related to the write-down of deferred tax assets as a result of new york city tax reforms enacted in april 2015. our assets increase d by $ 647.5 million , or 20.2 % , to $ 3.85 billion at december 31 , 2016 , from $ 3.20 billion at december 31 , 2015 . the increase was primarily attributable to increases in loans held-for-investment , net , of $ 594.4 million , cash and cash equivalents of $ 44.2 million , goodwill of $ 22.3 million , and bank owned life insurance of $ 15.3 million .
| 5,961 |
in oilfield services , the business grew as it acquired more customers and improved profitability , reflecting the strength of the market , augmented by the acquisition of biosuite llc in may 2018. octane additives continued to supply the one remaining customer in motor gasoline , albeit at reduced levels , consistent with the customer 's transition to unleaded fuel . critical accounting estimates note 2 of the notes to the consolidated financial statements includes a summary of the significant accounting policies and methods used in the preparation of the consolidated financial statements . business combinations the acquisition method of accounting requires that we recognize the assets acquired and liabilities assumed at their acquisition date fair values . goodwill is measured as the excess of consideration transferred over the acquisition date net fair values of the assets acquired and the liabilities assumed . the measurement of the fair values of assets acquired and liabilities assumed requires considerable judgment . although independent appraisals may be used to assist in the determination of the fair values of certain assets and liabilities , those determinations are usually based on significant estimates provided by management , such as forecast revenue or profit . in determining the fair value of intangible assets , an income approach is generally used and may incorporate the use of a discounted cash flow method . in applying the discounted cash flow method , the estimated future cash flows and residual values for each intangible asset are discounted to a present value using a discount rate appropriate to the business being acquired . these cash flow projections are based on management 's estimates of economic and market conditions including revenue growth rates , operating margins , capital expenditures and working capital requirements . 25 while we use our best estimates and assumptions as part of the process to value assets acquired and liabilities assumed at the acquisition date and contingent consideration at each balance sheet reporting date , our estimates are inherently uncertain and subject to refinement . during the measurement period , which occurs before finalization of the purchase price allocation , changes in assumptions and estimates based on new information that was not previously available , that result in adjustments to the fair values of assets acquired and liabilities assumed will have a corresponding offset to goodwill . subsequent adjustments will impact our consolidated statements of income . environmental liabilities we are subject to environmental laws in the countries in which we conduct business . our principal site giving rise to environmental remediation liabilities is the octane additives manufacturing site at ellesmere port in the united kingdom . there are also environmental remediation liabilities on a much smaller scale in respect of our other manufacturing sites in the u.s. and europe . at ellesmere port there is a continuing asset retirement program related to certain manufacturing units that have been closed . remediation provisions at december 31 , 2018 amounted to $ 49.5 million and relate principally to our ellesmere port site in the united kingdom . we recognize environmental liabilities when they are probable and costs can be reasonably estimated , and asset retirement obligations when there is a legal obligation and costs can be reasonably estimated . the company has to anticipate the program of work required and the associated future expected costs , and comply with environmental legislation in the countries in which it operates or has operated in . the company views the costs of vacating our ellesmere port site as contingent upon if and when it vacates the site because there is no present intention to do so . income taxes we are subject to income and other taxes in the u.s. and other jurisdictions . tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied . the calculation of our tax liabilities involves evaluating uncertainties in the application of accounting principles and complex tax regulations . we recognize liabilities for anticipated tax audit issues based on our estimate of whether , and the extent to which , additional taxes will be required . if we ultimately determine that payment of these amounts is unnecessary , we reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer necessary . we also recognize tax benefits to the extent that it is more likely than not that our positions will be sustained , based on technical merits of the position , when challenged by the taxing authorities . to the extent that we prevail in matters for which liabilities have been established , or are required to pay amounts in excess of our liabilities , our effective tax rate in a given period may be materially affected . an unfavourable tax settlement may require cash payments and result in an increase in our effective tax rate in the year of resolution . we report interest 26 and penalties related to uncertain tax positions as income taxes . for additional information regarding uncertain income tax positions , see note 10 of the notes to the consolidated financial statements . 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 ) . the tax act makes broad and complex changes to the u.s. tax code , including , but not limited to , ( 1 ) reducing the u.s. federal corporate tax rate from 35 per cent to 21 per cent ; ( 2 ) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries ; ( 3 ) generally eliminating u.s. federal income taxes on dividends from foreign subsidiaries ; ( 4 ) requiring a current inclusion in u.s. federal taxable income of certain earnings of controlled foreign corporations ; ( 5 ) creating a new limitation on deductible interest expense ; and ( 6 ) changing rules related to uses and limitations of nol carry forwards created in tax story_separator_special_tag 29 story_separator_special_tag style= '' margin-top:12pt ; margin-bottom:0pt ; font-size:12pt ; font-family : times new roman '' > foreign exchange loss on liquidation of subsidiary : the $ 1.8 million loss in the prior year related to the reclassification of historic foreign exchange translations of net assets from accumulated other comprehensive losses , for our captive insurance company which was liquidated . there has been no corresponding charge in the current year . other net income/ ( expense ) : for 2018 and 2017 , includes the following : replace_table_token_10_th interest expense , net : was $ 6.9 million in 2018 compared to $ 8.2 million in 2017 driven by lower average net debt as the business generated cash inflows . income taxes : the effective tax rate was 35.4 % and 51.8 % in 2018 and 2017 , respectively . the adjusted effective tax rate , once adjusted for the items set out in the following table , was 23.7 % in 2018 compared with 20.2 % in 2017. the company believes that this adjusted effective tax rate , a non-gaap financial measure , provides useful information to investors and may assist them in evaluating the company 's underlying performance and identifying operating trends . in addition , management uses this non-gaap financial measure internally to evaluate the performance of the company 's operations and for planning and forecasting in subsequent periods . 34 replace_table_token_11_th the most significant factor impacting our effective tax rate in 2018 and 2017 is the recognized implications of the tax act . on december 22 , 2017 , the u.s. government enacted comprehensive tax legislation , being the tax act . on the same date , sec staff issued staff accounting bulletin no . 118 ( sab 118 ) , which provided guidance on accounting for the tax effects of the tax act . sab 118 provides a measurement period that should not extend beyond one year from the tax act enactment date for companies to complete their accounting under asc 740 , income taxes . our accounting for the impact of the tax act under sab 118 is now complete . the deemed repatriation transition tax ( transition tax ) is a tax on certain previously untaxed accumulated earnings and profits ( e & p ) of the company 's non-u.s. subsidiaries . at december 31 , 2017 , we were able to reasonably estimate the transition tax and recorded a provisional transition tax obligation of $ 47.7 million . on the basis of revised e & p computations that were completed during the reporting period , we adjusted our transition tax estimate to $ 61.1 million . net of related consequential impacts recorded in our 2017 u.s. federal income tax return , we have recorded an additional $ 12.3 million income tax expense in the fourth quarter . our accounting in relation to the transition tax is now complete . further details regarding accounting for the tax act and the transition tax are given in note 10 of the notes to the consolidated financial statements . 35 results of operations fiscal 2017 compared to fiscal 2016 : replace_table_token_12_th we have recast certain prior period amounts to confirm to new accounting standards . 36 fuel specialties net sales : the table below details the components which comprise the year on year change in net sales spread across the markets in which we operate : replace_table_token_13_th volumes in the americas were higher as a result of increased demand following a slower than normal end to 2016. price and product mix in the americas was adversely impacted by increased sales of lower margin products . volumes in emea and aspac decreased due to customer reformulation to our new technologies . price and product mix in emea and aspac benefited from increased sales of higher margin products . avtel volumes were lower than the prior year due to variations in the timing and level of demand from customers , together with a favorable price mix . emea benefited from favorable exchange rate movements year over year , driven by a strengthening of the european union euro against the u.s. dollar . gross margin : the year on year decrease of 0.7 percentage points was adversely impacted by lower sales of higher margin products compared to a strong prior year , partly offset by the benefit of a stronger european union euro versus the u.s. dollar towards the end of the year . operating expenses : the year on year increase of $ 5.2 million was driven by $ 3.3 million higher selling and administrative expenses and $ 1.9 million higher research and development expenses . higher performance based personnel-related compensation has increased expenses year on year . performance chemicals net sales : the table below details the components which comprise the year on year change in net sales spread across the markets in which we operate : replace_table_token_14_th excluding the huntsman acquisition , increased personal care demand led to higher volumes in all our markets . price and product mix in the americas and aspac was adversely affected by pricing pressures in personal care , while emea benefited from favorable price and 37 product mix in personal care . aspac was adversely impacted by exchange rate movements ' year over year , driven by a weakening of the british pound sterling against the u.s. dollar . sales growth from the acquisition of our huntsman business at the end of 2016 has been excluded from the market analysis above and included as one variance for the segment total . gross margin : the year on year decrease of 13.2 percentage points was driven by the dilutive effect of the lower margins for our acquired huntsman business together with some one-off events for an unplanned plant outage and raw materials purchasing and pricing issues in the second quarter for the acquired business .
| results of operations the following table provides operating income by reporting segment : replace_table_token_6_th 30 results of operations fiscal 2018 compared to fiscal 2017 : replace_table_token_7_th we have recast certain prior period amounts to confirm to new accounting standards . 31 fuel specialties net sales : the table below details the components which comprise the year on year change in net sales spread across the markets in which we operate : replace_table_token_8_th volumes in all our regions were higher , driven by increased demand for our products and technology . price and product mix in the americas benefited from increased sales of higher margin products . avtel volumes were higher than the prior year due to variations in the timing and level of demand from customers . emea and aspac benefited from favorable exchange rate movements year over year , driven by a strengthening of the british pound sterling and the european union euro against the u.s. dollar . gross margin : the year on year decrease of 2.0 percentage points was adversely affected by the mix of product sales when compared to a strong prior year comparative . operating expenses : the year on year decrease of $ 1.8 million was driven by a reduction in the provisions for doubtful debts and lower accruals for agents ' commissions , partly offset by increased other expenses to support the business growth . performance chemicals net sales : the table below details the components which comprise the year on year change in net sales spread across the markets in which we operate : replace_table_token_9_th increased demand for our personal care products led to significantly higher volumes in the americas , together with a favorable price and product mix from increased sales of higher margin products .
| 5,962 |
our strategy is to own primarily premium-branded , focused-service and compact full-service hotels . focused-service and compact full-service hotels typically generate most of their revenue from room rentals , have limited food and beverage outlets and meeting space , and require fewer employees than traditional full-service hotels . we believe these types of hotels have the potential to generate attractive returns relative to other types of hotels due to their ability to achieve revpar levels at or close to those achieved by traditional full-service hotels while achieving higher profit margins due to their more efficient operating model and less volatile cash flows . as we look at factors that could impact our business , we find that the consumer is generally in good financial health , job creation remains positive , and an increase in wages is adding to consumers ' disposable income . while geopolitical and global economic uncertainty still exists and interest rates are rising , we remain cautiously optimistic that positive employment trends , high consumer confidence , and elevated corporate sentiment will continue to drive economic expansion in the u.s. and generate positive lodging demand and revpar growth for the industry . however , in light of accelerating supply and signs of slowing economic growth , revpar growth is likely to be moderate . low unemployment rates can impact the cost of labor through higher wages and benefits , which negatively impact our financial and operating results . we continue to follow a prudent and disciplined capital allocation strategy . we will continue to look for and weigh all possible investment decisions against the highest and best returns for our shareholders over the long term . we believe that our cash on hand and expected access to capital ( including availability under our revolver ) along with our senior management team 's experience , extensive industry relationships and asset management expertise , will enable us to pursue investment opportunities that generate additional internal and external growth . 40 table of contents as of december 31 , 2018 , we owned 151 hotel properties with approximately 28,800 rooms , located in 25 states and the district of columbia . we owned , through wholly-owned subsidiaries , a 100 % interest in 147 of our hotel properties , a 98.3 % controlling interest in the doubletree metropolitan hotel new york city , a 95 % controlling interest in the knickerbocker , and 50 % interests in entities owning two hotel properties . we consolidate our real estate interests in the 149 hotel properties in which we hold a controlling financial interest , and we record the real estate interests in the two hotel properties in which we hold an indirect 50 % interest using the equity method of accounting . we lease 150 of the 151 hotel properties to our trs , of which we own a controlling financial interest . our customers the majority of our hotels consist of premium-branded , focused-service and compact full-service hotels . as a result of this property profile , the majority of our customers are transient in nature . transient business typically represents individual business or leisure travelers . the majority of our hotels are located in business districts within major metropolitan areas . accordingly , business travelers represent the majority of the transient demand at our hotels . as a result , macroeconomic factors impacting business travel have a greater effect on our business than factors impacting leisure travel . group business is typically defined as a minimum of 10 guestrooms booked together as part of the same piece of business . group business may or may not use the meeting space at any given hotel . given the limited meeting space at the majority of our hotels , group business that utilizes meeting space represents a small component of our customer base . a number of our hotel properties are affiliated with brands marketed toward extended-stay customers . extended-stay customers are generally defined as those staying five nights or longer . our revenues and expenses our revenues are primarily derived from the operation of hotels , including the sale of rooms , food and beverage revenue and other revenue , which consists of parking fees , golf , pool and other resort fees , gift shop sales and other guest service fees . our operating costs and expenses consist of the costs to provide hotel services , including room expense , food and beverage expense , management and franchise fees and other operating expenses . room expense includes housekeeping and front office wages and payroll taxes , reservation systems , room supplies , laundry services and other costs . food and beverage expense primarily includes the cost of food , the cost of beverages and the associated labor costs . other operating expenses include labor and other costs associated with the other operating department revenue , as well as labor and other costs associated with administrative departments , sales and marketing , repairs and maintenance and utility costs . our hotels that are subject to franchise agreements are charged a royalty fee , plus additional fees for marketing , central reservation systems and other franchisor costs , in order for the hotel properties to operate under the respective brands . franchise fees are based on a percentage of room revenue and for certain hotels additional franchise fees are charged for food and beverage revenue . our hotels are managed by independent , third-party management companies under long-term agreements pursuant to which the management companies typically earn base and incentive management fees based on the levels of revenues and profitability of each individual hotel property . we generally receive a cash distribution from the management companies on a monthly basis , which reflects hotel-level sales less hotel-level operating expenses . key indicators of operating performance we use a variety of operating , financial and other information to evaluate the operating performance of our business . story_separator_special_tag some hotels , due to the limited focus of the services offered and size or space limitations at the hotel , may not have the type of facilities that generate other revenue . 42 table of contents property operating expenses — the components of our property operating expenses are as follows : ◦ room expense — these expenses include housekeeping and front office wages and payroll taxes , reservation systems , room supplies , laundry services and other room-related costs . like room revenue , occupancy is the major driver of room expense . these costs can increase based on an increase in salaries and wages , as well as the level of service and amenities that are provided at the hotel property . ◦ food and beverage expense — these expenses primarily include food , beverage and labor costs . occupancy and the type of customer staying at the hotel ( i.e. , catered functions are generally more profitable than restaurant , bar , and other food and beverage outlets that are located on the hotel property ) are the major drivers of food and beverage expense , which correlates closely with food and beverage revenue . ◦ management and franchise fee expense — a base management fee is computed as a percentage of gross hotel revenues . an incentive management fee is typically paid when the hotel 's operating income exceeds certain thresholds , and it is generally calculated as a percentage of hotel operating income after we have received a priority return on our investment in the hotel . a franchise fee is computed as a percentage of room revenue , plus an additional percentage of room revenue for marketing , central reservation systems and other franchisor costs . certain hotels will also pay an additional franchise fee which is computed as a percentage of food and beverage revenue . for a more in depth discussion of the management and franchise fees , please refer to the `` our hotel properties — management agreements '' and `` our hotel properties — franchise agreements '' sections . ◦ other operating expense — these expenses include labor and other costs associated with the sources of our other revenue , as well as the labor and other costs associated with the administrative departments , sales and marketing , repairs and maintenance , and utility costs at the hotel properties . most categories of variable operating expenses , including labor costs , fluctuate with changes in occupancy . increases in occupancy are accompanied by increases in most categories of variable operating expenses , while increases in adr typically only result in increases in certain categories of operating costs and expenses , such as management fees , franchise fees , travel agency commissions , and credit card processing fees , all of which are based on hotel revenues . therefore , changes in adr have a more significant impact on operating margins than changes in occupancy . 2018 significant activities our significant activities reflect our commitment to creating long-term shareholder value through enhancing our hotel portfolio 's quality , recycling capital and maintaining a prudent capital structure . during the year ended december 31 , 2018 , the following significant activities took place : in january 2018 , we modified our $ 400.0 million term loan initially due in 2019 , our $ 225.0 million term loan initially due in 2019 , and our $ 150 million term loan due in 2022. we extended the maturity for both the $ 400.0 million term loan and the $ 225.0 million term loan to january 2023 , and we improved the overall pricing for each of the modified term loans . in february 2018 , we sold the embassy suites boston marlborough in marlborough , massachusetts for $ 23.7 million . in march 2018 , we completed the early redemption of the senior secured notes in full for an aggregate principal amount of $ 524.0 million . in march 2018 , we sold the sheraton philadelphia society hill hotel in philadelphia , pennsylvania for $ 95.5 million . in july 2018 , we sold the embassy suites napa valley in napa , california for $ 102.0 million . in august 2018 , we sold the doubletree hotel columbia in columbia , maryland for $ 12.9 million . in august 2018 , we sold the vinoy renaissance st. petersburg resort & golf club in st. petersburg , florida for $ 185.0 million . in september 2018 , we sold the doubletree by hilton burlington vermont in burlington , vermont for $ 35.0 million . in october 2018 , we sold the holiday inn san francisco - fisherman 's wharf in san francisco , california for $ 75.3 million . 43 table of contents in november 2018 , we repaid an $ 85.0 million mortgage loan that encumbered one hotel property . we repurchased and retired 1.2 million common shares for approximately $ 21.8 million at an average price per share of $ 18.76. since we announced our share repurchase program in 2015 , we have repurchased and retired 9.9 million common shares for approximately $ 262.9 million . as of december 31 , 2018 , we had $ 177.1 million of remaining capacity under the share repurchase program . we declared cash dividends of $ 1.95 on each series a cumulative convertible preferred share for the year . we declared cash dividends of $ 1.32 per common share for the year . story_separator_special_tag style= '' font-family : inherit ; font-size:10pt ; '' > $ 6.8 million increase in property operating expenses attributable to the comparable properties . the components of our property operating expenses for the comparable properties owned at december 31 , 2018 and 2017 , respectively , were as follows ( in thousands ) : replace_table_token_9_th the increase in property operating expenses attributable to the comparable properties was due to higher room expense , food and beverage expense , and other operating expense .
| results of operations at december 31 , 2018 , 2017 and 2016 we owned 151 , 158 and 122 hotel properties , respectively . based on when a hotel property is acquired , sold , or closed for renovation , the operating results for certain hotel properties are not comparable for the years ended december 31 , 2018 , 2017 and 2016 . for the comparison between the years ended december 31 , 2018 and 2017 , the non-comparable properties include 37 hotel properties that were acquired in the merger with felcor on august 31 , 2017 , and eight dispositions that were completed between january 1 , 2017 and december 31 , 2018. for the comparison between the years ended december 31 , 2017 and 2016 , the non-comparable properties include 37 hotel properties that were acquired in the merger with felcor on august 31 , 2017 , and five dispositions that were completed between january 1 , 2016 and december 31 , 2017 . 44 table of contents comparison of the year ended december 31 , 2018 to the year ended december 31 , 2017 replace_table_token_7_th revenues total revenues increased $ 405.0 million , or 29.9 % , to $ 1.76 billion for the year ended december 31 , 2018 from $ 1.36 billion for the year ended december 31 , 2017 . the increase was a result of a $ 326.2 million increase in room revenue , a $ 47.8 million increase in food and beverage revenue , and a $ 31.0 million increase in other revenue . 45 table of contents room revenue room revenue increased $ 326.2 million , or 28.4 % , to $ 1.47 billion for the year ended december 31 , 2018 from $ 1.15 billion for the year ended december 31 , 2017 .
| 5,963 |
asu 2016-02 is effective for the company for annual reporting 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 thereto in “ item 8. financial statements and supplementary data. ” the discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances including those identified in “ cautionary note regarding forward-looking statements ” above . actual results may differ materially from these expectations due to potentially inaccurate assumptions and known or unknown risks and uncertainties . such forward-looking statements should be read in conjunction with our disclosures under “ item 1a . risk factors. ” overview we provide a full range of well services to major oil companies and independent oil and natural gas production companies to produce , maintain and enhance the flow of oil and natural gas throughout the life of a well . these services include rig-based and coiled tubing-based well maintenance and workover services , well completion and recompletion services , fluid management services , fishing and rental services and other ancillary oilfield services . additionally , certain of our rigs are capable of specialty drilling applications . we operate in most major oil and natural gas producing regions of the continental united states . we previously had operations in mexico , which was sold during the fourth quarter of 2016 , and canada and russia , which were sold in the second and third quarters of 2017 , respectively . the demand for our services fluctuates , primarily in relation to the price ( or anticipated price ) of oil and natural gas , which , in turn , is driven primarily by the supply of , and demand for , oil and natural gas . generally , as supply of those commodities decreases and demand increases , service and maintenance requirements increase as oil and natural gas producers attempt to maximize the productivity of their wells in a higher priced environment . however , in the lower oil and natural gas price environment that has persisted since late 2014 , demand for service and maintenance has decreased as oil and natural gas producers decrease their activity . in particular , the demand for new or existing field drilling and completion work is driven by available investment capital for such work and our customers have significantly curtailed their capital spending beginning in 2015 and continuing into 2018. because these types of services can be easily “ started ” and “ stopped , ” and oil and natural gas producers generally tend to be less risk tolerant when commodity prices are low or volatile , we may experience a more rapid decline in demand for well maintenance services compared with demand for other types of oilfield services . further , in a lower-priced environment , fewer well service rigs are needed for completions , as these activities are generally associated with drilling activity . emergence from voluntary reorganization and fresh start accounting upon our emergence from bankruptcy on the effective date , the company adopted fresh start accounting which resulted in the creation of a new entity for financial reporting purposes . as a result of the application of fresh start accounting , as well as the effects of the implementation of the plan , the consolidated financial statements on or after december 16 , 2016 are not comparable with the consolidated financial statements prior to that date . refer to “ note 3. fresh start accounting ” in “ item 8. financial statements and supplementary data ” for additional information . 26 index to financial statements references to “ successor ” or “ successor company ” relate to the financial position and results of operations of the reorganized company subsequent to december 15 , 2016. references to “ predecessor ” or “ predecessor company ” refer to the financial position and results of operations of the company prior to december 15 , 2016. business and growth strategies focus on production related services over the life of an oil and gas well , regular maintenance of well bore and artificial lift systems is required to maintain production and offset natural production declines . in most of these interventions , a well service rig is required to remove and replace items needing repair , or to perform activities that would increase the oil and gas production from current levels . in many instances these interventions require additional assets or services to perform . with the decline in oil prices beginning in 2014 , we believe that a number of oil and gas producers in the united states significantly curtailed their recurring well maintenance activities . we believe that a recovery in oil prices will result in oil and gas producers making the decision to resume regular well maintenance activities . additionally , we believe that in many instances since the oil price decline began in 2014 , oil and gas producers have foregone regular maintenance activities , and that additional demand for our services will be provided by oil and gas producers seeking to improve their production by repairing their wells . key is well positioned to capitalize on these trends through its fleet of active and warm stacked well service rigs and the additional fishing and rental service offerings it provides and we will continue to invest , either in equipment or through acquisition to grow and take advantage of this dynamic . growth in population of horizontal oil and gas wells since the revolution of horizontal well drilling and hydraulic fracturing began in the united states , thousands of new horizontal oil wells have been added , many in the period from 2012 to 2014. as the initial production from these wells declines over their first several years of production , and these wells are placed on artificial lift systems to maintain production , we believe that these wells will require periodic maintenance similar to a conventional oil well . story_separator_special_tag see “ segment operating results — years ended december 31 , 2017 and 2016 ” below for a more detailed discussion of the change in our revenues . direct operating expenses our direct operating expenses decreased $ 47.1 million , or 12.4 % , to $ 332.3 million ( 76.2 % of revenues ) for the year ended december 31 , 2017 , compared to $ 379.4 million ( 90.9 % of revenues ) for the combined year ended december 31 , 2016. the decrease is partially related to a $ 21.0 million gain on the sale of certain assets and a decrease in employee compensation costs , fuel expense and repair and maintenance expense as we took steps to reduce our cost structure . see “ segment operating results — years ended december 31 , 2017 and 2016 ” below for a more detailed discussion of the change in our direct operating expenses . depreciation and amortization expense depreciation and amortization expense decreased $ 50.3 million , or 37.3 % , to 84.5 million ( 19.4 % of revenues ) for the year ended december 31 , 2017 , compared to $ 134.9 million ( 32.3 % of revenues ) for the combined year ended december 31 , 2016. the decrease is primarily attributable to the reduction of property , plant and equipment due to the implementation of fresh start accounting in the fourth quarter of 2016. general and administrative expenses general and administrative expenses decreased $ 54.5 million , or 32.1 % , to $ 115.3 million ( 26.4 % of revenues ) for the year ended december 31 , 2017 , compared to $ 169.8 million ( 40.7 % of revenues ) for the combined year ended december 31 , 2016. the decrease is primarily due to a $ 24.0 million decrease in professional fees related to our 2016 corporate restructuring and lower employee compensation costs due to reduced staffing levels and a reduction in wages partially offset by a $ 5.2 million increase in legal settlement accruals . 31 index to financial statements impairment expense during the year ended december 31 , 2017 , we recorded a $ 0.2 million impairment to reduce the carrying value of the assets and related liabilities of our russian business unit , which was sold in the third quarter of 2017 , to fair market value . during the combined year ended december 31 , 2016 , we recorded a $ 44.6 million impairment to reduce the carrying value of assets held for sale to fair market value related to our business unit in mexico . reorganization items , net reorganization items primarily consist of $ 1.5 million of professional fees incurred in connection with our emergence from voluntary reorganization for the year ended december 31 , 2017 compared to a $ 578.7 million gain on debt discharge partially offset by a $ 299.6 million loss on fresh start accounting revaluations , a $ 19.2 million write-off of deferred financing costs and debt premiums and discounts , and $ 15.2 million of professional fees incurred in connection with our emergence from voluntary reorganization for the combined year ended december 31 , 2016. interest expense , net of amounts capitalized interest expense decreased $ 43.9 million to $ 31.8 million ( 7.3 % of revenues ) , for the year ended december 31 , 2017 , compared to $ 75.7 million ( 18.1 % of revenues ) for the combined year ended december 31 , 2016. the decrease is primarily related to the elimination of the predecessor company 's senior secured notes in connection with our emergence from voluntary reorganization . other ( income ) loss , net during the year ended december 31 , 2017 , we recognized other income , net , of $ 7.2 million , compared to $ 2.4 million for the combined year ended december 31 , 2016. our foreign exchange ( gain ) loss relates to u.s. dollar-denominated transactions in our foreign locations and fluctuations in exchange rates between local currencies and the u.s. dollar . the table below presents comparative detailed information about combined other loss , net at december 31 , 2017 and 2016 : replace_table_token_14_th income tax ( expense ) benefit our income tax benefit was $ 1.7 million ( 1.4 % effective rate ) on pre-tax loss of $ 122.3 million for the year ended december 31 , 2017 , compared to an income tax benefit of zero ( 0.00 % effective rate ) on a pre-tax loss of $ 10.2 million and a $ 2.8 million tax expense ( 2.2 % effective rate ) on pre-tax loss of $ 128.9 million for the period from december 16 , 2016 through december 31 , 2016 and for the period from january 1 , 2016 through december 15 , 2016 , respectively . our effective tax rates for such periods differ from the then-applicable u.s. statutory rate of 35 % due to a number of factors , including the mix of profit and loss between domestic and international taxing jurisdictions and the impact of permanent items , including goodwill impairment expense and expenses subject to statutorily imposed limitations such as meals and entertainment expenses , that affect book income but do not affect taxable income and discrete tax adjustments , such as valuation allowances against deferred tax assets and tax expense or benefit recognized for uncertain tax positions . 32 index to financial statements segment operating results years ended december 31 , 2018 and 2017 the following table shows operating results for each of our reportable segments for the years ended december 31 , 2018 and 2017 ( in thousands ) : for the year ended december 31 , 2018 replace_table_token_15_th for the year ended december 31 , 2017 replace_table_token_16_th rig services revenues for our rig services segment increased $ 48.1 million , or 19.3 % , to $ 297.0 million for the year ended december 31 , 2018 , compared to $ 248.8 million for the year ended december 31 , 2017 .
| consolidated results of operations the following tables set forth consolidated results of operations and financial information by operating segment and other selected information for the periods indicated . the period from december 16 to december 31 , 2016 ( successor company ) and the period from january 1 to december 15 , 2016 ( predecessor company ) are distinct reporting periods as a result of our emergence from bankruptcy on december 15 , 2016. references in these results of operations to the change and the percentage change combine the successor company and predecessor company results for the year ended december 31 , 2016 in order to provide some comparability of such information to the years ended december 31 , 2018 and december 31 , 2017. while this combined presentation is not presented according to generally accepted accounting principles in the united states ( “ gaap ” ) and no comparable gaap measure is presented , management believes that providing this financial information is the most relevant and useful method for making comparisons to the years ended december 31 , 2018 and december 31 , 2017. replace_table_token_11_th years ended december 31 , 2018 and 2017 revenues our revenues for the year ended december 31 , 2018 increased $ 85.5 million , or 19.6 % , to $ 521.7 million from $ 436.2 million for the year ended december 31 , 2017 , due to an increase in spending from our customers as they react to improving commodity prices and our ability to increase prices for our services . internationally , we had no revenue in 2018 as a result of the sale our operations in canada and russia . see “ segment operating results — years ended december 31 , 2018 and 2017 ” below for a more detailed discussion of the change in our revenues .
| 5,964 |
we own or operate 199 transfer stations , 190 active solid waste landfills and 69 recycling centers . we also operate 69 landfill gas and renewable energy projects . revenue for the year ended december 31 , 2013 was $ 8,417.2 million compared to $ 8,118.3 million for 2012. this 3.7 % increase in revenue was made up of increases in average yield of 1.3 % , fuel recovery fees of 0.3 % and acquisitions , net of divestitures of 0.5 % , as well as increases in volume of 1.3 % and recycling commodities increases of 0.3 % . the following table summarizes our revenue , costs and expenses for the years ended december 31 , 2013 , 2012 and 2011 ( in millions of dollars and as a percentage of revenue ) : replace_table_token_6_th our pre-tax income was $ 851.2 million , $ 823.9 million and $ 906.3 million for the years ended december 31 , 2013 , 2012 and 2011 , respectively . our net income attributable to republic services , inc. was $ 588.9 million , or $ 1.62 per diluted share for the year ended december 31 , 2013 , compared to $ 571.8 million , or $ 1.55 per diluted share , for the year ended december 31 , 2012 , and $ 589.2 million , or $ 1.56 per diluted share , for the year ended december 31 , 2011 . during each of the three years ended december 31 , 2013 , 2012 and 2011 , we recorded a number of charges and other expenses and benefits that impacted our pre-tax income , net income attributable to republic services , inc. ( net income – republic ) and diluted earnings per share as noted in the following table ( in millions , except per share data ) . additionally , see our “ cost of operations , ” “ selling , general and administrative expenses ” and “ income taxes ” discussions contained in the results of operations section of this management 's discussion and analysis of financial condition and results of operations for a discussion of other items that impacted our earnings . 27 replace_table_token_7_th we believe that presenting adjusted pre-tax income , adjusted net income attributable to republic services , inc. , and adjusted diluted earnings per share , which are not measures determined in accordance with accounting principles generally accepted in the united states ( u.s. gaap ) , provides an understanding of operational activities before the financial impact of certain items . we use these measures , and believe investors will find them helpful , in understanding the ongoing performance of our operations separate from items that have a disproportionate impact on our results for a particular period . we have incurred comparable charges and costs in prior periods , and similar types of adjustments can reasonably be expected to be recorded in future periods . in the case of the bridgeton remediation charges , we are adjusting such amounts due to their significant effect on our operating results ; however , in the ordinary course of our business , we often incur remediation adjustments that we do not adjust from our operating results . our definition of adjusted pre-tax income , adjusted net income attributable to republic services inc. , and adjusted diluted earnings per share may not be comparable to similarly titled measures presented by other companies . negotiation and withdrawal costs - central states pension and other funds . during the years ended december 31 , 2013 and 2012 , we recorded charges to earnings of $ 157.7 million and $ 35.8 million , respectively , primarily related to our negotiation and withdrawal liability from the central states , southeast and southwest areas pension fund ( the fund ) . also included within these charges to earnings for 2013 is $ 2.1 million for withdrawal events at the multiemployer pension plan to which we contribute related to our operations in puerto rico , as well as costs of $ 17.0 million ( $ 5.1 million in 2012 ) related to the negotiation of collective bargaining agreements under which we had obligations to contribute to the fund . restructuring charges . during the fourth quarter of 2012 , we announced a restructuring of our field and corporate operations to create a more efficient and competitive company . these changes included consolidating our field regions from four to three and our areas from 28 to 20 , relocating office space , and reducing administrative staffing levels . during the years ended december 31 , 2013 and 2012 , we incurred $ 8.6 million and $ 11.1 million , respectively , of restructuring charges , which consisted of severance and other employee termination benefits , relocation benefits , and the closure of offices with non-cancellable lease agreements . loss on extinguishment of debt . during the years ended december 31 , 2013 , 2012 and 2011 , we completed various refinancing transactions that resulted in cash paid for premiums and professional fees to repurchase outstanding debt , as well as non-cash charges for unamortized debt discounts and deferred issuance costs . for a more detailed discussion of the components of these costs and the debt series to which they relate , see our “ loss on extinguishment of debt ” discussion contained in the results of operations section of this management 's discussion and analysis of financial condition and results of operations . bridgeton remediation . we recorded environmental remediation charges at our closed bridgeton landfill in missouri of $ 108.7 million in june 2013 and $ 74.1 million during 2012 to manage the remediation area and monitor the site . 28 tax valuation allowance adjustment . during the fourth quarter of 2013 , we reduced our valuation allowance related to certain deferred tax assets for state net operating loss carryforwards due to our determination that it is more likely than not a portion of these carryforwards would be utilized in future years . ( gain ) loss on disposition of assets and impairments , net . story_separator_special_tag included in other cost of operations is occupancy and facility costs , which increased $ 7.5 million primarily due to increased facility maintenance expense . we recorded environmental remediation charges at our closed bridgeton landfill in missouri of $ 108.7 million in june 2013 and $ 74.1 million during 2012 to manage the remediation area and monitor the site . cost of operations – 2012 compared to 2011 our cost of operations increased $ 140.6 million or , as a percentage of revenue , 2.3 % in 2012 compared to 2011 , primarily as a result of the following : labor and related benefits increased due to merit based wage increases in 2012 compared to 2011 , as well as increases in health care costs . as a percentage of revenue , labor and related benefits were negatively impacted by the relative mix of higher collection revenue and lower landfill , transfer , commodity and subcontract revenue compared to 2011 because these revenues have little or no variable labor costs . transfer and disposal costs decreased , primarily due to lower disposal prices and lower volumes disposed at third party sites . during 2012 , approximately 67 % of the total waste volume we collected was disposed at landfill sites that we own or operate ( internalization ) compared to 66 % for 2011 . 33 maintenance and repairs expense increased due to costs associated with our fleet maintenance initiative , as well as the increased cost of tires and container refurbishment expenses . transportation and subcontract costs decreased during 2012 compared to 2011 , primarily due to the loss of a large national accounts contract . our fuel costs in aggregate dollars and as a percentage of revenue increased $ 13.6 million and 0.2 % , respectively , primarily due to higher fuel prices . average fuel costs per gallon for 2012 were $ 3.97 compared to $ 3.85 for 2011 , an increase of $ 0.12 or 3.1 % . franchise fees and taxes increased , primarily due to the acquisition of businesses in franchise markets . landfill operating expenses in aggregate dollars and as a percentage of revenue decreased $ 2.1 million , but remained relatively consistent as a percentage of revenue at 1.5 % for both 2012 and 2011. cost of goods sold relates to rebates paid for volumes delivered to our recycling facilities . cost of goods sold in aggregate dollars and as a percentage of revenue decreased $ 32.2 million and 0.4 % , respectively , primarily due to a decline in the market value of recycled commodities , offset by an increase in the volume of commodities processed . risk management expenses increased , primarily due to lower favorable actuarial development compared to the prior year . we recorded environmental remediation charges at our closed bridgeton landfill in missouri of $ 74.1 million during 2012 to manage the remediation area and monitor the site . depreciation , amortization and depletion of property and equipment the following table summarizes depreciation , amortization and depletion of property and equipment for the years ended december 31 , 2013 , 2012 and 2011 ( in millions of dollars and as a percentage of revenue ) : replace_table_token_12_th depreciation , amortization and depletion of property and equipment - 2013 compared to 2012 depreciation and amortization of property and equipment in aggregate dollars increased $ 24.0 million , primarily due to higher costs of residential side loaders for automating our residential collection routes and an increased number of cng vehicles , which are more expensive to purchase than diesel vehicles . in addition , we made increased investments in new and upgraded recycling infrastructure projects that became operational over the past several quarters . depreciation and amortization of property and equipment as a percentage of revenue remained relatively consistent at 6.5 % for 2013 and 6.4 % for 2012. landfill depletion and amortization expense in aggregate dollars increased $ 4.3 million , primarily due to increased landfill disposal volumes , as well as an overall increase in our average depletion rate . offsetting these increases were favorable amortization adjustments of $ 0.3 million that were recognized in 2013 relative to asset retirement obligations , compared to net unfavorable adjustments of $ 4.9 million in 2012. landfill depletion and amortization as a percentage of revenue remained relatively consistent at 3.1 % for 2013 and 3.2 % for 2012. depreciation , amortization and depletion of property and equipment - 2012 compared to 2011 depreciation and amortization of property and equipment increased $ 9.4 million for 2012 , primarily due to higher costs of residential side loaders and an increased number of cng vehicles . in addition , we made increased investments in new and upgraded recycling infrastructure projects that became operational in 2012. landfill depletion and amortization expense increased $ 2.1 million , primarily due to unfavorable adjustments to landfill depletion and amortization expense for asset retirement obligations of $ 4.9 million recorded during 2012 compared to favorable adjustments of $ 9.6 million recorded during 2011. offsetting the increase in costs relative to asset retirement obligations was an overall decline in landfill depletion due to lower disposal volumes . 34 amortization of other intangible assets and other assets expenses for amortization of intangible and other assets were $ 70.7 million , $ 70.1 million and $ 76.7 million for 2013 , 2012 and 2011 , respectively , or , as a percentage of revenue , 0.8 % for 2013 and 0.9 % for 2012 and 2011. our other intangible assets and other assets primarily relate to customer lists , franchise agreements , municipal contracts , trade names ( now fully amortized in 2013 ) , favorable lease assets and , to a lesser extent , non-compete agreements . amortization of intangible assets in aggregate dollars decreased during 2012 as compared to 2011 primarily due to municipal agreement intangibles acquired from allied that are now fully amortized .
| results of operations revenue we generate revenue primarily from our solid waste collection operations . our remaining revenue is from other services , including transfer station services , landfill disposal and recycling . our residential and commercial collection operations in some markets are based on long-term contracts with municipalities . certain of our municipal contracts have annual price escalation clauses that are tied to changes in an underlying base index such as the consumer price index . we generally provide commercial and industrial collection services to customers under contracts with terms up to three years . our transfer stations , landfills and , to a lesser extent , our recycling facilities generate revenue from disposal or tipping fees charged to third parties . in general , we integrate our recycling operations with our collection operations and obtain revenue from the sale of recyclable materials . other non-core revenue consists primarily of revenue from national accounts , which represents the portion of revenue generated from nationwide contracts in markets outside our operating areas where the associated waste handling services are subcontracted to local operators . consequently , substantially all of this revenue is offset with related subcontract costs , which are recorded in cost of operations . the following table reflects our revenue by service line for the years ended december 31 , 2013 , 2012 and 2011 ( in millions of dollars and as a percentage of our revenue ) : replace_table_token_9_th 30 the following table reflects changes in our revenue for the years ended december 31 , 2013 , 2012 and 2011 , as compared to the previous year : replace_table_token_10_th in 2013 , we conformed the terms we use to describe components of price in an effort to better align with industry participants . we have not changed our calculation methodology , but we believe use of these terms allows for consistent comparison across the industry .
| 5,965 |
the new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows with the purpose of decreasing the diversity in practice in how certain cash receipts and 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. as discussed in the section titled `` special note regarding forward-looking statements , '' the following 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 difference include , but are not limited to , those identified below and those discussed in the section titled `` risk factors '' and elsewhere in this annual report on form 10-k. our fiscal year ends july 31 , and our fiscal quarters end on october 31 , january 31 , april 30 and july 31. our fiscal years ended july 31 , 2018 , july 31 , 2017 and july 31 , 2016 are referred to as fiscal 2018 , fiscal 2017 and fiscal 2016 , respectively . overview zscaler was incorporated in 2007 , during the early stages of cloud adoption and mobility , based on a vision that the internet would become the new corporate network as the cloud becomes the new data center . we predicted that with rapid cloud adoption and increasing workforce mobility , traditional perimeter security approaches would provide inadequate protection for users and data and an increasingly poor user experience . we pioneered a security cloud that represents a fundamental shift in the architectural design and approach to network security . we generate revenue primarily from sales of subscriptions to access our cloud platform , together with related support services . we also generate an immaterial amount of revenue from professional and other services , which consist primarily of fees associated with mapping , implementation , network design and training . our subscription pricing is calculated on a per-user basis . we recognize subscription and support revenue ratably over the life of the contract , which is generally one to three years . as of july 31 , 2018 , we had expanded our operations to over 3,250 customers across every major industry , with users in 185 countries . government agencies and some of the largest enterprises in the world rely on us to help them transform to the cloud , including more than 300 of the forbes global 2000. we operate our business as one reportable segment . our revenue has experienced significant growth in recent periods . for fiscal 2018 , 2017 and 2016 , our revenue was $ 190.2 million , $ 125.7 million and $ 80.3 million , respectively , representing year-over-year growth rate of 51 % and 57 % , respectively . however , we have incurred net losses in all periods since our inception . for fiscal 2018 , 2017 and 2016 , our net loss was $ 33.6 million , $ 35.5 million and $ 27.4 million , respectively . we expect we will continue to incur net losses for the foreseeable future , as we continue investing in our sales and marketing organization to take advantage of our market opportunity , continue to invest in research and development efforts to enhance the functionality of our cloud platform , continue to incur additional compliance and other related costs as we operate as a public company , and deal with ongoing legal matters and related accruals , certain of which are described in further detail in note 5 to our consolidated financial statements included elsewhere in this annual report on form 10-k. initial public offering in march 2018 , we completed our ipo of common stock , in which we sold 13,800,000 shares . the shares were sold at an ipo price of $ 16.00 per share for net proceeds of $ 205.3 million , after deducting underwriters ' discounts and commissions of $ 15.5 million . in connection with the ipo , we incurred offering costs of $ 6.5 million which were recorded within stockholders ' equity ( deficit ) as a reduction of the net proceeds received from the ipo . immediately prior to the closing of the ipo , all our outstanding shares of convertible preferred stock were automatically converted into 72,500,750 shares of common stock on a one -to-one basis . 53 certain factors affecting our performance increased internet traffic and adoption of cloud-based software and security the adoption of cloud applications and infrastructure , explosion of internet traffic volumes and shift to mobile-first computing generally , and the pace at which enterprises adopt the internet as their corporate network in particular , impact our ability to drive market adoption of our cloud platform . we believe that most enterprises are in the early stages of a broad transformation to the cloud . organizations are increasingly relying on the internet to operate their businesses , deploying new saas applications and migrating internally managed line-of-business applications to the cloud . however , the growing dependence on the internet has increased exposure to malicious or compromised websites , and sophisticated hackers are exploiting the gaps left by legacy network security appliances . to securely access the internet and transform their networks , organizations must also make fundamental changes in their network and security architectures . we believe that most organizations have yet to fully make these investments . since we enable organizations to securely transform to the cloud , we believe that the imperative for organizations to securely move to the cloud will increase demand for our cloud platform and broaden our customer base . new customer acquisition we believe that our ability to increase the number of customers on our cloud platform is an indicator of our market penetration and our future business opportunities . story_separator_special_tag our dollar-based net retention rate may fluctuate due to a number of factors , including the performance of our cloud platform , the timing and the rate of arr expansion of our existing customers , potential changes in our rate of renewals and other risk factors described in this annual report on form 10-k. replace_table_token_8_th non-gaap financial measures in addition to our results determined in accordance with u.s. gaap , we believe the following non-gaap measures are useful in evaluating our operating performance . we use the following non-gaap financial information to evaluate our ongoing operations and for internal planning and forecasting purposes . we believe that non-gaap financial information , when taken 55 collectively , may be helpful to investors because it provides consistency and comparability with past financial performance . however , non-gaap financial information is presented for supplemental informational purposes only , has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with u.s. gaap . in particular , free cash flow is not a substitute for cash used in operating activities . additionally , the utility of free cash flow as a measure of our liquidity is further limited as it does not represent the total increase or decrease in our cash balance for a given period . in addition , other companies , including companies in our industry , may calculate similarly-titled non-gaap measures differently or may use other measures to evaluate their performance , all of which could reduce the usefulness of our non-gaap financial measures as tools for comparison . a reconciliation is provided below for each non-gaap financial measure to the most directly comparable financial measure stated in accordance with u.s. gaap . investors are encouraged to review the related gaap financial measures and the reconciliation of these non-gaap financial measures to their most directly comparable gaap financial measures , and not to rely on any single financial measure to evaluate our business . non-gaap gross profit and non-gaap gross margin we define non-gaap gross profit as gaap gross profit excluding stock-based compensation expense . we define non-gaap gross margin as non-gaap gross profit as a percentage of revenue . replace_table_token_9_th non-gaap loss from operations and non-gaap operating margin we define non-gaap loss from operations as gaap loss from operations excluding stock-based compensation expense and certain litigation-related expenses . we define non-gaap operating margin as non-gaap loss from operations as a percentage of revenue . these excluded litigation-related expenses are professional fees and related costs incurred by us in defending against significant claims that we deem not to be in the ordinary course of our business and , if applicable , accruals related to estimated losses in connection with these claims . there are many uncertainties and potential outcomes associated with any litigation , including the expense of litigation , timing of such expenses , court rulings , unforeseen developments , complications and delays , each of which may affect our results of operations from period to period , as well as the unknown magnitude of the potential loss relating to any lawsuit , all of which are inherently subject to change , difficult to estimate and could adversely affect our results of operations . replace_table_token_10_th 56 free cash flow and free cash flow margin free cash flow is a non-gaap financial measure that we calculate as net cash used in operating activities less purchases of property and equipment and capitalized internal-use software . free cash flow margin is calculated as free cash flow divided by revenue . we believe that free cash flow and free cash flow margin are useful indicators of liquidity that provide information to management and investors about the amount of cash generated from our operations that , after the investments in property and equipment and capitalized internal-use software , can be used for strategic initiatives , including investing in our business , and strengthening our financial position . free cash flow includes the cyclical impact of inflows and outflows resulting from contributions to our employee stock purchase plan for which the purchase period of approximately six months ends in each of our second and fourth fiscal quarter . as of july 31 , 2018 , the employee contributions to our employee stock purchase plan was $ 4.6 million , which will be reclassified to stockholders ' equity ( deficit ) upon issuance of the shares during our second quarter of fiscal 2019. replace_table_token_11_th calculated billings calculated billings is a non-gaap financial measure that we believe is a key metric to measure our periodic performance . calculated billings represents our total revenue plus the change in deferred revenue in a period . calculated billings in any particular period aims to reflect amounts invoiced for subscriptions to access our cloud platform , together with related support services related to our new and existing customers . we typically invoice our customers annually in advance , and to a lesser extent quarterly in advance , monthly in advance or multi-year in advance . calculated billings increased $ 101.2 million , or 65 % , in fiscal 2018 over fiscal 2017 , and $ 60.0 million , or 62 % , in fiscal 2017 over fiscal 2016 . as calculated billings continues to grow in absolute terms , we expect our calculated billings growth rate to trend down over time . we also expect that calculated billings will be affected by seasonality in terms of when we enter into agreements with customers ; and the mix of billings in each reporting period as we typically invoice customers annually in advance , and to a lesser extent quarterly in advance , monthly in advance or multi-year in advance . replace_table_token_12_th 57 components of results of operations revenue we generate revenue primarily from sales of subscriptions to access our cloud platform , together with related support services . these subscription and related support services accounted for approximately 99 % of our revenue for fiscal 2018 , 2017 and 2016 .
| resulting from a $ 34.4 million increase in deferred contract acquisition costs , as our sales commission payments increased due to the addition of new customers and expansion of our existing customer subscriptions , a $ 22.6 million increase in accounts receivable 70 due to timing on collections , a $ 5.1 million increase in prepaid expenses and other assets , as we support our business growth , and a $ 0.8 million decrease in accounts payable . net cash used in operating activities during fiscal 2017 was $ 6.0 million , which resulted from a net loss of $ 35.5 million , adjusted for non-cash charges of $ 25.1 million and net cash inflows of $ 4.3 million from changes in operating assets and liabilities . non-cash charges primarily consisted of $ 6.8 million for depreciation and amortization expense , $ 8.5 million for amortization of deferred contract acquisition costs and $ 9.9 million for stock-based compensation expense . the net cash inflows from changes in operating assets and liabilities was primarily the result of a $ 30.7 million increase in deferred revenue from advance invoicing in accordance with our subscription contracts and an aggregate $ 12.9 million increase in accounts payable , accrued compensation and accrued expenses and other liabilities . these cash inflows were partially offset by cash outflows resulting from a $ 22.0 million increase in deferred contract acquisition costs , as our sales commission payments increased due to the addition of new customers and expansion of our existing customer subscriptions , a $ 14.6 million increase in accounts receivable due to increased billings from our growing customer base which resulted in an overall increased accounts receivable balance and a $ 2.7 million increase in prepaid expenses and other assets .
| 5,966 |
the following discussion also includes five non-gaap financial measures , adjusted book value per share , mediaalpha 's earnings before interest , taxes , depreciation and amortization ( “ ebitda ” ) , adjusted total capital and co ns olidated portfolio returns excluding symetra , and common equity securities and other long-term investment returns excluding symetra , that have been reconciled to their most comparable gaap financial measures on page 51. white mountains believes these measures to be useful in evaluating white mountains 's financial performance and condition . results of operations for the years ended december 31 , 2017 , 2016 and 2015 overview—year ended december 31 , 2017 versus year ended december 31 , 2016 white mountains ended 2017 with book value per share of $ 931 and adjusted book value per share of $ 915 , an increase of 18.8 % and 16.1 % for the year , including dividends . the increases were primarily driven by the gain on the sale of onebeacon . comprehensive income attributable to common shareholders increased to $ 631 million in 2017 compared to $ 547 million in 2016. comprehensive income attributable to common shareholders in both 2017 and 2016 was driven by large transaction gains . in 2017 , onebeacon was acquired by intact financial corporation in an all-cash transaction for $ 18.10 per share , from which white mountains received $ 1.3 billion and recorded a net gain of $ 555 million . in 2016 , white mountains recorded net gains of $ 477 million and $ 82 million from the sales of sirius group and tranzact . see note 2 — “ significant transactions ” on page f-15 for a description of each transaction . for the year ended december 31 , 2017 , white mountains repurchased and retired 832,725 of its common shares for $ 724 million at an average share price of $ 869.29 , or approximately 95 % of white mountains 's december 31 , 2017 adjusted book value per share . for the year ended december 31 , 2017 , white mountains returned a total of $ 728 million of capital to shareholders through share repurchases and dividends . written premiums and msc in the hg global/bam segment totaled $ 101 million in 2017 , compared to $ 77 million in 2016 , as higher pricing more than offset a decrease in issuance volume . bam insured municipal bonds with par value of $ 10.4 billion in 2017 , compared to $ 11.3 billion in 2016. total pricing , which is written premiums plus msc , including the present value of future installment msc not yet collected , weighted by the par value of municipal bonds insured , was 99 basis points , up from 68 basis points in 2016. as of december 31 , 2017 , bam 's total claims paying resources were $ 708 million on gross par outstanding of $ 42 billion . total claims paying resources increased $ 65 million from december 31 , 2016 , reflecting positive cash flow building in the bam system . during 2017 , bam paid $ 5 million of principal and interest in cash on the surplus notes held by hg re . beginning in the second quarter of 2017 , white mountains changed its calculation of adjusted book value per share ( i ) to include a discount for the time value of money arising from the expected timing of cash payments of principal and interest on the bam surplus notes and ( ii ) to add back the unearned premium reserve , net of deferred acquisition costs , at hg global . see “ non-gaap financial measures ” on page 51. mediaalpha reported break-even results in 2017 , compared to pre-tax loss of $ 4 million in 2016. mediaalpha 's ebitda was $ 11 million in 2017 , compared to $ 7 million in 2016. the increases in pre-tax income and ebitda were primarily driven by growth in the health , life and medicare and the p & c verticals . in october 2017 , mediaalpha acquired certain assets associated with the health , life and medicare insurance business of healthplans.com . the acquired assets include domain names , advertiser and publisher relationships , traffic acquisition accounts , and owned and operated websites . during the fourth quarter of 2017 , which includes the annual open enrollment period for health and medicare coverages , business from the acquired assets contributed $ 2 million of both pre-tax income and ebitda . the pre-tax total return on invested assets was 5.6 % for 2017 , compared to 2.7 % for 2016. white mountains 's fixed income portfolio returned 3.5 % for 2017 and 2.4 % for 2016 , outperforming the longer duration bloomberg barclays u.s. intermediate aggregate index returns of 2.3 % for 2017 and 2.0 % for 2016. white mountains 's portfolio of common equity securities returned 20.1 % for 2017 and 6.2 % for 2016 , underperforming the s & p 500 index returns of 21.8 % for 2017 and 12.0 % for 2016. white mountains 's other long-term investments portfolio returned -5.8 % for 2017 , primarily attributable to losses from foreign currency forward contracts and private capital investments . white mountains 's other long-term investments portfolio returned 0.8 % for 2016. the results were primarily attributable to favorable mark-to-market adjustments to the surplus notes financed in conjunction with onebeacon 's sale of its runoff business ( the “ onebeacon surplus notes ” ) , mostly offset by losses from private equity funds and private capital investments . 26 overview—year ended december 31 , 2016 versus year ended december 31 , 2015 white mountains ended 2016 with book value per share of $ 785 and adjusted book value per share of $ 789 , an increase of 13.2 % and 13.3 % for the year , including dividends . comprehensive income attributable to common shareholders increased to $ 547 million in 2016 compared to $ 187 million in 2015. the increases in 2016 were driven by larger transaction related gains . story_separator_special_tag prior year amounts have been reclassified to conform to the current period 's presentation . see note 19 — “ held for sale and discontinued operations ” on page f-56 . hg global/bam the following tables present the components of pre-tax income included in white mountains 's hg global/bam segment related to the consolidation of hg global , which includes hg re and its other wholly-owned subsidiaries , and bam for the years ended december 31 , 2017 , 2016 and 2015 : replace_table_token_14_th ( 1 ) msc are recorded directly to bam 's equity , which is recorded as non-controlling interest on white mountains 's balance sheet . 30 replace_table_token_15_th ( 1 ) msc are recorded directly to bam 's equity , which is recorded as non-controlling interest on white mountains 's balance sheet . replace_table_token_16_th ( 1 ) msc are recorded directly to bam 's equity , which is recorded as non-controlling interest on white mountains 's balance sheet . 31 hg global/bam results—year ended december 31 , 2017 versus year ended december 31 , 2016 bam reports on a statutory accounting basis to the nydfs and does not report stand-alone gaap financial results . bam is owned by its members , the municipalities that purchase bam 's insurance for their debt issuances . bam charges an insurance premium on each municipal bond insurance policy it writes . a portion of the premium is an msc and the remainder is a risk premium . in the event of a municipal bond refunding , the msc from the original issuance can be reutilized , in effect serving as a credit against the total insurance premium on the refunding of the municipal bond . issuers of debt insured by bam are members of bam so long as any of their bam-insured debt is outstanding , and as members they have certain interests in bam , including the right to vote for bam 's directors and to receive dividends in the future , if declared . written premiums and msc in the hg global/bam segment were $ 101 million in 2017 , compared to $ 77 million in 2016 , as higher pricing more than offset a decrease in issuance volume . bam 's volume for 2017 was affected by s & p 's review of bam 's financial strength rating . on june 6 , 2017 , s & p placed bam on credit watch negative and initiated a detailed review of bam 's financial strength rating . on june 26 , 2017 , s & p concluded its review and affirmed bam 's “ aa/stable ” financial strength rating . during the time that bam was under review by s & p , it voluntarily withdrew from the marketplace and did not write any municipal bond insurance policies . total pricing , which is written premiums plus msc , weighted by the par value of municipal bonds insured , was 99 basis points in 2017 , up from 68 basis points in 2016. in 2017 , bam insured $ 10.4 billion of municipal bonds , $ 9.6 billion of which were in the primary market , down 8 % from 2016. the following table presents the gross par value of primary and secondary market policies issued , the gross written premiums plus msc and total pricing for the twelve months ended december 31 , 2017 and 2016 : replace_table_token_17_th ( 1 ) total pricing also includes the present value of future installment msc not yet collected of $ 2.8 for the twelve months ended december 31 , 2017. hg global reported gaap pre-tax income of $ 26 million and $ 22 million in 2017 and 2016 , which was driven by $ 19 million and $ 18 million of interest income on the bam surplus notes , respectively . bam is a mutual insurance company that is owned by its members . bam 's results are consolidated into white mountains 's gaap financial statements and attributed to non-controlling interests . white mountains reported $ 50 million of gaap pre-tax losses on bam in 2017 , driven by $ 19 million of interest expense on the bam surplus notes and $ 42 million of operating expenses , compared to $ 49 million of pre-tax losses in 2016 , driven by $ 18 million of interest expense on the bam surplus notes and $ 38 million of operating expenses . during 2017 , bam paid $ 5 million of principal and interest in cash on the surplus notes held by hg global . bam 's “ claims paying resources ” represent the capital and other financial resources bam has available to pay claims and , as such , is a key indication of bam 's financial strength . bam 's claims-paying resources include bam 's qualified statutory capital , including msc , net unearned premiums , contingency reserves , present value of future installment premiums and msc and the first loss reinsurance protection provided by hg re , which is collateralized and held in trusts . bam expects msc and hg re 's reinsurance protection to be the primary drivers of continued growth of its claims-paying resources . bam 's claims paying resources increased 10 % to $ 708 million at december 31 , 2017. the increase was primarily driven by $ 37 million of msc and a $ 44 million increase in the invested assets of the hg re collateral trusts , partially offset by bam 's 2017 statutory net loss of $ 25 million . the following table presents bam 's total claims paying resources as of december 31 , 2017 and 2016 : replace_table_token_18_th 32 beginning in 2017 , white mountains changed its calculation of adjusted book value per share ( i ) to include a discount for the time value of money arising from the expected timing of cash payments of principal and interest on the bam surplus notes and ( ii ) to add back the unearned premium reserve , net of deferred acquisition costs , at hg global .
| fixed income results white mountains maintains a high quality , short-duration fixed income portfolio . as of december 31 , 2017 , the fixed income portfolio duration , including short-term investments , was 3.4 years compared to 2.8 years as of december 31 , 2016. the increase in the duration of the fixed income portfolio over this period was primarily a result of adding modestly longer securities to the portfolio as prospective total returns became more attractive at higher interest rate levels . white mountains 's fixed income portfolio returned 3.5 % for 2017 , outperforming the longer duration bloomberg barclays u.s. intermediate aggregate index return of 2.3 % , as interest rates rose in the period . white mountains 's fixed income portfolio returned 2.4 % for 2016 , outperforming the longer duration bloomberg barclays u.s. intermediate aggregate index return of 2.0 % , as interest rates rose in the period . in the fourth quarter of 2017 , white mountains established a u.s. investment grade corporate bond portfolio with principal global investors , llc ( “ principal ” ) , a third party manager . as of december 31 , 2017 , the fair value of the principal u.s. investment grade corporate bond investments was $ 250 million and the duration of the principal investment grade corporate bond portfolio was approximately 4.7 years . in the fourth quarter of 2016 , white mountains established a medium duration gbp investment grade corporate bond mandate with legal & general investment management , ltd. ( “ lgim ” ) , a third-party manager . as of december 31 , 2017 , the fair value of the medium duration gbp investment grade corporate bonds was $ 206 million and the duration of the lgim portfolio was approximately 7.5 years . white mountains entered into a foreign currency forward contract , which is recorded in other long-term investments , to manage its gbp foreign currency exposure relating to this mandate .
| 5,967 |
our revenues are principally derived from advisory services on mergers and acquisitions , or m & a , financings and restructurings and are primarily driven by total deal volume and size of individual transactions . additionally , our private capital and real estate capital advisory group provides fund placement and other capital raising advisory services , where revenues are driven primarily by the amount of capital raised . greenhill was established in 1996 by robert f. greenhill , the former president of morgan stanley and former chairman and chief executive officer of smith barney . since our founding , greenhill has grown steadily , recruiting a number of managing directors from major investment banks ( as well as senior professionals from other institutions ) , with a range of geographic , industry and transaction specialties as well as different sets of corporate management and other relationships . as part of this expansion , we opened a london office in 1998 , opened a frankfurt office in 2000 and began offering financial restructuring advice in 2001. on may 11 , 2004 , we converted from a limited liability company to a corporation , and completed an initial public offering of our common stock . we opened our second u.s. office in 2005 and we currently have five offices in the u.s. we opened a canadian office in 2006. in 2008 , we opened an office in tokyo , and we entered the capital advisory business , which provides capital raising advice and related services to private equity and real estate funds . in 2010 , we acquired the australian advisory firm , caliburn , which has two australian offices . in 2012 , we opened our stockholm office . as we have expanded , we have recruited new managing directors to increase our industry sector and geographic coverage . since january 1 , 2008 we have increased the number of client facing managing directors , mostly through outside hires , by 2.5 times from 28 to 66 as of january 1 , 2013. we have added managing directors with sector experience in consumer goods , energy , financial services , forest products , gaming and hospitality , healthcare , industrials , infrastructure , pharmaceutical , and telecommunications as well as a team of managing directors focused on private equity capital advisory and another team focused on real estate capital advisory . additionally , over the past five years we have significantly increased our geographic reach by adding offices in the united states , japan , australia and sweden . although we recruited fewer managing directors over the past two years as compared to the period from 2008 through 2010 , we intend to continue our efforts to recruit new managing directors with industry sector experience and to increase our geographic reach . prior to 2011 , we also managed merchant banking funds and similar vehicles . we raised our first private equity fund in 2000 , our first venture capital fund in 2006 and our first european merchant banking fund in 2007. we completed the initial public offering of our special purpose acquisition company , ghl acquisition corp. , in 2008 , and that entity merged with iridium in 2009. effective december 31 , 2010 , we exited the merchant banking business in order to focus entirely on our advisory business . following our exit from the merchant banking business , we began the monetization of our investments in both our previously sponsored merchant banking funds and iridium . in 2011 , we sold substantially all of our interests in gcp ii and gsavp for $ 49.4 million , which represented their total book value . in december 2012 , the purchasers of gcp ii exercised their put rights requiring us to repurchase substantially all of our original interests in two portfolio companies for $ 15.5 million . also , in 2012 , we sold our entire interest in gcp europe for $ 27.2 million , which represented approximately 90 % of its book value . in october 2011 , we initiated a plan to sell our entire interest in iridium systematically over a period of two or more years . in aggregate , we generated net proceeds of $ 61.1 million from the sale of certain of investments in our merchant banking funds during the past two years . additionally , through the period from october 2011 , when we initiated our plan , to december 31 , 2012 , we sold 48 % of our holdings in iridium for proceeds of $ 36.3 million . the proceeds of the merchant banking fund and iridium sales were used to repurchase our common stock and reduce the outstanding amount of our revolving loan facility . we intend to use future net proceeds from the sale of our investments in iridium and any further sales or distributions from merchant banking funds to repurchase our common stock . see “ item 2. management 's discussion and analysis of financial condition and results of operations — liquidity and capital resources ” . at december 31 , 2012 , we owned 5,084,016 shares of iridium with a quoted market value of $ 34.2 million and held remaining investments in merchant banking funds with an estimated fair value of $ 16.8 million . at december 31 , 2012 , we employed 324 people . we strive to maintain a work environment that fosters professionalism , excellence , diversity and cooperation among our employees worldwide . 26 business environment economic and global financial market conditions can materially affect our financial performance . see “ risk factors. ” revenues and net income in any period may not be indicative of full-year results or the results of any other period and may vary significantly from year to year and quarter to quarter . advisory revenues were $ 291.5 million in the year ended december 31 , 2012 compared to $ 302.8 million in the year ended december 31 , 2011 , which represents a decrease of 4 % . story_separator_special_tag these variations can generally be attributed to the fact that our revenues are usually earned in large amounts throughout the year upon the successful completion of a transaction or restructuring or closing of a fund , the timing of which is uncertain and is not subject to our control . moreover , the value of our principal investments may vary significantly from period to period and depends on a number of factors beyond our control , including most notably credit and public equity markets and general economic conditions . as a result , our quarterly results vary and our results in one period may not be indicative of our results in any future period . 28 story_separator_special_tag style= '' vertical-align : top '' > the acquisition by axa private equity of limited partnership interests in private equity buyout funds and a portfolio of direct stakes in companies from citigroup ; 30 the sale of capital power income l.p. to atlantic power corp. ; the acquisition of coal and allied industries limited by rio tinto limited and mitsubishi corporation by way of scheme of arrangement ; the sale of the forzani group ltd. to canadian tire corporation , limited ; the capital raise by related real estate recovery fund , l.p. ; the acquisition of tower australia group limited by dai-ichi life insurance co. ; the acquisition by vf corporation of the timberland company ; and the acquisition by virgin money of northern rock plc . during 2011 , our capital advisory group served as global placement agent on behalf of private equity and real estate funds for seven final closings of the sale of limited partnership interests in such funds and one secondary market sale of limited partnership interests . we earned advisory revenues from 160 different clients in 2011 , up 14 % compared to 140 in 2010 . we earned $ 1 million or more from 74 clients in 2011 , up 30 % compared to 57 in 2010 , and 26 % of those were new to the firm in 2011 compared to 44 % in 2010 . the ten largest fee-paying clients contributed 35 % and 36 % to our total revenues in 2011 and 2010 , respectively , and only one of our ten largest fee-paying clients in 2011 had in any prior year been among our ten largest fee-paying clients . we did not have any client in 2011 or 2010 who accounted for 10 % or more of our total revenue . from a global perspective in 2011 , compared to 2010 , our advisory revenues increased in australia , north america and europe and declined in japan . by industry sector , greater activity in the consumer , financial services and healthcare sectors and fund placement activities generally offset declines in activity in the industrial and energy sectors . investment and merchant banking revenues in december 2009 , we sold our interest in the merchant banking business in order to focus entirely on our advisory business . as part of the sale arrangement , we continued to manage and administer the merchant banking funds during a transition period in 2010. for accounting purposes in 2010 , we recorded the revenue and expenses related to our management of the merchant banking funds in our consolidated results although the excess of the management fee revenue over the amount paid for compensation and other operating costs associated with the management of the funds accrued to the benefit of gcp capital and was recorded as noncontrolling interest . on january 1 , 2011 , gcp capital took over the management of the merchant banking funds . since our exit from the merchant banking business we have sought to realize value from our remaining principal investments , which principally consisted of investments in previously sponsored merchant banking funds and iridium . in 2011 , we sold substantially all of our interests in gcp ii to certain unaffiliated third parties and certain principals of gcp capital for an aggregate price of $ 44.8 million , which represented the book value ( which approximated fair value ) of the assets sold . as part of that sale , the purchasers had put rights , exercisable in december 2012 , to require us to repurchase their interests in either or both of two of the gcp ii portfolio companies sold to them at their purchase price , adjusted for further capital calls or distributions since the date of sale . the purchasers exercised substantially all of their put rights and we acquired interests in two portfolio companies of gcp ii for $ 15.5 million in the fourth quarter of 2012. we also sold in 2011 our entire interest in gsavp funds to certain unaffiliated third parties for $ 4.6 million , which also represented the book value ( which approximated fair value ) of the assets sold . we did not recognize any gain or loss on the sales of our interest in gcp ii or gsavp because we sold our interests at book value . see “ item 2. management 's discussion and analysis of financial condition and results of operations — liquidity and capital resources ” . in 2012 , we continued the liquidation of our previously sponsored merchant banking funds with the sale of our entire interest in gcp europe for proceeds of $ 27.2 million , which represented approximately 90 % of book value . we recognized a loss of $ 3.4 million as result of this sale . this transaction was pursued in order to accelerate the liquidation of our investment portfolio and generate additional funds for share repurchases . at december 31 , 2012 , we had remaining investments in previously sponsored and other merchant banking funds of $ 16.8 million , including interests with an estimated fair value of $ 9.7 million in the gcp ii portfolio companies , which we acquired upon exercise of the put rights in december 2012. at december 31 , 2012 , we had remaining unfunded commitments to merchant banking funds of $ 3.5 million .
| results of operations the following tables set forth data relating to the firm 's sources of revenues : historical revenues by source replace_table_token_7_th advisory revenues historical advisory revenues by client location replace_table_token_8_th historical advisory revenues by industry replace_table_token_9_th we operate in a highly competitive environment where there are no long-term contracted sources of revenue . each revenue-generating engagement is separately awarded and negotiated . our list of clients with whom there is an active revenue-generating engagement changes continually . to develop new client relationships , and to develop new engagements from historic client relationships , we maintain an active business dialogue with a large number of clients and potential clients , as well as with their financial and legal advisors , on an ongoing basis . we have gained a significant number of new clients each year through our business development initiatives , through recruiting additional senior investment banking professionals who bring with them client relationships and through referrals from members of boards of directors , attorneys and other parties with whom we have relationships . at the same time , we lose clients each year as a result of the sale or merger of a client , a change in a client 's senior management team , competition from other investment banks and other causes . a majority of our advisory revenue is contingent upon the closing of a merger , acquisition , financing , restructuring , fund or similar transaction . a transaction can fail to be completed for many reasons , including failure to agree upon final terms with the counterparty , failure to secure necessary board or shareholder approvals , failure to secure necessary financing , failure to achieve necessary regulatory approvals and adverse market conditions .
| 5,968 |
diluted net loss attributable to common stockholders is computed by adjusting net loss attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities , including the assumed conversion of our 2024 convertible notes , outstanding stock options and unvested restricted common stock , except where the result would be anti-dilutive . diluted net loss per share attributable to common stockholders is computed by dividing the diluted net loss attributable to common stockholders by the weighted average story_separator_special_tag financial condition and results of operations the following discussion and analysis of financial condition and results of operations should be read in conjunction with “ item 6. selected financial data ” and our consolidated financial statements and related notes appearing elsewhere in this annual report . this discussion and analysis and other parts of this annual report contain forward-looking statements based upon current beliefs , plans and expectations that involve risks , uncertainties and assumptions , such as statements regarding our plans , objectives , expectations , intentions and projections . our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors , including those set forth under “ item 1a . risk factors ” . you should carefully read the “ risk factors ” section of this annual report to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements . please also see the section entitled “ special note regarding forward-looking statements. ” overview we are a biopharmaceutical company focused on the discovery , development and commercialization of novel , local therapies for the treatment of patients with musculoskeletal conditions , beginning with osteoarthritis , a type of degenerative arthritis referred to as oa . on october 6 , 2017 , the u.s. food and drug administration , or fda , approved our product , zilretta , for marketing in the united states . zilretta is the first and only extended-release , intra-articular , or ia ( meaning in the joint ) , injection indicated for the management of oa related knee pain . zilretta is a non-opioid therapy that employs our proprietary microsphere technology to provide extended pain relief . the pivotal phase 3 trial , on which the approval of zilretta was based , showed that zilretta met the primary endpoint of pain reduction at week 12 , with statistically significant pain relief extending through week 16. we also have a product candidate ( fx201 ) in development for oa . we were incorporated in delaware in november 2007 , and to date we have devoted substantially all of our resources to developing our product candidates , including conducting clinical trials with our product candidates , preparing for and undertaking the commercialization of zilretta , providing general and administrative support for these operations and protecting our intellectual property . from our inception through december 31 , 2018 , we have raised approximately $ 756 million and funded our operations primarily through the sale of our common stock , convertible preferred stock , and convertible debt , as well as debt financing . until such time , if ever , that we can generate substantial product revenue , we expect to finance our cash needs through a combination of equity offerings , debt financings , government or third-party funding , and licensing or collaboration arrangements . we have incurred net losses in each year since our inception in 2007. our net losses were $ 169.7 million , $ 137.5 million , and $ 71.9 million for the years ended december 31 , 2018 , 2017 and 2016 , respectively . as of december 31 , 2018 , we had an accumulated deficit of $ 518.8 million . substantially all of our net losses resulted from costs incurred in connection with our development programs and from selling , general and administrative expenses associated with our operations . we anticipate that we will incur losses over the next few years . we expect that our operating expenses will continue to increase in connection with our ongoing activities , as we : continue the development and commercialization of zilretta , including our on-going and future clinical trials ; continue to scale-up manufacturing activities including the supply of clinical trial materials and commercial batches ; maintain a sales and marketing infrastructure for the commercialization of zilretta ; expand our development activities and advance additional product candidates ; maintain , expand and protect our intellectual property portfolio ; and add operational , financial and management information systems and personnel , including personnel to support our product development and commercialization efforts and operations as a public company . 61 we consider ed 2018 to be a foundational year for the commercialization of zilretta , as we managed re imbursement dynamics and ramped up our promotional and marketing efforts . zilretta is a physician-administered product , and therefore physicians are required to purchase and manage the inventory of zilretta , prior to administering the product to patients . physicians obtain reimbursement for zilretta from the applicable third-party payer , such as medicare or a health insurance company , only after it has been administered to patients . this is called a “ buy and bill ” process . because physicians are at financial risk for the cost of a “ buy and bill ” product until they have been reimbursed , concerns about reimbursement can impact a physician 's decision to use the product . shortly after the fda approved zilretta in october 2017 , we applied to the cms for a product-specific reimbursement code , known as a j code , under the healthcare common procedure coding system , or hcpcs . product-specific j codes provide reimbursement at a predetermined amount , in a timely and consistent manner , and are recognized by medicare and the overwhelming majority of commercial insurers . story_separator_special_tag we expense research and development costs as incurred . our direct research and development expenses consist primarily of external-based costs , such as fees paid to investigators , consultants , investigative sites , cros and companies that manufacture our clinical trial materials and potential future commercial supplies , and are tracked on a program-by-program basis . we do not allocate personnel costs , facilities or other indirect expenses to specific research and development programs . these indirect expenses are included within the amounts designated as “ personnel and other costs ” in the results of operations section below . inventory acquired prior to receipt of the marketing approval of zilretta was recorded as research and development expense as incurred . we began capitalizing the costs associated with the production of zilretta after the fda approval on october 6 , 2017. our research and development expenses are expected to increase in the foreseeable future . specifically , our costs will increase as we conduct additional clinical trials for zilretta and conduct further developmental activities for our portfolio . we can not determine with certainty the duration of and completion costs associated with ongoing and future clinical trials or the associated regulatory approval process , post-marketing development of zilretta or development of any product candidates in our pipeline . the duration , costs and timing associated with the further development of zilretta or the development of other product candidates will depend on a variety of factors , including uncertainties associated with the results of our clinical trials . as a result of these uncertainties , we are 63 currently unable to estimate with any precision our future research and development expenses for expanded indications for zilretta or any product candidates in our pipeline , or when we may generate sufficient revenue to achieve a positive cash flow position . we previously performed research and development for the u.s. department of defense under a cost reimbursable grant for a phase 2 clinical trial investigating zilretta in active military and medically retired veterans with post-traumatic knee oa . reimbursements were recorded as an offset to research and development expenses when invoices for allowable costs were prepared and submitted to the u.s. department of defense . we discontinued this phase 2 trial and terminated the grant as of july 31 , 2016. payments under cost reimbursable grants with agencies of the u.s. government were approximately $ 757,000. selling , general and administrative expenses selling , general and administrative expenses consist primarily of personnel costs , including salaries , related benefits , travel expenses and stock-based compensation of our executive , finance , business development , commercial , information technology , legal and human resources functions . other selling , general and administrative expenses include an allocation of facility-related costs , patent filing expenses , and professional fees for legal , consulting , auditing and tax services . we anticipate that our selling , general and administrative expenses will increase in the future as we continue to build our corporate and commercial infrastructure to support the continued development and commercialization of zilretta or any other product candidates . in particular , we expect to incur ongoing increases in selling , general and administrative expenses related to the commercialization of zilretta , including external marketing spend and the operation of our field sales force . additionally , we anticipate increased expenses related to the audit , legal and compliance , regulatory , investor relations and tax-related services associated with maintaining compliance with the sec and nasdaq requirements and healthcare laws and compliance requirements , director and officer insurance premiums and other costs associated with operating as a publicly-traded company . other income ( expense ) interest income . interest income consists of interest earned on our cash and cash equivalents balances and our marketable securities . the primary objective of our investment policy is capital preservation . interest expense . interest expense consists of contractual interest on our 2024 convertible notes , which accrue interest at a rate of 3.375 % per annum , payable semi-annually , and our term loan facility , which accrues interest at a fixed rate of 6.25 % per annum . also included in interest expense is the amortization of the final payment on the term loan and the debt discount related to the convertible notes , which is being amortized to interest expense using the effective interest method over the expected life of the debt . foreign currency gain ( loss ) . we maintain a bank account denominated in british pounds . all foreign currency payables and cash balances are measured at the applicable exchange rate at the end of the reporting period . all associated gains and losses from foreign currency transactions are reflected in the consolidated statements of operations , within other income and expense . other income ( expense ) . other income ( expense ) consists of the net accretion of premiums and discounts related to our marketable securities , and our realized gains ( losses ) on redemptions of our marketable securities . we will continue to record either income or expense related to accretion of discounts or amortization of premiums on marketable securities for as long as we hold these investments . also included in other income ( expense ) is the amortization of debt issuance costs on our term loan facility and the 2024 convertible notes , which are being amortized over the respective terms of the loans . income taxes as of december 31 , 2018 , we had $ 298.9 million and $ 219.4 million of federal and state net operating loss carryforwards , respectively , and $ 7.1 million and $ 3.5 million of federal and state research and development tax 64 credit carryforwards , respectively , available to offset our future taxable income , if any . these federal net operating loss carryforwards and research and development t ax credit carryforwards expire at various dates beginning in 2029 , if not utilized and are subject to review and possible adjustment by the internal revenue service . approximately $ 10 9 .
| results of operations year ended december 31 , 2018 compared to year ended december 31 , 2017 the following table summarizes our results of operations for the years ended december 31 , 2018 and 2017 : replace_table_token_4_th product revenue we began commercially selling zilretta within the united states in october 2017 , following fda approval on october 6 , 2017. for the years ended december 31 , 2018 and 2017 , we recorded $ 22.5 million and $ 0.4 million , respectively , of net product revenue . for further discussion regarding our revenue recognition policy , see note 3 to our consolidated financial statements appearing elsewhere in this form 10-k. cost of sales cost of sales was $ 7.3 million and $ 4 thousand for the years ended december 31 , 2018 and 2017 , respectively , of which $ 5.0 million relates to unabsorbed manufacturing and overhead costs related to the operation of the facility at patheon for the year ended december 31 , 2018. based on our policy to expense costs associated with the manufacture of our products prior to regulatory approval , the vast majority of the costs to manufacture zilretta that was recognized as revenue during the year ended december 31 , 2017 were expensed prior to the october 2017 fda approval and , therefore , are not included in cost of sales during the period . in addition , the majority of product sold during the year ended december 31 , 2018 was manufactured and previously charged to research and development expense prior to fda approval of zilretta and therefore is not included in cost of sales during the period . as of december 31 , 2018 , all of the finished goods inventory that was previously expensed has been sold to customers .
| 5,969 |
unless otherwise specifically indicated , all amounts herein are expressed in thousands , except for share data , and store count . overview we are a global leader in designing , marketing and distributing innovative footwear , apparel and accessories developed for both everyday casual lifestyle use and high performance activities . we market our products primarily under six proprietary brands , composed of the following three primary brands and our other brands : ugg® : premier brand in luxurious comfort footwear , and expanding into handbags , apparel , home and cold weather accessories ; teva® : born from the outdoors , active lifestyle footwear for the adventurous spirit ; and sanuk® : authentic southern california casual footwear for those seeking a playful escape . in addition to our three primary brands , our other brands include hoka one one® ( hoka ) , a line of footwear for all capacities of runners designed with a unique performance midsole geometry , oversized midsole volume and active foot frame ; ahnu® , a line of performance outdoor and yoga footwear ; and koolaburra® by ugg ( koolaburra ) , a line of fashion casual footwear using sheepskin and other plush materials . we sell our brands through quality domestic retailers and international distributors and retailers , as well as directly to our end-user consumers through our direct-to-consumer ( dtc ) business . independent third parties manufacture all of our products . change in fiscal year in february 2014 , our board of directors approved a change in our fiscal year end from december 31 to march 31. the change was intended to better align our planning , financial and reporting functions with the seasonality of our business . the 2016 , 2015 and 2013 fiscal years are for the periods ended march 31 , 2016 , march 31 , 2015 and december 31 , 2013 , respectively . the 2014 transition period was the quarter ended march 31 , 2014 , to coincide with the change in our fiscal year end . recent developments in july 2014 , we acquired our ugg brand distributor that had been selling to retailers in germany and continues to operate as a wholesale business in germany through the acquired subsidiary . the acquisition included certain intangible and tangible assets and the assumption of liabilities . the purchase price of the acquisition was not material to our consolidated financial statements . in april 2015 , we acquired substantially all the assets related to the koolaburra brand , a line of fashion casual footwear using sheepskin and other plush materials . we believe there is significant consumer demand for footwear using sheepskin and other plush materials at price points below those of the ugg brand . in july 2015 , we sold certain tangible and intangible assets , and the trade name related to the mozo® brand , a footwear brand crafted for culinary professionals . in february 2016 , we sold certain tangible and intangible assets , including the trade name related to the tsubo brand , a line of mid and high-end dress and dress casual footwear . the impacts of these sales were not material to our consolidated financial statements . 32 in february 2016 , we announced the implementation of a retail store fleet optimization and office consolidation that was intended to streamline brand operations , reduce overhead costs , create operating efficiencies and improve collaboration and included the closure of facilities and relocation of employees . we have begun to realign our brands across two groups : fashion lifestyle and performance lifestyle . the fashion lifestyle group will include the ugg and koolaburra brands . the performance lifestyle group will include the teva , sanuk and hoka brands . as part of this realignment , we also relocated our sanuk brand operations in irvine , california to the corporate headquarters in goleta , california . in addition , we closed our ahnu brand operations office in richmond , california and consolidated our european offices . furthermore , we are in the process of evaluating our portfolio of retail stores . we have identified 24 retail stores that are candidates for potential closure . subsequent to the sales of the mozo and tsubo brands , the operating results for our other brands only include hoka , ahnu and koolaburra . we plan to leverage elements , including particular styles , of the ahnu brand under the umbrella of the teva brand beginning in calendar year 2017. refer to note 2 to our accompanying consolidated financial statements in part iv of this annual report on form 10-k for further information . as a result of the retail store fleet optimization , office consolidation and software impairments , we have expensed restructuring charges totaling approximately $ 25,000 at march 31 , 2016. of this amount , approximately $ 9,000 is related to lease termination costs , $ 4,000 is related to severance costs , $ 6,000 is related to impairment of leasehold improvements and various assets , $ 4,000 is related to various bt supply chain software impairments , and $ 2,000 for termination of various contracts . of the total amount , approximately $ 15,000 was accrued as a non-cash impact at march 31 , 2016 , but will have cash impacts in the fiscal year ended march 31 , 2017. approximately $ 2,000 of the charges was recognized in cost of sales and the remainder was recorded in selling , general and administrative ( sg & a ) . it is anticipated that we will incur an additional $ 10,000 to $ 15,000 of similar restructuring charges in the fiscal year ending march 31 , 2017. the segment impacts of the total restructuring charges is as follow : sanuk brand wholesale charges of approximately $ 3,000 , other brands wholesale charges of approximately $ 2,500 related to the ahnu brand , dtc charges of approximately $ 10,500 , and the remainder of approximately $ 9,000 to unallocated overhead expenses , primarily bt supply chain software impairments and european office consolidation . story_separator_special_tag in order to calculate our constant currency information , we calculate the current period financial information using the foreign currency exchange rates that were in effect during the previous comparable period . we believe that evaluating certain financial and operating measures , such as net sales , net income ( loss ) and reportable segment information on a constant currency basis is important , as it facilitates comparison of our current financial performance to our historical financial performance , excluding the impact of foreign currency rate fluctuations that are not indicative of our core operating results and are largely outside of our control . however , constant currency measures should not be considered in isolation as an alternative to us dollar measures that reflect current period exchange rates , or to other financial measures calculated and presented in accordance with us gaap . segment overview below is an overview of each of the operating segments of our business , including some key trends and factors that we believe affect each segment , as well as some of our strategies for growing each segment . 34 ugg brand for almost 40 years , the ugg brand has been one of the most iconic and recognized brands in the global footwear industry which highlights our successful track record of building niche brands into lifestyle market leaders . with loyal consumers around the world the ugg brand has proven to be a highly resilient line of premium footwear , with expanded product offerings and a growing global audience that attracts women , men and children . ugg brand footwear continually earns media exposure from numerous outlets both organically and from strategic public relations efforts , including an increasing amount of exposure internationally . the ugg brand has invested in creating holistic , impactful integrated campaigns across paid , earned and owned media channels , including mobile , digital , social , out-of-home ( ooh ) and print , which are globally scalable , contributing to broader public awareness of the brand and its products . we believe the continued demand for ugg products has been , and will continue to be , driven by the following : high consumer brand loyalty , due to almost 40 years of delivering quality and luxuriously comfortable ugg footwear . evolution of our classics business through the evolution of features in our classic boot and the introduction of innovative , classics-inspired products such as the classic slim , the classic luxe , and the classic street , alongside targeted marketing campaigns . continued growth and diversification of our ugg footwear product lines in non-core categories , including weather , casual boots , slippers , specialty classics , and transitional products that bridge the seasons , which has been driven by an important shift in the way we guide our wholesale customers in the pre-booking process . exploration of opportunities in new product categories and styles beyond footwear , such as loungewear , handbags , cold-weather accessories and new home offerings . continued growth of the dtc channel , which we believe will continue to allow us to diversify our ugg product lines , as the dtc channel exposes individual consumers to the full line of our products . continued enhancement of our omni-channel capabilities to enable us to increasingly engage existing and prospective consumers in a more connected environment and expose them to the brand . in particular , we are working towards a more segmented channel and product approach to the market , whereby we can customize our product offerings based on unique consumer reach , market positioning and brand experience . continued evolution of our men 's product lines , alongside targeted ugg for men campaigns . we believe the iconic status and luxurious comfort of ugg products will continue to drive long-term consumer demand for the brand . recognizing that there is a significant fashion element to ugg footwear , and that footwear fashions and consumer preferences fluctuate , one of our key strategies involves diversifying the ugg product line and presenting ugg as a year-round , global , premium lifestyle brand with a broad product line suitable for a variety of climates and a number of occasions . as part of this strategic approach , we have increased our product offerings , including expanding our line of classics-inspired products , evolving our core product offerings such as the classic to deliver more qualities desired by the consumer , growing our transitional collection and spring lines , expanding our men 's and children 's lines , as well as introducing a variety of home offerings , handbags , cold weather accessories and apparel products . we also continue to focus on our marketing and promotional efforts , which we believe have contributed , and will continue to contribute , to our growth . in april 2016 , we continued the evolution of our ugg stylized logo to reflect a more modern , simplified aesthetic . we believe that the evolution of the ugg brand and our strategy of product diversification will also help decrease our reliance on sheepskin , which is in high demand and subject to price volatility . nonetheless , we can not assure investors that our efforts will continue to result in ugg brand growth . 35 teva brand for over 30 years teva has fueled the expression of freedom through the adventure and outdoor lifestyle around the globe . teva pioneered the sport sandal category in 1984 , and the originals collection honors the heritage of teva by revamping the styles on that the brand was founded by blending their original simplicity with modern sophistication . in the us , our focus will be to bolster our leadership position in sandals and to grow our market share through the modern outdoor lifestyle category extensions . within the us , we expect that teva will grow its position as a market leader within the sport sandal and modern outdoor lifestyle categories ( shoes and boots ) .
| results of operations year ended march 31 , 2016 compared to year ended march 31 , 2015 the following table summarizes our results of operations : replace_table_token_8_th 39 net sales . the following table summarizes our net sales by location and our net sales by brand and channel : replace_table_token_9_th the increase in overall net sales was due to increases in total dtc sales and other brands , ugg brand and teva brand wholesale sales , partially offset by a decrease in sanuk brand wholesale sales . we experienced an increase in the number of pairs sold in the ugg brand , other brands and teva brand wholesale segments , as well as the dtc segment , offset in part by a decrease in the number of pairs sold in the sanuk brand wholesale segment . this resulted in an increase in the overall volume of footwear sold for all brands of 4.6 % to approximately 32,100 pairs sold for the year ended march 31 , 2016 from approximately 30,700 pairs for the year ended march 31 , 2015 . the mitigating impacts on overall net sales were foreign currency exchange rate fluctuations as the us dollar continues to strengthen against most major currencies and increased promotional activity , which consisted of vendor-specific markdowns , price reductions , chargebacks , sales discounts , and sales reserves . on a constant currency basis , overall net sales increased to approximately $ 1,925,000. wholesale net sales of our ugg brand were positively impacted by an increase in the volume of pairs sold in the amount of approximately $ 73,000. wholesale net sales were negatively impacted by an increase in promotional activity of approximately $ 27,000 to promote sales that were slow due to warmer weather and to clear out inventory that will be obsolete in future seasons .
| 5,970 |
in the fourth quarter of 2008 , we terminated our interest rate swap with a notional amount of $ 200.0 million that converted variable rate financing based on 3-month libor into fixed interest rates . as of december 31 , 2009 , no interest rate swaps were in place . the following table summarizes the reclassification of pre-tax derivative losses into net loss from accumulated other comprehensive income ( loss ) : location of gain ( loss ) reclassified into net income story_separator_special_tag company overview american axle & manufacturing holdings , inc. ( holdings ) and its subsidiaries ( collectively , we , our , us or aam ) is a tier i supplier to the automotive industry . we manufacture , engineer , design and validate driveline and drivetrain systems and related components and chassis modules for light trucks , sport utility vehicles ( suvs ) , passenger cars , crossover vehicles and commercial vehicles . driveline and drivetrain systems include components that transfer power from the transmission and deliver it to the drive wheels . our driveline , drivetrain and related products include axles , chassis modules , driveshafts , power transfer units , transfer cases , chassis and steering components , driveheads , crankshafts , transmission parts and metal-formed products . we are the principal supplier of driveline components to general motors llc for its rear-wheel drive ( rwd ) light trucks and suvs manufactured in north america , supplying substantially all of gm 's rear axle and front four-wheel drive and all-wheel drive ( 4wd/awd ) axle requirements for these vehicle platforms . sales to gm were approximately 78 % of our total net sales in 2009 , 74 % in 2008 and 78 % in 2007. we are the sole-source supplier to gm for certain axles and other driveline products for the life of each gm vehicle program which was previously covered by a lifetime program contract ( lpc ) . as part of a settlement and commercial agreement , as described below , gm terminated the existing lpcs and entered into new lpcs in 2009. substantially all of our sales to gm are made pursuant to the new lpcs . the new lpcs have terms equal to the lives of the relevant vehicle programs or their respective derivatives , which typically run 6 to 10 years , and require us to remain competitive with respect to technology , design and quality . we are also the principal supplier of driveline system products for the chrysler llc 's heavy-duty dodge ram full-size pickup trucks ( dodge ram program ) and its derivatives . sales to chrysler were 8 % of our total net sales in 2009 , 10 % in 2008 and 12 % in 2007. in addition to gm and chrysler , we supply driveline systems and other related components to paccar inc. , volkswagen , harley-davidson , deere & company , tata motors , mack truck , ford motor company , and other original equipment manufacturers ( oems ) and tier i supplier companies such as hino motors ltd. and jatco ltd. sales to customers other than gm and chrysler accounted for approximately 14 % of our total net sales in 2009 as compared to 16 % in 2008 and 10 % in 2007. recent developments in 2009 , gm entered and exited bankruptcy with assistance from the u.s. government . on september 16 , 2009 , aam and gm entered into a settlement and commercial agreement ( 2009 settlement and commercial agreement ) . as part of this agreement , we received $ 110.0 million from gm for cure costs associated with contracts assumed and or terminated during gm 's chapter 11 bankruptcy proceedings and resolved certain commercial and financial obligations then outstanding between aam and gm , which resulted in , among other things , aam retaining all but one program that had previously been sourced to us and an adjustment of our installed capacity levels reserved for existing and awarded gm programs to reflect new estimates of market demand . we recorded $ 79.7 million of deferred revenue related to the 2009 settlement and commercial agreement , which we will recognize into revenue through 2019. in addition , gm confirmed its obligation to aam under the gm postretirement cost sharing agreement and aam amended its terms and conditions to be more consistent with the standard terms and conditions gm has with other tier 1 suppliers ( including commercial revisions related to metal market , warranty cost sharing , cost reductions programs , productivity commitments and payment terms ) . we do not expect these commercial revisions to have an impact on our results of operations until 2011. also , as part of this agreement , we entered into a $ 100.0 million second lien term loan facility with gm ( second lien term loan facility ) , issued 4.1 million warrants to gm to purchase aam common stock , and expedited the payment terms on our receivables from gm from approximately 45 days to approximately 10 days in exchange for a 1 % early payment discount ( expedited payment terms ) . in 2009 , chrysler also entered and exited bankruptcy with assistance from the u.s. government . chrysler has assumed our pre-bankruptcy contracts . gm implemented an extended summer production shutdown for many of their facilities we support during the second and third quarters of 2009. in connection with its bankruptcy filing , chrysler temporarily idled its manufacturing operations through its exit from bankruptcy . we estimate that the extended production shutdowns at gm and chrysler in the second and third quarters of 2009 adversely affected net sales by $ 304.3 million and gross profit ( loss ) by $ 95.0 million . 16 in the third quarter of 2009 , and concurrent with the 2009 settlement and commercial agreement , we modified our existing debt agreements with our senior lenders . story_separator_special_tag a significant portion of our current revenue stream is tied to full-size pickup trucks and suvs . as demand has softened for these products , our current revenue streams have been impacted . we are responding to the change in vehicle mix in the north american market as well as expected increases in corporate average fuel economy ( cafe ) regulations , with ongoing research and development ( r & d ) efforts that focus on fuel economy , emission reduction and environmental improvements . these efforts position us to compete as this product mix shift continues and have led to new business awards for products that support awd and rwd passenger cars and crossover vehicles . approximately 45 % of aam 's new and incremental business backlog launching from 2010 to 2014 , which is an estimated $ 1.0 billion , relates to aam 's newest awd systems for passenger cars and crossover vehicles . global automotive production the trend toward the globalization of automotive production continues to intensify in regions such as asia ( particularly china , india , south korea and thailand ) , eastern europe and south america . although the growth rate has recently slowed in these markets , automotive production in these regions is expected to continue to grow while production in the traditional automotive production centers such as north america , western europe and japan struggles to recover from recent declines . we have more than doubled our global installed capacity to support current and future opportunities while significantly reducing our installed capacity in the u.s. we have expanded our facilities in mexico , brazil and poland , invested in our china joint venture and are constructing new facilities in india and thailand . we also have offices in india , china , south korea , and brazil to support these developing markets . we expect our business activity in these markets to increase significantly over the next several years . a pproximately 70 % of our new and incremental business backlog is for end use markets outside of north america and approximately 80 % has been sourced to our manufacturing facilities outside the u.s. declining u.s. domestic oem market share intense competition from offshore and transplant oems has resulted in the decline of u.s. market share for u.s. domestic oems from approximately 48 % in 2008 to approximately 45 % in 2009. since 86 % of our 2009 revenue derived from net sales to gm and chrysler , this continuing trend is significant for us . we continue to aggressively pursue business with other oems and approximately 30 % of our new business backlog is related to customers other than gm and chrysler . increasing demand for alternative energy sources and electronic integration with a rapid shift towards aggressive , environmentally focused legislation in the u.s. , we have observed an increased demand for technologies designed to help reduce emissions , increase fuel economy and minimize the environmental impact of vehicles . in 2009 , u.s. president barack obama announced new cafe regulations that would increase the u.s. fuel-economy standard industry average to 35.5 miles per gallon by year 2016. as a result , oems and suppliers are competing intensely to develop and market new and alternative technologies , such as electric vehicles , hybrid vehicles , fuel cells , diesel engines and efficiency improvements of driveline systems to improve fuel economy and emissions . the electronic content of vehicles continues to expand , largely driven by consumer demand for greater vehicle performance , functionality , and affordable convenience options . this demand is a result of increased communication abilities in vehicles as well as increasingly stringent regulatory standards for energy efficiency , emissions reduction and increased safety . as these electronics continue to become more reliable and affordable , we expect this trend to continue . the increased use of electronics provides greater flexibility in vehicles and enables the oems to better control vehicle stability , fuel efficiency , and safety while improving the overall driving experience . suppliers with enhanced capability in electronic integration have greater sourcing opportunities with oems and may be able to obtain more favorable pricing for these products . we are continuing to invest in the development of advanced products focused on fuel economy , mass reductions , vehicle safety and performance leveraging electronics and technology . we have increased our focus on alternative energy and electronics by investing in product development that is consistent with the expected shift in market demand . price pressure year-over-year price reductions are a common competitive practice in the automotive industry . as oems continue to restructure and pursue cost cutting initiatives , we anticipate increased pressure to reduce the cost of our own operations . the majority of our products are sold under long-term contracts with prices scheduled at the time the contracts are established . many of our contracts require us to reduce our prices in subsequent years and most of our contracts allow us to adjust prices for engineering changes . we do not believe that the price reductions we have committed to our customers will have a material adverse impact on our future operating results because we intend to offset such price reductions through continued cost reductions , efficiency improvements and other productivity initiatives . steel and other metallic commodities worldwide commodity market conditions have resulted in volatile steel and other metallic material prices . as general economic conditions improve and production levels increase , demand for these commodities will grow and may cause prices to rise . we have taken actions to mitigate the impact of this trend through commercial agreements with our customers , strategic sourcing arrangements with suppliers and technology advancements that result in using less metallic content or less expensive metallic content in the manufacturing of our products . the majority of our sales contracts with our largest customers provide price adjustment provisions for metal market price fluctuations . we do not have metal market price provisions with all of our customers for all of the parts that we sell .
| results of operations special charges and other nonrecurring items in 2009 , 2008 and 2007 , we recorded special charges and nonrecurring operating costs that we do not consider indicative of our ongoing operating activities . the following table details these charges ( in millions ) : replace_table_token_5_th in addition , in 2009 , we recorded an income tax benefit of $ 48.8 million for a tax refund claim related to newly enacted legislation providing for a special 5-year net operating loss ( nol ) carryback election . these special charges , nonrecurring operating costs and special nol carrybacks are described in further detail in the sections “ gross profit ( loss ) ” , “ selling , general and administrative expenses ( sg & a ) ” and “ income tax expense ( benefit ) . ” net sales net sales were $ 1,521.6 million in 2009 as compared to $ 2,109.2 million in 2008 and $ 3,248.2 million in 2007. our sales in 2009 , as compared to 2008 , reflect a decrease of approximately 22 % in production volumes for the major full-size truck and suv programs we currently support for gm and chrysler and a decrease of approximately 76 % in products supporting gm 's mid-size light truck and suv programs . these decreases in sales in 2009 reflect the adverse impact of extended production shutdowns at gm and chrysler , which is estimated at $ 304.3 million . the decrease in sales also reflects general adverse economic conditions , the difficult market conditions in the automotive industry and the cancellation of gm 's mid-size suv program . our sales in 2008 , as compared to 2007 , reflect a decrease of approximately 41 % in production volumes for the major full-size truck and suv programs we currently support for gm and chrysler and a decrease of approximately 53 % in production volumes for the products supporting gm 's mid-size light truck and suv programs .
| 5,971 |
examples of forward-looking statements include , but are not limited to : ( i ) projections of revenues , expenses , income or loss , earnings or loss per common share , the payment or nonpayment of dividends , capital structure and other financial items ; ( ii ) statements of plans , objectives and expectations of first defiance or its management or board of directors , including those relating to products or services ; ( iii ) statements of future economic performance ; and ( iv ) statements of assumptions underlying such statements . words such as “ believes ” , “ anticipates ” , “ expects ” , “ intends ” , “ targeted ” , “ continue ” , “ remain ” , “ will ” , “ should ” , “ may ” and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements . forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements . factors that could cause actual results to differ from those discussed in the forward-looking statements include , but are not limited to : · local , regional , national and international economic conditions and the impact they may have on the company and its customers and the company 's assessment of that impact . · volatility and disruption in national and international financial markets . · government intervention in the u.s. financial system . · changes in the level of non-performing assets and charge-offs . · changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements . · the effects of and changes in trade and monetary and fiscal policies and laws , including the interest rate policies of the federal reserve . · inflation , interest rate , securities market and monetary fluctuations . · political instability . · acts of god or of war or terrorism . · the timely development and acceptance of new products and services and perceived overall value of these products and services by users . · changes in consumer spending , borrowing and saving habits . · changes in the financial performance and or condition of the company 's borrowers or customers . · technological changes including core system conversions . · acquisitions and integration of acquired businesses . · the ability to increase market share and control expenses . · changes in the competitive environment among financial holding companies and other financial service providers . · the effect of changes in laws and regulations ( including laws and regulations concerning taxes , banking , securities and insurance ) with which the company and its subsidiaries must comply . - 37 - · the effect of changes in accounting policies and practices , as may be adopted by the regulatory agencies , as well as the public company accounting oversight board ( “ pcaob ” ) , the financial accounting standards board ( “ fasb ” ) and other accounting standard setters . · the costs and effects of legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews . · greater than expected costs or difficulties related to the integration of new products and lines of business . · the company 's success at managing the risks involved in the foregoing items . forward-looking statements speak only as of the date on which such statements are made . the company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events . this item 7 presents information to assess the financial condition and results of operations of first defiance . this item should be read in conjunction with the consolidated financial statements and the supplemental financial data contained elsewhere in this annual report on form 10-k. non-gaap financial measures this annual report on form 10-k contains gaap financial measures and certain non-gaap financial measures . management believes that these measures are helpful in understanding the company 's results of operations or financial position . fully taxable-equivalent ( “ fte ” ) is an adjustment to net interest income to reflect tax-exempt income on an equivalent before-tax basis . the following tables present a reconciliation of non-gaap measures to their respective gaap measures at december 31 , 2018 and 2017. non-gaap financial measures – net interest income on an fte basis , net interest margin and efficiency ratio replace_table_token_24_th non-gaap financial measures – tangible book value replace_table_token_25_th - 38 - overview first defiance is a unitary thrift holding company that conducts business through its wholly-owned subsidiaries , first federal , first insurance and first defiance risk management . first federal is a federally chartered stock savings bank that provides financial services to communities based in northwest ohio , northeast indiana , and southeastern michigan where it operates 44 full service banking centers in fourteen northwest and central ohio counties , one northeast indiana county , and one southeastern michigan county . first federal operates one loan production office in ann arbor , michigan , which is located in washtenaw county . first federal provides a broad range of financial services including checking accounts , savings accounts , certificates of deposit , real estate mortgage loans , commercial loans , consumer loans , home equity loans and trust and wealth management services through its extensive branch network . first insurance sells a variety of property and casualty , group health and life and individual health and life insurance products . first insurance is an insurance agency that conducts business throughout first federal 's markets . story_separator_special_tag all loans over 90 days past due and or on non-accrual are classified as non-performing loans . non-performing status automatically occurs in the month in which the 90-day delinquency occurs . when a collateral dependent loan moves to non-performing status , first federal generally gets a new third party appraisal and charges the loan down appropriately based upon the new appraisal and an estimate of costs to liquidate the collateral . all properties that are moved into the other real estate owned ( “ oreo ” ) category are supported by current appraisals , and the oreo is carried at the lower of cost or fair value , which is determined based on appraised value less first federal 's estimate of the liquidation costs . - 40 - first federal does not adjust any appraisals upward without written documentation of this valuation change from the appraiser . when setting reserves and charge-offs on classified loans , appraisal values may be discounted downward based upon first federal 's experience with liquidating similar properties . appraisals are received within approximately 60 days after they are requested . the first federal loan loss reserve committee reviews the amount of each new appraisal and makes any necessary charge-off decisions at its meeting prior to the end of each quarter . any partially charged-off collateral dependent loans are considered non-performing , and as such , would need to show an extended period of time with satisfactory payment performance as well as cash flow coverage capability supported by current financial statements before first federal will consider an upgrade to performing status . first federal may consider moving the loan to accruing status after approximately six months of satisfactory payment performance . first federal monitors and tracks its loan to value quarterly to determine accuracy and any necessary charge-offs . based on these results , changes may occur in the processes used . loan modifications constitute a troubled debt restructuring ( “ tdr ” ) if first federal , for economic or legal reasons related to the borrower 's financial difficulties , grants a concession to the borrower that it would not otherwise consider . for loans that are considered tdrs and the balance is over $ 250,000 , first federal either computes the present value of expected future cash flows discounted at the original loan 's effective interest rate or it may measure impairment based on the fair value of the collateral . for those loans measured for impairment utilizing the present value of future cash flows method , any discount is carried as a specific reserve in the allowance for loan and lease losses . for those loans measured for impairment utilizing the fair value of the collateral , any shortfall is charged-off . for loans that are considered tdrs and the balance is under $ 250,000 a specific reserve is carried in the allowance for loan and lease losses based on a general reserve analysis . as of december 31 , 2018 , and december 31 , 2017 , first federal had $ 11.6 million and $ 13.8 million , respectively , of loans that were still performing and which were classified as tdrs . allowance for loan losses the allowance for loan losses represents management 's assessment of the estimated probable incurred credit losses in the loan portfolio at each balance sheet date . management analyzes the adequacy of the allowance for loan losses regularly through reviews of the loan portfolio . consideration is given to economic conditions , changes in interest rates and the effect of such changes on collateral values and borrower 's ability to pay , changes in the composition of the loan portfolio and trends in past due and non-performing loan balances . the allowance for loan losses is a material estimate that is susceptible to significant fluctuation and is established through a provision for loan losses based on management 's evaluation of the inherent risk in the loan portfolio . in addition to extensive in-house loan monitoring procedures , the company utilizes an outside party to conduct an independent loan review of commercial loan and commercial real estate loan relationships . the goal is to have approximately 55 % to 60 % of the portfolio reviewed annually . this includes all relationships over $ 5.0 million with new exposure greater than $ 2.0 million and a sample of other relationships greater than $ 5.0 million ; loan relationships between $ 1.0 million and $ 5.0 million with new exposure greater than $ 750,000 and a sample of other relationships between $ 1.0 million and $ 5.0 million ; and a sample of relationships less than $ 1.0 million . management utilizes the results of this outside loan review to assess the effectiveness of its internal loan grading system as well as to assist in the assessment of the overall adequacy of the allowance for loan losses associated with these types of loans . - 41 - the allowance for loan loss is made up of two basic components . the first component of the allowance for loan loss is the specific reserve in which the company sets aside reserves based on the analysis of individual impaired credits . in establishing specific reserves , the company analyzes all substandard , doubtful and loss graded loans quarterly and makes judgments about the risk of loss based on the cash flow of the borrower , the value of any collateral and the financial strength of any guarantors . for loans that are considered impaired and the balance is over $ 250,000 , first federal either computes the present value of expected future cash flows discounted at the original loan 's effective interest rate or it may measure impairment based on the fair value of the collateral . for those loans measured for impairment utilizing the present value of future cash flows method , any discount is carried as a specific reserve in the allowance for loan and lease losses . for those loans measured for impairment utilizing the fair value of the collateral , any shortfall is usually charged-off .
| summary first defiance reported net income of $ 46.2 million for the year ended december 31 , 2018 , compared to $ 32.3 million and $ 28.8 million for the years ended december 31 , 2017 and 2016 , respectively . on a diluted per common share basis , first defiance earned $ 2.26 in 2018 , $ 1.61 in 2017 and $ 1.60 in 2016. net interest income first defiance 's net interest income is determined by its interest rate spread ( i.e . the difference between the yields on its interest-earning assets and the rates paid on its interest-bearing liabilities ) and the relative amounts of interest-earning assets and interest-bearing liabilities . net interest income was $ 108.3 million for the year ended december 31 , 2018 , compared to $ 96.7 million and $ 78.9 million for the years ended december 31 , 2017 and 2016 , respectively . the tax-equivalent net interest margin was 3.98 % , 3.88 % and 3.74 % for the years ended december 31 , 2018 , 2017 and 2016 , respectively . the margin increased 10 basis points between 2017 and 2018. the increase in margin in 2018 was primarily due to the increase in interest rates as the federal rate hikes impacted asset yields more favorably than deposit costs as well as the mix of our noninterest-bearing balances . interest-earning asset yields increased 26 basis points ( to 4.59 % in 2018 from 4.33 % in 2017 ) and the cost of interest- bearing liabilities between the two periods increased 21 basis points ( to 0.80 % in 2018 from 0.59 % in 2017 ) . total interest income increased by $ 16.6 million or 15.4 % to $ 124.7 million for the year ended december 31 , 2018 , from $ 108.1 million for the year ended december 31 , 2017. this is due to solid loan growth , the increase in interest rates and a more profitable earning asset mix .
| 5,972 |
these statements may be identified by words such as “ estimate ” , “ forecast ” , “ project ” , “ plan ” , “ intend ” , “ believe ” , “ expect ” , “ anticipate ” , or variations or negatives thereof or by similar or comparable words or phrases . forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements . these risks and uncertainties include , but are not limited to , the following : changes to or new interpretations of u.s. or international tax regulations ; the global financial and economic situation ; changes in levels of unemployment and other economic conditions in the united states or foreign countries where the company does business , or in particular regions or industries ; reduction in the supply of candidates for temporary employment or the company 's ability to attract candidates ; the entry of new competitors into the marketplace or expansion by existing competitors ; the ability of the company to maintain existing client relationships and attract new clients in the context of changing economic or competitive conditions ; the impact of competitive pressures , including any change in the demand for the company 's services , on the company 's ability to maintain its margins ; the possibility of the company incurring liability for its activities , including the activities of its temporary employees , or for events impacting its temporary employees on clients ' premises ; the possibility that adverse publicity could impact the company 's ability to attract and retain clients and candidates ; the success of the company in attracting , training , and retaining qualified management personnel and other staff employees ; the company 's ability to comply with governmental regulations affecting personnel services businesses in particular or employer/employee relationships in general ; whether there will be ongoing demand for sarbanes-oxley or other regulatory compliance services ; the company 's reliance on short-term contracts for a significant percentage of its business ; litigation relating to prior or current transactions or activities , including litigation that may be disclosed from time to time in the company 's securities and exchange commission ( “ sec ” ) filings ; the ability of the company to manage its international operations and comply with foreign laws and regulations ; the impact of fluctuations in foreign currency exchange rates ; the possibility that the additional costs the company will incur as a result of health care reform legislation may adversely affect the company 's profit margins or the demand for the company 's services ; the possibility that the company 's computer and communications hardware and software systems could be damaged or their service interrupted ; and the possibility that the company may fail to maintain adequate financial and management controls and as a result suffer errors in its financial reporting . additionally , with respect to protiviti , other risks and uncertainties include the fact that future success will depend on its ability to retain employees and attract clients ; there can be no assurance that there will be ongoing demand for sarbanes-oxley or other regulatory compliance services ; failure to produce projected revenues could adversely affect financial results ; and there is the possibility of involvement in litigation relating to prior or current transactions or activities . because long-term contracts are not a significant part of the company 's business , future results can not be reliably predicted by considering past trends or extrapolating past results . further information regarding these and other risks and uncertainties is contained in item 1a . “ risk factors. ” executive overview demand for the company 's temporary and consultant staffing , permanent placement staffing and risk consulting and internal audit services is largely dependent upon general economic and labor trends both domestically and abroad . correspondingly , financial results for the year ended december 31 , 2018 , were positively impacted by improving global economic conditions . annual net service revenues reached $ 5.80 billion in 2018 , an increase of 10 % from the prior year . full-year 2018 net income increased to $ 434 million and diluted net income per share increased to $ 3.57 . all three of the company 's reportable segments experienced revenue growth , led by risk consulting and internal audit services and permanent placement staffing , both of which increased 17 % in 2018 on an as reported basis compared to last year . we believe that the company is well positioned in the current macroeconomic environment . the united states economic backdrop during 2018 was conducive to growth for the company as real gross domestic product ( “ gdp ” ) grew an estimated 2.6 % , while the unemployment rate declined from 4.1 % in december 2017 to 3.9 % in december 2018 . in the united states , the number of job openings has exceeded the number of hires since february 2015 , creating competition for skilled talent that increases the company 's value to clients . the u.s. labor market remains robust , with significant demand due to talent shortages across our professional disciplines . the number of temporary workers as a percentage of the overall u.s. workforce remains near an all-time high , a sign employers are building flexible staffing options into their human resource plans with increasing frequency . protiviti continues to see strong demand for its consulting and internal audit solutions . financial services continues to be protiviti 's biggest industry sector . protiviti has expanded its service offerings and continues to nurture and grow a loyal client base . 13 we monitor various economic indicators and business trends in all of the countries in which we operate to anticipate demand for the company 's services . we evaluate these trends to determine the appropriate level of investment , including personnel , which will best position the company for success in the current and future global macroeconomic environment . story_separator_special_tag if such losses are ultimately utilized to offset future operating income , the company will recognize a tax benefit up to the full amount of the related valuation reserve . while management believes that its judgments and interpretations regarding income taxes are appropriate , significant differences in actual experience may materially affect the future financial results of the company . stock-based compensation . under various stock plans , officers , employees and outside directors have received or may receive grants of restricted stock , stock units , stock appreciation rights or options to purchase common stock . the company recognizes compensation expense equal to the grant-date fair value for all stock-based payment awards that are expected to vest . this expense is recorded on a straight-line basis over the requisite service period of the entire award , unless the awards are subject to performance conditions , in which case the company recognizes compensation expense over the requisite service period of each separate vesting tranche . the company determines the grant-date fair value of its restricted stock and stock unit awards using the fair market value of its stock on the grant date , unless the awards are subject to market conditions , in which case the company utilizes a binomial-lattice model ( i.e. , monte carlo simulation model ) . the monte carlo simulation model utilizes multiple input variables to determine the stock-based compensation expense . no stock appreciation rights have been granted under the company 's existing stock plans . the company has not granted any options to purchase common stock since 2006. for the years ended december 31 , 2018 , 2017 and 2016 , compensation expense related to restricted stock and stock units was $ 45.0 million , $ 42.2 million and $ 42.7 million , respectively , of which $ 12.2 million , $ 11.4 million and $ 11.0 million was related to grants made in those respective years . based on the company 's results for the year ended december 31 , 2018 , a one-percentage point deviation in the estimated forfeiture rates would have resulted in a $ 0.4 million increase or decrease in compensation expense related to restricted stock and stock units . recent accounting pronouncements see note b— “ new accounting pronouncements ” to the company 's consolidated financial statements included under part ii—item 8 of this report . story_separator_special_tag style= '' font-family : inherit ; font-size:10pt ; '' > 2017 . key drivers of temporary and consultant staffing revenues include average hourly bill rates and the number of hours worked by the company 's temporary employees on client engagements . on an as adjusted basis , temporary and consultant staffing revenues increased 7.9 % for 2018 , compared to 2017 , due primarily to a 4.1 % increase in average bill rates and an increase in the number of hours worked by the company 's temporary employees . in the u.s. , 2018 revenues increased 5.8 % on an as reported basis and 5.5 % on an as adjusted basis , compared to 2017 . for the company 's international operations , 2018 revenues increased 16.0 % on an as reported basis and 17.0 % on an as adjusted basis , compared to 2017 . permanent placement staffing revenues were $ 512 million for the year ended december 31 , 2018 , increasing by 16.6 % compared to revenues of $ 439 million for the year ended december 31 , 2017 . key drivers of permanent placement staffing revenues consist of the number of candidate placements and average fees earned per placement . on an as adjusted basis , permanent placement staffing revenues increased 16.0 % for 2018 compared to 2017 , driven by increases in number of placements and average fees earned per placement . in the u.s. , 2018 revenues increased 16.4 % on an as reported basis and 16.1 % on an as adjusted basis , compared to 2017 . for the company 's international operations , 2018 revenues increased 17.0 % on an as reported basis , and increased 16.0 % on an as adjusted basis , compared to 2017 . historically , demand for permanent placement services is even more sensitive to economic and labor market conditions than demand for temporary and consulting staffing and this is expected to continue . 16 risk consulting and internal audit services revenues were $ 958 million for the year ended december 31 , 2018 , increasing by 17.3 % compared to revenues of $ 817 million for the year ended december 31 , 2017 . key drivers of risk consulting and internal audit services revenues are the billable hours worked by consultants on client engagements and average hourly bill rates . on an as adjusted basis , risk consulting and internal audit services revenues increased 13.2 % for 2018 compared to 2017 , driven primarily by increases in billable hours and average hourly billing rates . in the u.s. , 2018 revenues increased 12.0 % on an as reported basis , or 11.8 % on an as adjusted basis , compared to 2017 . for the company 's international operations , 2018 revenues increased 42.1 % on an as reported basis , or 19.2 % on an as adjusted basis , compared to 2017 . the international year-over-year increases were primarily driven by strong revenue performance in europe and australia . a reconciliation of the non-gaap year-over-year revenue growth rates to the as reported year-over-year revenue growth rates for the year ended december 31 , 2018 , is presented in the following table : replace_table_token_2_th gross margin . the company 's gross margin dollars were $ 2.41 billion for the year ended december 31 , 2018 , up 11.4 % from $ 2.16 billion for the year ended december 31 , 2017 . contributing factors for each reportable segment are discussed below in further detail . gross margin dollars for temporary and consultant staffing represent revenues less direct costs of services , which consist of payroll , payroll taxes and benefit costs for temporary employees , and reimbursable expenses .
| results of operations demand for the company 's temporary and consultant staffing , permanent placement staffing and risk consulting and internal audit services is largely dependent upon general economic and labor market conditions both domestically and abroad . correspondingly , results of operations for the year ended december 31 , 2018 , were positively impacted by improving global economic conditions . because of the inherent difficulty in predicting economic trends and the absence of material long-term contracts in any of the company 's business units , future demand for the company 's services can not be forecasted with certainty . we believe the company is well positioned in the current macroeconomic environment . the company 's temporary and permanent staffing business has 324 offices in 42 states , the district of columbia and 17 foreign countries , while protiviti has 62 offices in 23 states and 11 foreign countries . non-gaap financial measures the financial results of the company are prepared in conformity with accounting principles generally accepted in the united states of america ( “ gaap ” ) and the rules of the sec . to help readers understand the company 's financial performance , the company supplements its gaap financial results with revenue growth rates derived from non-gaap revenue amounts . 15 variations in the company 's financial results include the impact of changes in foreign currency exchange rates , billing days , and certain intercompany adjustments . the company provides “ as adjusted ” revenue growth calculations to remove the impact of these items . these calculations show the year-over-year revenue growth rates for the company 's reportable segments on both a reported basis and also on an as adjusted basis for global , u.s. and international operations . the company has provided this data because management believes it better reflects the company 's actual revenue growth rates and aids in evaluating revenue trends over time .
| 5,973 |
certain significant risks and uncertainties - the company is subject to those risks common in manufacturing-driven markets , including , but not limited to , competitive forces , dependence on key personnel , customer demand for its products , the successful protection of its proprietary technologies , compliance with government regulations , and the possibility of not being able to obtain additional financing when needed . recent accounting pronouncements - in may 2014 , the fasb and international accounting standards board issued their converged standard on revenue recognition , accounting standards update no . story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read in conjunction with the section titled `` selected financial data '' and the consolidated financial statements and related notes thereto included elsewhere in this annual report . this discussion contains forward-looking statements that involve risks and uncertainties . our actual results could differ materially from those discussed below . you should review the `` risk factors '' and `` special note regarding forward-looking statements '' sections of this annual report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis . overview we are a designer , manufacturer and marketer of ride dynamics component products used primarily on bicycles , side-by-side vehicles , or side-by-sides , on-road vehicles with off-road capabilities , off-road vehicles and trucks , all-terrain vehicles , or atvs , snowmobiles , specialty vehicles and applications , and motorcycles as well as suspension systems , or lift kits , used on trucks . virtually all of our revenues were from our product sales ; miscellaneous sources of revenue such as royalty income and service related repair work and the associated sale of components represented less than 1 % of our sales in each of the years ended december 30 , 2016 , december 31 , 2015 and december 31 , 2014 . we have determined that we operate in one reportable segment , which is the manufacturing , sale and service of ride dynamics products . our products fall into the following two categories : bikes ; and powered vehicles , including side-by-sides , on-road vehicles with off-road capabilities , off-road vehicles and trucks , atvs , snowmobiles , specialty vehicles and applications , and motorcycles . a significant portion of our sales are dependent on the demand for high-end or premium-priced bikes and products . in each of the years ended december 30 , 2016 , december 31 , 2015 and december 31 , 2014 , approximately 56 % , 58 % and 58 % , respectively , of our sales were attributable to sales of bike-related products and approximately 44 % , 42 % and 42 % , respectively , of our sales were attributable to sales of products for powered vehicles . our domestic sales totaled $ 187.5 million , $ 163.1 million and $ 128.3 million , or 47 % , 44 % and 42 % of our total sales in fiscal years 2016 , 2015 and 2014 , respectively . our international sales totaled $ 215.5 million , $ 203.7 million and $ 178.4 million , or 53 % , 56 % and 58 % of our total sales in fiscal years 2016 , 2015 and 2014 , respectively . sales attributable to countries outside the united states are based on shipment location . our international sales , however , do not necessarily reflect the location of the end users of our products as many of our products are incorporated into bikes that are assembled at international locations and then shipped back to the united states . we estimate , based on our internal projections , that approximately one-third of the end users of our products are located outside the united states . opportunities , challenges and risks we intend to focus on generating sales of our performance ride dynamics products through oems and in the aftermarket channel . to do this , we intend to continue to develop and introduce new and innovative products in our current end-markets and we intend to selectively develop products for applications and end-markets in which we do not currently participate . currently , the majority of our sales are dependent on the demand for performance suspension products . our aftermarket distribution network currently consists of more than 5,000 retail dealers and distributors worldwide . to further penetrate the aftermarket channel , we intend to selectively add additional dealers and distributors in certain geographic markets , expand our internal sales force and strategically increase the number of aftermarket specific products and services which we offer for existing vehicle platforms . in addition , we believe international expansion represents a significant opportunity for us and we intend to selectively increase infrastructure investments and focus on identified geographic regions . as a supplier to oem customers , we are largely dependent on the success of the business of our oem customers . model year changes by our oem customers may adversely impact our sales or cause our sales to vary from quarter to quarter . losses in market share or a decline in the overall market of our oem customers or the discontinuance by our oem customers of their products which incorporate our products could negatively impact our business and our results of operations . during 2015 , we completed the process of moving a majority of the manufacturing of our bike suspension component products to our facility in taichung , taiwan . we anticipate that this transition will enable us to shorten production lead times to our bike oem customers , improve supply chain efficiencies and reduce our manufacturing costs . the transition has had a positive impact on our operating margins and we expect continued benefits from the transition over time . 32 from time to time we have experienced , and may continue to experience , warranty costs and claims relating to our products . story_separator_special_tag the sport truck liability is measured at fair value at each balance sheet date by considering actual results and applying a black-scholes model to the company 's financial projections for future periods . we expect our contingent consideration and acquisition related compensation for the sport truck and race face/easton acquisitions to cease after the first quarter of 2017. income from operations we define income from operations as gross profit less our operating expenses . we use income from operations as an indicator of the profitability of our business and our ability to manage costs . other expense , net other expense , net consists of interest expense and other ( income ) expense , net . interest expense consists of interest charged to us under our credit facilities . other ( income ) expense , net consists of foreign currency transaction gains and losses , gains and losses on the disposal of fixed assets , and other miscellaneous items . income taxes we are subject to income taxes in the united states and various other foreign jurisdictions in which we do business . these foreign jurisdictions have statutory tax rates than differ from those in the united states , although certain of our international earnings are also taxable in the united states . effective in 2016 , we restructured the majority of our international operations to allow for deferral of taxes on indefinitely reinvested international earnings . accordingly , our effective tax rates will vary depending on the relative proportion of foreign to u.s. income and the further apportionment of that income to state and local jurisdictions . additionally , in future periods , our effective tax rate may vary depending on changes in tax laws in the various jurisdictions in which we do business . income taxes are computed using the asset and liability method , under which deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income . valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized . as of december 30 , 2016 , we did not have any valuation allowances recorded as we expect to fully utilize all of our deferred tax assets . as of december 30 , 2016 , our deferred tax assets include foreign tax credits and foreign net operating loss carryforwards of approximately $ 2,128 and $ 252 , respectively , which begin to expire in 2025 and 2034 , respectively , unless previously utilized . we also have federal and state research credits of approximately $ 455 and $ 1,496. the federal research credits begin to expire in 2036 unless previously utilized , and the state research credits do not expire . in the future , our effective tax rate could vary if we determine that there is a need to record a valuation allowance for our deferred tax assets , including those associated with credit carryforwards . 34 stock-based compensation gives rise to deferred tax assets to the extent of the compensation expense recognized on non-qualified stock options that have not been exercised or expired and restricted stock awards that have not vested . as of december 30 , 2016 , our deferred tax assets include $ 2.0 million associated with stock-based compensation expense . we adopted asu 2016-09 , improvements to employee share-based payment accounting in 2016 , and as a result , will be required to record the difference between the deferred tax asset and the actual tax deduction for stock-based compensation as a component of our income tax expense . prior to adoption , such differences were recorded as a component of equity . in 2016 and in future periods , our effective tax rate will vary based on such differences . we are subject to examination of our income tax returns by the u.s. internal revenue service , or irs , and other tax authorities . we regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our income tax liabilities and expense . should actual events or results differ from our current expectations , charges or credits to our income tax liabilities and income tax expense may become necessary . any such adjustments could have a significant impact on our effective tax rate . under u.s. generally accepted accounting principles , or gaap , an uncertain income tax position will not be recognized unless it has a greater than 50 % likelihood ( i.e. , more-likely-than-not ) of being sustained and then , measured only to the largest amount of benefit that is greater than 50 % likely to be realized upon ultimate settlement . we established liabilities for uncertain tax positions and deferred taxes associated with the deductibility of certain amortization and depreciation expenses . the liability for uncertain income tax positions represents the amount of tax we would be required to pay if certain tax deductions previously claimed on tax returns were not allowed upon examination by the taxing authorities . the liability for deferred taxes represents additional taxes that would be payable in future periods because of the potential non-deductibility of future amortization and depreciation expenses . as of december 30 , 2016 , our balance sheet reflected a liability for unrecognized tax benefits of $ 7.4 million , inclusive of amounts presented as contra to our deferred tax asset .
| results of operations the table below summarizes our results of operations for the years ended december 30 , 2016 , december 31 , 2015 , and december 31 , 2014 replace_table_token_6_th the following table sets forth statement of income data as a percentage of sales for the years indicated . 36 replace_table_token_7_th year ended december 30 , 2016 compared to year ended december 31 , 2015 sales replace_table_token_8_th 37 sales for the year ended december 30 , 2016 increase d approximately $ 36.3 million , or 9.9 % , compared to the year ended december 31 , 2015 . the sales increase reflects 13.7 % growth in powered vehicle products as well as a 7.1 % increase in mountain bike products for the year ended december 30 , 2016 compared to the prior year . the increase in bike product sales is due to the success of our current bike product lines including new products within those lines . the increase in sales of powered vehicle products was primarily due to continued higher demand for on and off-road suspension products . cost of sales replace_table_token_9_th cost of sales for the year ended december 30 , 2016 increase d approximately $ 21.9 million , or 8.6 % , compared to the year ended december 31 , 2015 . the increase in cost of sales was driven primarily by an increase in product sales , as well as certain business factors affecting gross margin which are discussed below . for the year ended december 30 , 2016 our gross margin was 31.4 % compared to 30.5 % for the year ended december 31 , 2015 . the increase in our gross profit margin was attributable primarily to cost improvements as we completed the transition of the majority of our bike manufacturing to taiwan .
| 5,974 |
executive officers , directors and greater than 10 % stockholders are required by sec regulations to furnish the company with copies of all section 16 ( a ) forms they file . based solely on its review of the copies of reporting forms received by the company , the company believes that the following forms 3 and 4 for transactions effected in 2011 were filed later than is required under section 16 ( a ) of the securities exchange act of 1934 : · messrs. cataldo , handelman , schroeder , coles , andrews and mcpeak were each late in filing form 3 's in connection with their appointment as officers and or directors as applicable ; · mr. voyticky has failed to file a form 3 ; and · messrs. schroeder , mcpeak , mckilligan and brooke were each late in filing one form 4. item 11. executive compensation compensation discussion and analysis overview of executive compensation program the compensation committee of our board of directors has responsibility for establishing , implementing and monitoring our executive compensation program philosophy and practices . the compensation committee seeks to ensure that the total compensation paid to our named executive officers is fair , reasonable and competitive . throughout this annual report , the individuals included in the summary compensation table on page 51 are referred to as the “ named executive officers . ” the compensation committee was established in august , 2011. however , the general economic terms of the compensation paid to our two named executive officers during 2011 were determined by our board of directors prior to the establishment of the compensation committee . the two employment agreements that we entered into with our two named executive officers were formally executed on october 3 , 2011 ( but were effective as of may 1 , 2011 story_separator_special_tag the following discussion and analysis of our results of operations and financial condition should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this report . our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties , such as our plans , objectives , expectations and intentions . actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors , including those set forth under the “ business ” section and elsewhere in this report . we use words such as “ anticipate , ” “ estimate , ” “ plan , ” “ project , ” “ continuing , ” “ ongoing , ” “ expect , ” “ believe , ” “ intend , ” “ may , ” “ will , ” “ should , ” “ could , ” and similar expressions to identify forward-looking statements . all forward-looking statements included in this report are based on information available to us on the date hereof and , except as required by law , we assume no obligation to update any such forward-looking statements . background on the company and recent change in strategic focus until march 2010 , we were known as freight management corp. , and we were engaged in the development of an internet-based , intelligent online system for business owners , freight forwarders in the shipping/freight industry and export/import industry . we were unable to develop this business and never generated any revenues from those proposed operations and thus determined to discontinue such business . on march 15 , 2010 , we entered the biopharmaceutical business when we acquired the rights , title and interest to certain assets , including certain patents , patent applications , materials , and know-how , related to the development and commercialization of biotechnology drugs , and then commenced developing anti-cancer drugs based primarily on anti-cd55+ antibodies ( the “ anti-cd55+ antibody program ” ) . we engaged the university of nottingham to conduct our research and development . although we initially believed that the proposed anti-cd55+ therapies that we were attempting to develop had significant commercial potential , test results received in mid-2011 from the studies performed for us by the university of nottingham failed to meet the pre-clinical development endpoints . accordingly , in 2011 we decided to ( i ) end our development efforts for the anti-cd55+ technology , and ( ii ) pursue the development of a new ready-to-infuse adoptive cell therapy product candidate we refer to as contego . on october 5 , 2011 we licensed the rights to the adoptive cell therapy from the national institute of health and to a manufacturing process for contego ( initially for stage iv metastatic melanoma ) that we intend to develop to enable us to make the adoptive cell therapy available to a larger number of patients . the license agreement required us to pay the nih approximately $ 723,000 of upfront licensing fees and expense reimbursements in 2011. in addition , we will have to pay royalties of six percent ( 6 % ) of net sales ( subject to certain annual minimum royalty payments ) , a percentage of revenues from sublicensing arrangements , and lump sum benchmark royalty payments on the achievement of certain clinical and regulatory milestones for each of the various indications . we also have to make certain benchmark payments to the nih based on the development and commercial release of licensed products using the technology underlying the license agreement . if we achieve all benchmarks for metastatic melanoma , up to and including the product 's first commercial sale in the united states , the total amount of such benchmark payments will be $ 6,050,000 for the melanoma indication . the benchmark payments for the other three indications , if all benchmarks are achieved , will be $ 6,050,000 for ovarian cancer , $ 12,100,000 for breast cancer , and $ 12,100,000 for colorectal cancer . story_separator_special_tag the increase in net cash used in operating activities was primarily due to significantly increased operating activities in fiscal 2011 compared to the prior years and , as a result , to the larger net loss in fiscal 2011. cash used in operating activities included the payment of $ 723,000 to the nih in early december 2011 , the $ 500,000 payment to lonza in december 2011 , $ 500,000 paid pursuant to the crada , and $ 2,103,719 that was paid to our officers and consultants in cash . net cash used in operating activities was , however , significantly less than the our net loss of $ 25,694,000 due to non-cash expenses , including $ 8,010,000 of common stock paid to an officer for services , $ 498,000 of other services paid in shares of common stock , $ 1,793,904 fair value of vested stock options and warrants , $ 2,563,647 fair value of derivative liability recorded upon issuance of warrants , $ 498,452 of common stock issued for services and $ 1,742,037 fair value of common stock transferred to officer and director and $ 5,000,000 of amortization of discounts on our convertible notes . net cash provided by financing activities was $ 5,488,000 for the year ended december 31 , 2011 , compared to $ 1,905,017 for the year ended december 31 , 2010. the increase was primarily due to $ 5,000,000 of notes ( excluding related costs ) that we issued in july 2011. since our inception , we have funded our operations primarily through private sales of equity securities and convertible loans . in 2010 , we raised a total of $ 1,945,000 from the sale of our common stock ( including warrants ) . in 2011 , we raised a total of $ 895,000 from the sale of 850,000 shares of our common stock and five-year class “ c ” warrants to purchase 850,000 shares that exercisable at $ 1.25 per share . 32 in a private placement that closed on july 27 , 2011 , we raised gross proceeds of $ 5,000,000 from the sale of the notes and five year warrants ( the “ note warrants ” ) to purchase 4,000,000 shares of our common stock . the notes were initially convertible at $ 1.25 per share , and the warrants are initially exercisable at $ 1.25 per share , subject in both cases to anti-dilution adjustments for issuances below the exercise price then in effect and customary adjustments in the event of stock split , reverse stock split , stock dividend , recapitalization , reorganization or similar transaction involving this company 's common stock . one-half of the gross proceeds of the $ 5,000,000 note offering ( i.e . $ 2,500,000 ) was released to us at the closing , and the balance of the proceeds were held in escrow . the second tranche of $ 2,500,000 was released on october 5 , 2011 following the signing of worldwide nonexclusive license with the nih for the rights to certain intellectual property owned by the united states government related to tumor infiltrating lymphocytes and t-cell technologies . the notes initially were to mature november 30 , 2011. the notes have been amended seven prior times to extend the maturity date of the notes , most recently to march 30 , 2012 ( effective march 13 , 2012 , we entered into amendment no . 7 to tranche a senior unsecured convertible notes and tranche b senior unsecured convertible notes with the holders of the notes to further extend the maturity date to march 30 , 2012 ) . as of the date of this annual report , we do not have sufficient funds to repay the notes on their current maturity date . as a result , unless the note holders elect to convert their notes or unless we either obtain at least $ 5,000,000 of new funding by the maturity date of the notes or obtain an extension of the maturity date of the notes , we will be in default on our payment obligations under the notes . upon a default , the interest rate on the notes increases to 15 % per annum , and the holders of the notes have the right to demand that we immediately redeem all of the notes at a price that is the greater than the outstanding balance of the notes . in general , the investors may demand that the notes be redeemed at a price equal to the greater of ( i ) 125 % of the outstanding balance of the notes , or ( ii ) an amount based on 135 % of the greatest closing sale price of our common stock during the period beginning on the date of default until the redemption demand . a default will also permit the holders of the notes to pursue collection actions against us . furthermore , even if the holders of the notes were to agree to extend the maturity date of the notes , based on our internally prepared budget , our current financial resources are only sufficient to fund our operations through the middle of april 2012. our current cash position will be further reduced by the next $ 250,000 quarterly installment that we are required to pay under the crada , which was due march 5 , 2012 and , therefore , is currently overdue and in default . in addition , we received an invoice in the amount of $ 684,183 from the nih , which amount is due by may 26 , 2012. finally , in order to develop our cōntego program in accordance with our business plan and our agreement with the nih we believe that we would have to spend in excess of $ 35 million during the next twelve months . accordingly , in order to operate our business , we have to obtain substantial additional proceeds in the near future .
| results of operations revenues we have not generated any revenues since the inception of this company . as a development stage company that is currently engaged in the development of therapeutics to fight cancer , we have not yet generated any revenues from our biopharmaceutical business . we currently do not anticipate that we will generate any revenues during 2012 from the sale or licensing of any products . in addition , we have also not generated any revenues from our prior business plans . costs and expenses operating expenses . operating expenses include compensation-related costs for our employees dedicated to general and administrative activities , legal fees , audit and tax fees , consultants and professional services , and general corporate expenses . our operating expenses were $ 19,303,000 , $ 644,000 and $ 16,000 for the fiscal years ended december 31 , 2011 ( “ fiscal 2011 ” ) , 2010 ( “ fiscal 2010 ” ) and 2009 ( “ fiscal 2009 ” ) , respectively . our operating expenses in fiscal 2011 increased by $ 18,659,000 compared to fiscal 2010 primarily as a result of the non-cash compensation we paid in fiscal 2011 to our two new executive officers , our consultants , and our advisors . in fiscal 2010 we only had two part-time officers , and our operations were limited . in fiscal 2011 , we changed our business as we started our new contego line of business . in connection with the change in our business focus , we hired two full-time executives and retained a consulting firm to assist us with the acquisition and development of our intellectual properties . in addition , we expanded the size of our board of directors and established a scientific advisory board . most of the compensation paid to our officers , directors , consultants and advisors was paid in securities rather than in cash . the total amount of such non-cash compensation we paid in fiscal 2011 was $ 14,608,000.
| 5,975 |
our fiscal year unless otherwise indicated , ( a ) all $ amounts are in u.s. dollars ( `` usd '' ) , ( b ) comparisons are to comparable prior periods , and ( c ) 2016 , 2015 and 2014 refers to the 12 months ended december 31 , 2016 , december 31 , 2015 , and december 31 , 2014 , respectively . for 2016 , the consolidated statement of operations includes millercoors ' results of operations for the period from january 1 , 2016 , to october 10 , 2016 , on an equity method basis of accounting and from october 11 , 2016 , to december 31 , 2016 , on a consolidated basis of accounting . additionally , our consolidated balance sheet as of december 31 , 2016 , includes our acquired assets and liabilities , which were recorded at their respective acquisition-date fair values upon completion of the acquisition . where indicated , we have reflected unaudited pro forma information for 2016 and 2015 which gives effect to the acquisition and the related financing as if they were completed on january 1 , 2015 , the first day of the company 's 2015 fiscal year . operational measures we use certain operational measures , such as sales-to-wholesalers ( “ stws ” ) and sales-to-retailers ( “ strs ” ) , which we believe are important metrics . stw is a metric that we use in our u.s. business to reflect the sales from our operations to our direct customers , generally wholesalers . we believe the stw metric is important because it gives an indication of the amount of beer and adjacent products that we have produced and shipped to customers . str is a metric that we use in our canada and u.s. businesses to refer to sales closer to the end consumer than stws , which generally means sales from our wholesalers or our company to retailers , who in turn sell to consumers . we believe the str metric is important because , unlike stws , it provides the closest indication of the performance of our brands in relation to market and competitor sales trends . acquisition on november 11 , 2015 , anheuser-busch inbev sa/nv ( “ abi ” ) announced it had entered into a definitive agreement to acquire sabmiller plc ( `` sabmiller '' ) ( “ abi/sabmiller transaction ” ) and concurrently , on november 11 , 2015 , we entered into a purchase agreement ( as amended , the “ purchase agreement ” ) with abi to acquire , contingent upon the closing of the abi/sabmiller transaction , all of sabmiller 's 58 % economic interest and 50 % voting interest in millercoors and all trademarks , contracts and other assets primarily related to the miller brand portfolio outside of the u.s. and puerto rico for $ 12.0 billion in cash , subject to downward adjustment as described in the purchase agreement ( the `` acquisition '' ) . on october 11 , 2016 , the acquisition was completed and millercoors , previously a joint venture between mcbc and sabmiller , became a wholly-owned subsidiary of mcbc and as a result , mcbc now owns 100 % of the outstanding equity and voting interests of millercoors . the acquisition was funded through cash on hand , including proceeds received from our february 3 , 2016 , equity issuance , the issuance of our 2016 notes , as defined below , as well as borrowings on our term loan agreement . further , as we elected to treat the acquisition as an asset acquisition for u.s. tax purposes , we expect to receive substantial cash tax benefits for the first 15 years following the close of the acquisition . under the purchase agreement , we retained the rights to all of the brands currently in the millercoors portfolio for the u.s. and puerto rican markets , including import brands such as peroni and pilsner urquell , as well as obtained full ownership of the miller brand portfolio outside of the u.s. and puerto rico . additionally , in consolidating control of millercoors , we expect we will further improve our scale and agility , benefit from significantly enhanced cash flows from operations , and capture substantial operational synergies . we believe the purchase of the miller brand trademarks outside of the u.s. and puerto rico provides a strategic opportunity to leverage the iconic miller trademark globally alongside mcbc 's trademarks for coors and staropramen , and presents volume and profit growth opportunities for mcbc in both core markets , as well as emerging markets . on july 7 , 2016 , mcbc issued approximately $ 5.3 billion senior notes with portions maturing from july 15 , 2019 , through july 15 , 2046 ( “ usd notes ” ) , and eur 800.0 million senior notes maturing july 15 , 2024 ( “ eur notes ” ) , and molson coors international lp , a delaware limited partnership and wholly-owned subsidiary of mcbc , completed a private placement of cad 1.0 billion senior notes maturing july 15 , 2023 , and july 15 , 2026 ( “ cad notes ” ) ( usd notes , eur notes and cad notes , collectively , the `` 2016 notes '' ) . on october 11 , 2016 , under our term loan agreement , we borrowed $ 1.0 billion under the 3-year tranche and $ 1.5 billion under the 5-year tranche , for an aggregate principal amount of $ 2.5 billion . the 35 net proceeds received from the term loan borrowings as well as the 2016 notes , and the february 3 , 2016 , equity offering were sufficient to fund the purchase price of the acquisition , and on october 11 , 2016 , the $ 12.0 billion of cash consideration was transferred upon completion of the acquisition . story_separator_special_tag million for the sale of our vancouver brewery within specials items , net and recorded gains of $ 20.5 million for the sale of non-operating assets within other income ( expense ) . further , an indirect tax provision charge of approximately $ 50 million was recorded in the fourth quarter of 2016 in our europe business which unfavorably impacted net sales . on a pro forma basis - in 2016 , pro forma net income from continuing operations attributable to mcbc decreased 48.9 % due to higher charges on our indefinite-lived intangible asset brand impairment , the above-mentioned indirect tax provision recorded in europe and higher tax expense . the decrease was partially offset by lower cost of goods sold . the pro forma net sales decrease of 2.3 % in 2016 is driven by unfavorable foreign currency exchange rates , which had a negative impact of $ 182.4 million , the indirect tax provision charge of approximately $ 50 million recorded in the fourth quarter of 2016 in our europe business , and lower volume . in 2016 , we had impairment charges of $ 526.0 million versus $ 275.0 million in 2015 as further discussed in `` results of operations '' below . cost of goods sold decreased primarily as result of supply chain cost savings and lower commodity costs . additionally , in accordance with our commitment to deleverage , during the fourth quarter of 2016 , we made principal payments of $ 200 million on our $ 1.0 billion 3 -year tranche term loan . we generated cash flow from operating activities of approximately $ 1.1 billion , representing a 57.4 % increase from $ 715.9 million in 2015 . the increase in operating cash flow in 2016 compared to 2015 is primarily related to additional operating cash generated by the u.s. business from october 11 , 2016 , through december 31 , 2016 , as a result of the acquisition , as well as the $ 227.1 million discretionary contribution made to our u.k. pension plan in 2015 , slightly offset by higher cash paid for income taxes and interest in 2016. regional financial highlights : in the u.s. , millercoors realized lower cost of goods sold and grew net sales per hectoliter with positive pricing and mix which increased our income from continuing operations before income taxes on both a 37 reported basis and a pro forma basis compared to 2015. this increase was partially offset by lower volume . on a reported basis , income from continuing operations was also significantly impacted by the net benefit of approximately $ 3.0 billion recorded within special items , net related to the revaluation of our previously held equity interest and the reclassification of our accumulated other comprehensive loss related to our historical 42 % interest as described in note 4 , `` acquisition and investments '' . additionally , we grew our share of the premium light segment with both coors light and miller lite . in above premium , we purchased three regional craft breweries during the year and began integrating these high potential businesses . although blue moon seasonals and redd 's had a challenging year , peroni continued to grow volume and henry 's hard soda , which was launched just over a year ago , became the number one hard soda franchise in 2016. coors banquet , which completed its tenth consecutive year of volume growth , gained segment share and ended 2016 with accelerating volume trends . during the year we continued strategizing the improvement of our performance in the economy segment and are beginning to see progress . additionally , the closure of the eden brewery was completed in september . in our canada segment , we drove positive pricing and mix , and achieved growth in our above premium brands . coors banquet , mad jack , belgian moon , creemore and our heineken import portfolio all continued to grow volume and market share . however , as a result of market pressure , specifically in quebec and the west , volume declined . we reported a loss from continuing operations before income taxes of $ 135.5 million in 2016 compared to income of $ 277.3 million in 2015 primarily due to indefinite-lived intangible asset brand impairment charges incurred in 2016 of $ 495.2 million as well as lower volume , higher brand amortization and commercial investments and unfavorable foreign currency impacts , partially offset by cost savings and lower compensation expense . additionally , in 2016 , we completed the sale of our vancouver brewery and accordingly recorded a gain of $ 110.4 million within specials items , net . in our europe segment , o ur continued portfolio premiumization and mix management positively impacted our performance and we grew volumes in our above premium brands and market share in the region . in 2016 , we reported income from continuing operations before income taxes of $ 138.0 million , versus a loss of $ 109.7 million in 2015 , primarily driven by lower special charges due to indefinite-lived intangible asset brand impairment charges incurred in 2015 of $ 275.0 million , slightly offset by the indirect tax provision charge recorded in 2016 of approximately $ 50 million as further discussed in detail within note 18 , `` commitments and contingencies '' , higher brand amortization , lower net pension benefit and unfavorable foreign currency movements . our mci segment reported a loss from continuing operations before income taxes of $ 39.7 million in 2016 , compared to $ 24.8 million in the prior year , primarily driven higher special charges as a result of total alcohol prohibition in bihar , which resulted in an aggregate impairment charge of $ 30.8 million recorded in 2016 and negatively impacted our ongoing operations in bihar , the repatriation of our u.k. staropramen rights to our european business and higher brand investments in latin america .
| results of operations united states segment we have presented pro forma financial information for 2016 and 2015 to enhance comparability of financial information between periods . results for the period from january 1 , 2016 , through october 10 , 2016 , are actual results recorded when we accounted for millercoors under the equity method of accounting , and , therefore , its results of operations were reported as equity income within mcbc 's consolidated statements of operations . results for the period from october 11 , 2016 , through december 31 , 2016 , are actual results recorded when millercoors was fully consolidated within our results of operations . we have aggregated these reported 2016 results and applied pro forma adjustments to arrive at combined u.s. segment pro forma financial information for the full year 2016. we have also included actuals and pro forma financial information for 2015. for comparability between 2015 and 2014 , actuals have been presented below . replace_table_token_19_th 42 replace_table_token_20_th n/m = not meaningful ( 1 ) pro forma amounts give effect to the acquisition and completed financing as if they had occurred at the beginning of fiscal year 2015. see part ii - item 7 management 's discussion and analysis , `` pro forma information , '' for details of pro forma adjustments . ( 2 ) historical volumes have been recast to reflect the impacts of aligning policies on reporting financial volumes as a result of the acquisition . see `` worldwide beer volume '' above for further details . ( 3 ) on a reported basis , reflects gross segment sales , purchases , and volumes which are eliminated in the consolidated totals . ( 4 ) see part ii—item 8 financial statements and supplementary data , note 7 , `` special items '' of the notes for detail of special items .
| 5,976 |
factors that could cause or contribute to such differences include , but are not limited to , the buyer 's ability and willingness to close the sale transactions , the volatility of oil and gas prices , production timing and volumes , our ability to continue as a going concern , estimates of proved reserves , operating costs and capital expenditures , economic and competitive conditions , regulatory changes and other uncertainties , as well as those factors discussed below and elsewhere in this annual report , all of which are difficult to predict . as a result of these risks , uncertainties and assumptions , the forward-looking events discussed may not occur . 19 index to financial statements overview alta mesa resources , inc. ( “ amr ” ) , together with its consolidated subsidiaries ( “ we ” , “ us ” , “ our ” or “ the company ” ) , is an independent exploration and production company focused on the development of unconventional onshore oil and natural gas reserves in the eastern portion of the anadarko basin in oklahoma . we operate in two reportable business segments - upstream and midstream . alta mesa holdings , lp ( “ alta mesa ” ) conducts our upstream activities and owns our proved and unproved oil and gas properties located in an area of the anadarko basin commonly referred to as the stack . we generate upstream revenue principally by the production and sale of oil , gas and ngls . kingfisher midstream , llc ( “ kfm ” ) conducts our midstream operations . kfm has a gas and oil gathering network , a cryogenic gas processing plant with offtake capacity , field compression facilities and a produced water disposal system in the anadarko basin that generates revenue primarily through long-term , fee-based contracts . on september 11 , 2019 , amr , alta mesa and all of its subsidiaries ( the “ amh debtors ” and together with amr , the “ initial debtors ” ) filed voluntary petitions ( “ initial bankruptcy petitions ” ) for relief under chapter 11 of the u.s. bankruptcy code ( “ bankruptcy code ” ) in the u.s. bankruptcy court for the southern district of texas ( “ bankruptcy court ” ) . on january 12 , 2020 , kfm and all of its subsidiaries ( collectively , the “ kfm debtors ” ) filed voluntary petitions ( “ kfm bankruptcy petitions ” ) for relief under the bankruptcy code . on january 13 , 2020 , srii opco gp , llc and srii opco ( collectively , the “ srii debtors ” and , together with the kfm debtors , the “ additional debtors ” ) filed voluntary petitions ( “ srii bankruptcy petitions and , together with the kfm bankruptcy petitions , the “ additional bankruptcy petitions ” ) for relief under the bankruptcy code . the additional debtors ' chapter 11 cases are being jointly administered with the initial debtors ' chapter 11 cases . the initial and additional debtors operate their businesses as “ debtors-in-possession ” under the jurisdiction of the bankruptcy court and in accordance with the applicable provisions of the bankruptcy code . on december 31 , 2019 , the initial debtors entered into a purchase and sale agreement ( as amended and restated in january 2020 , the “ amh psa ” ) with bce-mach iii llc ( the “ buyer ” ) pursuant to which the amh debtors agreed to sell to the buyer substantially all of our upstream assets for an unadjusted purchase price of $ 232.0 million in cash , subject to customary purchase price adjustments ( such transaction , the “ amh sale transaction ” ) . on december 31 , 2019 , the kfm debtors entered into a purchase and sale agreement ( as amended and restated in january 2020 , the “ kfm psa ” and , together with the amh psa , the “ psas ” ) with the buyer pursuant to which the kfm debtors agreed to sell to the buyer substantially all of our midstream assets for an unadjusted purchase price of $ 88.0 million in cash , subject to customary purchase price adjustments ( such transaction , the “ kfm sale transaction ” and , together with the amh sale transaction , the “ sale transactions ” ) . the sale transactions are expected to close no later than mid- april 2020 , after which we will no longer own any operating assets . following the expected sale , we intend to provide certain transition services to the buyer for a limited period of time and expect to wind down our remaining business during the first half of 2020 , which will result in the dissolution of amr and its subsidiaries . in march 2020 , amr , the amh debtors and the srii debtors expect to file a chapter 11 plan ( collectively , the “ amr plan ” ) . the amr plan will generally provide for the distribution of the proceeds of the amh sale transaction to amh 's creditors and transfer any remaining assets of the initial debtors and srii opco debtors into a liquidating trust to administer and monetize such assets and to reconcile creditor claims against such debtors for the benefit of their respective creditors . pursuant to the amr plan , all outstanding shares of class a common stock and class c common stock in the company are expected to be canceled . the amr plan will be subject to approval by the bankruptcy court and the initial debtors and the srii debtors are expected to solicit votes on the amr plan from certain of their creditors entitled to vote thereon pursuant to the requirements of the bankruptcy code . we expect the bankruptcy court to hold a hearing to consider confirmation of the amr plan in april 2020. to the extent that the amr plan is confirmed by the bankruptcy court , amr expects the amr plan to become effective and be consummated shortly thereafter . story_separator_special_tag derivatives we previously operated a hedging program in accordance with requirements under the alta mesa rbl . settlements and fair value changes in our derivatives had significant impacts on our results of operations . our derivatives were reported at fair value and were sensitive to changes in the price of oil and gas . changes in derivatives were reported as gain ( loss ) on derivatives , which include both the unrealized increase and decrease in their fair value , as well as the effect of realized settlements during the period . in connection with alta mesa 's bankruptcy filing , we cancelled ( prior to contract settlement date ) all open derivative contracts in september 2019 for net proceeds of approximately $ 4.0 million . proceeds received were used to make permanent repayments against our outstanding borrowings under the alta mesa rbl . after september 2019 , we held no open derivative positions . for 2019 , we recognized a net loss on our derivatives of $ 11.7 million , which includes $ 7.6 million in cash settlements received for derivatives . impairments 2019 as noted above , the initial debtors filed for bankruptcy protection in september 2019 and the additional debtors filed for bankruptcy protection in january 2020. as a result of our bankruptcy filings and previous restrictions by our lenders on our ability to access additional capital , our ability to incur the levels of spending necessary to continue to develop our upstream properties and expand our midstream operations were significantly restricted . this negatively impacted our future drilling plans and our expectations regarding production levels , which contributed to lower throughput expectations for our midstream processing assets . in addition , the sale transactions reflect prices of $ 232.0 million for substantially all of the upstream properties and assets and $ 88.0 million for our midstream assets . as these prices were below the carrying value of the respective assets , we adjusted our carrying values down to the expected sales prices , after estimated direct sales costs , as we believe the buyer has the intent and ability to close the sale transactions . additionally , as a result of the expected sales of our assets described above and our expectations of contracts that will be rejected in bankruptcy , we also recognized impairments of our operating lease right-of-use assets and a long-term prepaid asset due to our inability to recover the carrying value of these assets . 2018 in late fourth quarter of 2018 , the combination of depressed prevailing oil and gas prices , changes to assumed spacing in conjunction with evolving views on the viability of multiple benches and reduced individual well expectations resulted in impairment charges of $ 2.0 billion to our proved and unproved oil and gas properties . individual well expectations were impacted by reductions in estimated reserve recovery of original oil and gas in place based on our 2018 drilling results . in may 2018 , a subsidiary of kfm entered into agreements with a third party to jointly construct and operate a new crude oil pipeline via creation of cimarron that we accounted for under the equity method . cimarron 's proposed pipeline was to extend from our processing plant to cushing , oklahoma and was to be constructed and operated by cimarron , which we determined was controlled by the third-party . as the late-2018 outlook for alta mesa volumes and third-party volume opportunities in the area were significantly lower than initially projected , we suspended future contributions to cimarron and elected to abandon the project . we conducted an impairment analysis resulting in the recognition of an impairment charge of $ 16.0 million during the 2018 successor period to reduce the carrying value of our investment in cimarron to its estimated fair value at december 31 , 2018 . 22 index to financial statements based on an estimation of the fair value of kfm utilizing an income approach that took into consideration the late 2018-outlook for alta mesa and third-party volumes available for processing , we determined that a portion of the value of kfm 's plant and equipment and all of kfm 's intangible assets and goodwill were impaired at december 31 , 2018 . the summary of impairment expense follows ( there was no impairment expense during the 2018 predecessor period ) : replace_table_token_8_th story_separator_special_tag style= '' font-family : inherit ; font-size:10pt ; '' > increased primarily due to an increase in expired and expiring leases , primarily for those in major and kingfisher counties in oklahoma . geological and geophysical costs decreased as a result of headcount reductions . 26 index to financial statements depreciation , depletion and amortization expense for 2019 decreased as a result of a significantly lower depletable base due to impairments recorded during 2018 and 2019. replace_table_token_13_th impairment of assets for 2019 consisted of impairment of our proved and unproved properties , operating lease right-of-use assets and a long-term prepaid asset . our oil and gas properties were impaired during the third quarter of 2019 based on our impairment analysis resulting from our bankruptcy filing and further impaired during the fourth quarter of 2019 after taking into consideration the expected purchase price of the amh sale transaction , net of estimated direct costs , for substantially all of our upstream assets . operating lease right-of-use assets were impaired during the second quarter 2019 based on our inability to fully recover cash outflows due to lessors for certain unused office space . a further impairment of the remaining value of our operating lease right-of-use assets , as well as significant portion of a long-term prepaid asset , was taken as of december 31 , 2019 , due to the expected sale of substantially all of our assets and the expected rejection of certain leases and contracts that indicated we would not be able to fully recover the carrying value of those assets . we believe the buyer has the intent and ability to close the sale transactions .
| results of operations business segments our discussion of results of operations is presented on a segment basis . our two reportable segments are ( 1 ) upstream and ( 2 ) midstream , which separately feature distinct revenue producing activities . we evaluate upstream and midstream segment performance using adjusted ebitdax and adjusted ebitda , respectively . the company 's management believes adjusted ebitdax and adjusted ebitda are useful because they allow users to more effectively evaluate our operating performance , compare the results of our operations from period to period and against our peers without regard to our financing methods or capital structure and because it highlights trends in our business that may not otherwise be apparent when relying solely on gaap measures . adjusted ebitdax and adjusted ebitda should not be considered as an alternative to our segments ' net income ( loss ) , operating income ( loss ) or other performance measures derived in accordance with gaap and may not be comparable to similarly titled measures in other companies ' reports . the company 's applicable corporate activities have also been allocated to the supported business segments . for the year ended december 31 , 2019 compared to the periods from february 9 , 2018 through december 31 , 2018 ( 2018 successor period ) and january 1 , 2018 through february 8 , 2018 ( predecessor period ) the tables included below set forth financial information for the year ended december 31 , 2019 . the 2018 successor period and the predecessor period are distinct reporting periods as a result of the business combination . the predecessor period amounts below exclude operating results related to discontinued operations . we refer to the combined 2018 successor period from february 9 , 2018 through december 31 , 2018 and the predecessor period from january 1 , 2018 through february 8 , 2018 as the “ 2018 period ” .
| 5,977 |
general the following discussion is intended to provide information to facilitate the understanding and assessment of the consolidated financial condition and results of operations of the bancorp and its subsidiaries . it should be read in conjunction with the audited consolidated financial statements and notes appearing elsewhere in this annual report on form 10-k. the bank offers a wide range of financial services . it currently operates 21 branches in southern california , 12 branches in northern california , nine branches in new york state , one branch in massachusetts , two branches in texas , three branches in washington state , three branches in illinois , one branch in new jersey , one branch in nevada , one branch in hong kong and two representative offices ( one in shanghai , china , and one in taipei , taiwan ) . the bank is a commercial bank , servicing primarily individuals , professionals , and small to medium-sized businesses in the local markets in which its branches are located . the financial information presented herein includes the accounts of the bancorp , its subsidiaries , including the bank , and the bank 's consolidated subsidiaries . all material transactions between these entities are eliminated . critical accounting policies the 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 of america . the preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities , revenues and expenses , and related disclosures of contingent assets and liabilities at the date of our consolidated financial statements . actual results may differ from these estimates under different assumptions or conditions . certain accounting policies involve significant judgments and assumptions by management which have a material impact on the carrying value of certain assets and liabilities ; management considers such accounting policies to be critical accounting policies . the judgments and assumptions used by management are based on historical experience and other factors , which are believed to be reasonable under the circumstances . management believes the following are critical accounting policies that require the most significant judgments and estimates used in the preparation of the consolidated financial statements : a llowance for credit l osses the determination of the amount of the provision for credit losses charged to operations reflects management 's current judgment about the credit quality of the loan portfolio and takes into consideration changes in lending policies and procedures , changes in economic and business conditions , changes in the nature and volume of the portfolio and in the terms of loans , changes in the experience , ability , and depth of lending management , changes in the volume and severity of past due , non-accrual , and adversely classified or graded loans , changes in the quality of the loan review system , changes in the value of underlying collateral for collateral-dependent loans , the existence and effect of any concentrations of credit and the effect of competition , legal and regulatory requirements , and other external factors . the nature of the process by which we determine the appropriate allowance for loan losses requires the exercise of considerable judgment . the allowance is increased by the provision for loan losses and decreased by charge-offs when management believes the uncollectibility of a loan is confirmed . subsequent recoveries , if any , are credited to the allowance . a weakening of the economy or other factors that adversely affect asset quality could result in an increase in the number of delinquencies , bankruptcies , or defaults , and a higher level of non-performing assets , net charge-offs , and provision for loan losses in future periods . 35 the total allowance for credit losses consists of two components : specific allowances and general allowances . to determine the adequacy of the allowance in each of these two components , we employ two primary methodologies , the individual loan review analysis methodology and the classification migration methodology . these methodologies support the basis for determining allocations between the various loan categories and the overall adequacy of our allowance to provide for probable losses inherent in the loan portfolio . these methodologies are further supported by additional analysis of relevant factors such as the historical losses in the portfolio , and environmental factors which include trends in delinquency and non-accrual , and other significant factors , such as the national and local economy , the volume and composition of the portfolio , strength of management and loan staff , underwriting standards , and the concentration of credit . the bank 's management allocates a specific allowance for “ impaired credits , ” in accordance with accounting standard codification ( “ asc ” ) section 310-10-35. for non-impaired credits , a general allowance is established for those loans internally classified and risk graded pass , minimally acceptable , special mention , or substandard based on historical losses in the specific loan portfolio and a reserve based on environmental factors determined for that loan group . the level of the general allowance is established to provide coverage for management 's estimate of the credit risk in the loan portfolio by various loan segments not covered by the specific allowance . the allowance for credit losses is discussed in more detail in “ risk elements of the loan portfolio — allowance for credit losses ” below . investment securities the classification and accounting for investment securities are discussed in detail in note 1 to the consolidated financial statements . under asc topic 320 , “ accounting for certain investments in debt and equity securities ” , investment securities must be classified as held-to-maturity , available-for-sale , or trading . the appropriate classification is based partially on our ability to hold the securities to maturity and largely on management 's intentions with respect to either holding or selling the securities . story_separator_special_tag an impairment charge is recognized for the amount by which the carrying amount of goodwill exceeds its implied fair value . valuation of other real estate owned ( oreo ) real estate acquired in the settlement of loans is initially recorded at fair value , less estimated costs to sell . specific valuation allowances on other real estate owned are recorded through charges to operations to recognize declines in fair value subsequent to foreclosure . gains on sales are recognized when certain criteria relating to the buyer 's initial and continuing investment in the property are met . results of operations overview for the year ended december 31 , 2014 , we reported net income attributable to common stockholders of $ 137.8 million , or $ 1.72 per diluted share , compared to net income attributable to common stockholders of $ 113.5 million , or $ 1.43 per share , in 2013 , and net income attributable to common stockholders of $ 101.0 million , or $ 1.28 per share , in 2012. the $ 24.4 million increase in net income from 2013 to 2014 was primarily the result of increases in net interest income , the elimination of dividends on preferred stock , a higher negative provision for credit losses , decreases in costs associated with debt redemption , decreases in amortization of core deposit premiums , decreases in professional services expense , and decreases in oreo expense . these were partially offset by decreases in gains on sale of securities , increases in salaries and incentive compensation expense , increases in litigation expenses , and increases in fdic and state assessments . the return on average assets in 2014 was 1.26 % , improving from 1.17 % in 2013 , and from 1.11 % in 2012. the return on average stockholders ' equity was 8.95 % in 2014 , improving from 8.0 % in 2013 , and from 7.48 % in 2012 . 37 story_separator_special_tag cellspacing= '' 0 '' id= '' mtab2266 '' style= '' font-size : 10pt ; font-family : times new roman , times , serif ; width : 100 % ; text-indent : 0px '' > ● decrease in rate : the average yield of interest bearing assets decreased 7 basis points to 4.10 % in 2014 from 4.17 % in 2013. the rate on taxable investment securities decreased 57 basis points to 1.71 % in 2014 from 2.28 % in 2013. the decrease in taxable investment securities yields caused a $ 9.5 million decline in interest income . the rate on loans decreased 14 basis points to 4.58 % in 2014 from 4.72 % in 2013. the decrease in loan yield caused a $ 11.0 million decline in interest income . ● change in the mix of interest-earning assets : average gross loans , which generally have a higher yield than other types of investments , comprised 83.5 % of total average interest-earning assets in 2014 , an increase from 78.1 % in 2013 . average investment securities comprised 13.9 % of total average interest-bearing assets in 2014 , a decrease from 19.8 % in 2013. interest expense decreased by $ 6.4 million , or 7.8 % , to $ 75.9 million in 2014 , compared with $ 82.3 million in 2013 , primarily due to decreased cost from securities sold under agreements to repurchase offset by increased cost from time deposits and money market deposits . the overall decrease in interest expense was primarily due to decreases in volume on securities sold under agreements to repurchase offset by increases on rate and volume on interest bearing deposits as discussed below : ● changes in volume : average securities sold under agreements to repurchase decreased $ 343.0 million , or 35.3 % in 2014 and contributed to $ 13.5 million decrease in interest expense . average time deposits increased $ 264.2 million , or 6.6 % , and average money market deposits increased $ 191.7 million , or 15.8 % , causing interest expense to increase by $ 3.3 million . the changes in volume contributed to decreases in interest expense of $ 10.8 million ● increase in rate : the average cost of interest bearing deposits increased to 0.66 % in 2014 from 0.64 % in 2013. the average cost securities sold under agreements to repurchase increased to 3.92 % in 2014 from 3.88 % in 2013. the average cost of long-term debt increased to 3.73 % in 2014 from 2.18 % in 2013. the increase in rate caused interest expense to increase by $ 4.3 million . ● change in the mix of interest-bearing liabilities : average interest bearing deposits of $ 6.92 billion increased to 88.5 % of total interest-bearing liabilities in 2014 compared to 83.9 % in 2013. offsetting the increase , average securities sold under agreements to repurchase decreased to 8.1 % of total interest-bearing liabilities in 2014 compared to 12.9 % in 2013. our taxable-equivalent net interest margin , defined as taxable-equivalent net interest income to average interest-earning assets , increased to 3.35 % in 2014 from 3.33 % in 2013. the increase in the net interest margin was due to the impact from increases in loans and decreases in securities sold under agreements to repurchase offset by decreases in investment securities . net interest income increased $ 3.4 million , or 1.1 % , from $ 321.3 million in 2012 to $ 324.7 million in 2013. taxable-equivalent net interest income , using a statutory federal income tax rate of 35 % , totaled $ 325.2 million in 2013 , compared with $ 323.5 million in 2012 , an increase of $ 1.7 million , or 0.5 % .
| highlights ● diluted earnings per share increased 20.3 % to $ 1.72 per share for the year ended december 31 , 2014 compared to $ 1.43 per share for the year ended december 31 , 2013 . ● strong growth in loans – total loans increased $ 829.5 million , or 10.3 % , excluding loans held for sale , during 2014 , to $ 8.9 billion at december 31 , 2014 , compared to $ 8.1 billion at december 31 , 2013. net income available to common stockholders and key financial performance ratios are presented below for the three years indicated : replace_table_token_5_th net interest income net interest income increased $ 18.1 million , or 5.6 % , from 324.7 million in 2013 to $ 342.8 million in 2014. interest income on tax-exempt securities was zero in 2014 compared to $ 1.0 million , or $ 1.5 million on a tax-equivalent basis , in 2013. the increase in net interest income was due primarily to the the increase in loan interest income and the decrease in interest expense from securities sold under agreements to repurchase , offset by the decrease in interest income from available-for-sale securities . average loans for 2014 were $ 8.53 billion , a $ 901.7 million , or an 11.8 % , increase from $ 7.63 billion in 2013. compared with 2013 , average commercial mortgage loans increased $ 411.4 million , or 10.6 % , average residential mortgage loans increased $ 222.8 million , or 15.7 % , average commercial loans increased $ 173.8 million , or 8.1 % , and average real estate construction loans increased $ 95.4 million , or 53.9 % . average investment securities were $ 1.42 billion in 2014 , a decrease of $ 515.6 million , or 26.7 % , from 2013 , due primarily to decreases in agency mortgage-backed securities of $ 483.4 million , or 38.6 % .
| 5,978 |
exchange act of 1934 , as amended , or the exchange act . these statements are often identified by the use of words such as may , will , expect , believe , anticipate , intend , could , should , estimate , or continue , and similar expressions or variations . such forward-looking statements are subject to risks , uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements . factors that could cause or contribute to such differences include , but are not limited to , those discussed in the section titled risk factors , set forth in part i , item 1a of this annual report on form 10-k and elsewhere in this report . the forward-looking statements in this annual report on form 10-k represent our views as of the date of this annual report on form 10-k. we anticipate that subsequent events and developments will cause our views to change . however , while we may elect to update these forward-looking statements at some point in the future , we have no current intention of doing so except to the extent required by applicable law . you should , therefore , not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this annual report on form 10-k. we are a producer of custom industrial enzymes . our products enable novel , sustainable processes for the manufacture of biofuels , chemicals , and pharmaceutical ingredients . we are developing our flagship codexyme cellulase enzymes to convert non-food plant material , which we call cellulosic biomass , into affordable sugars , which can then be converted into renewable fuels and chemicals . we have been developing these cellulase enzymes with royal dutch shell plc , or shell , since 2006 for applications in the biofuels markets . we intend to market codexyme cellulase enzymes to chemicals manufacturers worldwide . we are also developing our own novel processes to manufacture certain specialty and bio-based commodity chemicals , which we intend to commercialize with strategic partners . the first of these products is codexol detergent alcohols . detergent alcohols are used to manufacture surfactants , which are key , active cleaning ingredients in consumer products such as shampoos , liquid soaps and laundry detergents . we have commercialized our technology , products and services in the pharmaceuticals market . there are currently over 50 pharmaceutical firms using our technology , products and services in their manufacturing process development , including the production of some of the world 's bestselling and fastest growing drugs . we create our products by applying our codeevolver directed evolution technology platform which introduces genetic mutations into microorganisms , giving rise to changes in the enzymes which they produce . once we identify potentially beneficial mutations , we test combinations of these mutations until we have created variant enzymes that exhibit marketable performance characteristics superior to competitive products . this process allows us to make continuous , efficient improvements to the performance of our enzymes . to date , we have generated revenues primarily from collaborative research and development funding , pharmaceutical product sales and government grants . our revenues have increased in each of the last three fiscal years , growing from $ 82.9 million in 2009 , to $ 107.1 million in 2010 and $ 123.9 million in 2011. most of our revenues since inception have been derived from collaborative research and development arrangements , which accounted for 78 % , 66 % , and 58 % of our revenues in , 2009 , 2010 and 2011 , respectively . collaborative research and development received from shell accounted for 76 % , 62 % and 51 % of our revenues in 2009 , 2010 and 2011 , respectively . 55 our product sales accounted for 22 % , 31 % and 39 % of our revenues in 2009 , 2010 and 2011 , respectively . our product sales have increased in each of the last three fiscal years , from $ 18.6 million in 2009 , to $ 32.8 million in 2010 and to $ 49.0 million in 2011. notwithstanding our revenue growth , we have continued to experience significant losses as we have invested heavily in research and development and administrative infrastructure in connection with the growth in our business . in light of the growth in market acceptance of our products and services to date , we intend to continue our investment in research and development . as of december 31 , 2011 , we had an accumulated deficit of $ 184.7 million . we incurred net losses of $ 20.3 million , $ 8.5 million and $ 16.6 million in the years ended december 31 , 2009 , 2010 and 2011 , respectively . we targeted the pharmaceutical industry as the first market for our products and services . in this market , we have historically entered into collaborations , which have involved complex service and intellectual property agreements under which we research and develop optimized enzymes for innovator pharmaceutical companies in connection with their drug development efforts . in these collaborations , we typically receive revenues in the form of one or more of the following : up-front payments , milestone payments , payments based upon the number of full-time employee equivalents , or ftes , engaged in related research and development activities and licensing fees and royalties . our pharmaceutical products include enzymes , pharmaceutical intermediates , active pharmaceutical ingredients , or apis , and codex ® biocatalyst panels and kits . our pharmaceutical customers incorporate our enzymes into the manufacturing processes used to produce their drugs . our intermediates are complex chemical substances that have been manufactured by , or on behalf of , us using our enzymes . drug manufacturers use intermediates to produce the apis used in their drugs . story_separator_special_tag in 2011 , we met or exceeded four out of six technical goals under the collaborative research agreement by the applicable deadlines and earned milestone payments of $ 5.6 million . as of december 31 , 2011 , we remain eligible for $ 8.5 million in milestone payments related to the technical goals for 2012 and $ 10.0 million in milestone payments for the commercial goals . shell will also be required to pay us a royalty per gallon with respect to certain products manufactured using our technology platform , including liquid fuels , fuel additives and lubricants , if shell or any of its licensees manufactures such products . with respect to cellulosic biomass converted into sugars , shell agreed to pay us a royalty per gallon of fuel product made from those sugars . with respect to sugars converted into fuel , shell agreed to pay us a separate royalty per gallon of fuel product . we may be entitled to receive one or both of these royalties depending on whether shell uses our technology to commercialize one or both of these steps . under our research and development collaboration with shell , we retain ownership of all intellectual property we develop , other than patent rights related to certain fuel innovations , and shell will have an exclusive license to such intellectual property we develop . we have agreed to work exclusively with shell until november 2012 to convert cellulosic biomass into fermentable sugars that are used in the production of fuels and related products and to convert these sugars into fuels and related products . however , shell is not required to work exclusively with us , and could develop or pursue alternative technologies that it decides to use for commercialization purposes instead of any technology developed under our collaborative research agreement . even if shell decides to commercialize products based on our technologies , they have no obligation to purchase their biocatalyst supply from us . if shell chooses to commercialize any biofuels products developed through our 57 collaboration , we believe that the combination of our technology platform with shell 's proven project development capabilities and resources could enable a biofuels solution that extends from the conversion of cellulosic biomass into biofuels to delivery and distribution of refined biofuels to consumers at the pump . in connection with our collaboration with shell , we entered into a multi-party collaborative research and license agreement with iogen energy corporation , or iogen , and shell in july 2009 , which is focused on the conversion of cellulosic biomass to ethanol for commercial scale production . iogen has agreed to pay us a royalty per gallon with respect to certain fuel products , which include liquid fuels , fuel additives and lubricants , that are covered by inventions jointly made by us and iogen , but that are solely owned by iogen . we will be entitled to collect royalties from shell or iogen for any use of our biofuels technology by shell or iogen . shell can choose to commercialize cellulosic ethanol manufactured using our technology independently , or in collaboration with iogen . in october 2010 , we acquired maxygen inc 's , or maxygen , directed evolution technology patent portfolio for net consideration of $ 20.2 million consisting of $ 20.0 million paid to maxygen , related transaction costs of $ 0.7 million and a royalty payable extinguishment of $ 0.5 million . in conjunction with this transaction , we terminated our existing license agreement with maxygen including terminating our obligation to pay biofuels royalties to maxygen . during 2011 , our carbon management program received $ 2.2 million in funding under a 2010 arpa-e recovery act program grant from the u.s. department of energy for development of innovative technology to remove carbon dioxide from coal-fired power plant emissions . the grant supports development of biocatalysts for more efficient carbon capture from these plants and terminates in june 2012. we also had a collaboration in carbon management with alstom power , inc. or alstom which included funding for up to 12 ftes . we recognized $ 3.8 million in revenue in 2011 from this collaboration . the collaboration terminated in october 2011. we also received grant revenues in 2011 of $ 1.3 million from the singapore economic development board , or edb , for our pharmaceuticals research and development center in singapore . our strategy for collaborative arrangements is to retain substantial participation in the future economic value of our technology while receiving current cash payments to offset research and development costs and working capital needs . these agreements are complex and have multiple elements that cover a variety of present and future activities . in addition , certain elements of these agreements are intrinsically difficult to separate and treat as separate units for accounting purposes , especially exclusivity payments . consequently , we expect to recognize these exclusivity payments over the term of the exclusivity period . we have limited internal manufacturing capacity at our headquarters in redwood city , california . we expect to rely on third-party manufacturers for commercial production of our biocatalysts for the foreseeable future . our in-house manufacturing is dedicated to producing both our codex ® biocatalyst panels and kits and biocatalysts for use by our customers in pilot scale production . we also supply initial commercial quantities of biocatalysts for use by our collaborators to produce pharmaceutical intermediates and manufacture biocatalysts that we sell . we actively seek contract manufacturers who are willing to invest in capital equipment to manufacture our products at commercial scale . as a result , we are heavily dependent on the availability of manufacturing capacity at , and the reliability of , our contract manufacturers . we also pursue collaborations with industry leaders that allow us to leverage our collaborators ' engineering , manufacturing and commercial expertise , their distribution infrastructure and their ability to fund commercial scale production facilities .
| results of operations financial operations overview the following table shows the amounts from our consolidated statements of operations for the periods presented ( in thousands ) . replace_table_token_6_th nm = not meaningful years ended december 31 , 2011 and 2010 revenues replace_table_token_7_th revenues increased during the year ended december 31 , 2011 compared to the year ended december 31 , 2010 , due to increases from product sales and collaborative research and development projects which was partially offset by a decline from government grants . product revenues increased $ 16.2 million or 49 % in 2011 compared to 2010 primarily due to an increase in product sales to both generic and innovator pharmaceutical customers . collaborative research and development revenues increased $ 1.2 million in 2011 compared to 2010 primarily due to $ 3.9 million increase in our revenues from collaborations with alstom in carbon management partially offset by a $ 2.9 million decrease in our collaboration revenues related to shell . our pharmaceutical collaboration projects increased $ 0.3 million in 2011 . 64 collaborative research and development revenues derived from shell decreased $ 2.9 million to $ 63.2 million in 2011 compared to $ 66.1 million in 2010. this includes milestone payments of $ 5.6 million and $ 7.4 million earned during 2011 and 2010 , respectively . we achieved four of six milestone targets in 2011 and seven of eight milestone targets in 2010. effective august 2011 , shell reduced the number of funded ftes engaged in our research and development collaboration with them from 128 to 116 ftes . this reduction was to ftes located in the united states . we had an average of 124 and 128 ftes in this collaboration during the years ended december 31 , 2011 and 2010 , respectively .
| 5,979 |
factors that could cause or contribute to those differences include , but are not limited to , those identified below and those discussed in the section entitled “ risk factors ” included elsewhere in this annual report on form 10-k. this annual report on form 10-k contains “ forward-looking statements ” within the meaning of section 21e of the securities exchange act of 1934 , as amended , or the “ exchange act ” . these statements are often identified by the use of words such as “ believe , ” “ may , ” “ potentially , ” “ will , ” “ estimate , ” “ continue , ” “ anticipate , ” “ intend , ” “ could , ” “ should , ” “ would , ” “ project , ” “ plan , ” “ predict , ” “ expect , ” “ seek ” and similar expressions or variations . such forward-looking statements are subject to risks , uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements . factors that could cause or contribute to such differences include , but are not limited to , those identified herein , and those discussed in the section titled “ risk factors ” , set forth in part i , item 1a of this annual report on form 10-k. except as required by law , we disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements . overview we provide a leading cross-channel advertising cloud platform that enables digital marketers to improve performance of their online advertising campaigns across devices , realize efficiencies and time savings , and make better business decisions . our integrated platform is a software-as-a-service , or “ saas , ” analytics , workflow , and optimization solution for marketing professionals , allowing them to effectively manage their digital advertising spend across search , social and display channels . our software solution is designed to help our customers : · measure the effectiveness of their advertising campaigns through our proprietary reporting and analytics capabilities ; · manage and execute campaigns through our intuitive user interface and underlying technology that streamlines and automates key functions , such as ad creation and bidding , across multiple publishers and channels ; and · optimize campaigns across multiple publishers and channels based on market and business data to achieve desired revenue outcomes using our predictive bid management technology . in december 2015 , our customers collectively managed more than $ 7.8 billion in annualized advertising spend on our platform globally across a wide range of industries . we market and sell our solutions to advertisers directly and through leading advertising agencies . for 2015 , 2014 and 2013 , our revenues were $ 108.5 million , $ 99.4 million and $ 77.3 million , respectively , representing period-over-period growth of 9 % , 29 % and 30 % , respectively . we incurred net losses of $ 33.3 million , $ 33.2 million and $ 35.9 million in 2015 , 2014 and 2013 , respectively . the majority of our revenue is earned from subscription contracts under which we provide advertisers with access to our search , social and display advertising management platform , either directly or through the advertiser 's relationship with an agency that has a contract with us . in accordance with the subscription contracts , we charge fees generally based upon the amount of advertising spend that our customers manage through our platform . our search subscription contracts are generally one year or longer in length , while initial social and display contracts may vary in duration . under our subscription contracts with most of our direct advertisers and some of our agency customers , customers are contractually committed to a minimum monthly platform fee , which is payable on a monthly basis over the duration of the contract and is generally greater than one-half of our estimated monthly revenues from these customers , at the time the contract is signed . however , most of our subscription contracts with our advertising agency customers do not include a committed minimum monthly platform fee . our contractual arrangement is with the advertising agency and the advertiser is not a party to the terms of the contract . accordingly , most advertisers through our agency customers do not have a commitment to use our services and the advertisers may be added or removed from our platform at the discretion of the respective agency . we invoice the advertising agency for the amounts due under the contract . historically , approximately half of our revenues have been earned from advertising agency customers . our subscription fee under most contracts is variable based upon the value of advertising spend that our customers manage through our platform . our deferred revenues consist of the unearned portion of billed subscription fees . our subscription contracts indicate the date at which we begin invoicing our customers , which is generally the first day of the month following the execution of the contract . we generally invoice the greater of the minimum monthly platform fee or the percentage of advertising spend on our platform . the implementation process for new advertisers is typically four to six weeks ; however , we generally have not charged a separate implementation fee under our standard subscription contracts . our implementation and customer support personnel , as well as costs associated with our operating infrastructure , are included in our cost of revenues . our cost of revenues and operating expenses have increased in absolute dollars due to our need to increase our 31 headcount to grow our business and to increase data center capacity to support customer revenue growth on our platform . we expect that our cost of revenues wil l continue to increase in absolute dollars as we continue to invest in our growth . story_separator_special_tag we believe that these investments are necessary to maintain and improve our competitive position . general and administrative expenses general and administrative expenses consist primarily of personnel costs , including salaries , benefits , stock-based compensation expense and bonuses , for our administrative , legal , human resources , finance and accounting employees and executives . also included are non-personnel costs , such as travel-related expenses , audit fees , tax services and legal fees , as well as professional fees , insurance and other corporate expenses , along with amortization of intangible assets and allocated overhead . we expect to incur incremental costs associated with supporting the growth of our business , both in terms of size and geographic expansion , and to meet the increased compliance requirements associated with our continued operation as a public company . such costs include increases in our accounting and legal personnel , additional consulting , legal and audit fees , insurance costs , board of directors ' compensation and the costs of achieving and maintaining compliance with the sarbanes-oxley act of 2002. as a result , our general and administrative expenses may increase in absolute dollars in future periods . other income ( expenses ) , net and interest expenses , net other income ( expenses ) , net , primarily consists of foreign currency transaction gains and losses . interest expense , net , consists primarily of interest income earned on our cash equivalents offset by the interest expense for our capital lease payments and borrowings under our equipment advances and revolving line of credit . ( provision for ) benefit from income taxes the ( provision for ) benefit from income taxes consists of federal , state and foreign income taxes . due to recent losses , we maintain a valuation allowance against our deferred tax assets as of december 31 , 2015. we consider all available evidence , both positive and negative , in assessing the extent to which a valuation allowance should be applied against our deferred tax assets . 33 results of operations the following table is a summary of our consolidated statements of operations . the period-to-period comparisons of results are not necessarily indicative of results for future periods . replace_table_token_9_th ( 1 ) stock-based compensation expense included in the consolidated statements of operations data above was as follows : replace_table_token_10_th ( 2 ) amortization of intangible assets included in the consolidated statements of operations data above was as follows : replace_table_token_11_th ( 3 ) restructuring related expenses included in the consolidated statements of operations data above was as follows : replace_table_token_12_th 34 the following table sets forth our consolidated results of operations for the specified periods as a percentage of our revenues for those periods . percent of revenue figures are rounded and therefore may not subtotal exactly . replace_table_token_13_th the following tables set forth our consolidated revenues by geographic area : replace_table_token_14_th replace_table_token_15_th adjusted ebitda adjusted ebitda is a financial measure not calculated in accordance with generally accepted accounting principles in the united states ( “ gaap ” ) . we define adjusted ebitda as net loss , adjusted for stock-based compensation expense , depreciation , the amortization of internally developed software , the amortization of intangible assets , the capitalization of internally developed software , interest expense , net , the benefit from or provision for income taxes , other income or expenses , net , and costs associated with acquisitions and restructurings . adjusted ebitda is a financial measure that is not calculated in accordance with gaap . adjusted ebitda should not be considered as an alternative to net loss , operating loss or any other measure of financial performance calculated and presented in accordance with gaap . we prepare adjusted ebitda to eliminate the impact of items that we do not consider indicative of our core operating performance . investors are encouraged to evaluate these adjustments and the reasons we consider them appropriate . 35 we believe adjusted ebitda is useful to investors in evaluating our operating performance for the following reasons : · adjusted ebitda is widely used by investors and securities analysts to measure a company 's operating performance without regard to items , such as stock-based compensation expense , depreciation and amortization , capitalized software development costs , interest expense , net , benefit from or provision for income taxes , other income or expenses , net , costs associated with acquisitions and restructurings , that can vary substantially from company to company depending upon their financing , capital structures and the method by which assets were acquired ; · our management uses adjusted ebitda in conjunction with gaap financial measures for bonus compensation and planning purposes , including the preparation of our annual operating budget , as a measure of operating performance and the effectiveness of our business strategies and in communications with our board of directors concerning our financial performance ; and · adjusted ebitda provides consistency and comparability with our past financial performance , facilitates period-to-period comparisons of operations and also facilitates comparisons with other peer companies , many of which use similar non-gaap financial measures to supplement their gaap results . we understand that , although adjusted ebitda is frequently used by investors and securities analysts in their evaluations of companies , adjusted ebitda has limitations as an analytical tool , and investors should not consider it in isolation or as a substitute for analysis of our results of operations as reported under gaap .
| quarterly results of operations the following table sets forth our unaudited quarterly consolidated statements of operations data for each of the eight quarters in the period ended december 31 , 2015. we have prepared the quarterly data on a basis consistent with our audited annual financial statements , including , in the opinion of management , all normal recurring adjustments necessary for the fair statement of the financial information contained in these statements . the historical results are not necessarily indicative of future results and should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report on form 10-k. replace_table_token_28_th ( 1 ) stock-based compensation expense included in the consolidated statements of operations data above was as follows : replace_table_token_29_th ( 2 ) amortization of intangible assets included in the consolidated statements of operations data above was as follows : replace_table_token_30_th 41 ( 3 ) restructuring related expenses included in the consolidated statements of operations data above was as follows : replace_table_token_31_th the following table sets forth our consolidated results of operations for the specified periods as a percentage of our revenues for those periods . percent of revenue figures are rounded and therefore may not subtotal exactly . replace_table_token_32_th liquidity and capital resources since our incorporation in march 2006 , we have relied primarily on sales of our capital stock to fund our operating activities . from incorporation until our ipo , we raised $ 105.7 million , net of related issuance costs , in funding through private placements of our preferred stock . in march and april 2013 , we raised net proceeds of $ 109.3 million in our ipo . from time to time , we have also utilized equipment lines to fund capital purchases .
| 5,980 |
a valuation allowance is provided for known and anticipated credit losses , as determined by story_separator_special_tag the following discussion of our consolidated results of operations and cash flows for the years ended december 31 , 2011 , 2010 and 2009 and consolidated financial condition as of december 31 , 2011 and 2010 should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this document . overview we are a diversified spanish-language media company with a unique portfolio of television and radio assets that reach hispanic consumers across the united states , as well as the border markets of mexico . we operate in two reportable segments : television broadcasting and radio broadcasting . our net revenue for the year ended december 31 , 2011 was $ 194.4 million . of that amount , revenue generated by our television segment accounted for 68 % and revenue generated by our radio segment accounted for 32 % . as of the date of filing this report , we own and or operate 53 primary television stations located primarily in california , colorado , connecticut , florida , massachusetts , nevada , new mexico , texas and washington , d.c. we own and operate 48 radio stations ( 37 fm and 11 am ) located primarily in arizona , california , colorado , florida , nevada , new mexico and texas . our television and radio stations typically have local websites and other digital and interactive media platforms that provide users with news and information as well as a variety of other products and services . we generate revenue primarily from sales of national and local advertising time on television and radio stations , and from retransmission consent agreements . advertising rates are , in large part , based on each medium 's ability to attract audiences in demographic groups targeted by advertisers . we recognize advertising revenue when commercials are broadcast . 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 directly with agencies , we record net revenue from these agencies . seasonal revenue fluctuations are common in the broadcasting industry and are due primarily to variations in advertising expenditures by both local and national advertisers . in addition , advertising revenue is generally higher during even-numbered years resulting from political advertising and every four years resulting from advertising aired during the world cup ( 2010 and 2014 ) . we also generate revenue from retransmission consent agreements that are entered into with mvpds . we refer to such revenue 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 when it is accrued pursuant to the agreements we have entered into with respect to such revenue . our primary expenses are employee compensation , including commissions paid to our sales staff and amounts paid to our national representative firms , as well as expenses for marketing , promotion and selling , technical , local programming , engineering , and general and administrative . our local programming costs for television consist primarily of costs related to producing a local newscast in most of our markets . the comparability of our results between 2011 and 2010 is affected by acquisitions in those periods . in those years , we primarily acquired new media properties in markets where we already owned existing media properties . while new media properties contribute to the financial results of their markets , we do not attempt to measure their effect as they typically are integrated into existing operations . 43 story_separator_special_tag the federal communications commission , or fcc , licenses for any of the company 's univision-affiliated television stations . each share of class u common stock is automatically convertible into one share of the company 's class a common stock ( subject to adjustment for stock splits , dividends or combinations ) in connection with any transfer to a third party that is not an affiliate of univision . 45 results of operations separate financial data for each of the company 's operating segments is provided below . segment operating profit ( loss ) is defined as operating profit ( loss ) before corporate expenses , loss ( gain ) on sale of assets and impairment charge . the company evaluates the performance of its operating segments based on the following ( in thousands ) : replace_table_token_8_th * percentage not meaningful . ( 1 ) consolidated adjusted ebitda means net income ( loss ) plus gain ( loss ) on sale of assets , depreciation and amortization , non-cash impairment charge , non-cash stock-based compensation included in operating and corporate expenses , net interest expense , other income ( loss ) , gain ( loss ) on debt extinguishment , income tax 46 ( expense ) benefit , equity in net income ( loss ) of nonconsolidated affiliate , non-cash losses and syndication programming amortization less syndication programming payments . we use the term consolidated adjusted ebitda because that measure is defined in our syndicated bank credit facility and does not include gain ( loss ) on sale of assets , depreciation and amortization , non-cash impairment charge , non-cash stock-based compensation , net interest expense , other income ( loss ) , gain ( loss ) on debt extinguishment , income tax ( expense ) benefit , equity in net income ( loss ) of nonconsolidated affiliate , non-cash losses and syndication programming amortization and does include syndication programming payments . since our ability to borrow from our 2010 credit facility is based on a consolidated adjusted ebitda financial covenant , we believe that it is important to disclose consolidated adjusted ebitda to our investors . story_separator_special_tag and 2010. we believe that selling , general and administrative expenses will increase during 2012 primarily as a result of employee salary increases during the first quarter of 2012 and expenses associated with the anticipated increase in net revenue . we had implemented salary reductions as a cost-savings strategy during the first quarter of 2009. corporate expenses . corporate expenses decreased to $ 15.7 million for the year ended december 31 , 2011 from $ 18.4 million for the year ended december 31 , 2010 , a decrease of $ 2.7 million . the decrease was primarily attributable to higher expenses in 2010 due to the creation of a reserve for a $ 3.0 million note 49 receivable and accrued interest relating to the sale of our publishing segment in 2003 , partially offset by the increase in interactive expenses and partial restoration of employee salaries in 2011. as a percentage of net revenue , corporate expenses decreased to 8 % for the year ended december 31 , 2011 from 9 % for the year ended december 31 , 2010. corporate expenses as a percentage of net revenue decreased because the decrease in corporate expenses outpaced the decrease in net revenue . we believe that corporate expenses will increase during 2012 primarily as a result of employee salary increases during the first quarter of 2012. we had implemented salary reductions as a cost-savings strategy during the first quarter of 2009. depreciation and amortization . depreciation and amortization decreased to $ 18.7 million for the year ended december 31 , 2011 from $ 19.2 million for the year ended december 31 , 2010 , a decrease of $ 0.5 million . the decrease was primarily due to a decrease in depreciation as certain assets are now fully depreciated . impairment charge . continuing operations includes an impairment charge of $ 36.1 million for the year ended december 31 , 2010 , which was a result of a $ 9.9 million impairment of goodwill in our radio segment , a $ 2.6 million impairment of our radio fcc licenses and a $ 23.6 million impairment of our television fcc licenses . operating income . as a result of the above factors , operating income was $ 35.0 million for the year ended december 31 , 2011 , compared to $ 3.9 million for the year ended december 31 , 2010 , after giving effect to the impairment charge in 2010. interest expense . interest expense increased to $ 37.7 million for the year ended december 31 , 2011 from $ 24.4 million for the year ended december 31 , 2010 , an increase of $ 13.3 million . the increase in interest expense was primarily attributable to the change in the fair value of our interest rate swap agreements during the year ended december 31 , 2010. those interest rate swap agreements were terminated in july 2010. other income . we recorded other income of $ 0.7 million related to the remeasurement of our previously-held 50 % interest in ler to fair value in connection with our acquisition of the remaining 50 % interest of ler during the year ended december 31 , 2011. loss on debt extinguishment . we recorded a loss on debt extinguishment of $ 0.4 million related to unamortized finance costs and bond discount associated with the repurchase of notes during the year ended december 31 , 2011. we recorded a loss on debt extinguishment of $ 1.0 million related to unamortized finance costs under our previous amended syndicated bank credit facility agreement for the year ended december 31 , 2010. income tax expense . income tax expense for the year ended december 31 , 2011 was $ 5.8 million . the effective income tax rate was higher than our expected statutory rate of approximately 38 % due to changes in the valuation allowance and deductions attributable to indefinite-lived intangible assets . income tax benefit for the year ended december 31 , 2010 was $ 3.4 million . the effective income tax rate was lower than our expected statutory rate of approximately 38 % due to changes in the valuation allowance and deductions attributable to indefinite-lived intangibles . as of december 31 , 2011 , we believe that our deferred tax assets will not be fully realized in the future and we are providing a full valuation allowance against those deferred tax assets . in determining our deferred tax assets subject to a valuation allowance , we excluded the deferred tax liabilities attributable to indefinite-lived intangibles . 50 segment operations television net revenue . net revenue in our television segment decreased to $ 131.5 million for the year ended december 31 , 2011 from $ 132.6 million for the year ended december 31 , 2010 , a decrease of $ 1.1 million . the decrease was primarily attributable to a decrease in national advertising , the non-occurrence of advertising revenue from the world cup in 2011 compared to 2010 and a decrease in political advertising revenue , which was not material in 2011 , partially offset by an increase in retransmission consent revenue . we generated a total of $ 17.1 million and $ 13.7 million in retransmission consent revenue for the years ended december 31 , 2011 and 2010 , respectively . we anticipate that retransmission consent revenue for the full year 2012 will be greater than it was for the full year 2011 and will continue to be a growing source of net revenues in future periods . direct operating expenses . direct operating expenses in our television segment increased to $ 53.8 million for the year ended december 31 , 2011 from $ 52.9 million for the year ended december 31 , 2010 , an increase of $ 0.9 million . the increase was primarily attributable to an increase in salary expense as a result of the partial restoration of employee salaries in 2011 , partially offset by a decrease in expenses associated with the decrease in net revenue .
| highlights during 2011 , we faced challenging comparisons to 2010 , when we benefited from world cup and political advertising revenue and revenue from a large los angeles promotional event , whereas revenue from these and other similar periodically occurring revenue sources either did not occur or were not material in 2011. net revenue decreased to $ 194.4 million , a decrease of $ 6.1 million , or 3 % , from $ 200.5 million in 2010. nevertheless , our audience shares remain strong in the nation 's most densely populated hispanic markets . net revenue for our television segment decreased to $ 131.5 million in 2011 , from $ 132.6 million in 2010. this decrease of $ 1.1 million , or 1 % , in net revenue , was primarily due to a decrease in national advertising , the non-occurrence of advertising revenue from the world cup in 2011 compared to 2010 and a decrease in political advertising revenue , which was not material in 2011 , partially offset by an increase in retransmission consent revenue . we generated a total of $ 17.1 million of retransmission consent revenue in 2011. we anticipate that retransmission consent revenue for the full year 2012 will be greater than it was for the full year 2011 and will continue to be a growing source of net revenue in future periods . net revenue for our radio segment decreased to $ 62.9 million in 2011 , from $ 67.9 in 2010. this decrease of $ 5.0 million , or 7 % , was primarily due to the non-occurrence of advertising revenue from the world cup in 2011 compared to 2010 and a decrease in political advertising revenue , which was not material in 2011. acquisitions and dispositions on january 3 , 2011 , we completed the acquisition of ler , a representation firm that sells national spots and digital advertising to advertising agencies on our behalf and other clients .
| 5,981 |
as of december 31 , 2011 , the company had total interest reserves of $ 6.8 million on 34 loans with an aggregate unpaid principal balance of $ 524.3 million and had three non-performing loans with an aggregate unpaid principal balance of $ 38.4 million with a funded interest reserve of $ 0.1 million . income from non-performing loans is generally recognized on a cash basis only to the extent it is story_separator_special_tag you should read the following discussion in conjunction with the sections of this report entitled `` risk factors '' , `` forward-looking statements '' , and `` selected consolidated financial information of arbor realty trust , inc. and subsidiaries '' and the historical consolidated financial statements of arbor realty trust , inc. and subsidiaries , including related notes , included elsewhere in this report . story_separator_special_tag and a 46 purchase out of bankruptcy , respectively , in the first quarter of 2011. we also acquired one new real estate owned property through deed in lieu of foreclosure and sold a real estate property held-for-sale in 2010. we have made , and continue to make modifications and extensions to loans when it is economically feasible to do so . in some cases , a modification is a more viable alternative to foreclosure proceedings when a borrower can not comply with loan terms . in doing so , lower borrower interest rates , combined with non-performing loans , will lower our net interest margins when comparing interest income to our costs of financing . these trends may persist with a prolonged economic downturn and we feel if they do , there will be continued modifications and delinquencies in the foreseeable future , which may result in reduced net interest margins and additional losses throughout our sector . commercial real estate financing companies were severely impacted by the economic downturn and until relatively recently have had very little access to the capital markets or the debt markets in order to meet their existing obligations or to refinance maturing debt . we responded to these troubled times by decreasing investment activity for capital preservation , aggressively managing our assets through restructuring and extending our debt facilities and repurchasing our previously issued debt at discounts when economically feasible . in order to accomplish these goals , we have worked closely with our borrowers in restructuring our loans , receiving payoffs and paydowns and monetizing our investments as appropriate . additionally , based on available liquidity and market opportunities , we have from time to time repurchased our debt at discounts as well as shares of our common stock . we will continue to remain focused on executing these strategies when appropriate and where available if this significant economic downturn persists . refer to item 1a `` risk factors '' above and item 7a . `` quantitative and qualitative disclosures about market risk '' below for additional risk factors . sources of operating revenues we derive our operating revenues primarily through interest received from making real estate-related bridge , mezzanine and junior participation loans and preferred equity investments . interest income earned on these loans and investments represented approximately 75 % , 97 % and 96 % of our total revenues in 2011 , 2010 and 2009 , respectively . interest income may also be derived from profits on equity participation interests . no such interest income was recognized in 2011 , 2010 and 2009. we also derive interest income from our investments in commercial real estate collateralized debt obligation ( `` cdo '' ) bond securities , commercial mortgage-backed securities ( `` cmbs '' ) and residential mortgage-backed securities ( `` rmbs '' ) . interest on these investments represented approximately 1 % , 2 % and 4 % of our total revenues in 2011 , 2010 and 2009 , respectively . property operating income is derived from our real estate owned assets . in 2011 , property operating income represented approximately 24 % , of our total revenue . the operation of a portfolio of hotel properties that we own is seasonal with the majority of revenues earned in the first two quarters of the calendar year . no such income was recognized in 2010 and 2009. additionally , we derive operating revenues from other income that represents loan structuring and defeasance fees , and miscellaneous asset management fees associated with our loans and investments portfolio . revenue from other income represented approximately 1 % of our total revenues in 2011 , 2010 and 2009. income or loss from equity affiliates and gain or loss on sale of loans and real estate we derive income or loss from equity affiliates relating to joint ventures that were formed with equity partners to acquire , develop and or sell real estate assets . these joint ventures are not majority owned or controlled by us , and are not consolidated in our financial statements . these investments are 47 recorded under either the equity or cost method of accounting as appropriate . we record our share of net income and losses from the underlying properties of our equity method investments and any other-than-temporary impairment of these investments on a single line item in the consolidated statements of operations as income or loss from equity affiliates . in 2011 , income from equity affiliates was $ 3.7 million while in 2010 and 2009 , loss from equity affiliates totaled $ 1.3 million and $ 0.4 million , respectively . we also may derive income or loss from the sale of loans and real estate . we may acquire real estate by foreclosure or through partial or full settlement of mortgage debt or for investment in order to stabilize the property and dispose of it for a future anticipated return . we may also acquire real estate notes generally at a discount from lenders in situations where the borrower wishes to restructure and reposition its short-term debt and the lender wishes to divest certain assets from its portfolio . story_separator_special_tag we utilize internally developed valuation models and techniques primarily consisting of discounted cash flow and direct capitalization models in determining the fair value of the underlying collateral on an individual loan . we may also obtain a third party appraisal , which may value the collateral through an `` as-is '' or `` stabilized value '' methodology . such appraisals may be used as an additional source of valuation information only and no adjustments are made to appraisals . included in the evaluation of the capitalization and market discount rates , we consider not only assumptions specific to the collateral but also geographical and industry trends that could impact the collateral 's value . if upon completion of the valuation , the fair value of the underlying collateral securing the impaired loan is less than the net carrying value of the loan , an allowance is created with a corresponding charge to the provision for loan losses . the allowance for each loan is maintained at a level that is believed to be adequate by management to absorb probable losses . we had a $ 185.4 million allowance for loan losses at december 31 , 2011 related to 24 loans in our portfolio with an aggregate carrying value of approximately $ 285.0 million , before loan loss reserves . at december 31 , 2010 , we had a $ 205.5 million allowance for loan losses related to 30 loans in our portfolio with an aggregate carrying value of approximately $ 530.6 million , before loan loss reserves . loan terms may be modified if we determine that based on the individual circumstances of a loan and the underlying collateral , a modification would more likely increase the total recovery of the combined principal and interest from the loan . any loan modification is predicated upon a goal of maximizing the collection of the loan . typical triggers for a modification would include situations where the projected cash flow is insufficient to cover required debt service , when asset performance is lagging 49 the initial projections , where there is a requirement for rebalancing , where there is an impending maturity of the loan , and where there is an actual loan default . loan terms that have been modified have included , but are not limited to interest rate , maturity date and in certain cases , principal amount . length and amounts of each modification have varied based on individual circumstances and are determined on a case by case basis . if the loan modification constitutes a concession whereas we do not receive ample consideration in return for the modification , and the borrower is experiencing financial difficulties and can not repay the loan under the current terms , then the modification is considered by us to be a troubled debt restructuring . if we receive a benefit , either monetary or strategic , and the above criteria are not met , the modification is not considered to be a troubled debt restructuring . we record interest on modified loans on an accrual basis to the extent that the modified loan is contractually current . to date , we have not recorded interest income on a modified loan where we have not subsequently received the cash . loss on restructured loans are recorded when we grant a concession to a borrower in the form of principal forgiveness related to a payoff or the substitution or addition of a new debtor for the original borrower or when we incur costs on behalf of the borrower related to the modification , payoff or the substitution or addition of a new debtor for the original borrower . when a loan is restructured , we record the investment at net realizable value , taking into account the cost of all concessions at the date of restructuring . the reduction in the recorded investment is recorded as a charge to the consolidated statement of operations in the period in which the loan is restructured . in addition , a gain or loss may be recorded upon the sale of a loan to a third party as a charge to the consolidated statement of operations in the period in which the loan was sold . during the years ended december 31 , 2011 , 2010 and 2009 , we recorded loss on sale and restructuring of loans of $ 5.7 million , $ 7.2 million and $ 57.6 million , respectively . charge-offs to the allowance for loan losses occur when losses are confirmed through the receipt of cash or other consideration from the completion of a sale ; when a modification or restructuring takes place in which we grant a concession to a borrower or agree to a discount in full or partial satisfaction of the loan ; when we take ownership and control of the underlying collateral in full satisfaction of the loan ; when loans are reclassified as other investments ; or when significant collection efforts have ceased and it is highly likely that a loss has been realized . for the years ended december 31 , 2011 , 2010 and 2009 , we recorded charge-offs to the allowance for loan losses of $ 58.8 million , $ 194.9 million and $ 41.3 million , respectively . real estate owned and held-for-sale real estate owned , shown net of accumulated depreciation and impairment charges , is comprised of real property acquired by foreclosure or through partial or full settlement of mortgage debt . the real estate acquired is recorded at the estimated fair value at the time of acquisition . costs incurred in connection with the foreclosure of the properties collateralizing the real estate loans are expensed as incurred and costs subsequently incurred to extend the life or improve the assets subsequent to foreclosure are capitalized .
| overview we are a maryland corporation that was formed in june 2003 to invest in multi-family and commercial real estate-related bridge loans , junior participating interests in first mortgages , mezzanine loans , preferred and direct equity and , in limited cases , discounted mortgage notes and other real estate-related assets , which we refer to collectively as structured finance investments . we have also invested in mortgage-related securities . we conduct substantially all of our operations through our operating partnership and its wholly-owned subsidiaries . our operating performance is primarily driven by the following factors : net interest income earned on our investments net interest income represents the amount by which the interest income earned on our assets exceeds the interest expense incurred on our borrowings . if the yield earned on our assets decreases or the cost of borrowings increases , this will have a negative impact on earnings . however , if the yield earned on our assets increases or the cost of borrowings decreases , this will have a positive impact on earnings . net interest income is also directly impacted by the size and performance of our asset portfolio . see `` current market conditions , risks and recent trends '' below for risks and trends of our net interest income . credit quality of our assets effective asset and portfolio management is essential to maximize the performance and value of a real estate/mortgage investment . maintaining the credit quality of our loans and investments is of critical importance . loans that do not perform in accordance with their terms may have a negative impact on earnings and liquidity . cost control we seek to minimize our operating costs , which consist primarily of employee compensation and related costs , management fees and other general and administrative expenses .
| 5,982 |
you should review the “ cautionary note regarding forward-looking statements ” on page ii and item 1a ( risk factors ) of part i 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 we are a provider of ai solutions , including our proprietary ai operating system , aiware . through our recent acquisition of wazee digital , we have expanded our offerings to include digital content management and licensing solutions . we also operate a full-service media advertising agency . through our recent acquisition of performance bridge , we have expanded our advertising offerings to include more comprehensive podcast solutions . our business , products and services are discussed in detail in item 1 ( business ) of this annual report on form 10-k. the following is a discussion and analysis of certain factors that have affected our results of operations and financial condition during the periods included in the accompanying consolidated financial statements . in this discussion , we refer to our media advertising agency ( including performance bridge 's offerings ) as our advertising business , our aiware platform and digital content management offerings collectively as our aiware saas solutions , and our content licensing and live events services as our aiware content licensing and media services . 34 acquisitions performance bridge on august 21 , 2018 , we acquired all of the outstanding capital stock of performance bridge by means of a merger of one of our indirect , wholly owned subsidiaries with and into performance bridge , with performance bridge surviving the merger as our indirect , wholly owned subsidiary . we paid initial consideration of $ 5.2 million and expect to pay an additional $ 4.4 million in contingent earnout amounts based on performance bridge 's achievement of certain revenue milestones in its 2018 fiscal year . the initial consideration was comprised of $ 1.2 million paid in cash and $ 3.9 million paid by the issuance of a total of 349,072 shares of our common stock based on our closing stock price on august 21 , 2018. the initial consideration was subject to adjustment based on a final calculation of performance bridge 's net assets at closing , which has been completed in the first quarter of 2019 and resulted in the issuance of an additional 6,482 shares of common stock to the former stockholder of performance bridge . a portion of the initial consideration , consisting of $ 0.1 million in cash and 34,335 shares of common stock , was deposited into a third-party escrow account at closing and will be held in such account until august 21 , 2020 , to secure certain indemnification and other obligations of the former stockholder of performance bridge . the additional earnout consideration will be comprised of 20 % cash ( $ 0.9 million ) and 80 % shares of our common stock ( approximately 600,000 shares ) and is expected to be paid and issued in the first quarter of 2019. we have incurred less than $ 0.1 million in transaction costs relating to this acquisition , which have been expensed as incurred and are included in general and administrative expenses in the accompanying statement of operations and comprehensive loss for the year ended december 31 , 2018. wazee digital on august 31 , 2018 , we acquired all of the outstanding capital stock of wazee digital by means of a merger of one of our wholly owned subsidiaries with and into wazee digital , with wazee digital surviving the merger as our wholly owned subsidiary . we paid an aggregate purchase price of $ 12.6 million , comprised of $ 7.4 million paid in cash and $ 5.1 million paid by the issuance of a total of 491,157 shares of our common stock based on our closing stock price on august 31 , 2018. a portion of the consideration , consisting of $ 0.9 million in cash and 60,576 shares of common stock , was deposited into a third-party escrow account at closing to secure certain indemnification and other obligations of the former stockholders of wazee digital . a portion of such escrowed consideration was released in march 2019 , and the balance will be held in such account until august 31 , 2020. we have incurred $ 1.9 million in transaction costs relating to this acquisition , which have been expensed as incurred . also , we incurred severance expense of $ 0.3 million in connection with the resignation of a former wazee digital executive . both the transaction costs and severance expense were included in general and administrative expenses in the accompanying statement of operations and comprehensive loss for the year ended december 31 , 2018. machine box on september 6 , 2018 , we acquired all of the outstanding capital stock of machine box by means of a merger of one of our wholly owned subsidiaries with and into machine box , with machine box surviving the merger as our wholly owned subsidiary . we paid initial consideration of $ 1.5 million and we may pay up to an additional $ 3.0 million in contingent amounts if machine box achieves certain technical development and integration milestones within 12 months after the closing of the acquisition . the initial consideration was comprised of $ 0.4 million paid in cash and $ 1.1 million paid by issuance of a total of 128,300 shares of our common stock , of which $ 0.1 million in cash and 26,981 shares of common stock were held back from payment and issuance by us until september 6 , 2020 , to secure certain indemnification and other obligations of the former stockholders of machine box . story_separator_special_tag common stock offerings in may 2017 , we completed an underwritten initial public offering ( “ ipo ” ) of 2,500,000 shares of our common stock at an ipo price per share to the public of $ 15.00 , pursuant to which we raised net proceeds of approximately $ 32.6 million , after deducting underwriting discounts and commissions and offering costs of approximately $ 4.9 million . in november 2017 , we completed an offering of our common stock , pursuant to which we sold an aggregate of 1,121,250 shares of our common stock ( which included the full exercise of the underwriters ' option to purchase additional shares ) at $ 23.00 per share , for aggregate net proceeds of approximately $ 23.8 million after deducting underwriting discounts and commissions and offering costs of approximately $ 2.0 million . in june 2018 , we completed an offering of our common stock , pursuant to which we sold an aggregate of 1,955,000 shares of our common stock ( which included the full exercise of the underwriters ' option to purchase additional shares ) at $ 18.00 per share , for aggregate net proceeds of approximately $ 32.8 million after deducting underwriting discounts and commissions and offering costs of approximately $ 2.3 million . acacia investment in 2016 , we entered into an investment agreement with acacia that provided for acacia to invest up to $ 50.0 million in our company , consisting of both debt and equity components . pursuant to the investment agreement , we entered into a convertible secured promissory note that provided a total of $ 20.0 million in borrowings with an interest rate of 6.0 % per annum ( the “ acacia note ” ) . the acacia note was secured by substantially all of our assets . upon the completion of our ipo in may 2017 , the outstanding $ 20.0 million of principal and all accrued interest under the acacia note were converted into 1,523,746 shares of our common stock at a conversion price per share of $ 13.6088 . 37 in conjunction with the acacia note , we issued to acacia three four-year warrants ( the “ acacia note warrants ” ) to purchase a number of shares of our common stock that would be determined in the future depending upon a number of factors , including whether the acacia note was converted to our common stock or repaid at maturity . upon completion of our ipo , these warrants became exercisable to purchase an aggregate of 154,311 shares of our common stock at an exercise price per share of $ 13.6088. we also entered into a five-year warrant agreement with acacia in conjunction with the acacia note ( the “ primary warrant ” ) . under the primary warrant , acacia could purchase shares of our common stock if certain events occurred in the future , in an amount equal to $ 50.0 million less the balance of the principal and accrued interest under the acacia note . upon the completion of our ipo , the primary warrant was automatically exercised in full at an exercise price per share of $ 13.6088 , and we issued to acacia 2,150,335 shares of our common stock in exchange for cash proceeds of $ 29.3 million . upon the exercise in full of the primary warrant in connection with our ipo , we issued to acacia a five-year warrant to purchase 809,400 shares of our common stock at an exercise price per share of $ 13.6088 ( the “ 10 % warrant ” ) , with fifty percent of the shares underlying the 10 % warrant vesting as of the issuance of the 10 % warrant and the remaining fifty percent of the shares vesting on the first anniversary of the issuance date of the 10 % warrant . bridge loan financing in march 2017 , we entered into a note purchase agreement with acacia and veritone loc i , llc ( “ vloc ” ) , ( collectively the “ bridge loan lenders ” ) , which provided for an $ 8.0 million line of credit pursuant to secured convertible notes that accrued interest at the rate of 8 % per year , compounded quarterly ( the “ bridge loan ” ) . the bridge loan was secured by a security interest in substantially all of our assets , which was of equal priority to the security interest of acacia under the acacia note . we borrowed the initial $ 2.0 million installment under the bridge loan in march 2017 , and we borrowed the second $ 2.0 million installment in april 2017. prior to the completion of our ipo , the bridge loan lenders exercised their options to advance the $ 4.0 million remaining under the bridge loan . upon the completion of our ipo , the $ 8.0 million of principal and all accrued interest under the bridge loan were automatically converted into 590,717 shares of our common stock at a conversion price per share of $ 13.6088. in connection with the bridge loan , we issued 120,000 shares of our common stock to the bridge loan lenders upon the execution of the note purchase agreement . in addition , in connection with the funding of the $ 8.0 million principal amount of the bridge loan , we issued to the bridge loan lenders an aggregate of 180,000 shares of our common stock and warrants to purchase an aggregate of 240,000 shares of our common stock , which have a ten-year life .
| results of operations the following tables set forth our results of operations for the periods presented in dollars and as a percentage of our net revenues for those periods . the period-to-period comparisons of our historical results are not necessarily indicative of the results that may be expected in the future . replace_table_token_3_th replace_table_token_4_th year ended december 31 , 2018 compared with year ended december 31 , 2017 net revenues replace_table_token_5_th 44 the year-over-year increase in total net revenues was due primarily to the $ 7.0 million of revenues generated by wazee digital and performance bridge following our acquisition of those businesses in the third quarter of 2018. also c ontributing to the year-over-year increase was an increase in revenues generated from our aiware saas solutions ( excluding acquisitions ) of $ 3.2 million , or approximately 220 % , compared with 2017 , due primarily to growth in the numb er of accounts on our platform , as we continued to grow our business with existing customers and add new customers in the media and entertainment market . in addition , advertising revenues ( excluding acquisitions ) increased by $ 2 .5 million , or approximatel y 19 % , in 201 8 compared with 2017 , attributable to increased business with both existing and new clients . all of the revenues generated from aiware content licensing and media services in 2018 resulted from our acquisition of wazee digital , for which we ha d no corresponding revenue in 2017. in late 2018 , we released new applications on our aiware platform , including our attribute application for use by customers in the media and entertainment market , and our identify and redact applications , which address use cases primarily in the government market . we are currently developing other industry-specific applications for the legal and compliance market , which we expect to release in approximately the first half of 2019.
| 5,983 |
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 disclosure of contingent assets and liabilities , if any , at the date of the financial statements . we base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances . if these estimates differ materially from actual results , the impact on our financial statements may be material . we review our financial reporting and disclosure practices and accounting policies quarterly to ensure that they provide accurate and transparent information relative to the current economic and business environment . during the year ended december 31 , 2015 , there were no significant changes to the critical accounting policies . use of estimates the preparation of financial statements , 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 and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period . actual results could differ from those estimates . cash the company considers all cash , bank deposits and highly liquid investments with an original maturity of three months or less to be cash . fair value of financial instruments recorded financial instruments at december 31 , 2015 consist of cash and short-term obligations . the related fair values of these financial instruments approximated their carrying values due to either the short-term nature of these instruments or based on the interest rates currently available to the company . earnings per share basic earnings ( loss ) per share are computed based on weighted average shares outstanding during the period . diluted earnings ( loss ) per share are computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period . dilutive common stock equivalent shares consist of the dilutive effect of stock options , and preferred stock common stock equivalents . income taxes the company accounts for income taxes in accordance with asc 740 , accounting for income taxes , as clarified by asc 740-10 , accounting for uncertainty in income taxes . under this method , deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws . deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year . in providing for deferred taxes , the company considers tax regulations of the jurisdictions in which the company operates , estimates of future taxable income , and available tax planning strategies . if tax regulations , operating results or the ability to implement tax-planning strategies vary , adjustments to the carrying value of deferred tax assets and liabilities may be required . valuation allowances are recorded related to deferred tax assets based on the “ more likely than not ” criteria of asc 740 . 10 asc 740-10 requires that the company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit . for tax positions meeting the “ more-likely-than-not ” threshold , the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority . retained earnings distributions the company 's preferred stockholders are entitled to receive payment before any of the common stockholders upon a liquidation of the company and we can not pay dividends on our common stock unless we first pay dividends required by our preferred stock . story_separator_special_tag new roman , times , serif ; text-align : left '' > $ 528,500 $ 675,000 net cash used in operating activities for the year ended december 31 , 2015 , our net loss of ( $ 1,104,478 ) adjusted for non-cash expenses and benefits was ( $ 548,958 ) . this was offset by a decrease in accounts payable and accrued expenses of $ 45,809 and an increase in other prepaid insurance which used cash of $ 8,752. for the year ended december 31 , 2014 , our net loss of ( $ 11,088,060 ) adjusted for non-cash expenses and benefits was ( $ 467,925 ) . this was offset by an increase in accounts payable and accrued expenses which provided cash of $ 56,602 and a decrease in prepaid insurance which provided cash of $ 10,904. at december 31 , 2015 , the company had a net working capital of $ 27,476 as compared to a net working capital of $ 93,183 at december 31 , 2014. the change in net working capital is primarily the result of an equity raise during of the year ended december 31 , 2015 in the amount of $ 528,500 offset by normal operations . the company recognizes that , due to the lack of operations and cash flow , it will have to rely upon future capital contributions from investors to generate cash flow for the foreseeable future . 12 net cash provided by financing activities during 2015 , the company issued 2,936,111 shares of common stock to accredited investors for $ 528,500. the proceeds of the advances were used to fund working capital requirements . preferred stock dividends for series a are accrued for the year ended december 31 , 2015 in the amount of $ 103,750. during 2012 , due to the lack of cash flow , the company offered to pay the accrued dividends in common stock in lieu of cash . substantially all preferred shareholders accepted the common stock in lieu of cash . on september 30 , 2014 , the company story_separator_special_tag 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 disclosure of contingent assets and liabilities , if any , at the date of the financial statements . we base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances . if these estimates differ materially from actual results , the impact on our financial statements may be material . we review our financial reporting and disclosure practices and accounting policies quarterly to ensure that they provide accurate and transparent information relative to the current economic and business environment . during the year ended december 31 , 2015 , there were no significant changes to the critical accounting policies . use of estimates the preparation of financial statements , 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 and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period . actual results could differ from those estimates . cash the company considers all cash , bank deposits and highly liquid investments with an original maturity of three months or less to be cash . fair value of financial instruments recorded financial instruments at december 31 , 2015 consist of cash and short-term obligations . the related fair values of these financial instruments approximated their carrying values due to either the short-term nature of these instruments or based on the interest rates currently available to the company . earnings per share basic earnings ( loss ) per share are computed based on weighted average shares outstanding during the period . diluted earnings ( loss ) per share are computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period . dilutive common stock equivalent shares consist of the dilutive effect of stock options , and preferred stock common stock equivalents . income taxes the company accounts for income taxes in accordance with asc 740 , accounting for income taxes , as clarified by asc 740-10 , accounting for uncertainty in income taxes . under this method , deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws . deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year . in providing for deferred taxes , the company considers tax regulations of the jurisdictions in which the company operates , estimates of future taxable income , and available tax planning strategies . if tax regulations , operating results or the ability to implement tax-planning strategies vary , adjustments to the carrying value of deferred tax assets and liabilities may be required . valuation allowances are recorded related to deferred tax assets based on the “ more likely than not ” criteria of asc 740 . 10 asc 740-10 requires that the company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit . for tax positions meeting the “ more-likely-than-not ” threshold , the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority . retained earnings distributions the company 's preferred stockholders are entitled to receive payment before any of the common stockholders upon a liquidation of the company and we can not pay dividends on our common stock unless we first pay dividends required by our preferred stock . story_separator_special_tag new roman , times , serif ; text-align : left '' > $ 528,500 $ 675,000 net cash used in operating activities for the year ended december 31 , 2015 , our net loss of ( $ 1,104,478 ) adjusted for non-cash expenses and benefits was ( $ 548,958 ) . this was offset by a decrease in accounts payable and accrued expenses of $ 45,809 and an increase in other prepaid insurance which used cash of $ 8,752. for the year ended december 31 , 2014 , our net loss of ( $ 11,088,060 ) adjusted for non-cash expenses and benefits was ( $ 467,925 ) . this was offset by an increase in accounts payable and accrued expenses which provided cash of $ 56,602 and a decrease in prepaid insurance which provided cash of $ 10,904. at december 31 , 2015 , the company had a net working capital of $ 27,476 as compared to a net working capital of $ 93,183 at december 31 , 2014. the change in net working capital is primarily the result of an equity raise during of the year ended december 31 , 2015 in the amount of $ 528,500 offset by normal operations . the company recognizes that , due to the lack of operations and cash flow , it will have to rely upon future capital contributions from investors to generate cash flow for the foreseeable future . 12 net cash provided by financing activities during 2015 , the company issued 2,936,111 shares of common stock to accredited investors for $ 528,500. the proceeds of the advances were used to fund working capital requirements . preferred stock dividends for series a are accrued for the year ended december 31 , 2015 in the amount of $ 103,750. during 2012 , due to the lack of cash flow , the company offered to pay the accrued dividends in common stock in lieu of cash . substantially all preferred shareholders accepted the common stock in lieu of cash . on september 30 , 2014 , the company
| results of operations the following table summarizes our results for the years ended december 31 , 2015 and 2014 : replace_table_token_1_th general and administrative expenses general and administrative expenses include : compensation , professional fees and costs related to being a public company , amortization of identifiable intangible assets and other costs . the table below summarizes the general and administrative expenses for the years ended december 31 , 2015 and 2014 : replace_table_token_2_th general and administrative expenses for the year ended december 31 , 2015 were $ 1,104,478 as compared to $ 7,000,404 for the year ended december 31 , 2014. the primary reason for the decrease was a decrease in compensation costs of $ 6,021,062 due to an accounting charge of approximately $ 6,630,000 which related to the sale of common stock in a private placement in 2014 which was offset by director stock compensation of approximately $ 555,000. the decrease in compensation expense was partially offset by an increase in public company costs of $ 39,087 , accounting fees of $ 9,159 and legal fees of $ 50,715 due to the company 's acquisition activity in 2015 as compared to 2014. these costs were offset by a decrease in insurance of $ 29,445 . 11 interest expense interest expense was $ 0 and $ 4,087,656 for the years ended december 31 , 2015 and 2014 , respectively . the 2014 amounts were the result of discount interest paid to banyan holdings on demand notes the company entered into for $ 165,583 and a discount of $ 3,922,073 related to the sale of common stock in a private placement .
| 5,984 |
in the following discussion and analysis . a discussion of the year ended december 31 , 2018 compared to the year ended december 31 , 2017 has been reported previously in our annual report on form 10-k for the year ended december 31 , 2018 , filed with the sec on march 7 , 2019 , under the heading `` management 's discussion and analysis of financial condition and results of operations . '' overview we are a clinical-stage biopharmaceutical company using our proprietary peptide chemistry platform to develop novel therapeutics for the treatment of serious diseases that are caused by excessive or uncontrolled activation of the complement system , a critical component of the immune system . inappropriate activation of the complement system can quickly turn it from a beneficial defense system to an aggressor that plays a major role in immune and inflammatory diseases . the complement system , which consists of approximately 30 interacting proteins , offers a target-rich opportunity for us to leverage our proprietary peptide chemistry platform , which was pioneered by nobel laureate dr. jack szostak and allows us to inhibit certain uncontrolled complement pathway factors involved in complement-mediated diseases . known as our extreme diversity platform , this proprietary macrocyclic peptide chemistry technology allows us to produce synthetic macrocyclic peptides that combine the diversity and specificity of antibodies with the pharmacological properties of small molecules . the relatively small molecular size of a peptide allows for enhanced tissue penetration 98 compared to larger monoclonal antibodies and biologics . we believe this technology will allow us to pursue challenging targets for which only monoclonal antibodies have been developed . on october 9 , 2019 , we entered into an agreement and plan of merger , or the merger agreement , with ucb s.a. , or ucb , pursuant to which we will be acquired by ucb and will survive the proposed acquisition as an indirect wholly owned subsidiary of ucb . under the terms of the merger agreement , our stockholders will be entitled to receive $ 48.00 in cash for each share of common stock held at closing of the acquisition . the total transaction value , net of our cash of approximately $ 0.4 billion , is approximately $ 2.1 billion . the boards of directors of both ucb and ra pharma have unanimously approved the transaction and the company 's stockholders have voted to approve the transaction . the transaction remains subject to obtaining antitrust clearance and other customary closing conditions . the transaction is expected to close by the end of the first quarter of 2020. for additional discussion , please refer to note 12 , `` acquisition and related costs '' to our consolidated financial statements included elsewhere within this annual report on form 10-k. we are developing our lead product candidate , zilucoplan , for the treatment of various complement-mediated diseases , including generalized myasthenia gravis ( gmg ) , immune-mediated necrotizing myopathy ( imnm ) , amyotrophic lateral sclerosis ( als ) , and other tissue-based complement-mediated disorders . zilucoplan is a potent , synthetic , macrocyclic peptide inhibitor of complement component 5 ( c5 ) , formulated for convenient , self-administered , subcutaneous ( sc ) injection , which is an injection into the tissue under the skin . the relatively small size of this peptide allows for distinct advantages compared to larger monoclonal antibodies , including enhanced tissue penetration and an optimized route of administration . additionally , we have a c5 life cycle management plan with an extended release ( xr ) program for zilucoplan and an oral , small molecule c5 inhibitor . mg is a chronic , complement-mediated , autoimmune disease that causes weakness in the skeletal muscles . patients with mg present with muscle weakness that characteristically becomes increasingly severe with repeated use and recovers with rest . muscle weakness can be localized to specific muscles , such as those responsible for eye movements , but often progresses to affect a broader range , including head , limb , and respiratory muscles . this is often described as the generalized , or severe , form of the disease . we initiated a phase 2 clinical trial with zilucoplan for gmg in the fourth quarter of 2017. in august 2018 , we announced the early completion of enrollment of 44 patients in our phase 2 clinical trial in gmg , surpassing our original enrollment target of 36 patients . we announced completion of dosing of all patients in november 2018 and reported positive top-line data in december 2018. in the phase 2 clinical trial , zilucoplan achieved clinically meaningful and statistically significant reductions in both the primary and key secondary endpoints for both zilucoplan dose groups tested versus placebo at 12 weeks . in may 2019 , we presented results from the open-label , long-term extension study , in which statistically significant and clinically meaningful improvements in primary and secondary endpoints were sustained in patients treated with zilucoplan at 24 weeks . in september 2019 , the u.s. food and drug administration ( fda ) granted orphan drug designation to zilucoplan for the treatment of mg. in october 2019 , ra pharma announced the initiation of dosing in a single , pivotal , randomized , double-blind , placebo-controlled phase 3 trial evaluating zilucoplan for the treatment of gmg , or the raise study . the trial , which incorporates feedback from the fda , the european medicines agency ( ema ) , and japan 's pharmaceuticals and medical devices agency ( pmda ) , is designed to evaluate the efficacy of a once-daily , sc self-administered dose of 0.3 mg/kg of zilucoplan versus placebo . top-line results from the raise study are expected in early 2021. imnm is an autoimmune myopathy characterized by skeletal muscle necrosis , severe proximal limb weakness , and elevated creatine kinase ( ck ) levels . imnm is categorized into two subtypes defined by the presence of distinct autoantibodies against 3-hydroxy-3-methylglutaryl-coenzyme a reductase , of hmgcr , or signal recognition particle , or srp . story_separator_special_tag sales of the common stock , if any , will be made by methods deemed to be `` at the market offerings . '' we have agreed to pay jefferies a commission of up to 3 % of the gross proceeds from the sale of the shares of its common stock , if any . the sales agreement will terminate upon the earliest of : ( a ) the sale of $ 100.0 million of shares of our common stock or ( b ) the termination of the sales agreement by us or jefferies . as of december 31 , 2019 , we had not sold any shares of common stock under this program . in july 2019 , we completed a follow on public offering of 4,600,000 shares of common stock , including the full exercise of the underwriters ' option to purchase an additional 600,000 shares , at $ 32.50 per share and received aggregate net proceeds of $ 140.2 million , after deducting $ 9.0 million of underwriting discounts and commissions and approximately $ 0.3 million of offering expenses . as of december 31 , 2019 , we had an accumulated deficit of $ 290.8 million . our net losses were $ 102.7 million and $ 64.9 million for the years ended december 31 , 2019 and 2018 , respectively . we have incurred significant net operating losses in every year since our inception and expect to continue to incur increasing net operating losses and significant expenses for the foreseeable future . our net losses may fluctuate significantly from quarter to quarter and year to year . we anticipate that our expenses will increase significantly as we : continue to advance our lead program , zilucoplan , through clinical development by establishing clinical proof-of-concept activity using convenient sc administration in gmg , imnm , and als ; continue our current research programs and development activities ; seek to identify additional research programs and additional product candidates ; initiate pre-clinical testing and clinical trials for any product candidates we identify and develop , maintain , expand and protect our intellectual property portfolio ; hire additional research , clinical and scientific personnel ; and incur additional costs associated with operating as a public company , including expanding our operational , finance and management teams . we believe that , our cash and cash equivalents as of december 31 , 2019 , will enable us to fund our operating expenses and capital expenditure requirements through at least the end of 2021. we do not expect to generate revenue from product sales unless and until we successfully complete development and obtain regulatory approval for a product candidate , which we expect will take a number of years and is subject to significant uncertainty . additionally , we believe that our available funds as of december 31 , 2019 , will be sufficient to fund pre-commercialization activities for zilucoplan , xr formulation of zilucoplan ( life-cycle extension program ) , clinical development of pipeline programs , and for working capital and general corporate purposes . it is also possible that we will not achieve the 101 progress that we expect with respect to zilucoplan because the actual costs and timing of clinical development activities are difficult to predict and are subject to substantial risks and delays . we will be required to obtain further funding through public or private equity offerings , debt financings , collaborations and licensing arrangements or other sources . adequate additional financing may not be available to us on acceptable terms , or at all . our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy . financial overview revenue we have derived all of our revenue to date from the merck agreement , which we entered into in april 2013. under the merck agreement , we collaborated with merck and used our proprietary drug discovery technology platform to identify orally available cyclic peptides for non-complement targets nominated by merck and provided specific research and development services . at the signing , merck paid us an upfront , non-refundable , license fee payment of $ 4.5 million . in addition , during the research term , which ended in april 2016 , merck reimbursed us for research and development services provided by us in accordance with a pre-specified number of our full-time equivalent employees working under the merck agreement . at the conclusion of the research term , merck elected to continue the development of a non-complement cardiovascular program target with a large market opportunity , for which we had received $ 9.0 million in pre-clinical and clinical milestone payments as of december 31 , 2019. for the years ended december 31 , 2019 and 2018 , we recognized $ 3.0 million and $ 2.5 million , respectively , from the achievement of a clinical and pre-clinical milestone . we are also entitled to receive future aggregate milestone payments of up to $ 56.0 million and low-to-mid single digit percentage royalties on any future sales for this program target . for additional information about the merck agreement , see item 8 , `` financial statements and supplementary data '' within this annual report on form 10-k. to date , we have not generated any revenue from product sales and do not expect to do so in the near future . we expect that our revenue will be less than our expenses for the foreseeable future and that we will experience increasing losses as we continue our development of , and seek regulatory approvals for , our product candidates and begin to commercialize any approved products . our ability to generate revenue for each product candidate for which we receive regulatory approval will depend on numerous factors , including competition , commercial manufacturing capability and market acceptance of our products .
| result of operations comparison of the years ended december 31 , 2019 and 2018 the following table summarizes our results of operations : replace_table_token_6_th revenue revenue for the year ended december 31 , 2019 , was $ 3.0 million resulting from the achievement of a clinical milestone under the merck agreement . revenue for the year ended december 31 , 2018 , was $ 2.5 million resulting from the achievement of a pre-clinical milestone under the merck agreement . research and development expenses research and development expenses increased by $ 28.2 million to $ 82.6 million for the year ended december 31 , 2019 , from $ 54.4 million for the year ended december 31 , 2018. this increase was attributable to : a $ 16.6 million increase in cro and cmo expenses primarily relating to our lead product candidate zilucoplan ; a $ 7.0 million increase in compensation , benefits , non-cash stock-based compensation , and other employee-related expenses due to 2019 salary increases and higher average headcount to support our increased research and development activities ; a $ 2.0 million increase in license fees related to an upfront payment in connection with our zilucoplan fluidcrystal® ( fc ) extended release formulation under development with camurus ; a $ 1.1 million increase in consulting and professional fees ; a $ 0.5 million increase in laboratory supply and reagent expenses ; and a $ 1.0 million increase in other expenses .
| 5,985 |
xpo logistics , inc. consolidated summary financial table for the year ended december 31 , replace_table_token_3_th consolidated results year ended december 31 , 2016 compared to year ended december 31 , 2015 our consolidated revenue for 2016 increased 91.8 % to $ 14,619.4 million from $ 7,623.2 million in 2015 . this increase was driven by the 2015 acquisitions of nd , con-way , btt and ux , as well as organic growth . on october 30 , 2015 , xpo acquired con-way inc. ( “ con-way ” ) . headquartered in ann arbor , michigan , con-way was a fortune 500 company with a transportation and logistics network of 582 locations and approximately 30,000 employees serving over 36,000 customers . on june 8 , 2015 , xpo acquired a majority interest in norbert dentressangle sa ( “ nd ” ) , a leading provider of transportation and logistics services in western europe . the increase in cost of transportation services of 89.0 % from 2015 to 2016 was primarily the result of the acquisitions of nd , con-way and btt . as a percentage of revenue , cost of transportation and services decreased to 53.9 % in 2016 compared to 54.7 % in 2015 , primarily as a result of a shift in the mix of our business with a more significant component of our revenue being attributable to the ltl and european transportation service offerings following the acquisitions of nd and con-way . cost of transportation and services typically represents a lower percentage of revenue in these service offerings than in our legacy asset-light transportation services . cost of transportation and services is primarily attributable to the cost of providing or procuring freight transportation services for xpo customers , salaries paid to employee drivers in our full truckload and ltl businesses , and commissions paid to independent station owners in our global forwarding business . direct operating expense for 2016 was $ 4,594.1 million , or 31.4 % as a percentage of revenue , compared to $ 2,367.0 million , or 31.0 % as a percentage of revenue , for 2015 . direct operating expense increased primarily due to the acquisitions of nd and con-way and growth to support the last mile business . direct operating expenses are both fixed and variable expenses and consist of operating costs related to our contract logistics facilities , intermodal equipment lease expense , depreciation expense , maintenance and repair costs , property taxes , operating costs of our local drayage and last mile warehousing facilities , the direct costs related to the ltl service centers and european pallet network , such as direct labor , facilities and forklift trucks , and fixed terminal and cargo handling expenses . operating costs of our contract logistics facilities consist mainly of personnel costs , facility and equipment expenses , materials and supplies , information technology expenses , depreciation expense and other operating expenses related to our contract logistics facilities . intermodal equipment maintenance and repair costs consist of the 23 costs related to the maintenance of the intermodal equipment fleet . operating costs of our local drayage and last mile warehousing facilities consist mainly of personnel costs , rent , maintenance , utilities and other facility related costs . operating costs of our ltl facilities consist mainly of personnel costs , rent and depreciation of service center equipment . fixed terminal and cargo handling costs primarily relate to the fixed rent and storage expense charged by terminal operators . sales , general and administrative expense ( “ sg & a ” ) increased to $ 1,651.2 million in 2016 from $ 1,113.4 million in 2015 primarily due to sg & a associated with acquisitions . sg & a as a percentage of revenue decreased to 11.3 % in 2016 as compared to 14.6 % in 2015 . the decrease is attributable to a reduction in acquisition-related costs , a change in the mix of the company 's business operations resulting from the acquisition of con-way , and the cost saving measures being implemented as part of the integration of acquired businesses , particularly in our ltl service offering . sg & a consists of costs relating to customer acquisition , carrier procurement , billing , customer service , salaries and related expenses of the executive and administrative staff , acquisition-related costs , office expenses , technology services , professional fees and other purchased services relating to the aforementioned functions , and depreciation and amortization expense . foreign currency gain was $ 40.3 million in 2016 compared to foreign currency loss of $ 44.8 million in 2015 . the gain in 2016 was primarily due to a $ 39.7 million gain on unrealized foreign currency option and forward contracts . the loss in 2015 was primarily due to $ 31.7 million foreign currency transaction and remeasurement losses on the cash held to purchase nd and a $ 9.7 million loss on the forward contract related to the nd acquisition . the debt extinguishment loss of $ 69.7 million in 2016 includes $ 35.2 million from the redemption of the senior notes due 2019 , $ 18.0 million from the refinancing of the term loan , and $ 16.5 million from the repurchase of term loan debt . interest expense for 2016 increased 66.6 % to $ 361.1 million from $ 216.7 million in 2015 . the increase in interest expense was primarily attributable to the increased indebtedness incurred by the company in order to fund the 2015 acquisitions of con-way and nd . average total indebtedness increased approximately 72 % from 2015 to 2016 , consistent with the increase in interest expense . our effective income tax rates in 2016 and 2015 were 20.9 % and 32.2 % , respectively . story_separator_special_tag year ended december 31 , 2015 compared to year ended december 31 , 2014 revenue in our transportation segment increased by 130.1 % to $ 4,924.4 million in 2015 compared to $ 2,140.0 million in 2014 . this increase was driven largely by the acquisitions of nd , con-way , btt and ux , as well as organic growth . the increase in cost of transportation services of 118.5 % from 2014 to 2015 was primarily the result of the acquisitions of nd , con-way and btt . as a percentage of revenue , cost of transportation and services decreased to 75.5 % in 2015 compared to 79.5 % in 2014 , primarily the result of lower relative cost of transportation and services within the total cost structure of the acquired asset-based businesses . direct operating expense for 2015 was $ 507.1 million , or 10.3 % as a percentage of revenue , compared to $ 90.0 million , or 4.2 % as a percentage of revenue , for 2014 . direct operating expense increased primarily due to the acquisitions of nd , con-way , btt and ux . sg & a expense increased by 96.4 % to $ 646.9 million in 2015 from $ 329.3 million in 2014 . as a percentage of revenue , sg & a expense decreased to 13.1 % in 2015 as compared to 15.4 % in 2014 . the increase in sg & a expense was primarily due to the contribution of sg & a associated with new acquisitions and transaction and integration costs . 25 logistics story_separator_special_tag style= '' font-family : inherit ; font-size:10pt ; '' > 2015 and $ 21.3 million used in 2014 . cash flows from operations increased in 2016 primarily due to the improvement in profitability . an increase in the company 's accounts receivable reduced our cash from operations by $ 153.7 million in 2016 compared to $ 7.8 million of cash provided in 2015 . investing activities provided $ 142.0 million of cash in 2016 compared to $ 4,085.4 million used in 2015 and $ 858.3 million used in 2014 . during 2016 , the company received $ 547.7 million from the sale of its north american truckload operations , used $ 483.4 million of cash to purchase fixed assets and received $ 68.9 million from the sale of assets . during 2015 , the company used $ 3,887.0 million of cash in acquisitions , $ 249.0 million to purchase fixed assets and received $ 60.3 million from the sale of assets . during 2014 , the company used $ 814.0 million of cash in acquisitions and $ 44.6 million to purchase fixed assets . 27 financing activities used $ 680.8 million in 2016 compared to $ 3,644.9 million generated in 2015 and $ 1,502.2 million generated in 2014 . the primary use of cash in 2016 was the $ 1,889.2 million repurchase of debt and the $ 151.4 million repayment of debt and capital leases . the main source of cash from financing activities in 2016 was the $ 1,352.0 million of net proceeds from the issuance of long-term debt . in 2015 , our primary source of cash was the $ 4,108.9 million of net proceeds from the issuance of long-term debt and $ 1,228.1 million of net proceeds from the issuance of preferred and common stock . the primary uses of cash from financing activities were the repayment of $ 1,215.6 million of debt and the purchase of the noncontrolling interest in nd of $ 459.7 million . during 2014 , the company received $ 1,097.4 million of net proceeds from the issuance of preferred and common stock and $ 489.6 million of net proceeds from the issuance of long-term debt . debt facilities on october 30 , 2015 , the company entered into the second amended and restated revolving loan credit agreement ( the “ abl facility ” ) among xpo and certain of xpo 's u.s. and canadian wholly owned subsidiaries ( which include the u.s. subsidiaries of the former con-way ) , as borrowers , the other credit parties from time to time party thereto , the lenders party thereto and morgan stanley senior funding , inc. , as agent for such lenders . the abl facility replaced xpo 's existing amended credit agreement , and , among other things , ( i ) increased the commitments under the abl facility to $ 1.0 billion , ( ii ) permitted the acquisition of con-way and the transactions relating thereto , ( iii ) reduced the margin on loans under the abl facility by 0.25 % from that contained in the existing amended credit agreement and ( iv ) matures on october 30 , 2020. up to $ 350 million of the abl facility is available for issuance of letters of credit , and up to $ 50 million of the abl facility is available for swing line loans . at december 31 , 2016 , the company had a borrowing base of $ 986.5 million and availability under the abl facility of $ 717.4 million after considering outstanding advances of $ 30.0 million and outstanding letters of credit of $ 239.1 million . as of december 31 , 2016 , the company was in compliance with the abl facility 's financial covenants . contractual obligations the following table reflects our contractual obligations as of december 31 , 2016 : replace_table_token_6_th actual amounts of contractual cash obligations may differ from estimated amounts due to changes in foreign currency exchange rates . we do not have any other material commitments that have not been disclosed elsewhere . off-balance sheet arrangements the company guarantees the lease payments of certain tractor and trailer equipment utilized by subcontract carriers . these guarantees continue through the end of the lease of the equipment , which is typically four years . the maximum amount of the guarantee is limited to the amount of unpaid principal and interest . as of december 31 , 2016 , the maximum amount of these guarantees was approximately $ 20.8 million .
| summary financial table for the year ended december 31 , replace_table_token_5_th note : total depreciation and amortization for the logistics segment included in cost of transportation and services , direct operating expense and sg & a was $ 192.3 million , $ 136.9 million and $ 16.3 million for the years ended december 31 , 2016 , 2015 and 2014 , respectively . logistics year ended december 31 , 2016 compared to year ended december 31 , 2015 revenue in our logistics segment increased by 92.3 % to $ 5,323.9 million in 2016 compared to $ 2,768.4 million in 2015 . this increase was driven by the acquisitions of nd and con-way . the increase in cost of transportation services of 139.0 % from 2015 to 2016 was primarily the result of the acquisitions of nd and con-way . as a percentage of revenue , cost of transportation and services increased to 23.4 % in 2016 compared to 18.8 % in 2015 , primarily as a result of the higher relative cost of transportation and services within the acquired businesses , which include managed transportation services that the logistics segment did not previously provide . direct operating expense in 2016 was $ 3,395.5 million , or 63.8 % as a percentage of revenue , compared to $ 1,859.5 million , or 67.2 % as a percentage of revenue , in 2015 . direct operating expense increased due to the acquisitions of nd and con-way , while direct operating expense as a percentage of revenue declined due to cost saving measures being implemented as part of the integration of acquired businesses . sg & a increased to $ 472.1 million in 2016 from $ 305.7 million in 2015 . the increase in sg & a was due to the contribution of sg & a associated with the acquisitions of nd and con-way . as a percentage of revenue , sg & a expense decreased to 8.8 % in 2016 compared to 11.0 % in 2015 .
| 5,986 |
our stores offer an extensive range of automotive products and services , including new and used vehicles ; parts and service , which include repair and maintenance services , replacement parts , and collision repair service ; and finance and insurance products . as of december 31 , 2018 , our new vehicle revenue brand mix consisted of 47 % imports , 33 % luxury , and 20 % domestic brands . our revenues are derived primarily from : ( i ) the sale of new vehicles ; ( 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 '' collectively referred to as `` used '' ) ; ( iii ) repair and maintenance services , including collision repair , the sale of automotive replacement parts , and the reconditioning of used vehicles ( collectively referred to as `` parts and service '' ) ; and ( iv ) the arrangement of third-party vehicle financing and the sale of a number of vehicle protection products ( defined below and 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 our f & i business based on f & i gross profit per vehicle sold . our continued 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 and allocation of desirable vehicles from the automobile 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 . additionally , our ability to sell certain new and used vehicles can be negatively impacted by a number of factors , some of which are outside of our control and may include manufacturer imposed stop-sales or open safety recalls , primarily due to , but not limited to , vehicle safety concerns or a vehicle 's failure to meet environmental related requirements . further , governmental actions , such as changes in , or the imposition of , tariffs or trade restrictions on imported goods , may adversely affect vehicle sales and depress demand . however , 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 diversified brand and geographic mix . the seasonally adjusted annual rate ( `` saar '' ) of new vehicle sales in the u.s. during 2018 was 17.3 million compared to 17.2 million in 2017 . the automotive retail business continues to benefit from the availability of credit to consumers , strong consumer confidence and historically low unemployment levels . demand for new vehicles is generally highest during the second , third , and fourth quarters of each year and , accordingly , we expect our revenues to generally be higher during these periods . we typically experience higher sales of luxury vehicles in the fourth quarter , which have higher average selling prices and gross profit per vehicle retailed . revenues and operating results may be impacted significantly from quarter-to-quarter by changing economic conditions , vehicle manufacturer incentive programs , adverse weather events , or other developments outside our control . our gross profit margin varies with our revenue mix . sales of new vehicles generally result in a lower gross profit margin than used vehicle sales , sales of parts and service , and sales of f & i products . as a result , when used vehicle , parts and service , and f & i 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 ) , which we believe allows 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 profit , advertising expense on a per vehicle retailed ( `` pvr '' ) basis , and all other sg & a expenses in the aggregate as a percentage of total gross profit . we had total available liquidity of $ 356.1 million as of december 31 , 2018 , which consisted of cash and cash equivalents of $ 8.3 million , $ 32.2 million of funds in our floor plan offset accounts , $ 190.0 million of availability under our new vehicle floor plan facility that is able to be re-designated to our revolving credit facility , $ 47.0 million of availability under our revolving credit facility , and $ 78.6 million of availability under our used vehicle revolving floor plan facility . for further discussion of our liquidity , please refer to `` liquidity and capital resources '' below . 30 critical accounting policies and significant estimates preparation of financial statements in conformity with accounting principles generally accepted in the united states of america , requires management to make estimates and assumptions , that affect the amounts of assets and liabilities and disclosures of contingent assets and liabilities , as of the date of the financial statements , and reported amounts of revenues and expenses during the periods presented . story_separator_special_tag expenses associated with employee medical , workers compensation , property , and general liability claims , including premiums for insurance coverage , for the years ended december 31 , 2018 , 2017 , and 2016 , totaled $ 29.9 million , $ 27.9 million , and $ 30.9 million , respectively . 32 story_separator_special_tag style= '' line-height:120 % ; font-size:10pt ; '' > 36 used vehicle— replace_table_token_11_th used vehicle metrics— replace_table_token_12_th used vehicle revenue increase d by $ 138.3 million ( 8 % ) , as a result of a 7 % increase in used vehicle retail units sold , and a 2 % increase in revenue per used vehicle retailed . in 2018 , same store used vehicle retail gross profit increased by $ 4.1 million ( 3 % ) . overall , our gross margin percent decreased from 7.4 % in 2017 to 7.2 % in 2018 . we primarily attribute the 20 basis point decrease in same store used vehicle retail gross margin to increased competition and price transparency within the used vehicle marketplace . we believe that our used vehicle inventory continues to be well-aligned with current consumer demand , with approximately 34 days of supply as of december 31 , 2018 . 37 parts and service— replace_table_token_13_th the $ 34.9 million ( 4 % ) increase in parts and service revenue was primarily due to a $ 30.7 million ( 6 % ) increase in customer pay revenue and a $ 14.4 million ( 13 % ) increase in wholesale parts revenue , partially offset by a $ 10.2 million ( 7 % ) decrease in warranty revenue . same store parts and service revenue increased $ 18.5 million ( 2 % ) from $ 785.6 million in 2017 to $ 804.1 million in 2018 . the increase in same store parts and service revenue was due to a $ 20.2 million ( 4 % ) increase in customer pay revenue and a $ 11.1 million ( 10 % ) increase in wholesale parts revenue , partially offset by a $ 12.8 million ( 8 % ) decrease in warranty revenue . parts and service gross profit , excluding reconditioning and preparation , increased by $ 16.4 million ( 4 % ) to $ 391.6 million and same store gross profit , excluding reconditioning and preparation , increased by $ 9.1 million ( 2 % ) to $ 384.0 million . the $ 9.1 million increase in same store gross profit is primarily due to a $ 14.1 million ( 5 % ) increase in customer pay gross profit partially offset by a $ 6.2 million ( 8 % ) decrease in warranty gross profit . we attribute the increase in same store gross profit to our continued focus on customer retention and the recent trend of increasing new vehicle sales over the past few years . we continue to focus on increasing our parts and service revenue , specifically our customer pay business , over the long-term by upgrading equipment , improving the customer experience and capitalizing on our dealership training programs . further , we have recently enhanced our technicians benefit package with the goal of improving retention and attracting new technicians in order to maximize our fixed capacity . 38 finance and insurance , net— replace_table_token_14_th f & i revenue , net increased by $ 17.1 million ( 6 % ) in 2018 when compared to 2017 primarily as a result of a 6 % increase in new and used retail unit sales . on a same store basis f & i revenue , net increased by $ 10.6 million ( 4 % ) in 2018 when compared to 2017 primarily as a result of a 3 % increase in same store new and used retail unit sales and a 1 % increase in f & i per vehicle retailed . we continued to benefit from a favorable consumer lending environment , which allowed more of our customers to take advantage of a broader array of f & i products and our continued focus on improving the f & i results at our lower-performing stores through our f & i training programs . 39 selling , general , and administrative expense— replace_table_token_15_th sg & a expense as a percentage of gross profit decreased 60 basis points from 69.1 % in 2017 to 68.5 % in 2018 . same store sg & a expense as a percentage of gross profit decreased by 50 basis points , from 68.9 % in 2017 to 68.4 % in 2018 . the company benefited from decreases in rent and share-based compensation expense on both a total company and same store basis . these decreases were partially offset by increases in other expenses including investments in our omni-channel initiatives intended to improve the customer experience and generate long-term operational efficiencies . depreciation and amortization expense — the $ 1.6 million ( 5 % ) increase in depreciation and amortization expense during 2018 compared to 2017 , was primarily the result of depreciation associated with the three dealership acquisitions made in 2018 , additional assets placed into service during 2017 and 2018 , as well as depreciation expense associated with the purchase of previously leased properties . franchise rights impairment — we assessed our manufacturer franchise rights for impairment by comparing the present value of cash flows attributable to each franchise right to its carrying value . as a result of our impairment testing , we recognized a $ 3.7 million pretax non-cash charge related to three of our franchises . 40 other operating ( income ) expenses , net — other operating ( income ) expenses , net includes gains and losses from the sale of property and equipment , income derived from lease arrangements , and other non-core operating items . the $ 1.1 million in other operating income , net for 2018 , is primarily due a $ 0.7 million gain resulting from legal settlements and $ 0.4 million of other non-core operating income .
| results of operations the year ended december 31 , 2018 compared to the year ended december 31 , 2017 replace_table_token_7_th 33 replace_table_token_8_th total revenue during 2018 increase d by $ 417.9 million ( 6 % ) compared to 2017 , due to a $ 227.6 million ( 6 % ) increase in new vehicle revenue , a $ 138.3 million ( 8 % ) increase in used vehicle revenue , a $ 34.9 million ( 4 % ) increase in parts and service revenue and a $ 17.1 million ( 6 % ) increase in f & i revenue . the $ 47.1 million ( 4 % ) increase in gross profit during 2018 was the result of a $ 7.8 million ( 6 % ) increase in used vehicle gross profit , a $ 17.1 million ( 6 % ) increase in f & i revenue and a $ 26.0 million ( 5 % ) increase in parts and service gross profit , partially offset by a $ 3.8 million ( 2 % ) decrease in new vehicle gross profit . our total gross profit margin decreased 40 basis points from 16.4 % in 2017 to 16.0 % in 2018 , primarily due to margin pressure in our new vehicle and used vehicle business lines . income from operations during 2018 increase d by $ 23.2 million ( 8 % ) compared to 2017 , primarily due to a $ 47.1 million increase in gross profit and a $ 2.4 million decrease in other operating ( income ) expense , net , partially offset by a $ 26.1 million increase in selling , general and administrative expenses and a $ 1.6 million ( 5 % ) increase in depreciation and amortization expenses .
| 5,987 |
f-13 golden minerals company notes to the consolidated financial statements - ( continued ) ( expressed in united states dollars ) in addition , for freestanding equity-classified financial instruments , asu 2017-11 also requires entities that present earnings per share ( eps ) in accordance with topic 260 to recognize the effect story_separator_special_tag s you should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes beginning on page f-1 in this annual report on form 10-k. this discussion and analysis contains forward-looking statements that involve risks , uncertainties and assumptions . 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 “ risk factors ” in this annual report on form 10-k. our company we were incorporated in delaware under the delaware general corporation law in march 2009 , and are the successor to apex silver mines limited for purposes of reporting under the exchange act . during the year ended december 31 , 2017 , our only sources of income were revenues from the lease of our oxide plant , sales of non-core assets , and a tax refund received by an argentine subsidiary . we incurred net operating losses for the years ended december 31 , 2017 and 2016. we remain focused on evaluating and searching for mining opportunities in north america ( including mexico ) with near term prospects of mining , and particularly for properties within reasonable haulage distances of our velardeña processing plants . we are also reviewing strategic opportunities , focusing primarily on development or operating properties in north america , including mexico . during 2018 , we also intend to continue evaluation activities at our el quevar exploration property in argentina and our exploration efforts on selected properties in our portfolio of approximately 10 exploration properties located primarily in mexico . 2017 highlights velardeña oxide plant lease agreement in july 2015 , we leased our velardeña oxide plant to a wholly-owned subsidiary of hecla mining company for an initial term of 18 months beginning july 1 , 2015. the lease agreement contained several lease extension options , and in the third quarter 2016 , the lease was extended through june 2017. the 2016 extension included an agreement under which hecla would construct , at its cost , certain tailings expansion facilities to accommodate hecla 's increased use of tailings capacity in excess of an agreed amount , while preserving flexibility for future tailings expansions . the tailings expansion work began in early 2017 and is now completed . the parties agreed that hecla would either leave unused at the end of the lease term an agreed amount of capacity in the expanded tailings facility , or construct an additional expansion at its cost . in connection with their agreement regarding tailings impoundment expansions , the parties agreed that hecla had the right to extend the lease for an additional 18 months following june 30 , 2017 , or until december 31 , 2018. on march 24 , 2017 , hecla exercised its right to extend the lease until december 31 , 2018. on august 2 , 2017 , we granted hecla an option to extend the lease for an additional period of up to two years ending no later than december 31 , 2020 ( the “ extension period ” ) in exchange for a $ 1.0 million cash payment and the purchase of $ 1.0 million , or approximately 1.8 million shares , of our common stock issued at a price of $ 0.55 per share , which was the undiscounted 30-day volume weighted average stock price at the time of the option agreement . hecla must exercise the option to extend the lease no later than october 3 , 2018. all of the fixed fees and throughput related charges remain the same as under the original lease . similar volume limitations apply to any required future tailings expansions , which hecla will fund , leaving unused at the end of the lease term an agreed amount of capacity in the expanded tailings facility . hecla will have the right to terminate the lease during the extension period for any reason with 120 days ' notice . hecla will also have a one-time right of first refusal to continue to lease the plant following a termination notice through december 31 , 2020 if we decide to use the oxide plant for our own purposes before december 31 , 2020 . 50 hecla is responsible for ongoing operation and maintenance of the oxide plant . during the year ended december 31 , 2017 , hecla processed approximately 131,000 tonnes of material through the oxide plant , resulting in total revenues to us of approximately $ 6.7 million , comprised of approximately $ 3.0 million for direct plant charges plus fixed fees and other net reimbursable costs totaling approximately $ 3.7 million . we incurred costs of approximately $ 2.1 million related to the services we provide under the lease and reported a net operating margin of approximately $ 4.5 million during the year ended december 31 , 2017. we expect hecla to continue to process material near the intended approximately 400 tonnes per day rate during 2018 , which would generate cash payments to us , net of reimbursable costs , of approximately $ 4.6 million during the full year 2018. however , because hecla has the right to terminate the lease on sixty days ' notice , there is no assurance that these amounts will be received . el quevar in february 2018 we announced a revised estimate of mineralized material for the yaxtché deposit at el quevar based on re-modeling existing previously released data using updated geologic controls and a modeling method that optimizes grade . see “ item 1 and 2 : business and properties – el quevar – mineralized material estimate ” above . story_separator_special_tag million in exploration or development expenditures incurred over a second three-year period . in february 2018 , we amended the celaya earn-in agreement to permit electrum to earn , at its option , an additional 20 % interest in the celaya project in exchange for a payment of $ 1.0 million . electrum can now increase its total interest in the project to 80 % by contributing 100 % of the $ 2.5 million of additional expenditures required in the second three-year earn-in period . following the second earn-in period we will have the right to maintain our 20 % participating interest or our interest could ultimately be converted into a carried 10 % net profits interest if we elect not to participate as a joint venture owner . electrum global holdings ' mexican subsidiary , minera adularia , has reported the completion of 12,400 meters of drilling on the property in fifteen drill holes in their ongoing drill program through the end of 2017. results to date show intercepts of epithermal quartz vein mineralization with grades for gold , silver , lead and zinc that warrant further drill testing . other exploration activities mogotes . during the fourth quarter 2017 we completed a 2,580 meter drill program on our mogotes property on the el mogote claim located 7 kilometers southeast of the town of velardeña , durango , mexico . the drill program was planned to test an area of silicification and breccias hosted in volcanic rocks . the altered area is exposed over a strike length of 1.5 kilometers and a width of about 500 meters . results from the drill program showed low grade gold mineralization in two of the holes . the epithermal system appears to be more deeply centered than the surface geochemical values initially indicated . additional targeting work is being carried out on the mogotes claims including geologic mapping and sampling focused on several outcropping veins in the northern portion of the claims and on our adjacent pistachon claim , part of 52 the chicago mine holdings . previous work on the mogotes property identified the possible continuation of industrias peñoles ' santa maria silver-zinc mine mineralization onto our mogotes claims . the mogotes property was purchased from silver standard resources in 2015 and is wholly owned by one of golden minerals ' mexican subsidiaries , subject to a 2 % net smelter return royalty to silver standard and a pre-existing finder 's fee agreement ( 2 % of direct exploration and development expenditures , capped at $ 365,000 ) . yoquivo . in october 2017 we acquired the right to purchase claims covering the yoquivo district , ocampo municipality , chihuahua through an option agreement . the yoquivo district is a past producing , bonanza grade epithermal vein gold and silver district located 35 kilometers southeast of the ocampo mining district . we have the right to purchase six claims totaling 1,906 hectares for payment of $ 0.5 million over four years plus outstanding claim taxes totaling approximately $ 0.1 million . no cash payments to the owner are due until the second anniversary of the agreement . the owner retains a 2 % net smelter return royalty capped at $ 2.0 million . zacatecas . in april 2016 , we entered into an option agreement under which santacruz silver mining ltd. may acquire our interest in certain nonstrategic mineral claims located in the zacatecas mining district , zacatecas , mexico for a series of payments totaling $ 1.5 million , including a final payment of $ 0.5 million due in april 2018. to date , santacruz has paid us approximately $ 0.9 million . we amended the option agreement in february 2018 to extend the due dates for the remaining series of payments through september 2018. to complete the acquisition of the zacatecas properties santacruz must now make three additional payments of $ 225,000 each in march , june and september 2018. santacruz has the right to terminate the option agreement at any time , and the agreement could be terminated , at our option , if santacruz fails to make subsequent payments when due . rodeo . during 2016 , we completed a 2,080-meter core drilling program at the rodeo property , approximately 80 kilometers west of the velardeña properties in durango mexico . the results from the program revealed a gold and silver bearing epithermal vein and breccia system with encouraging gold and silver values over an approximate 50 to 70 meter true width . the system is exposed at the top of a northwesterly striking ridge and dips steeply to the northeast over about one kilometer of strike length . during january 2017 , the engineering firm of tetra tech completed an estimate of mineralized material at the rodeo deposit , prepared pursuant to canadian national instrument 43-101 , containing 3.3 gpt gold and 11 gpt silver for a total of 46,000 ounces of gold and 0.2 million ounces of silver . we believe this material , as currently identified , could provide additional mined material for our velardeña oxide mill following the completion of the hecla lease , currently set to expire december 31 , 2020. in initial test work conducted during 2017 , we have received confirmation of good gold and silver metallurgical recoveries for milled material . bottle roll cyanide leach testing of the high-grade samples resulted in gold extractions of 80 to 86 percent . silver extractions ranged from 72 to 76 percent for all tests . test work also indicates that the material is not suitable for gold and silver recovery by heap leaching .
| results of operations for the results of operations discussed below , we compare the results of operations for the year ended december 31 , 2017 to the results of operations for the year ended december 31 , 2016. revenue from oxide plant lease . we recorded revenue of $ 6.7 million and $ 6.4 million for the years ended december 31 , 2017 and 2016 respectively from the lease of our velardeña oxide plant to hecla . oxide plant lease costs . during the years ended december 31 , 2017 and 2016 we recorded $ 2.2 and $ 2.0 million , respectively of costs related to the oxide plant lease consisting primarily of reimbursable labor and utility costs which for accounting purposes were also included in revenue from the oxide plant lease . exploration expense . our exploration expense , including work at the santa maria , mogotes and other properties , totaled $ 3.1 million for the year ended december 31 , 2017. our exploration expense , including drilling at the san luis del cordero , santa maria , and rodeo properties , totaled $ 3.7 million for the year ended december 31 , 2016. exploration expense for both years was incurred primarily in mexico and includes property holding costs , costs incurred by our local exploration offices , and allocated corporate administrative expenses . velardeña shutdown and care and maintenance costs . we recorded $ 1.6 million and $ 2.0 million for the years ended december 31 , 2017 and 2016 , respectively , for expenses related to shut down and care and maintenance at our velardeña properties as the result of the suspension of mining and processing activities in november 2015. the 2016 expense included certain one-time repair and maintenance costs associated with the plant shut down . el quevar project expense .
| 5,988 |
company overview mannatech is a global wellness solution provider , which was incorporated and began operations in november 1993. we develop and sell innovative , high quality , proprietary nutritional supplements , topical and skin care and anti-aging products , and weight-management products that target optimal health and wellness . we currently sell our products in three regions : ( i ) the americas ( the united states , canada , colombia and mexico ) ; ( ii ) europe/the middle east/africa ( “ emea ” ) ( austria , the czech republic , denmark , estonia , finland , germany , the republic of ireland , namibia , the netherlands , norway , south africa , spain , sweden and the united kingdom ) ; and ( iii ) asia/pacific ( australia , japan , new zealand , the republic of korea , singapore , taiwan , hong kong , and china ) . on july 1 , 2017 , we revised our 2017 associate compensation plan , which was designed to stimulate business growth and development for our active business building associates and to maximize the buying experience for our preferred customers . in doing so , the company hopes to better utilize commission dollars to stimulate company growth . the 2017 associate compensation plan provides revised income streams , new leadership levels and titles , and modified various volume requirements for our associates . in addition , the 2017 associate compensation plan re-designated members as preferred customers and modified their pricing structure . we conduct our business as a single reporting segment and primarily sell our products through a network of approximately 215,000 active associates and preferred customer positions held by individuals that had purchased our products and or packs or paid associate fees during the last 12 months , who we refer to as current associates and preferred customers . new pack sales and the receipt of new associate fees in connection with new positions in our network are leading indicators for the long-term success of our business . new associate or preferred customer positions are created in our network when our associate fees are paid or packs and products are purchased for the first time under a new account . we operate as a seller of nutritional supplements , topical and skin care and anti-aging products , and weight-management products through our network marketing distribution channels operating in 25 countries and direct e-commerce retail in china . we review and analyze net sales by geographical location and by packs and products on a consolidated basis . each of our subsidiaries sells similar products and exhibits similar economic characteristics , such as selling prices and gross margins . because we sell our products through network marketing distribution channels , the opportunities and challenges that affect us most are : recruitment of new and retention of current associates and preferred customers that occupy sales or purchasing positions in our network ; entry into new markets and growth of existing markets ; niche market development ; new product introduction ; and investment in our infrastructure . our subsidiary in china , meitai , is currently operating as a traditional retailer under a cross-border e-commerce model . meitai can not legally conduct a direct selling business in china until it acquires a direct selling license in china . 40 current economic conditions and recent developments overall net sales decreased $ 3.6 million , or 2.0 % , for 2017 , as compared to 2016 . while our 2017 net sales declined $ 5.9 million , or 3.3 % , on a constant dollar basis ( see non-gaap measures , below ) , favorable foreign exchange caused a $ 2.3 million increase in gaap net sales as compared to 2016. our operations outside of the americas accounted for approximately 63.7 % and 61.1 % of our consolidated net sales for 2017 and 2016 , respectively . the net sales comparisons for the year ended december 31 , 2017 and december 31 , 2016 were primarily affected by our 2017 associate compensation plan , which was strategically designed to de-emphasize the importance of pack sales in order to stay current and competitive with industry changes . in connection with the 2017 associate compensation plan , pack sales have been replaced with associate fees for the united states , canada , south africa , japan , australia , new zealand , singapore , hong kong , and taiwan . associate fees , which an associate must pay annually in order to be entitled to earn commissions , benefits and incentives in these regions , now average approximately $ 50 annually ( which may vary across geographic markets ) . pack sales had an average value of $ 197 during fiscal year 2017 before we implemented the 2017 associate compensation plan . as we roll out associate fees ( and replace pack sales ) across our remaining markets , we expect to see a decrease in future sales volumes from pack sales . however , actual results may vary from our expectations . as a result of this aforementioned change associated with implementing the 2017 associate compensation plan , pack sales ( as well as other revenue metrics related to packs ) decreased relative to comparative periods . the number of packs sold to , and associate fees paid by , new and continuing independent associates and preferred customers decreased 16.5 % during 2017 to approximately 104,600 as compared to 125,300 during 2016 . in addition , average pack value decreased by $ 77 , to $ 136 for the year ended december 31 , 2017 , as compared to $ 213 for the same period in 2016 . the number of product orders decreased 4.1 % during the year ended december 31 , 2017 to approximately 942,300 as compared to 982,600 during the same period in 2016 . story_separator_special_tag the approximate number of active new and continuing active associates and preferred customers who purchased our packs or products or paid associate fees during the twelve months ended december 31 was as follows : replace_table_token_14_th other sales other sales consisted of : ( i ) freight revenue charged to our independent associates and preferred customers ; ( ii ) sales of promotional materials ; ( iii ) monthly fees collected for the success tracker and mannatech+ customized electronic business-building and educational materials , databases and applications ; ( iv ) training and event registration fees ; and ( v ) a reserve for estimated sales refunds and returns . promotional materials , training , database applications and business management tools to support our independent associates , which in turn helps stimulate product sales . 45 for the year ended december 31 , 2017 , other sales decreased by $ 0.4 million , or 8.0 % , to $ 4.6 million , as compared to $ 5.0 million for the same period in 2016 . the decrease was primarily due to a decrease in freight revenues , which was partially offset by an increase in event fees . gross profit for the year ended december 31 , 2017 , gross profit decreased by $ 2.7 million , or 1.9 % , to $ 141.0 million , as compared to $ 143.7 million for the same period in 2016 . gross profit as a percentage of net sales increased to 79.8 % for 2017 , as compared to 79.7 % for 2016 . the increase in gross profit percentage was primarily due to favorable effects of foreign exchange and a change in sales mix towards products with a better margin . commission and incentives commission expenses increased for the year ended december 31 , 2017 , by 1.1 % , or $ 0.8 million to $ 71.3 million , as compared to $ 70.5 million for the same period in 2016. commissions as a percentage of net sales were 40.4 % for the year ending december 31 , 2017 and 39.1 % for the same period in the prior year . this increase was due to transition costs of adopting the 2017 associate compensation plan on july 1 , 2017 and transitioning away from the legacy associate compensation plan . incentive costs decreased for the year ended december 31 , 2017 by 13.5 % , or $ 0.5 million , to $ 3.2 million as compared to $ 3.7 million for the same period in 2016. the costs of incentives , as a percentage of net sales decreased to 1.8 % for the year ended december 31 , 2017 , as compared to 2.1 % for the same period in 2016. selling and administrative expenses selling and administrative expenses include a combination of both fixed and variable expenses . these expenses consist of compensation and benefits for employees , temporary and contract labor and marketing-related expenses , such as the costs to introduce our new brand , and the costs related to hosting our corporate-sponsored events . for the year ended december 31 , 2017 , overall selling and administrative expenses decreased by $ 1.7 million , or 4.7 % , to $ 35.5 million , as compared to $ 37.2 million for the same period in 2016 . the decrease in selling and administrative expenses consisted of a $ 1.5 million decrease in payroll related costs as we had a greater number of employees in the prior comparative period , a $ 0.2 million decrease in marketing costs , and a $ 0.4 million decrease in stock based compensation expense . these decreases were partially offset by a $ 0.4 million increase in warehouse costs as we expand our non-direct selling business in china . other operating costs other operating costs include accounting/legal/consulting fees , travel and entertainment expenses , credit card processing fees , off-site storage fees , utilities , bad debt , and other miscellaneous operating expenses . for the year ended december 31 , 2017 , other operating costs decreased by $ 3.1 million , or 10.5 % , to $ 26.6 million , as compared to $ 29.7 million for the same period in 2016 . for the year ended december 31 , 2017 , other operating costs , as a percentage of net sales , were 15.1 % , as compared to 16.5 % for the same period in 2016 . the decrease was due to a $ 1.2 million decrease in travel and entertainment costs , a $ 0.5 million decrease in legal and consulting fees , a $ 0.3 million decrease in office expenses , and a $ 0.2 million decrease in each of the following expense categories : bad debt expense , accounting and auditing fees , and research and development . in addition , the decrease was further caused by a $ 0.4 million impairment of internally developed software during the third quarter of 2016. depreciation and amortization expense for each of the years ended december 31 , 2017 and 2016 , depreciation and amortization expense was $ 1.9 million . other expense , net primarily due to foreign exchange gains , other expense was $ 0.3 million and $ 1.8 million for the years ending december 31 , 2017 and 2016 , respectively . 46 provision for income taxes provision for income taxes include current and deferred income taxes for both our domestic and foreign operations . our statutory income tax rates by jurisdiction are as follows , for the years ended december 31 : replace_table_token_15_th ( 1 ) on march 21 , 2014 , the company suspended operations in the ukraine , but maintains the legal entity , mannatech ukraine llc .
| results of operations year ended december 31 , 2017 compared to year ended december 31 , 2016 the tables below summarize our consolidated operating results in dollars and as a percentage of net sales for the years ended december 31 , 2017 and 2016 ( in thousands , except percentages ) . replace_table_token_9_th non-gaap financial measures to supplement our financial results presented in accordance with generally accepted accounting principles in the united states ( `` gaap '' ) , we disclose operating results that have been adjusted to exclude the impact of changes due to the translation of foreign currencies into u.s. dollars , including changes in : net sales , gross profit , and income from operations . we refer to these adjusted financial measures as constant dollar items , which are non-gaap financial measures . we believe these measures provide investors an additional perspective on trends . to exclude the impact of changes due to the translation of foreign currencies into u.s. dollars , we calculate current year results and prior year results at a constant exchange rate , which is the prior year 's rate . currency impact is determined as the difference between actual growth rates and constant currency growth rates . replace_table_token_10_th a ) coincident with the introduction of the 2017 associate compensation plan , which was implemented on july 1 , 2017 , the company collects associate fees , which each associate pays to the company annually in order to be entitled to earn commissions , benefits and incentives for that year . the company collected associate fees within the united states , canada , south africa , japan , australia , new zealand , singapore , hong kong , and taiwan during the year ended december 31 , 2017. prior to the change , associates purchased packs that were bundles of products within these respective geographic markets . since implementing the 2017 associate compensation plan , total associate fees represented an immaterial amount of total sales .
| 5,989 |
the loans were due to be repaid on october 31 , 2018 , however , on october 2 , 2018 , the expiry date was extended to october 31 , 2019 . ( b ) interest expense paid to related persons during the years ended december 31 , 2018 and 2017 , interest expense of hk $ 581,264 ( equivalent to $ 74,162 ) and hk $ 160,000 ( equivalent to $ 20,526 ) , respectively , was paid to related persons . ( c ) amounts due to shareholders on august 15 , 2018 , arcus allotted and issued 884,871 ordinary shares of arcus ( equivalent to 6,999,209 shares of the company ; each share of arcus was exchanged for 7.91 shares of the company 's common stock ) at $ 10 each to repay the debts to mr. loo chi kin with total amount , hk $ 69,410,892 ( equivalent to $ 8,848,710 ) , within the group . amounts due to shareholders are unsecured , interest-free and not demand for repayment within 12 months . ( d ) amount due to a director amount due to a director included hk $ 576,000 ( equivalent to $ 73,560 ) salaries accrued to the director , tak shing eddie wong as of december 31 , 2018. the amount is unsecured , has no collateral or guarantee and is interest-free . the amount was fully paid on february 14 , 2019 . 40 tgs international ltd. notes to consolidated financial statements december 31 , 2018 and 2017 note 12 — net loss per share loss per common share is presented under two formats : basic loss per common share and diluted loss per common share . basic loss per common share is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding during the period . diluted loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period , plus the potentially dilutive impact of common shares equivalents ( e.g . stock options and warrants ) . dilutive common share equivalents consist of the incremental common shares issuable upon exercise of stock options and warrants . the following table sets forth the computation of basic and diluted net loss per share : replace_table_token_16_th note 13 — warrant equity on november 21 , 2018 ( “ issuance date ” ) , the company issued a subscription package ( the “ subscription package ” ) of up to $ 52,500 , consisting of 150,000 common shares and 50,000 warrants exercisable at $ 1.00 ( the “ warrants ” ) to purchase common stock within three years from the issuance date , to accredited subscribers . the company determined that these warrants are free standing financial instruments that are legally detachable and separately exercisable from the common stock . all of the company 's outstanding warrants are considered to be indexed to the company 's own stock and are therefore classified as equity under asc 480. the warrants , in specified situations , provide for certain compensation remedies to a holder if the company fails to timely deliver the shares underlying the warrants in accordance with the warrant terms . the company has no plans to consummate a fundamental transaction and does not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants . as of november 21 , 2018 , the company reviewed the valuation technique and inputs used to determine the fair value of the outstanding warrants . for each of the measurement dates , the company engaged an outside valuation company to calculate the fair value of warrants based on the binominal option pricing model ( “ binomial ” ) . set out below the major parameters adopted in the valuation : november 21 , 2018 stock price of the issuer $ 0.3 risk-free rate 15.5 % volatility 65.6 % dividend yield 0.0 % the warrants outstanding and fair values at each of the respective valuation dates are summarized below : replace_table_token_17_th 41 tgs international ltd. notes to consolidated financial statements december 31 , 2018 and 2017 note 14 - commitments the company is renting or leasing offices located in hong kong and mongolia with total monthly payments of $ 17,208 and $ 2,500 , respectively . the aggregate minimum payments over the next five years are as follows : - replace_table_token_18_th rental expenses for all operating leases of office premises in hong kong and mongolia amounted to $ 225,126 and $ 137,679 for the years ended december 31 , 2018 and 2017 , respectively . note 15 – subsequent events ( a ) on march 2 , 2019 , the company entered into a corporation agreement with a well-known fluorite equipment manufacturer in china to invest around rmb17,000,000 ( equivalent to $ 2,531,410 ) to build the plant in mine b for producing acid-grade powder . after the manufacturer recoups all its investment by means of profit sharing , the ownership of the plant will transfer to the company . ( b ) up to march 22 , 2019 , the company entered into subscription agreements with five unrelated individuals whereby the individuals subscribed for 180,000 shares of common stock of company at a price of $ 2.50 per share story_separator_special_tag 20 forward looking statements this annual report contains forward-looking statements . these statements relate to future events or our future financial performance . story_separator_special_tag in some cases , you can identify forward-looking statements by terminology such as “ may ” , “ should ” , “ expects ” , “ plans ” , “ anticipates ” , “ believes ” , “ estimates ” , “ predicts ” , “ potential ” or “ continue ” or the negative of these terms or other comparable terminology . these statements are only predictions and involve known and unknown risks , uncertainties and other factors that may cause our or our industry 's actual results , levels of activity , performance or achievements to be materially different from any future results , levels of activity , performance or achievements expressed or implied by these forward-looking statements . although we believe that the expectations reflected in the forward-looking statements are reasonable , we can not guarantee future results , levels of activity , performance or achievements . except as required by applicable law , including the securities laws of the united states , we do not intend to update any of the forward-looking statements to conform these statements to actual results . our audited financial statements are stated in united states dollars ( $ ) and are prepared in accordance with united states generally accepted accounting principles . the following discussion should be read in conjunction with our financial statements and the related notes to the consolidated financial statements included elsewhere in this form 10-k. the following discussion contains forward-looking statements that reflect our plans , estimates and beliefs . our actual results could differ materially from those discussed in the forward-looking statements . factors that could cause or contribute to such differences include , but are not limited to , those discussed below and elsewhere in this annual report . in this annual report , unless otherwise specified , all dollar amounts are expressed in united states dollars and all references to “ common shares ” refer to the common shares in our capital stock . as used in this annual report , the terms “ we ” , “ us ” , “ our ” or the “ company ” mean tgs international ltd. , a nevada corporation , and our subsidiaries , unless otherwise indicated . general overview tgs international ltd. was established on december 1 , 2016 in nevada , usa . on september 14 , 2018 , tgs international and arcus entered into a share exchange agreement , dated september 14 , 2018 , with chi kin loo , billion plus limited , first fortune investment limited , great win limited and master value holdings limited , pursuant to which the selling stockholders agreed to sell all of their ordinary shares of arcus to the company in exchange for an aggregate of 7,000,000 shares of common stock of tgs international ltd .. we are a mining company focused on both fluorite mining operations in mongolia ( 3 mines in total , mining license numbers : mv-016819 , mv-017305 and mv-009918 ) and sales of fluorite across mongolia , china and korea . our trial production started in 2015 and has been ongoing since that time . in order to maximize our productivity and boost sales in 2019 and the future , an agreement of outsourcing the exploration of mine b in 2019 was entered into between the company and the independent third party mongolian company hmmb llc , who has ample experience in exploration in mongolia and possesses professional exploration teams , in august 2018. with the strategic cooperation with hmmb llc , we believe sales and production could reach usd5,200,000 and 22,000 tons respectively in 2019. for the sake of further strengthening the company 's cash flow , there are 2 placements that the company carried out in 2018. the company may carry out private placement again in 2019 if it fits the company 's development . on november 21 , 2018 , the company completed the first private placement of 150,000 common shares at a price of $ 0.35 per share with a warrants option to purchase an aggregate of 50,000 common shares . the warrants will be exercisable within three years from the date of the company receiving fund from investors at exercise price of $ 1.00 per common share . the company also issued to the placement agent 15,000 common shares at a price of $ 2.49 per common share for the services rendered . in december 2018 , the company entered into the second placement agent 's agreement of 500,000 common shares at a price of $ 2.50 per share with a warrants option to purchase an aggregate of 100,000 common shares . the warrants will be exercisable within three years from the date of the company receiving fund from investors at exercise price of $ 3.00 per common share . up to march 22 , 2019 , the company issued 180,000 common shares at a price of $ 2.50 per share with a warrants option of 36,000 common shares through an agent . 21 story_separator_special_tag meet our cash needs for the next 12 months . issuances of additional shares will result in dilution to our existing stockholders . importantly , there is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing ( whether from related parties or otherwise ) to fund our planned business activities . we presently do not have any arrangements or commitments for additional financing for the expansion of our operations , and no potential lines of credit or sources of financing are currently available for the purpose of proceeding with our plan of operations . off-balance sheet arrangements we have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition , changes in financial condition , revenues or expenses , results of operations , liquidity , and capital expenditures or capital resources that are material to stockholders . critical accounting
| results of operations comparison of years ended december 31 , 2018 and december 31 , 2017 sales sales consisted mainly of fluorspar products generated from trial production at our mines and commission income . in 2018 , we had total sales of $ 667,804 , as compared to sales of $ 295,262 during 2017. the percentage of such increase was approximately 126 % as a result of the increase in the commission income sales of $ 393,566 during 2018. cost of sales cost of sales included raw material costs , mining overhead , including depreciation expenses and transportation , and handling costs related to the movement of finished goods from mines to customer designated locations . additionally , cost of sales included customs duties , product packaging cost , the cost of tooling and inventory shrinkage , and damages . our total cost of sales increased from $ 474,434 in 2017 to $ 516,961 in2018 . the percentage of such increase was approximately 9 % as a result of mainly the increment of mining workers ' salaries expenses in 2018. the cost of sales not in line with the increase in sales mainly because the reduction of the usage of mining supplies during the year . gross profit ( loss ) since the company is still in trial production , the revenue from our sales normally can not cover our cost of sales , which results in a gross loss . however , the gross loss of $ 179,172 in 2017 was turned into a gross profit of $ 150,843 in 2018. the reasons for gross profit in 2018 are mainly due to the increase in the commission income . administrative expenses administrative expenses include salaries and benefits , consulting , audit , tax , legal , insurance , rent and utilities , and other general operating expenses .
| 5,990 |
if our first lien leverage ratio is greater than or equal to 5.00 to 1.00 but less than 5.50 to 1.00 , our facility fee story_separator_special_tag executive overview introduction the following analysis of the financial condition and results of operations of gray television , inc. ( we , us , our , gray or the company ) should be read in conjunction with our audited consolidated financial statements and notes thereto included elsewhere herein . overview we own 36 television stations serving 30 television markets . seventeen of our stations are affiliated with the cbs network owned by cbs inc. ( cbs ) , ten are affiliated with the nbc network owned by national broadcasting company , inc. ( nbc ) , eight are affiliated with the abc network owned by american broadcasting company ( abc ) , and one is affiliated with the fox network owned by fox broadcasting company ( fox ) . our 17 cbs-affiliated stations make us the largest independent owner of cbs affiliates in the united states . based on the results of the average of the nielsen february , may , july , and november 2011 ratings reports , our combined station group has 23 markets with stations ranked # 1 in local news audience and 22 markets with stations ranked # 1 in overall audience within their respective markets . of the 30 markets that we serve , we operate the # 1 or # 2 ranked station in 29 of those markets . in addition to our primary channels that we broadcast from our television stations , we currently broadcast 40 secondary channels including one affiliated with abc , four affiliated with fox , eight affiliated with the cw network or the cw plus network , both owned by the cw network , llc ( collectively cw ) , 18 affiliated with master distribution service , inc. ( an affiliate of twentieth television , inc. ) ( mynetworktv or mynet. ) , one affiliated with untamed sports network , one affiliated with the country network and seven local news/weather channels in certain of our existing markets . we created our secondary channels to better utilize our excess broadcast spectrum . our secondary channels are similar to our primary broadcast channels ; however , our secondary channels are affiliated with networks different from those affiliated with our primary broadcast channels . our combined tv station group reaches approximately 6.2 % of total united states households . our operating revenues are derived primarily from broadcast and internet advertising , and from other sources such as retransmission consent , production of commercials , tower rentals , and consulting . broadcast advertising is sold for placement either preceding or following a television station 's network programming and within local and syndicated programming . broadcast advertising is sold in time increments and is priced primarily on the basis of a program 's popularity among the specific audience an advertiser desires to reach , as measured by nielsen . in addition , broadcast advertising rates are affected by the number of advertisers competing for the available time , the size and demographic makeup of the market served by the station and the availability of alternative advertising media in the market area . broadcast advertising rates are generally the highest during the most desirable viewing hours , with corresponding reductions during other hours . the ratings of a local station affiliated with a major network can be affected by ratings of network programming . we also sell internet advertising on our stations ' websites . these advertisements may be sold as banner advertisements , pre-roll advertisements or video and other types of advertisements . most advertising contracts are short-term , and generally run only for a few weeks . approximately 65 % of the net revenues of our television stations for the year ended december 31 , 2011 were generated from local advertising ( including political advertising revenues ) , which is sold primarily by a station 's 33 index to financial statements sales staff directly to local accounts , and the remainder represented primarily by national advertising , which is sold by a station 's national advertising sales representative . the stations generally pay commissions to advertising agencies on local , regional and national advertising and the stations also pay commissions to the national sales representative on national advertising , including certain political advertising . broadcast advertising revenue is generally highest in the second and fourth quarters each year . this seasonality results partly from increases in advertising in the spring and in the period leading up to and including the holiday season . broadcast advertising revenue is also generally higher in even-numbered years , due to spending by political candidates , political parties and special interest groups . this political spending typically is heaviest during the fourth quarter of such years . our primary broadcasting operating expenses are employee compensation , related benefits and programming costs . in addition , the broadcasting operations incur overhead expenses , such as maintenance , supplies , insurance , rent and utilities . a large portion of the operating expenses of the broadcasting operations is fixed . during the recent economic recession , many of our advertising customers reduced their advertising spending , which reduced our revenue . the economy improved somewhat in 2011 as compared to 2010. although our total revenue for 2011 decreased when compared to 2010 , this decrease was due primarily to a decrease in political revenue resulting from a decrease in the number of national , state and local elections in the off year of the two year political cycle . our 2011 local and internet advertising revenue increased over 2010 amounts due primarily to an improvement in the economy in 2011 as compared to 2010. our national advertising revenue also benefited from an improving economy , but our national revenue decreased in 2011 compared to 2010 due partially to a change in networks broadcasting the super bowl and a lack of olympic games coverage . story_separator_special_tag there was no corresponding broadcast of olympic games during 2009. retransmission consent revenue increased $ 3.1 million , or 20 % , to $ 18.8 million due to the improved terms of our retransmission contracts compared to those in effect during 2009. production and other revenue increased $ 0.3 million , or 5 % , to $ 7.4 million due primarily to increased revenue from producing news for a station not owned by 38 index to financial statements gray . 2010 revenues were also positively impacted by consulting revenue earned from our agreement with young . we earned base consulting revenue of $ 2.2 million and $ 0.9 million for 2010 and 2009 , respectively . the increase was due to the agreement being effective for only a portion of 2009. pursuant to the terms of the consulting agreement , we recorded $ 5.3 million of incentive consulting revenue for the year ended december 31 , 2010. we were not eligible for an incentive consulting fee in the year ended december 31 , 2009. this agreement became effective on august 10 , 2009 and expires december 31 , 2012. broadcast expenses broadcast expenses ( before depreciation , amortization and gain on disposal of assets ) increased $ 8.8 million , or 5 % , to $ 196.4 million for 2010 compared to 2009 due primarily to increases in payroll expense of $ 7.1 million and national sales representation expense of $ 2.9 million , partially offset by decreases in employee benefit expense of $ 1.6 million and electricity expense of $ 0.5 million . payroll expense increased primarily due to increases in sales and certain other incentive compensation due to the increase in advertising revenue discussed above . national sales representation fees earned by third parties also increased due to increased advertising revenue . national sales representation expense is equal to a certain percentage of our national sales revenue ( including certain political advertising revenue ) and increases as this revenue increases . employee benefit expense decreased due to a decrease in health care expense of $ 1.1 million and pension expense of $ 0.3 million . health care expense decreased primarily due to fewer claims being incurred . pension expense decreased primarily due to an increase in our pension expense discount rate . electricity expenses decreased due to the discontinuance of our analog broadcasts . corporate and administrative expenses corporate and administrative expenses ( before depreciation , amortization and gain on disposal of assets ) decreased $ 0.6 million , or 4 % , to $ 13.5 million during 2010 as compared to 2009. the decrease was due primarily to a decrease in relocation expense of $ 0.6 million , consulting expense of $ 0.6 million and legal expense of $ 0.6 million , partially offset by an increase in payroll expense of $ 1.3 million . relocation expense decreased due to the relocation of certain employees in 2009 , while no similar relocations took place in 2010. consulting expense decreased due to the expiration , on december 31 , 2009 , of a consulting agreement with our former chairman . legal expense decreased primarily due to a decrease in the number of retransmission consent revenue contracts being negotiated in the current period compared to the comparable period of the prior year . the increase in payroll expense was due primarily to an increase in bonus compensation expense , partially offset by a decrease in non-cash stock-based compensation . bonus compensation expense increased due to the payment of $ 1.05 million in bonuses to certain executive officers related to the completed refinancing in 2010. in addition , bonus compensation expense increased an additional $ 1.2 million reflecting incentive compensation in 2010 resulting from the increase in revenue discussed above . non-cash stock-based compensation expense decreased $ 1.0 million due to outstanding stock options becoming fully vested . we recorded non-cash stock-based compensation expense during 2010 and 2009 of $ 0.3 million and $ 1.4 million , respectively . depreciation depreciation of property and equipment totaled $ 30.6 million and $ 32.6 million for 2010 and 2009 , respectively . depreciation expense decreased in 2010 compared to 2009 due to reduced capital expenditures in recent years compared to that of prior years . as a result , more assets acquired in prior years have become fully depreciated than were purchased in recent years . 39 index to financial statements amortization of intangible assets amortization of intangible assets was $ 0.5 million for 2010 as compared to $ 0.6 million for 2009. amortization expense decreased in 2010 compared to 2009 as a result of certain assets becoming fully amortized in 2010. gain on disposal of assets gain on disposal of assets decreased $ 5.7 million , or 75 % , to $ 1.9 million during 2010 as compared to 2009. the fcc has mandated that all broadcasters operating microwave facilities on certain frequencies in the 2 ghz band relocate to other frequencies and upgrade their equipment . the spectrum being vacated by these broadcasters has been reallocated to third parties who , as part of the overall fcc-mandated spectrum reallocation project , must provide affected broadcasters with new digital microwave replacement equipment at no cost to the broadcaster and also reimburse those broadcasters for certain associated out-of-pocket expenses . during 2010 and 2009 , we recognized gains of $ 2.2 million and $ 9.2 million , respectively , on the disposal of equipment associated with the spectrum reallocation project . the gains from the spectrum reallocation project were partially offset by losses on disposals of equipment in the ordinary course of business . interest expense interest expense increased $ 1.0 million , or 1 % , to $ 70.0 million for 2010 compared to 2009. interest expense increased due to an increase in average debt balance partially offset by a decrease in our average interest rates .
| results of operations year ended december 31 , 2011 ( 2011 ) compared to year ended december 31 , 2010 ( 2010 ) revenue total revenue decreased $ 38.9 million , or 11 % , to $ 307.1 million for 2011 compared to 2010 reflecting decreased political and national advertising revenue and consulting revenue , partially offset by increased local and internet advertising revenue and retransmission consent revenue . political advertising revenue decreased $ 44.1 million , or 77 % , to $ 13.5 million reflecting decreased advertising from political candidates and special interest groups during the off year of the two-year political advertising cycle . national advertising revenue , excluding political advertising revenue , decreased $ 1.3 million , or 2 % , to $ 56.3 million . local advertising revenue , excluding political advertising revenue , increased $ 3.9 million , or 2 % , to $ 187.0 million . internet advertising revenue increased $ 6.7 million , or 50 % , to $ 20.1 million . local and internet advertising revenue as compared to 2010 benefitted from increased spending by advertisers in an improving economic environment . our national advertising revenue also benefited from an improving economy , but national advertising revenue decreased primarily due to the change in the broadcast network carrying the super bowl in 2011 to fox from cbs and the lack of olympic games coverage in 2011. these events did not have as large a negative effect upon our local and internet advertising revenue as they did on our national advertising revenue and , as a result , we were able to grow our local and internet advertising revenue . net advertising revenue associated with the broadcast of the 2011 super bowl on our one primary fox-affiliated channel and four secondary fox-affiliated channels 35 index to financial statements approximated $ 0.2 million , which was a decrease from approximately $ 0.9 million earned in 2010 on our seventeen cbs-affiliated channels .
| 5,991 |
the remaining amount , representing the excess of the loan 's cash flows expected to be collected over the fair value is the accretable yield ( accreted into interest income over the remaining life of the loan or pool ) . refer to note 6 acquired sjb assets and fdic loss sharing asset for pci loans by type at december 31 , 2015. a provision for loan losses on the pci portfolio will be recorded if there is deterioration in the expected cash flows on pci loans as a result of deteriorated credit quality , compared to those previously . the portion of the loss on sjb loans reimbursable from the fdic was recorded in noninterest income as a decrease in the fdic loss sharing asset . decreases in expected cash flows on the acquired impaired loans as of the measurement date compared to previously estimated are recognized by recording a provision for loan losses on acquired impaired loans . loans accounted for as part of a pool are measured based on the expected cash flows of the entire pool . fdic loss sharing asset on october 16 , 2009 , the bank acquired substantially all of the assets and assumed substantially all of the liabilities of sjb from the fdic in an fdic-assisted transaction . the bank entered into a loss sharing agreement with the fdic , whereby the fdic covered a substantial portion of any future losses on certain acquired assets . the acquired assets subject to the loss sharing story_separator_special_tag the following discussion provides information about the results of operations , financial condition , liquidity , and capital resources of cvb financial corp. and its wholly owned subsidiary . this information is intended to facilitate the understanding and assessment of significant changes and trends related to our financial condition and the results of our operations . this discussion and analysis should be read in conjunction with this annual report on form 10-k , and the audited consolidated financial statements and accompanying notes presented elsewhere in this report . critical accounting policies the preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities , revenues and expenses , and related disclosures of contingent assets and liabilities at the date of our financial statements . actual results may differ from these estimates under different assumptions or conditions . critical accounting policies are defined as those that are reflective of significant judgments and uncertainties , and are essential to understanding management 's discussion and analysis of financial condition and results of operations . the following is a summary of the more judgmental and complex accounting estimates and principles . in each area , we have identified the variables most important in the estimation process . we have used the best information available to make the necessary estimates to value the related assets and liabilities . actual performance that differs from our estimates and future changes in the key variables could change future valuations and impact the results of operations . allowance for loan losses ( alll ) arriving at an appropriate level of allowance for loan losses involves a high degree of judgment . our allowance for loan losses provides for probable losses based upon evaluations of known and inherent risks in the loan and lease portfolio . the determination of the balance in the allowance for loan losses is based on an analysis of the loan and lease finance receivables portfolio using a systematic methodology and reflects an amount that , in our judgment , is appropriate to provide for probable credit losses inherent in the portfolio , after giving consideration to the character of the loan portfolio , current economic conditions , past credit loss experience , and such other factors as deserve current recognition in estimating inherent credit losses . the provision for loan losses is charged to expense . for a full discussion of our methodology of assessing the adequacy of the allowance for loan losses , see item 7 , management 's discussion and analysis of financial condition and results of operation risk management and note 3 summary of significant accounting policies and note 7 loans and lease finance receivables and allowance for loan losses of our consolidated financial statements presented elsewhere in this report . investment securities the company classifies as held-to-maturity ( htm ) those debt securities that the company has the positive intent and ability to hold to maturity . securities classified as trading are those securities that are bought and held principally for the purpose of selling them in the near term . all other debt and equity securities are classified as available-for-sale ( afs ) . securities held-to-maturity are accounted for at cost and adjusted for amortization of premiums and accretion of discounts . trading securities are accounted for at fair value with the unrealized gains and losses being included in current earnings . available-for-sale securities are accounted for at fair value , with the net unrealized gains and losses , net of income tax effects , presented as a separate component of stockholders ' equity . realized gains and losses on sales of securities are recognized in earnings at the time of sale and are determined on a specific-identification basis . purchase premiums and discounts are recognized in interest income using the effective-yield method over the estimated terms of the securities . for mortgage-backed securities ( mbs ) , the amortization or accretion is based on estimated average lives of the securities . the lives of these securities can fluctuate based on the amount of prepayments received on the underlying collateral of the securities . the company 's investment in the federal home loan bank of san francisco ( fhlb ) stock is carried at cost . 33 at each reporting date , securities are assessed to determine whether there is an other-than-temporary impairment ( otti ) . story_separator_special_tag overview on october 14 , 2015 , we announced that we have entered into a merger agreement with county commerce bank ( ccb ) , pursuant to which ccb will merge into citizens business bank upon closing of the transaction . ccb is headquartered in ventura county with total assets of approximately $ 250 million . this acquisition extends our geographic footprint northward into the central coast of california . the acquisition is scheduled to close in the first quarter of 2016. the company opened a new commercial banking center in santa barbara , ca in january 2016. this follows recent strategic moves into the central coast area , which included a new location in oxnard in march 2015 and the announced merger agreement with county commerce bank in october 2015. for the year ended december 31 , 2015 , we reported net earnings of $ 99.1 million , compared with $ 104.0 million for 2014 , a decrease of $ 4.9 million , or 4.69 % . diluted earnings per share were $ 0.93 per share for the year ended december 31 , 2015 , compared to $ 0.98 per share for 2014. pre-tax earnings for 2015 included a $ 5.6 million loan loss provision recapture compared to $ 16.1 million for the same period of 2014 , and debt termination expense of $ 13.9 million as a result of the redemption of $ 200 million of 4.52 % fixed rate debt from the fhlb on february 23 , 2015. net interest income for 2015 was positively impacted by a year-over-year decrease of $ 8.1 million in interest expense for borrowings as a result of the repayment of the fhlb fixed rate debt . at december 31 , 2015 , total assets of $ 7.67 billion increased $ 293.3 million , or 3.98 % , from total assets of $ 7.38 billion at december 31 , 2014. interest-earning assets totaled $ 7.29 billion at december 31 , 2015 , an increase of $ 271.2 million , or 3.86 % , when compared with total interest-earning assets of $ 7.02 billion at december 31 , 2014. the increase in interest-earning assets was primarily due to a $ 199.9 million increase in total loans and an $ 80.9 million increase in total investment securities . this was partially offset by a $ 7.4 million decrease in interest-earning balances due from the federal reserve and a $ 7.8 million decrease in fhlb stock . total investment securities were $ 3.22 billion at december 31 , 2015 , an increase of $ 80.9 million from $ 3.14 billion at december 31 , 2014. during the third quarter of 2015 , we transferred investment securities from our afs security portfolio to htm . transfers of securities into the htm category from the afs category are transferred at fair value at the 35 date of transfer . the fair value of these securities at the date of transfer was $ 898.6 million . the unrealized holding gain or loss at the date of transfer is retained in accumulated other comprehensive income and in the carrying value of the held-to-maturity securities . the net unrealized holding gain at the date of transfer was $ 3.9 million after-tax and will continue to be reported in accumulated other comprehensive income ( aoci ) and amortized over the remaining life of the securities as a yield adjustment . at december 31 , 2015 , investment securities htm totaled $ 851.0 million . the after-tax unrealized gain reported in aoci on investment securities htm was $ 3.0 million at december 31 , 2015. at december 31 , 2015 , investment securities afs totaled $ 2.37 billion , inclusive of a pre-tax unrealized gain of $ 30.9 million . total loans and leases , net of deferred fees and discount , of $ 4.02 billion at december 31 , 2015 , increased by $ 199.9 million , or 5.24 % , from $ 3.82 billion at december 31 , 2014. the $ 199.9 million increase in loans was principally due to increases of $ 127.8 million in commercial real estate loans , $ 37.0 million in commercial and industrial loans , $ 28.6 million in sfr mortgage loans , $ 22.9 million in dairy & livestock and agribusiness loans , and $ 13.4 million in construction loans . this growth was partially offset by decreases of $ 28.1 million in sba loans , $ 3.7 million in municipal lease finance receivables , and $ 1.5 million in consumer loans . noninterest-bearing deposits were $ 3.25 billion at december 31 , 2015 , an increase of $ 383.8 million , or 13.39 % , compared to $ 2.87 billion at december 31 , 2014. at december 31 , 2015 , noninterest-bearing deposits were 54.93 % of total deposits , compared to 51.14 % at december 31 , 2014. our average cost of total deposits was 9 basis points for 2015 and 2014. at december 31 , 2015 and 2014 , we had $ 46.0 million in short-term borrowings . at december 31 , 2015 , we had $ 25.8 million of junior subordinated debentures , unchanged from december 31 , 2014. the allowance for loan losses totaled $ 59.2 million at december 31 , 2015 , compared to $ 59.8 million at december 31 , 2014. the allowance for loan losses was reduced by $ 5.6 million in 2015 , offset by net recoveries of $ 5.0 million . this compares with a $ 16.1 million recapture of loan loss provision for 2014. the allowance for loan losses was 1.51 % and 1.62 % of total loans and leases outstanding , excluding pci loans , at december 31 , 2015 and december 31 , 2014 , respectively . our capital ratios under the revised capital framework referred to as basel iii remain well-above regulatory standards . as of december 31 , 2015 , the company 's tier 1 leverage capital ratio totaled 11.22 % , our common equity tier 1 ratio totaled 16.49 % , our tier 1 risk-based capital ratio totaled 16.98
| summary of significant accounting policies and note 21 business segments of the consolidated financial statements . key measures we use to evaluate the segments ' performance are included in the following table for the years ended december 31 , 2015 , 2014 and 2013. these tables also provide additional significant segment measures useful to understanding the performance of these segments . certain amounts in the prior periods ' presentation of segments ' performance have been reclassified between segments to conform to the current year presentation with no impact on previously reported consolidated net income . 48 business financial and commercial banking centers replace_table_token_12_th ( 1 ) interest income and interest expense include credit for funds provided and charges for funds used , respectively . these are eliminated in the condensed consolidated presentation . ( 2 ) yield on loans excludes pci discount accretion , and is accounted for at the corporate level . for the year ended december 31 , 2015 , the centers ' segment pre-tax profit increased by $ 6.8 million , or 5.11 % , primarily due to an increase in interest income of $ 8.2 million , or 4.82 % , compared to 2014. the $ 8.2 million increase in interest income for 2015 was principally due to a $ 149.7 million increase in average loans , partially offset by a 10 basis point drop in the loan yield to 4.78 % for 2015 , compared to 4.88 % for 2014. the market for new loans continued to remain competitive .
| 5,992 |
in computing beneficial ownership of each person , all amounts exclude common units issuable upon the exercise of outstanding story_separator_special_tag the following discussion and analysis should be read in conjunction with our consolidated financial statements and notes thereto presented in this annual report . the following discussion contains “ forward-looking statements ” that reflect our future plans , estimates , beliefs , and expected performance . actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors . see “ item 1a . risk factors ” and “ cautionary statement regarding forward-looking statements. ” overview we are a publicly traded delaware limited partnership formed by diamondback on february 27 , 2014 to , among other things , own , acquire and exploit oil and natural gas properties in north america . the partnership is currently focused on oil and natural gas properties in the permian basin . as of december 31 , 2015 , our general partner held a 100 % non-economic general partner interest in us , and diamondback had an approximate 88 % limited partner interest in us . diamondback also owns and controls our general partner . we operate in one reportable segment engaged in the acquisition of oil and natural gas properties . our assets consist primarily of producing oil and natural gas properties principally located in the permian basin of west texas . sources of our revenue our revenues are derived from royalty payments we receive from our operators based on the sale of oil and natural gas production , as well as the sale of natural gas liquids that are extracted from natural gas during processing . royalty income may vary significantly from period to period as a result of changes in commodity prices , production mix and volumes of production sold by our operators . for the year ended december 31 , 2015 , our revenues were derived 93 % from oil sales , 3 % from natural gas liquid sales and 4 % from natural gas sales . for the year ended december 31 , 2014 , our revenues were derived 91 % from oil sales , 6 % from natural gas liquid sales and 3 % from natural gas sales . for the period from inception through december 31 , 2013 , our revenues were derived 93 % from oil sales , 5 % from natural gas liquid sales and 2 % from natural gas sales . as a result , our revenues are more sensitive to fluctuations in oil prices than they are to fluctuations in natural gas liquids or natural gas prices . oil , natural gas liquids and natural gas prices have historically been volatile . during 2015 , west texas intermediate posted prices ranged from $ 34.55 to $ 61.36 per bbl and the henry hub spot market price of natural gas ranged from $ 1.63 to $ 3.32 per mmbtu . on december 31 , 2015 , the west texas intermediate posted price for crude oil was $ 37.13 per bbl and the henry hub spot market price of natural gas was $ 2.28 per mmbtu . over the past several months , oil prices have declined from over $ 61.00 per bbl in june 2015 to below $ 27.00 per bbl in january 2016 due in large part to increasing supplies and weakening demand growth . lower prices may not only decrease our revenues , but also potentially the amount of oil and natural gas that our operators can produce economically . lower oil and natural gas prices may also result in a reduction in the borrowing base under our credit agreement , which may be redetermined at the discretion of our lenders . principal components of our cost structure production and ad valorem taxes production taxes are paid on produced oil and natural gas based on a percentage of revenues from products sold at fixed rates established by federal , state or local taxing authorities . where available , we benefit from tax credits and exemptions in our various taxing jurisdictions . we are also subject to ad valorem taxes in the counties where our production is located . ad valorem taxes are generally based on the valuation of our oil and gas properties . general and administrative in connection with the closing of the ipo , our general partner and diamondback entered into the first amended and restated agreement of limited partnership , dated as of june 23 , 2014. the partnership agreement requires us to reimburse our general partner for all direct and indirect expenses incurred or paid on our behalf and all other expenses allocable to us or otherwise incurred by our general partner in connection with operating our business . the partnership agreement does not set a limit on the amount of expenses for which our general partner and its affiliates may be reimbursed . these expenses include salary , bonus , incentive compensation and other amounts paid to persons who perform services for us or on our behalf and expenses allocated to our general partner by its affiliates . our general partner is entitled to determine the expenses that are allocable to us . 44 in connection with the closing of the ipo , we and our general partner entered into an advisory services agreement with wexford , pursuant to which wexford provides general financial and strategic advisory services to us and our general partner in exchange for a $ 0.5 million annual fee and certain expense reimbursement . our predecessor incurred costs for overhead , including the cost of management , operating and administrative services provided under the shared services agreement with diamondback e & p llc , a wholly owned subsidiary of diamondback , audit and other fees for professional services and legal compliance . in connection with the closing of the ipo , the shared services agreement with diamondback e & p llc was terminated . story_separator_special_tag net interest expense for the years ended december 31 , 2015 and 2014 and for the period from inception through december 31 , 2013 was $ 1.1 million , $ 11.2 million and $ 5.7 million , respectively . adjusted ebitda adjusted ebitda is a supplemental non-gaap financial measure that is used by management and external users of our financial statements , such as industry analysts , investors , lenders and rating agencies . we believe adjusted ebitda is useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods or capital structure . we define adjusted ebitda as net income ( loss ) plus interest expense , interest expense –related party , net of capitalized interest , non-cash unit-based compensation expense , depletion expense and impairment expense . adjusted ebitda is not a 48 measure of net income ( loss ) as determined by gaap . we exclude the items listed above from net income ( loss ) in arriving at adjusted ebitda because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets , capital structures and the method by which the assets were acquired . certain items excluded from adjusted ebitda are significant components in understanding and assessing a company 's financial performance , such as a company 's cost of capital and tax structure , as well as the historic costs of depreciable assets , none of which are components of adjusted ebitda . adjusted ebitda should not be considered as an alternative to , or more meaningful than , net income as determined in accordance with gaap or as an indicator of our operating performance or liquidity . our computations of adjusted ebitda may not be comparable to other similarly titled measures of other companies . the following table presents a reconciliation of adjusted ebitda to the most directly comparable gaap financial measure for the periods indicated . replace_table_token_8_th liquidity and capital resources overview our primary sources of liquidity have been cash flows from operations and equity and debt financings , including borrowings under our credit agreement , and our primary uses of cash have been , and are expected to continue to be , to pay distributions to our unitholders and for replacement and growth capital expenditures , including the acquisition of oil and natural gas properties . our ability to generate cash is subject to a number of factors , some of which are beyond our control , including commodity prices , weather and general economic , financial , competitive , legislative , regulatory and other factors . in 2016 , we believe cash flows from operations and availability under our credit agreement will provide sufficient liquidity to manage our cash needs and contractual obligations and to fund expected capital expenditures . we continually monitor market conditions and may consider issuing more equity or taking on debt if we believe conditions to be favorable . our partnership agreement does not require us to distribute any of the cash we generate from operations . we believe , however , that it is in the best interests of our unitholders if we distribute a substantial portion of the cash we generate from operations . the board of directors of our general partner has adopted a policy to distribute an amount equal to the available cash we generate each quarter to our unitholders . cash distributions are made to the common unitholders of record on the applicable record date , generally within 60 days after the end of each quarter . available cash for each quarter is determined by the board of directors of our general partner following the end of such quarter . available cash for each quarter generally equals adjusted ebitda reduced for cash needed for debt service and other contractual obligations and fixed charges and reserves for future operating or capital needs that the board of directors of our general partner deems necessary or appropriate , if any . 49 the following table presents cash distributions approved by the board of directors of our general partner for the periods presented . replace_table_token_9_th * as of february 19 , 2016 , the q4 2015 distribution had not occurred . we will make our q4 2015 distribution to diamondback on february 26 , 2016 . our credit agreement on july 8 , 2014 , we entered into a $ 500.0 million secured revolving credit agreement with wells fargo as the administrative agent , sole book runner and lead arranger . the credit agreement , which was amended august 15 , 2014 to add additional lenders to the lending group , matures on july 8 , 2019. the credit agreement was further amended on may 22 , 2015 to , among other things , increase the borrowing base from $ 110.0 million to $ 175.0 million and to provide for certain restrictions on purchasing margin stock . on november 13 , 2015 , the borrowing base was increased from $ 175.0 million to $ 200.0 million . as of december 31 , 2015 , the borrowing base was set at $ 200.0 million and we had $ 34.5 million in outstanding borrowings under the credit agreement . the outstanding borrowings under the credit agreement bear interest at a rate elected by us that is equal to an alternative base rate ( which is equal to the greatest of the prime rate , the federal funds effective rate plus 0.5 % and 3-month libor plus 1.0 % ) or libor , in each case plus the applicable margin . the applicable margin ranges from 0.5 % to 1.50 % in the case of the alternative base rate and from 1.50 % to 2.50 % in the case of libor , in each case depending on the amount of the loan outstanding in relation to the borrowing base .
| results of operations results presented and factors affecting the comparability of our results to the historical financial results of our predecessor viper energy partners lp was formed on february 27 , 2014 and did not own any assets prior to the contribution of our predecessor to us on june 17 , 2014. the assets of our predecessor consisted of mineral interests in oil and natural gas properties in the permian basin , which were acquired on september 19 , 2013. see note 3 –acquisitions , to our audited consolidated financial statements included elsewhere in this annual report . the contribution of our predecessor to us on june 17 , 2014 was accounted for as a combination of entities under common control with assets and liabilities transferred at their carrying amounts in a manner similar to a pooling of interests . therefore , the financial and operating data below represent our predecessor 's operations for periods prior to june 17 , 2014 and , for periods on and after june 17 , 2014 , the financial and operating data represent the combination of our predecessor and our operations . our results of operations and our future results of operations may not be comparable to the historical results of operations of our predecessor for the periods presented , primarily for the reasons described below : long-term debt in connection with the closing of the ipo , the subordinated note issued by our predecessor to diamondback effective september 19 , 2013 was converted to equity ; therefore , we no longer have the note payable and related interest expense . on july 8 , 2014 , we entered into a secured revolving credit agreement with wells fargo as the administrative agent , sole book runner and lead arranger .
| 5,993 |
except when the context otherwise requires or where otherwise indicated , ( 1 ) all references to “ venator , ” the “ company , ” “ we , ” “ us ” and “ our ” refer to venator materials plc and its subsidiaries , or , as the context requires , the historical pigments and additives business of huntsman , ( 2 ) all references to “ huntsman ” refer to huntsman corporation , our controlling shareholder , and its subsidiaries , ( 3 ) all references to the “ titanium dioxide ” segment or business refer to the tio 2 business of venator , or , as the context requires , the historical pigments and additives segment of huntsman and the related operations and assets , liabilities and obligations , ( 4 ) all references to the “ performance additives ” segment or business refer to the functional additives , color pigments , timber treatment and water treatment businesses of venator , or , as the context requires , the pigments and additives segment of huntsman and the related operations and assets , liabilities and obligations , ( 5 ) all references to “ other businesses ” refer to certain businesses that huntsman retained in connection with the separation and that are reported as discontinued operations in our consolidated and combined financial statements , ( 6 ) all references to “ huntsman international ” refer to huntsman international llc , a wholly-owned subsidiary of huntsman and the entity through which huntsman operates all of its businesses , ( 7 ) all references to hhn refer to huntsman ( holdings ) netherlands b.v. , a wholly-owned subsidiary of huntsman and the huntsman entity that owns a majority of our ordinary shares , ( 8 ) we refer to the internal reorganization prior to our ipo , the separation transactions initiated to separate the venator business from huntsman 's other businesses , including the entry into and effectiveness of the separation agreement and ancillary agreements , and the senior credit facilities ( defined below ) and senior notes ( defined below ) , including the use of the net proceeds of the senior credit facilities and the senior notes , which were used to repay intercompany debt we owed to huntsman and to pay related fees and expenses , as the “ separation ” and ( 9 ) the “ rockwood acquisition ” refers to huntsman 's acquisition of the performance and additives and tio 2 businesses of rockwood holdings , inc. ( “ rockwood ” ) completed on october 1 , 2014. this md & a contains forward-looking statements concerning trends or events potentially affecting our business or future performance , including , without limitation , statements relating to our plans , strategies , objectives , expectations and intentions . the words “ aim , ” “ anticipate , ” “ believe , ” “ budget , ” “ continue , ” “ could , ” “ effort , ” “ estimate , ” “ expect , ” “ forecast , ” “ goal , ” “ guidance , ” “ intend , ” “ likely , ” “ may , ” “ might , ” “ objective , ” “ outlook , ” “ plan , ” “ potential , ” “ predict , ” “ project , ” “ seek , ” “ should , ” “ target , “ will ” or “ would ” and similar expressions identify forward-looking statements . we do not undertake to update , revise or correct any of the forward-looking information unless required to do so under the federal securities laws . when considering these forward-looking statements , you should keep in mind the risk factors and other cautionary statements contained in this report . see “ note regarding forward-looking statements ” and “ part 1. item 1a . risk factors. ” basis of presentation prior to the separation , our operations were included in huntsman 's financial results in different legal forms , including but not limited to : ( 1 ) wholly-owned subsidiaries for which the titanium dioxide and performance additives businesses were the sole businesses ; ( 2 ) legal entities which are comprised of other businesses and include the titanium dioxide and or performance additives businesses ; and ( 3 ) variable interest entities in which the titanium dioxide and performance additives businesses are the primary beneficiaries . the consolidated and combined financial statements include all revenues , costs , assets , liabilities and cash flows directly attributable to us . the consolidated and combined financial statements also include allocations of direct and indirect corporate expenses through the date of the separation , which are based upon an allocation method that in the opinion of management is reasonable . because the historical consolidated and combined financial information for the periods indicated reflect the combination of these legal entities under common control , the historical consolidated and combined financial information includes the results of operations of other huntsman businesses that are not a part of our operations after the separation . we report the results of those 52 other businesses as discontinued operations . please see “ part ii . item 8. financial statements and supplementary data—note 15. discontinued operations ” of this report . in addition , the consolidated and combined financial statements have been prepared from huntsman 's historical accounting records through the separation and are presented on a stand-alone basis as if our operations had been conducted separately from huntsman ; however , prior to the separation , we did not operate as a separate , stand-alone entity for the periods presented and , as such , the consolidated and combined financial statements reflecting balances and activity prior to the separation , may not be indicative of the financial position , results of operations and cash flows had we been a stand-alone company . for purposes of these consolidated and combined financial statements , all significant transactions with huntsman international have been included in group equity . all intercompany transactions within the consolidated business have been eliminated . story_separator_special_tag site . story_separator_special_tag in 2018 , we expect to spend approximately $ 120 million on capital expenditures , excluding reconstruction of our pori , finland facility . in 2017 , our adjusted effective tax rate was 18 % . our tax expense is significantly affected by the mix of income and losses in tax jurisdictions in which we operate . we expect our adjusted long-term effective tax rate will be approximately 15 % to 20 % . we believe the impact of the 2017 tax act on our adjusted long-term effective tax rate will not be material , given the low percentage of our global pre-tax income earned in the united states . as a result of the 2017 tax act we have recorded a provisional decrease of $ 3 million to our net deferred tax assets with a corresponding net tax expense of $ 3 million . additionally , also due to the 2017 tax act , other income for the quarter and year ended december 31 , 2017 increased by $ 34 million as a result of the decrease in the future expected payments to huntsman pursuant to the tax matters agreement entered into as part of our separation . we expect our cash tax rate will be between 10 % to 15 % in 2018 . 55 results of operations the following table sets forth our consolidated and combined results of operations for the years ended december 31 , 2017 , 2016 and 2015. replace_table_token_6_th 56 replace_table_token_7_th nm—not meaningful ( 1 ) our management uses adjusted ebitda to assess financial performance . adjusted ebitda is defined as net income ( loss ) before interest expense , net , income tax ( expense ) benefit , depreciation and amortization , and net income attributable to noncontrolling interests , as well as eliminating the following adjustments : ( a ) business acquisition and integration expenses ; ( b ) separation ( gain ) expense , net ; ( c ) u.s. income tax reform ; ( d ) ( gain ) loss on disposition of businesses/assets ; ( e ) net income of discontinued operations , net of tax ; ( f ) certain legal settlements and related expenses ; ( g ) amortization of pension and postretirement actuarial losses ; ( h ) net plant incident ( credits ) costs ; and ( i ) restructuring , impairment and plant closing and transition costs . we believe that net income ( loss ) is the performance measure calculated and presented in accordance with u.s. gaap that is most directly comparable to adjusted ebitda . we believe adjusted ebitda is useful to investors in assessing our ongoing financial performance and provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of our operational profitability and that may obscure underlying business results and trends . however , this measure should not be considered in isolation or viewed as a substitute for net income or other measures of performance determined in accordance with u.s. gaap . moreover , adjusted ebitda as used herein is not necessarily comparable to other similarly titled measures of other companies due to potential inconsistencies in the methods of calculation . our management believes this measure is useful to compare general operating performance from period to period and to make certain related management decisions . adjusted ebitda is also used by securities analysts , lenders and others in their evaluation of different companies because it excludes certain items that can vary widely across different industries or among companies within the same industry . for example , interest expense can be highly dependent on a company 's capital structure , debt levels and credit ratings . therefore , the 57 impact of interest expense on earnings can vary significantly among companies . in addition , the tax positions of companies can vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the various jurisdictions in which they operate . as a result , effective tax rates and tax expense can vary considerably among companies . finally , companies employ productive assets of different ages and utilize different methods of acquiring and depreciating such assets . this can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies . nevertheless , our management recognizes that there are limitations associated with the use of adjusted ebitda in the evaluation of us as compared to net income . our management compensates for the limitations of using adjusted ebitda by using this measure to supplement u.s. gaap results to provide a more complete understanding of the factors and trends affecting the business rather than u.s. gaap results alone . in addition to the limitations noted above , adjusted ebitda excludes items that may be recurring in nature and should not be disregarded in the evaluation of performance . however , we believe it is useful to exclude such items to provide a supplemental analysis of current results and trends compared to other periods because certain excluded items can vary significantly depending on specific underlying transactions or events , and the variability of such items may not relate specifically to ongoing operating results or trends and certain excluded items , while potentially recurring in future periods , may not be indicative of future results . for example , while ebitda from discontinued operations is a recurring item , it is not indicative of ongoing operating results and trends or future results .
| executive summary we are a leading global manufacturer and marketer of chemical products that improve the quality of life for downstream consumers and promote a sustainable future . our products comprise a broad range of innovative chemicals and formulations that bring color and vibrancy to buildings , protect and extend product life , and reduce energy consumption . we market our products globally to a diversified group of industrial customers through two segments : titanium dioxide , which consists of our tio 2 business , and performance additives , which consists of our functional additives , color pigments , timber treatment and water treatment businesses . we are a leading global producer in many of our key product lines , including tio 2 , color pigments and functional additives , a leading north american producer of timber treatment products and a leading european producer of water treatment products . recent developments initial public offering and separation on august 8 , 2017 , we completed our ipo of 26,105,000 ordinary shares , par value $ 0.001 per share ( the “ ordinary shares ” ) which included 3,405,000 ordinary shares issued upon the exercise in full by the underwriters of their option to purchase additional shares , at a public offering price of $ 20.00 per share . all of the ordinary shares were sold by huntsman , and we did not receive any proceeds from the offering . in conjunction with our ipo , venator assumed the titanium dioxide and performance additives businesses of huntsman and the related assets , liabilities and obligations and operations and entered into the separation agreement to effect the separation of this business from huntsman . prior to our ipo , venator was a wholly-owned subsidiary of huntsman . the ordinary shares began trading august 3 , 2017 on the new york stock exchange under the symbol “ vntr.
| 5,994 |
the company evaluates premises and equipment for financial impairment as events or changes in circumstances indicate that the carrying amount of such assets may not be fully recoverable . bank owned life insurance the company has purchased life insurance policies on certain key executives . bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date , which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement . income taxes the company files its income taxes on a consolidated basis with its subsidiary . income tax expense is the total of current year income tax due or refundable and the change in deferred tax assets and liabilities . deferred tax assets and liabilities are recognized for the tax consequences of temporary differences between the reported amount of assets and liabilities and their tax bases . deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment . a valuation allowance is recognized if , based on the weight of available evidence management believes it is more likely than not that some portion or all of the deferred tax assets will not be realized . on the consolidated balance sheet , net deferred tax assets are included in accrued interest receivable and other assets . f - 21 plumas bancorp and subsidiary notes to consolidated financial statements ( continued ) 3. summary of significant accounting policies ( continued story_separator_special_tag general we are a bank holding company for plumas bank , a california state-chartered commercial bank . we derive our income primarily from interest received on real estate related , commercial and consumer loans and , to a lesser extent , interest on investment securities , fees received in connection with servicing deposit and loan customers and fees from the sale of loans . our major operating expenses are the interest we pay on deposits and borrowings and general operating expenses . we rely on locally-generated deposits to provide us with funds for making loans . we are subject to competition from other financial institutions and our operating results , like those of other financial institutions operating in california , are significantly influenced by economic conditions in california , including the strength of the real estate market . in addition , both the fiscal and regulatory policies of the federal and state government and regulatory authorities that govern financial institutions and market interest rates also impact the bank 's financial condition , results of operations and cash flows . critical accounting policies our accounting policies are integral to understanding the financial results reported . our most complex accounting policies require management 's judgment to ascertain the valuation of assets , liabilities , commitments and contingencies . we have established detailed policies and internal control procedures that are intended to ensure valuation methods are applied in an environment that is designed and operating effectively and applied consistently from period to period . the following is a brief description of our current accounting policies involving significant management valuation judgments . allowance for loan losses . the allowance for loan losses is an estimate of credit losses inherent in the company 's loan portfolio that have been incurred as of the balance-sheet date . the allowance is established through a provision for loan losses which is charged to expense . additions to the allowance are expected to maintain the adequacy of the total allowance after credit losses and loan growth . credit exposures determined to be uncollectible are charged against the allowance . cash received on previously charged off amounts is recorded as a recovery to the allowance . the overall allowance consists of two primary components , specific reserves related to impaired loans and general reserves for inherent losses related to loans that are collectively evaluated for impairment . we evaluate our allowance for loan losses quarterly . we believe that the allowance for loan losses is a critical accounting estimate because it is based upon management 's assessment of various factors affecting the collectibility of the loans , including current economic conditions , past credit experience , delinquency status , the value of the underlying collateral , if any , and a continuing review of the portfolio of loans . we can not provide you with any assurance that economic difficulties or other circumstances which would adversely affect our borrowers and their ability to repay outstanding loans will not occur which would be reflected in increased losses in our loan portfolio , which could result in actual losses that exceed reserves previously established . other real estate owned . other real estate owned ( oreo ) represents properties acquired through foreclosure or physical possession . oreo is initially recorded at fair value less costs to sell when acquired . write-downs to fair value at the time of transfer to oreo is charged to allowance for loan losses . subsequent to foreclosure , we periodically evaluate the value of oreo held for sale and record a valuation allowance for any subsequent declines in fair value less selling costs . subsequent declines in value are charged to operations . fair value is based on our assessment of information available to us at the end of a reporting period and depends upon a number of factors , including our historical experience , economic conditions , and issues specific to individual properties . our evaluation of these factors involves subjective estimates and judgments that may change . income taxes . the company files its income taxes on a consolidated basis with its subsidiary . the allocation of income tax expense ( benefit ) represents each entity 's proportionate share of the consolidated provision for income taxes . 23 deferred income taxes reflect the estimated future tax effects of temporary differences between the reported amount of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations . story_separator_special_tag net loans decreased by 6 % from $ 307 million at december 31 , 2010 to $ 287 million at december 31 , 2011. this decline in net loans was mostly related to normal pay downs and prepayments , loan charge-offs , real estate acquired through foreclosure and our continued efforts to reduce the level of construction and land development loan balances . at december 31 , 2011 investment securities totaled $ 57.9 million compared to $ 63.0 million at december 31 , 2010. investment securities are composed of debt securities issued by agencies sponsored by the u.s. government . total deposits were $ 391 million as of december 31 , 2011 , a decrease of $ 33.7 million , or 8 % , from the december 31 , 2010 balance of $ 425 million . the decline in deposits was primarily related to maturities from a higher rate promotional time deposit product we began offering in june , 2009 and continued to offer until april 30 , 2010. core deposit growth was strong with increases in non-interest bearing deposits of $ 14.1 million and savings deposits of $ 10.8 million . non-interest bearing deposits as a percentage of total deposits increased from 26.3 % at december 31 , 2010 to 32.2 % at december 31 , 2011. shareholders ' equity as of december 31 , 2011 increased by $ 1.6 million to $ 39.6 million up from $ 38.0 million as of december 31 , 2010. this increase was mostly related to earnings during the period , the reversal of $ 524 thousand in accrued preferred stock dividends and an increase of $ 210 thousand in accumulated other comprehensive income/loss from a loss of $ 52 thousand at december 31 , 2010 to accumulated other comprehensive income of $ 158 thousand at december 31 , 2011. the return on average assets was 0.20 % for 2011 , up from 0.19 % for 2010. the return on average common equity was 0.9 % for 2011 , down from 1.1 % for 2010 . 25 story_separator_special_tag a > interest on time deposits declined by $ 946 thousand . average time deposits declined by $ 27.8 million from $ 124.8 million during 2010 to $ 97.0 million for the year ended december 31 , 2011. the decrease in time deposits is mostly related to a promotional time deposit product we began offering in june , 2009 and continued to offer until april 30 , 2010. these promotional time deposits have now fully matured . the average rate paid on these promotional deposits during 2011 was 2 % . the average rate paid on time deposits decreased from 1.61 % during 2010 to 1.09 % during the current twelve month period . this decrease primarily relates to a decline in market rates paid in the company 's service area and the maturity of the higher rate promotional deposits . interest expense on now accounts declined by $ 195 thousand . rates paid on now accounts declined by 18 basis points from 0.38 % during 2010 to 0.20 % during 2011 , as we significantly lowered the rate paid on local public agencies now accounts . although we lost deposits by lowering this rate ; we continue to focus on the profitability of the public sweep accounts rather than growing public sweep balances . interest expense on money market accounts decreased by $ 106 thousand related primarily to a decrease in rate paid on these accounts of 23 basis points from 0.52 % during 2010 to 0.29 % during 2011. this was primarily related to a significant drop in the rates paid on our money market sweep product . we no longer offer the money market sweep account having replaced it with a product that utilizes repurchase agreements during the third quarter of 2011. interest on fhlb long term borrowings decreased by $ 130 thousand as there were no outstanding long term borrowings during 2011. interest expense on junior subordinated debentures , which increased by $ 14 thousand from 2010 , fluctuates with changes in the 3-month london interbank offered rate ( libor ) rate . interest on other borrowings in 2011 primarily relates to interest paid on repurchase agreements . net interest margin is net interest income expressed as a percentage of average interest-earning assets . as a result of the changes noted above , the net interest margin for 2011 decreased 16 basis points to 4.08 % , from 4.24 % for 2010 . 2010 compared to 2009. net interest income , on a nontax-equivalent basis , was $ 17.5 million for the year ended december 31 , 2010 , a decline of $ 1.6 million , or 8.6 % , from $ 19.2 million for 2009. the overall change in net interest income was primarily a result of a decrease of $ 1.8 million in loan interest income , due to a decline in average loans outstanding . additionally , interest on investments securities declined by $ 391 thousand , related to a decrease in yield . partially offsetting these decreases in interest income was a decline in rates paid on the company 's deposits and borrowings . interest income decreased $ 2.2 million , or 9.4 % , to $ 20.7 million for the year ended december 31 , 2010. interest and fees on loans decreased by $ 1.8 million from $ 20.7 million for the year ended december 31 , 2009 to $ 18.9 million for 2010. the average loan balances were $ 323.9 million for 2010 , down $ 30.6 million from the $ 354.5 million for 2009. the decline in loan balances is consistent with the decrease in economic activity in the company 's service area and the company 's successful effort to reduce its exposure to real estate construction and land development loans .
| results of operations net interest income the following table presents , for the years indicated , the distribution of consolidated average assets , liabilities and shareholders ' equity . average balances are based on average daily balances . it also presents the amounts of interest income from interest-earning assets and the resultant yields expressed in both dollars and yield percentages , as well as the amounts of interest expense on interest-bearing liabilities and the resultant cost expressed in both dollars and rate percentages . nonaccrual loans are included in the calculation of average loans while nonaccrued interest thereon is excluded from the computation of yields earned : replace_table_token_6_th ( 1 ) interest income is reflected on an actual basis and is not computed on a tax-equivalent basis . ( 2 ) average nonaccrual loan balances of $ 20.2 million for 2011 , $ 18.8 million for 2010 and $ 25.1 million for 2009 are included in average loan balances for computational purposes . ( 3 ) loan origination fees and costs are included in interest income as adjustments of the loan yields over the life of the loan using the interest method . loan interest income includes net loan fees ( costs ) of $ 49,000 , $ ( 20,000 ) and $ ( 214,000 ) for 2011 , 2010 and 2009 , respectively . ( 4 ) net interest spread represents the average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities . ( 5 ) net interest margin is computed by dividing net interest income by total average earning assets .
| 5,995 |
the company records , as a reduction of revenue , the estimated impact of such returns . in determining the estimate of product sales that will be returned , management analyzes historical returns , current economic trends , changes in customer demand and acceptance of the company 's products . based on this information , management reserves a percentage of each dollar of product sales that provide the customer with the right of return . advertising expenses the company expenses advertising costs as incurred in accordance with asc 720-35 , other expensesadvertising cost. advertising and promotional expenses recognized totaled $ 534 million , $ 446 million and $ 442 million for the fiscal years ended june 30 , 2015 , 2014 story_separator_special_tag this discussion and analysis contains statements that constitute forward-looking statements within the meaning of section 21e of the securities exchange act of 1934 , as amended ( the exchange act ) , and section 27a of the securities act of 1933 , as amended . all statements that are not statements of historical fact are forward-looking statements . the words expect , estimate , anticipate , predict , believe and similar expressions and variations thereof are intended to identify forward-looking statements . these statements appear in a number of places in this discussion and analysis and include statements regarding the intent , belief or current expectations of the company , its directors or its officers with respect to , among other things , trends affecting the company 's financial condition or results of operations and the outcome of contingencies such as litigation and investigations . readers are cautioned that any forward-looking statements are not guarantees of future performance and involve risks and uncertainties . more information regarding these risks , uncertainties and other important factors that could cause actual results to differ materially from those in the forward-looking statements is set forth under the heading risk factors in item 1a of this annual report on form 10-k ( the annual report ) . the company does not ordinarily make projections of its future operating results and undertakes no obligation ( and expressly disclaims any obligation ) to publicly update or revise any forward-looking statements , whether as a result of new information , future events or otherwise , except as required by law . readers should carefully review this document and the other documents filed by the company with the securities and exchange commission ( the sec ) . this section should be read together with the consolidated financial statements of news corporation and related notes set forth elsewhere in this annual report . introduction news corporation ( together with its subsidiaries , news corporation , news corp , the company , we , or us ) is a global diversified media and information services company comprised of businesses across a range of media , including : news and information services , book publishing , digital real estate services , cable network programming in australia , digital education and pay-tv distribution in australia . the separation and distribution on june 28 , 2013 ( the distribution date ) , the company completed the separation of its businesses ( the separation ) from twenty-first century fox , inc. ( 21st century fox ) . as of the effective time of the separation , all of the outstanding shares of the company were distributed to 21st century fox stockholders based on a distribution ratio of one share of company class a or class b common stock for every four shares of 21st century fox class a or class b common stock , respectively , held of record as of june 21 , 2013 ( the record date ) . following the separation , the company 's class a and class b common stock began trading independently on the nasdaq global select market ( nasdaq ) , and chess depositary interests representing the company 's class a and class b common stock began trading on the australian securities exchange ( asx ) . in connection with the separation , the company entered into the separation and distribution agreement ( the separation and distribution agreement ) and certain other related agreements which govern the company 's relationship with 21st century fox following the separation . ( see note 13 to the consolidated financial statements ) . the company 's financial statements as of and for the fiscal years ended june 30 , 2015 , 2014 and 2013 are presented on a consolidated basis . the company 's consolidated statements of operations for the fiscal years ended june 30 , 2015 and 2014 reflect the company 's operations as a stand-alone company . the company 's consolidated balance sheets as of june 30 , 2015 and 2014 consist of the company 's consolidated balances , subsequent to the separation . prior to the separation , the company 's combined financial statements were prepared on a stand-alone basis derived from the consolidated financial statements and accounting records of 21st century fox . the company 's consolidated statement of operations for the fiscal year ended june 30 , 2013 included allocations of general 40 corporate expenses for certain support functions that were provided on a centralized basis by 21st century fox and not recorded at the business unit level , such as expenses related to finance , human resources , information technology , facilities , and legal , among others . these expenses were allocated to the company on the basis of direct usage when identifiable , with the remainder allocated on a pro rata basis of consolidated revenues , operating income , headcount or other measures of the company . management believes the assumptions underlying these consolidated financial statements , including the assumptions regarding allocating general corporate expenses from 21st century fox , were reasonable . nevertheless , these consolidated financial statements may not include all of the actual expenses that would have been incurred by the company and may not reflect the company 's consolidated results of operations and cash flows had it been a stand-alone company during the applicable periods . story_separator_special_tag book publishing the book publishing segment derives revenues from the sale of general fiction , nonfiction , children 's and religious books in the u.s. and internationally . the revenues and operating results of the book publishing segment are significantly affected by the timing of releases and the number of its books in the marketplace . the book publishing marketplace is subject to increased periods of demand during the end-of-year holiday season in its main operating geographies . this marketplace continues to change due to technical innovations , electronic book devices and other factors . each book is a separate and distinct product , and its financial success depends upon many factors , including public acceptance . major new title releases represent a significant portion of the book publishing segment 's sales throughout the fiscal year . print-based consumer books are generally sold on a fully returnable basis , resulting in the return of unsold books . in the domestic and international markets , the book publishing segment is subject to global trends and local economic conditions . 43 operating expenses for the book publishing segment include costs related to paper , printing , authors ' royalties , editorial , promotional , art and design expenses . selling , general and administrative expenses include salaries , employee benefits , rent and other routine overhead . digital real estate services the digital real estate services segment sells online advertising services on its residential real estate and commercial property sites and also licenses certain professional software products on a subscription basis . significant expenses associated with these sites and software solutions include development costs , advertising and promotional expenses , hosting and support services , salaries , employee benefits and other routine overhead expenses . consumers are increasingly turning to the internet and mobile devices for real estate information . the digital real estate services segment 's success depends on its continued innovation to provide products and services that make its websites and mobile applications useful for consumers and real estate and mortgage professionals and attractive to its advertisers . cable network programming the cable network programming segment consists of fox sports australia , which offers the following seven channels in high definition : fox sports 1 , fox sports 2 , fox sports 3 , fox sports 4 , fox sports 5 , fox footy and fox sports news . revenue is primarily derived from monthly affiliate fees received from pay-tv providers ( mainly foxtel ) based on the number of subscribers . fox sports australia competes primarily with espn , bein sports , the free-to-air ( fta ) channels and certain telecommunications companies in australia . the most significant operating expenses of the cable network programming segment are the acquisition and production expenses related to programming and the expenses related to operating the technical facilities of the broadcast operations . the expenses associated with licensing programming rights are recognized during the applicable season or event , which can cause results at the cable network programming segment to fluctuate based on the timing and mix of the company 's local and international sports programming . other expenses include marketing and promotional expenses related to improving the market visibility and awareness of the channels and their programming . additional expenses include salaries , employee benefits , rent and other routine overhead expenses . digital education the digital education segment consists of amplify , the brand for the company 's digital education business . amplify 's technology solutions transform the way teachers teach and students learn in two primary areas : amplify insight , amplify 's data and assessment business , which formerly operated under the brand wireless generation , inc. ( wireless generation ) , commenced operations in 2000 and was acquired in fiscal 2011. amplify insight provides powerful assessment products and services to support teachers and school districts , including student assessment tools and analytic technologies , intervention programs , enterprise education information systems , and professional development and consulting services . amplify learning , amplify 's curriculum business , is developing digital content for k-12 english language arts , math and science , including software that will combine interactive , game-like experiences , rich , immersive media and sophisticated analytics to make the classroom teaching and learning experience more engaging , rigorous , personalized and effective . amplify learning 's digital curriculum incorporates the common core state standards adopted by most states in the u.s. and is available for use on multiple platforms . 44 amplify also operates amplify access , a platform business that delivers a tablet-based distribution system which includes a tablet designed for the k-12 market , instructional software and curated third-party content . the company has initiated a strategic review of its digital education business . in the fourth quarter of fiscal 2015 , the company determined it would cease actively marketing amplify 's access products to new customers ; however , it will continue to provide service and support to its existing customers . the company is reviewing strategic alternatives with respect to the insight and learning businesses . significant expenses associated with the company 's digital education business include product development costs , salaries , employee benefits and other routine overhead . other the other segment primarily consists of general corporate overhead expenses , the corporate strategy and creative group and costs related to the u.k. newspaper matters . the company 's corporate strategy and creative group was formed to identify new products and services across the company 's businesses to increase revenues and profitability and to target and assess potential acquisitions and investments . other business developments during fiscal 2015 , the company purchased a 14.99 % interest in apn news and media limited ( apn ) for approximately $ 112 million . apn operates a portfolio of australian and new zealand radio and outdoor media assets and small regional print interests . in november 2014 , the company completed its acquisition of move , a leading provider of online real estate services .
| results of operations this section provides an analysis of the company 's results of operations for the three fiscal years ended june 30 , 2015 , respectively . this analysis is presented on a consolidated basis and a segment basis . in addition , a brief description is provided of significant transactions and events that impact the comparability of the results being analyzed . liquidity and capital resources this section provides an analysis of the company 's cash flows for the three fiscal years ended june 30 , 2015 , respectively , as well as a discussion of the company 's financial arrangements and outstanding commitments , both firm and contingent , that existed as of june 30 , 2015. critical accounting policies this section discusses accounting policies considered important to the company 's financial condition and results of operations , and which require significant judgment and estimates on the part of management in application . in addition , note 2 to the consolidated financial statements summarizes the company 's significant accounting policies , including the critical accounting policy discussion found in this section . 41 overview of the company 's businesses the company manages and reports its businesses in the following six segments : news and information services the news and information services segment includes the global print and digital product offerings of the wall street journal and barron 's publications , marketwatch , and the company 's suite of professional information products , including factiva , dow jones risk & compliance , dow jones newswires , dow jones private markets and djx . the company also owns , among other publications , the australian , the daily telegraph , herald sun and the courier mail in australia , the times , the sunday times , the sun and the sun on sunday in the u.k. and the new york post in the u.s. this segment also includes news america marketing , a leading provider of free-standing inserts , in-store marketing products and services and digital marketing solutions .
| 5,996 |
the maximum number of shares issuable upon vesting is 200 % of the msus initially granted based on the average price of the company 's common stock relative to the index story_separator_special_tag overview pros provides ai solutions that power commerce in the digital economy by providing fast , frictionless and personalized buying experiences . pros solutions enable dynamic buying experiences for both b2b and b2c companies across industry verticals . companies can use our selling , pricing , revenue optimization and ecommerce solutions to assess their market environments in real time to deliver customized prices and offers . our solutions enable buyers to move fluidly across our customers ' direct sales , online , mobile and partner channels with personalized experiences regardless of which channel those buyers choose . our decades of data science and ai expertise are infused into our solutions and are designed to reduce time and complexity through actionable intelligence . we provide standard configurations of our software based on the industries we serve and offer professional services to configure these solutions to meet the specific needs of each customer . story_separator_special_tag recorded a $ 2.3 million loss on debt extinguishment related to the exchange transactions . in the fourth quarter , at maturity , the company settled the remaining principal of the 2019 notes in cash and distributed approximately 0.3 million shares of its common stock to the notes holders , which represented the conversion value in excess of the principal amount . in august 2019 , the company issued a notice of redemption to the holders of its outstanding 2.0 % convertible senior notes due june 2047 ( the `` 2047 notes '' , and together with the 2019 notes and the 2024 notes , the `` notes '' ) , and during the third and fourth quarter of 2019 , the company converted the entire aggregate principal of $ 106.3 million of the 2047 notes and delivered approximately 2.3 million shares of its common stock upon conversion . the company recorded a $ 3.4 million loss on debt extinguishment related to the redemption . the loss on extinguishment is included in the other ( expense ) income , net in the the consolidated statements of comprehensive income ( loss ) . 25 factors affecting our performance key factors and trends that have affected and we believe will continue to affect our operating results include : buying preferences driving technology adoption . corporate buyers are increasingly demanding the same type of digital buying experience that they enjoy as consumers . for example , buyers often prefer not to interact with a sales representative as their primary source of research , and increasingly prefer to buy online when they have already decided what to buy . in response , we believe that businesses are increasingly modernizing their sales process to compete in digital commerce by adopting technologies which provide fast , frictionless , and personalized buying experiences across sales channels . we believe we are uniquely positioned to help power these buying experiences with our ai-powered solutions that enable buyers to move fluidly across our customers ' direct sales , online , mobile and partner channels and have personalized experiences however they choose to buy . continued investments . we are focused on creating awareness for our solutions , expanding our customer base and growing our recurring revenues . while we incurred losses in 2019 , we believe our market is large and underpenetrated and therefore we intend to continue investing in sales , marketing , customer success , cloud support , security , privacy , infrastructure and other long-term initiatives to expand our ability to sell and renew our subscription offerings globally . we also plan to continue investing in product development to enhance our existing technologies and develop new applications and technologies . cloud migrations . sales of our cloud-based solutions have , and we expect future sales of our cloud-based solutions will continue to result in a decrease in our maintenance and support revenue , as existing customers migrate from our licensed solutions to our cloud solutions . sales mix impacts subscription revenue recognition timing . the mix of subscription services and professional services can create revenue variability in given periods based on the nature and scope of services sold together . professional services that are deemed to be distinct from the subscription services are accounted for as a separate performance obligation and revenue is recognized as the services are performed . if determined that the professional services are not considered distinct , the professional services and the subscription services are determined to be a single performance obligation and all revenue is recognized over the contractual term of the subscription beginning on the date that subscription services are made available to the customer , resulting in a deferral of revenue and revenue recognized over a shorter period of time , which would have a negative near-term financial impact . description of key components of our operating results revenue we derive our revenues primarily from recurring revenue , which includes subscription and maintenance and support services . recurring revenues accounted for 80 % of our total revenue in 2019 . subscription services . subscription services revenue primarily consists of fees that give customers access to one or more of our cloud applications with routine customer support . subscription services revenue is generally recognized ratably over the contractual term of the arrangement beginning on the date that our service is made available to the customer . our subscription contracts do not provide customers with the right to take possession of the software supporting the applications and , as a result , are accounted for as service contracts . our subscription contracts are generally two to five years in length , billed annually in advance , and are generally non-cancelable . maintenance and support . maintenance and support revenue includes customer support for our on-premises software and the right to unspecified software updates and enhancements . we recognize revenue from maintenance arrangements ratably over the period in which the services are provided . story_separator_special_tag the increase in gross profit percentage was primarily attributable to a 48 % increase in subscription revenue combined with a smaller increase in cost of subscription driven by efficiencies we achieved in our cloud infrastructure . cost of maintenance and support . the cost of maintenance and support declined primarily due to a decrease in employee-related costs mainly due to a decrease in contract labor . maintenance and support gross profit percentages for the years ended december 31 , 2019 and 2018 , were 81 % and 82 % , respectively . 28 cost of license . cost of license consists of third-party fees for licensed software and remained consistent year-over-year . license gross profit percentages for the years ended december 31 , 2019 and 2018 , were 94 % and 93 % , respectively . cost of services . cost of services increased primarily due to an increase in employee-related costs driven by higher headcount and third party system integrators to support our current customer implementations , related travel expenses , other facility and overhead expenses . services gross profit percentages for the years ended december 31 , 2019 and 2018 , were 2 % and 11 % , respectively . the decrease in services gross profit percentages was primarily attributed to an increase in third party system integrators to support an increased number of customer implementations in 2019 as compared to 2018. services gross profit percentages vary period to period depending on different factors , including the level of professional services required to implement our solutions , our effective man-day rates , our utilization of third party system integrators and the utilization of our professional services personnel . gross profit . overall gross profit increased for the year ended december 31 , 2019 principally attributable due to an increase of 27 % in total revenue as compared to the same period in 2018 mainly due to an increase in our subscription revenue . operating expenses : replace_table_token_7_th selling and marketing expenses . sales and marketing expenses increased primarily due to an increase of $ 13.9 million in employee-related costs driven by higher headcount , as we continue to focus on adding new customers and increasing penetration within our existing customer base . in addition , there was an increase of $ 3.6 million in expenses for sales and marketing events and sales related travel . general and administrative expenses . general and administrative expenses increased primarily due to a $ 3.7 million increase in employee-related costs driven by higher headcount and an increase of $ 3.1 million in professional fees and facility expenses , partially offset by a decrease of $ 0.8 million related to a bad debt recovery in 2019. research and development expenses . research and development expenses increased primarily due to a $ 9.3 million increase in employee-related costs driven by higher headcount , and a $ 2.3 million increase in facility and other overhead expenses . acquisition-related expenses . acquisition-related expenses were $ 0.5 million and $ 0.1 million for the years ended december 31 , 2019 and 2018 , respectively , and consisted primarily of integration costs , professional fees and retention bonuses for our acquisition of travelaer in 2019 and pros travel commerce , inc. ( formerly vayant travel technologies , inc. ) ( `` vayant '' ) in 2018. other ( expense ) income , net : replace_table_token_8_th convertible debt interest and amortization . convertible debt interest and amortization expense for each of the years ended december 31 , 2019 and 2018 related to coupon interest and amortization of debt discount and issuance costs attributable to our 29 notes . convertible debt interest and amortization decreased primarily as a result of our settlement of the 2019 notes and 2047 notes during the period . other ( expense ) income , net . the decrease in other ( expense ) income , net for the year ended december 31 , 2019 , primarily related to a $ 5.7 million loss on debt extinguishment related to our 2019 notes and 2047 notes recognized in 2019. this decrease was partially offset by an increase in interest income and the impact of movements in foreign currency exchange rates during the period . income tax provision : replace_table_token_9_th our tax provision for the year ended december 31 , 2019 included both foreign income and withholding taxes , and state taxes not based on pre-tax income . no tax benefit was recognized on jurisdictions with a projected loss for the year due to the valuation allowances on our deferred tax assets . our 2019 and 2018 effective tax rates had an unusual relationship to pretax loss from operations due to a valuation allowance on our net deferred tax assets . our income tax provisions in 2019 and 2018 only included foreign income and withholding taxes , and state taxes not based on pre-tax income , resulting in an effective tax rate of ( 0.9 ) % and ( 0.3 ) % , respectively . the difference between the effective tax rates and the federal statutory rate of 34 % for the years ended december 31 , 2019 and 2018 was primarily due to the increase in our valuation allowance of $ 12.4 million and $ 20.4 million , respectively . as of december 31 , 2019 and 2018 , we had a valuation allowance on our net deferred tax assets of $ 106.5 million and $ 94.2 million , respectively . the increase in the valuation allowance was principally attributable to an additional valuation allowance recorded on our current year 's tax loss . comparison of year ended december 31 , 2018 with year ended december 31 , 2017 revenue : replace_table_token_10_th subscription revenue . subscription revenue increased primarily due to an increase in the number of subscriptions purchased by new and existing customers .
| executive summary in 2019 , we continued to achieve important milestones in our cloud transformation which began in 2015 , while continuing to enable customers to leverage our ai-driven solutions to help them compete in the digital economy . in 2019 , our subscription revenue surpassed 50 % of total revenue and our total revenue increased by 27 % year-over-year . o ther notable items for the year included : subscription revenue increased by 48 % in 2019 over 2018 , and accounted for 56 % , 48 % and 36 % of total revenue for the years ended december 31 , 2019 , 2018 and 2017 , respectively ; recurring revenue , which consists of maintenance and subscription revenue , accounted for 80 % of our total revenue and grew by 25 % in 2019 over 2018 ; annual recurring revenue ( `` arr '' ) was $ 220.4 million on a constant currency basis ( $ 219.8 million on an as reported basis ) as of december 31 , 2019 , up 16 % ( 16 % as reported ) year-over-year ; completed an offering of $ 143.8 million aggregate principal amount of 2024 notes in a private placement ; and retired our outstanding convertible senior notes due in 2019 and our outstanding convertible senior notes due in 2047 , in an aggregate principal amount of $ 143.8 million and $ 106.3 million , respectively . arr is one of our key performance metrics to assess the health and trajectory of our overall business . arr , a non-gaap financial measure , is defined , as of a specific date , as contracted recurring revenue , including contracts with a future start date , together with annualized overage fees incurred above contracted minimum transactions , and excluding perpetual and term license agreements recognized as license revenue in accordance with gaap .
| 5,997 |
at october 1 , 2020 , the company performed qualitative assessments to story_separator_special_tag ( $ in millions , except per share data ) measures within this md & a that are not based on accounting principles generally accepted in the united states of america ( non-gaap ) are marked with an asterisk ( * ) the first time they are presented within this part ii - item 7. an explanation of these measures is contained in the glossary of selected terms included as exhibit 99.1 to this annual report on form 10-k and are reconciled to the most directly comparable measures prepared in accordance with accounting principles generally accepted in the united states of america ( gaap ) in the appendix to the company 's fourth quarter 2020 investor supplement . increases or decreases in this md & a that are not meaningful are marked `` n.m. '' . forward-looking information statements made in the following discussion that are not historical in nature are forward-looking within the meaning of the private securities litigation reform act of 1995 and are subject to known and unknown risks , uncertainties and other factors . horace mann educators corporation ( referred to in this report as `` we '' , `` our '' , `` us '' , the `` company '' , `` horace mann '' or `` hmec '' ) is an insurance holding company . we are not under any obligation to ( and expressly disclaim any such obligation to ) update or revise any forward-looking statements , whether as a result of new information , future events or otherwise . it is important to note that our actual results could differ materially from those projected in forward-looking statements due to a number of risks and uncertainties inherent in our business . see part i - item 1a of this annual report on form 10-k for additional information regarding risks and uncertainties . introduction the purpose of this md & a is to provide an understanding of our consolidated results of operations and financial condition . this md & a should be read in conjunction with the consolidated financial statements and notes thereto contained in part ii - item 8 of this report . hmec is an insurance holding company and through its subsidiaries , we market and underwrite personal lines of property and casualty insurance products , supplemental insurance products , retirement products and life insurance products in the united states of america ( u.s. ) . we market our products primarily to k-12 teachers , administrators and other employees of public schools and their families . this md & a covers our consolidated financial highlights followed by consolidated results of operations , an outlook for future performance , details about critical accounting estimates , results of operations by segment , investment results , liquidity and financial resources , future adoption of new accounting standards and effects of inflation and changes in interest rates . covid-19 considerations beginning in march 2020 , the global pandemic associated with the novel coronavirus covid-19 and related economic conditions introduced unprecedented challenges for our country . those challenges are ongoing . we relied on our previously developed corporate pandemic plan to address preparation , prevention and response measures specific to covid-19 while allowing flexibility to quickly react to evolving circumstances and implement varying actions accordingly . as discussed in our quarterly report on form 10-q for the quarterly period ended september 30 , 2020 , we successfully transitioned the organization , through our employees and agents , from one that relied on in-person experience to one that has become primarily virtual . while the current environment continues to present challenges , our operations are being conducted successfully and we continue to support our agents and serve our customers in an effective manner . as of the end of december 2020 , the majority of our employees continue to work remotely . the return to office plans are being guided by data from the center for disease control . we presently limit office occupancy to horace mann educators corporation annual report on form 10-k37 approximately half of pre-covid-19 levels to enable effective social distancing for some time . we have also implemented other prevention strategies to reduce the potential transmission of covid-19 , such as requiring face masks in common office areas . taking into account the virtual work environment , we have implemented additional cybersecurity measures including increasing security and network monitoring to proactively identify and prevent potential security threats and vulnerabilities . we also are identifying and assessing critical third-party vendors and ensuring their ability to continue to perform as anticipated . horace mann markets primarily to k-12 teachers , administrators and other employees of public schools and their families and we estimate that 80 % of our customer base are educators or other individuals employed by public school systems . in our experience , educators generally remain employed during periods of economic disruption . as the country entered the 2020 - 2021 school year facing continued pandemic-related challenges , educators have largely remained employed , although they may be even busier than before , as many are being asked to devote time to both in-person teaching as well as remote learning to minimize the spread of covid-19 in their communities . we continue to work with our network of exclusive agents to make sure they are using virtual tools that can allow them to reach current and potential educator customers when face-to-face interactions are not possible . we are implementing a variety of new and modified forums to provide access to the financial solutions we offer educators . however , growth in new sales has slowed since the pandemic began , particularly sales generated from in-person events at schools . this may be exacerbated if public school systems face budget constraints due to the economic impacts of the pandemic and or access to `` in school '' events remains restricted . story_separator_special_tag for 2019 , other income increased $ 3.8 million compared to 2018 , due , in part , to a six month contribution from supplemental . benefits , claims and settlement expenses for 2020 , benefits , claims and settlement expenses were lower due to favorable loss experience as a result of lower frequency of losses related to reduced driving activity due to covid-19 , partially offset by higher catastrophe losses and a full year of reported benefits and settlement expenses from the supplemental segment . for 2019 , benefits , claims and settlement expenses were lower compared to 2018 , due to reduced catastrophe losses and improved automobile experience , partially offset by the inclusion of losses from the new supplemental segment . interest credited for 2020 , interest credited decreased $ 8.2 million compared to 2019 , driven primarily by lower interest rates and a lower level of federal home loan bank ( fhlb ) funding agreements . under the deposit method of accounting , the interest credited on the reinsured annuity block continues to be reported . the average deferred annuity credited rate , excluding the reinsured block was 2.4 % and 2.5 % for 2020 and 2019 , respectively . for 2019 , interest credited increased $ 6.6 million compared to 2018 primarily due to higher interest costs on fhlb funding agreements . operating expenses for 2020 , operating expenses increased $ 3.2 million compared to 2019 , primarily due to the inclusion of $ 42.7 million of operating expenses from supplemental operations compared to $ 22.3 million in 2019 , offset by expense reduction initiatives as well as lower levels of spending on travel and other expenses because of covid-19 . for 2019 , operating expenses increased $ 29.2 million compared to 2018 , driven by the inclusion of nta and bcg operations as well as $ 5.5 million of severance charges incurred in 2019 pertaining to expense reduction initiatives . dac unlocking and amortization expense for 2020 , dac unlocking and amortization expense decreased $ 9.3 million compared to 2019 , primarily due to accelerated amortization of the dac asset associated with the reinsured annuity block that occurred in retirement in 2019 and a lower level of amortization of property and casualty dac in 2020 attributed to lower levels of production . for 2019 , dac unlocking and amortization expense was comparable to 2018. for life , dac unlocking resulted in immaterial changes to amortization for the three years ended 2020 , 2019 and 2018. intangible asset amortization expense for 2020 , intangible asset amortization expense increased $ 5.6 million compared to 2019 , primarily due a full year of reported intangible asset amortization expense for nta . for 2019 , the increase in intangible asset amortization expense compared to 2018 was due to the acquisitions of nta and bcg . interest expense for 2020 , interest expense decreased slightly compared to 2019 due to lower interest rates . for 2019 , interest expense increased $ 2.6 million compared to 2018 , primarily due to utilizing our senior revolving credit facility in the third quarter of 2019 to partially fund the acquisition of nta . other expense - goodwill and intangible asset impairments for 2020 , other expense represents goodwill and intangible asset impairment charges with regards to bcg . for 2019 , other expense represents an annuity goodwill impairment charge in retirement resulting from the annuity reinsurance transaction . see part ii - item 8 , note 6 of the consolidated financial statements in this report for further information . income tax expense the effective income tax rate on our pretax income , including net investment gains ( losses ) was 16.5 % , 22.0 % and 6.2 % for the years ended december 31 , 2020 , 2019 and 2018 , respectively . income from investments in tax-advantaged securities reduced the effective income tax rates by 3.6 , 2.3 and 21.2 percentage points for 2020 , 2019 and 2018 , respectively . the goodwill and intangible asset impairment charges in the retirement horace mann educators corporation annual report on form 10-k41 segment decreased the effective income tax rate by 0.1 percentage points at december 31 , 2020 and increased the effective income tax rate by 2.3 percentage points at december 31 , 2019. on march 27 , 2020 , h.r . 748 , the coronavirus aid , relief , and economic security act , “ the cares act ” , was signed into legislation . the cares act includes tax provisions relevant to businesses , and some of the significant changes include allowance of a five-year carryback of net operating losses for 2018-2020 and the suspension of the 80 % limitation of taxable income for net operating loss carryforwards for 2018-2020. the effects of the cares act are reflected in our income tax expense calculations for the year ended december 31 , 2020. accounting standards codification topic 740 : income taxes requires that the impact of the cares act be recognized in the period in which the law was enacted . as a result , total income tax expense for the year ended december 31 , 2020 , includes a benefit of $ 2.8 million ( that reduced the effective income tax rate by 2.8 percentage points ) to reflect a net operating loss carryback to taxable years for which the corporate rate was 35 % as compared to the current corporate rate of 21 % . we record liabilities for uncertain tax filing positions where it is more likely than not that the position will not be sustainable upon audit by taxing authorities . these liabilities are reevaluated routinely and are adjusted appropriately based on changes in facts or law . we have no unrecorded liabilities from uncertain tax filing positions . at december 31 , 2020 , our federal income tax returns for years prior to 2014 are no longer subject to examination by the internal revenue service .
| investment results our investment strategy is primarily focused on generating income to support product liabilities and balances principal protection and risk . total net investment income includes net investment income from our investment portfolio as well as accreted investment income from the deposit asset on reinsurance related to our reinsured block of approximately $ 2.9 billion of policy liabilities related to legacy individual annuities written in 2002 or earlier that was effective april 1 , 2019. replace_table_token_20_th for 2020 , net investment income from our investment portfolio decreased $ 34.0 million compared to 2019 for two reasons . first , we had a smaller invested asset base for full-year 2020. in 2019 , the invested asset base was higher in the first quarter , prior to the transfer of $ 2.1 billion of invested assets as part of the annuity reinsurance transaction . second , market weakness in early 2020 resulted in lower full-year returns from limited partnership interests . for 2019 , net investment income from our investment portfolio was $ 82.2 million below 2018 because of the transfer of invested assets . in addition , interest rates declined significantly in 2019 and our yield on new investments also reflected a strategic decision to further improve the quality of our investment portfolio . this was partially offset by stronger returns on alternative investments and increased prepayment activity . for 2020 , pretax net unrealized investment gains on fixed maturity securities were up $ 222.0 million compared to 2019 , reflecting u.s. treasury rates that declined 101 basis points with mostly flat investment grade credit spreads . for 2019 , pretax net unrealized investment gains on fixed maturity securities were up $ 193.3 million compared to 2018 , reflecting u.s. treasury rates that declined 76 basis points and tighter credit spreads across most asset classes .
| 5,998 |
the company has not paid dividends to its stockholders since its inception and does not plan to pay cash dividends in the foreseeable future . therefore , the company has assumed an expected dividend rate of zero . expected volatility rates are based on historical volatility of the common stock of comparable publicly traded entities , and other factors due to the lack of historic information story_separator_special_tag you should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included in this annual report on form 10-k. some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus , including information with respect to our plans and strategy for our business , includes forward-looking statements that involve risks and uncertainties as described under the heading forward-looking statements elsewhere in this annual report on form 10-k. you should review the disclosure under the heading risk factors 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 we are a clinical-stage biopharmaceutical company dedicated to the discovery and development of our anticalin ® class of biotherapeutics for patients with diseases in which we believe there is high unmet medical need . our current development plans focus mainly on two drug candidates , prs-080 and prs-060 . prs-080 is an anticalin protein that binds to hepcidin , a natural regulator of iron in the blood . prs-080 has been designed to target hepcidin for the treatment of functional iron deficiency , or fid , in anemic patients with chronic kidney disease , or ckd , particularly in end-stage renal disease patients requiring dialysis . prs-060 is a drug candidate that binds to the il-4ra receptor , thereby inhibiting il-4 and il-13 , two cytokines , small proteins mediating signaling between cells within the human body , known to be key mediators in the inflammatory cascade that causes asthma and other inflammatory diseases . we initiated a phase i clinical trial with prs-080 in healthy volunteers in november 2014. the trial is currently enrolling subjects and we expect to report the data from this trial by the end of 2015. prs-060 is currently in preclinical development , and we intend to begin a phase i clinical trial with prs-060 in 2016. we are also developing prs-110 and our 300-series anticalin ® proteins in oncology . prs-110 is a monovalent antagonist , a polypeptide molecule with one target-binding domain , that is designed to block both ligand-dependent and ligand-independent activity . cmet is a receptor tyrosine kinase , a well-known high-affinity cell surface receptor that transmits signals into the cell when a corresponding ligand binds to it , which is essential for embryonic development and wound healing and has been associated with several different cancers , including renal , gastric and lung carcinomas , central nervous system tumors and sarcomas . our second set of oncology drug candidates is our 300-series platform within a product opportunity in immuno-oncology . the 300-series anticalin proteins target checkpoint proteins and define a variety of multifunctional biotherapeutics that genetically link an antibody with one or more anticalin proteins , thereby constituting a multispecific protein . we are conducting preclinical experiments on a number of 300-series lead candidates and intend to choose a candidate for clinical trials in oncology by the end of 2015. our core anticalin ® technology and platform was developed in germany , and we have partnership arrangements with major multi-national pharmaceutical companies headquartered in the u.s. , europe and japan and with regional pharmaceutical companies headquartered in india . these include existing agreements with daiichi sankyo company limited , or daiichi sankyo , and sanofi group , or sanofi , pursuant to which our anticalin platform has consistently achieved its development milestones . we have discovery and preclinical collaboration and service agreements with both academic institutions and private firms in australia . we also intend to establish a greater u.s. presence and take advantage of the u.s. capital markets , additional potential corporate partners , and the broad expertise found in the biotechnology industry in the united states . since inception , we have devoted nearly all of our efforts and resources to our research and development activities . we have incurred significant net losses since inception . for the years ended december 31 , 2014 and 2013 , we reported net loss of $ 9.8 million and net income of $ 0.1 million , respectively . as of december 31 , 2014 , we had an accumulated deficit of $ 65.8 million . our net profit for the year ended december 31 , 2013 is not 81 indicative of a trend . we expect to continue incurring substantial losses for the next several years as we continue to develop our clinical and preclinical drug candidates and programs . our operating expenses are comprised of research and development expenses and general and administrative expenses . we have not generated any revenues from product sales to date , and we do not expect to generate revenues from product sales for at least the next several years . our revenues for the fiscal years ended december 31 , 2014 and 2013 were primarily from license and collaboration agreements with our partners , and , to a lesser extent , from grants from government agencies . the u.s. dollar is the reporting currency for all periods presented . the functional currency for pieris operating is euros . all assets and liabilities denominated in euros are translated into u.s. dollars at the exchange rate on the balance sheet date . revenues and expenses are translated at the average rate during the period . equity transactions are translated using historical exchange rates . adjustments resulting from translating foreign currency financial statements into u.s. dollars are included in accumulated other comprehensive loss . story_separator_special_tag in return , pieris operating agreed to pay to tum certain annual license fees , milestones and royalties for its own proprietary drug development and sales , as well as a variable fee as a function of out-licensing revenues , or the out-license fee , where such out-license fee is creditable against annual license payments to tum . as required by the agreement , pieris operating provided to tum its calculation of the out-license fee for the period beginning july 4 , 2003 and ending on december 31 , 2012 in the amount of $ 0.4 million excluding value-added tax . tum has asserted that the out-license fee for this period amounts to 2.5 million ( $ 3.0 million ) excluding value-added tax and has threatened to terminate the license agreement if the out-license fee is not paid . we believe that if tum sought to terminate the license agreement for cause as a result of this dispute , it would potentially face wrongful termination claims for substantial damages if the arbitral tribunal in the tum arbitration sides with pieris in its final decision regarding the proper amount of the out-license fee . pieris operating instituted arbitration to request confirmation that pieris operating 's calculation of the payments owed to tum is accurate and will govern all current and future payments due in respect of the out-license fee under the agreement . in april 2014 , tum argued to the arbitrators that it is not the proper party to be sued under the action for a declaratory arbitration decision brought by pieris operating in relation to the agreement , and that instead , it is the free state of bavaria that is the proper respondent to the action . pieris operating has responded that tum has capacity to be sued in relation to any disputes arising from and regarding contractual provisions of the agreement and is thus also the proper respondent in the action . in accordance with the arbitration rules of the deutsche institution für schiedsgerichtsbarkeit , each party to the arbitration proceeding has appointed one arbitrator and the party-named arbitrators collectively selected the third arbitrator as the chairman of the arbitration panel . pieris operating has recorded a liability on its balance sheet in respect of such payment in the amount of 271,000 ( $ 327,937 ) . 83 on december 1 , 2014 , tum filed its statement of defense , maintaining its earlier calculation of the out-license fee . on december 23 , 2014 , tum filed a counterclaim in the amount of 2,529,400 ( $ 3,060,827 ) to suspend the statute of limitations on its claims . on january 12 , 2015 , pieris operating filed a reply brief in response to tum 's statement of defense , filed on december 1 , 2014. the arbitration panel held its first hearing in munich , germany on january 20 , 2015 , however the arbitration panel did not come to a conclusion on whether tum is the proper respondent in the action or on the merits of the case . the panel had previously indicated that it will first decide the issue of whether tum is the proper respondent in this action . the panel resolved that the value in dispute for both parties ' claims and counterclaims would be fixed at 3,500,000 ( $ 4,235,350 ) , as the calculation of the outstanding out-licensing fee also impacts future payments . on march 3 , 2015 , pieris operating submitted a reply brief responding to tum 's statement of defense and counterclaim . tum must submit a rebuttal brief by march 31 , 2015. for more information about the tum arbitration , see item 3. legal proceedingsarbitration proceeding with technische universität münchen. key financial terms and metrics the following discussion summarizes the key factors our management believes are necessary for an understanding of our consolidated financial statements . revenues we have not generated any revenues from product sales to date , and we do not expect to generate revenues from product sales for at least the next several years . our revenues for the last two years have been primarily from the license and collaboration agreements with sanofi group , or sanofi , and daiichi sankyo company limited , or daiichi sankyo and , to a much lesser extent , grants from government agencies . the revenues from sanofi and daiichi sankyo have been comprised primarily of upfront payments , research and development services and , to a lesser extent , milestone payments . we recognized revenues from upfront payments under these agreements on a straight-line basis over the required service period because we determined that the licenses to which the payments related did not have standalone value . research service revenue is recognized when the costs are incurred and the services have been performed . revenue from milestone payments is recognized when all of the following conditions are met : ( 1 ) the milestone payments are non-refundable , ( 2 ) the achievement of the milestone involves substantial risk and was not reasonably assured at the inception of the arrangement , ( 3 ) substantive effort on our part is involved in achieving the milestone , ( 4 ) the amount of the milestone payment is reasonable in relation to the effort expended or the risk associated with achievement of the milestone , and ( 5 ) a reasonable amount of time passes between the up-front license payment and the first milestone payment . we expect our revenues for the next several years to consist of upfront payments , research funding and milestone payments from strategic collaborations we currently have or may establish in the future . we also may receive grants from government agencies and foundations funds in connection with our drug development efforts . expenses the process of researching and developing drugs for human use is lengthy , unpredictable and subject to many risks . we expect to continue incurring substantial expenses for the next several years as we continue to develop our clinical and preclinical drug candidates and programs .
| results of operations comparison of years ended december 31 , 2014 and december 31 , 2013 the following table sets forth our revenues and operating expenses for the fiscal years ended december 31 , 2014 and 2013 : replace_table_token_2_th 85 revenues the following table provides a comparison of revenues for the years ended december 31 , 2014 and 2013 ( amounts in thousands ) : replace_table_token_3_th the decrease in revenues from upfront payments in the fiscal year ended december 31 , 2014 compared to the fiscal year ended december 31 , 2013 related primarily to the successful hand over to collaboration partners of collaboration projects in june 2014 , october 2014 and march 2013 , and the termination of one collaboration project in november 2013. because the recognition of upfront payments is spread over the expected time period in which we are performing research services for corresponding partner projects and until hand-over or termination of the projects , we realized more revenues from upfront payments for collaboration projects in 2013 than in 2014. in 2014 , we only realized revenues from upfront payments for two collaboration projects from january to june 2014 and one out of the two collaboration projects from july to october 2014 , compared to realized revenues for upfront payments for four collaboration projects from january to march 2013 and three out the four collaboration projects from january to november 2013 in fiscal year ended december 31 , 2013. the $ 2.7 million decrease in revenues from research and development services in the fiscal year ended december 31 , 2014 compared to the fiscal year ended december 31 , 2013 related primarily to a $ 2.1 million decrease in research funding from collaboration partners .
| 5,999 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.