document stringlengths 8.64k 13.4k | summary stringlengths 179 2.97k | __index_level_0__ int64 0 16.8k |
|---|---|---|
for the year ended december 31 , 2019 the amount in accumulated other comprehensive loss were comprised of unrealized gains and losses on short-term investments . leases effective january 1 , 2019 , the company determines if an arrangement is a lease at inception . operating leases are included in right-of-use ( “ rou ” ) lease assets , current portion story_separator_special_tag you should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included elsewhere in this annual report on form 10-k. some of the information contained in this discussion and analysis or set forth elsewhere in this annual report on form 10-k , including information with respect to our plans and strategy for our business , includes forward-looking statements that involve risks and uncertainties . you should review the “ risk factors ” section 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 biopharmaceutical company focused on the discovery , development and commercialization of novel therapeutics . our mission is to bring hope with life-changing therapies to patients and families that are affected by rare diseases . our lead product candidate is qls-215 , a potential best-in-class monoclonal antibody inhibitor of plasma kallikrein in preclinical development for the treatment of hereditary angioedema , or hae , a rare , debilitating and potentially life-threatening disease . in january 2021 , as further described below , we acquired quellis biosciences , inc. , or quellis , including the qls-215 program , and announced a private placement that , upon closing in february 2021 , resulted in gross proceeds to us of approximately $ 110.0 million before deducting placement agent and other offering expenses . in november 2020 , after we stopped the development of our edasalonexent program as a potential treatment for duchenne muscular dystrophy , or dmd , we decided to explore and evaluate strategic options and engaged ladenburg thalmann & co. , inc. as our strategic financial advisor . the acquisition of quellis was the result of our evaluation of strategic options and we believe that the acquisition represents an opportunity to create substantial value for our stockholders . hae is a rare , debilitating and potentially life-threatening disease . the treatment options for patients with hae have improved , however there is remaining unmet medical need and the global market for hae therapy is strong and growing . the vision for our lead program , qls-215 , is to develop a best-in-class monoclonal antibody inhibitor of plasma kallikrein for hae prophylaxis that is able to treat hae by achieving sustained blood levels of qls-215 with infrequent dosing . plasma kallikrein is a critical component of hae that causes pathologic vascular permeability , vasodilation and ultimately excessive tissue swelling . qls-215 is a humanized monoclonal antibody targeting plasma kallikrein that has shown in preclinical studies that it may potentially enable patients to dose less frequently and potentially be more effective than existing hae treatments . qls-215 is currently in preclinical development and we expect to submit an investigational new drug application , or ind , for qls-215 in the first half of 2022 and plan to initiate a phase 1a clinical trial with initial results anticipated by the end of 2022. subsequently , assuming positive data from the phase 1a clinical trial , we plan to initiate a phase 1b/2 trial in patients with hae in 2023 with initial results anticipated by the end of 2023. we believe that these clinical trials have the opportunity to establish proof of concept for the differentiated profile of qls-215 . previously , our lead program was edasalonexent , which was in phase 3 clinical development for the treatment of dmd . in october 2020 , we announced that the phase 3 polarisdmd trial of edasalonexent did not meet its primary endpoint , which was a change from baseline in the north star ambulatory assessment over one year of treatment with edasalonexent compared to placebo . in addition , we announced that the secondary endpoint timed function tests ( time to stand , 10-meter walk/run and 4-stair climb ) did not show statistically significant improvements . based on these results , we stopped activities related to the development of edasalonexent , including the galaxydmd open-label extension trial . the phase 3 polaris dmd trial was a one-year placebo-controlled trial designed to evaluate the safety and efficacy of edasalonexent in boys ages 4-7 ( up to 8 th birthday ) with dmd . the trial enrolled 131 boys across eight countries , with any mutation type , who were not on steroids . edasalonexent was well-tolerated , consistent with the safety profile seen to date . the majority of adverse events were mild in nature and the most common treatment-related adverse events were diarrhea , vomiting , abdominal pain and rash . there were no treatment-related serious adverse events and no dose reductions . data from the phase 3 polarisdmd trial will be further analyzed and we expect to publish these data . 75 january 2021 quellis acquisition and february 2021 financing in january 2021 , we acquired quellis pursuant to an agreement and plan of merger , or the merger agreement , by and among us , cabo merger sub i , inc. , a delaware corporation and our wholly owned subsidiary , or the first merger sub , cabo merger sub ii , llc , a delaware limited liability company and our wholly owned subsidiary , or the second merger sub , and quellis . pursuant to the merger agreement , the first merger sub merged with and into quellis , pursuant to which quellis was the surviving entity and became a wholly owned subsidiary of catabasis , or the first merger . story_separator_special_tag we are also unable to predict when , if ever , material net cash inflows would commence from any such product candidates . this is due to the fact that we would need to raise substantial additional capital to fund the clinical development of any such product candidates and the numerous risks and uncertainties associated with developing product candidates , including the uncertainties of : establishing an appropriate safety profile with ind-enabling toxicology studies ; successful enrollment in , and completion of clinical trials ; receipt of marketing approvals from applicable regulatory authorities ; establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers ; 77 obtaining and maintaining patent and trade secret protection and regulatory exclusivity ; launching commercial sales , if and when we are able to obtain marketing approval , whether alone or in collaboration with others ; and a continued acceptable safety profile following approval . a change in the outcome of any of these variables with respect to the development of qls-215 or any future product candidate would significantly change the costs and timing associated with the development of that product candidate . general and administrative expenses general and administrative expenses consist primarily of salaries and other related costs , including stock-based compensation , for personnel in executive , finance , accounting , commercial , business development , legal and human resources functions . other significant costs include facility costs not otherwise included in research and development expenses , legal fees relating to patent and corporate matters , and fees for accounting and consulting services . we anticipate that in the near term our general and administrative expenses will remain relatively consistent with their current levels , although as we continue to develop qls-215 and potentially expand our pipeline to include other product candidates , our general and administrative expenses may increase . reduction in workforce in december 2020 , following the decision to stop development of edasalonexent , we announced that we were reducing our workforce during the quarter ended december 31 , 2020. charges for employee severance and employee benefits of $ 0.4 million were recorded in the year ended december 31 , 2020 , all of which will be paid in 2021. substantially all of these costs were recorded in the research and development section of the accompanying consolidated statement of operations . other income ( expense ) other income ( expense ) , net consists of interest income earned on our cash , cash equivalents and short-term investments and net amortization expense on short-term investments , and gains and losses related to foreign currency fluctuations . critical accounting policies and significant judgments and estimates this discussion and analysis of our financial condition and results of operations is based on our financial statements , which we have prepared in accordance with united states generally accepted accounting principles . we believe that several accounting policies are important to understanding our historical and future performance . we refer to these policies as critical because these specific areas generally require us to make judgments and estimates about matters that are uncertain at the time we make the estimate , and different estimates—which also would have been reasonable—could have been used . on an ongoing basis , we evaluate our estimates and judgments , including those described in greater detail below . we base our estimates on historical experience and other market-specific or other relevant assumptions that we believe to be reasonable under the circumstances , the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources . actual results may differ from these estimates under different assumptions or conditions . while our significant accounting policies are described in more detail in the notes to our financial statements included elsewhere in this annual report on form 10-k , we believe that the following accounting policy is the most critical to aid you in fully understanding and evaluating our financial condition and results of operations . accrued research and development expenses as part of the process of preparing our financial statements , we are required to estimate our accrued expenses . this process involves reviewing contracts , identifying services that have been performed on our 78 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 cost . the majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met . we make estimates of our accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known to us at that time . we periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary . the significant estimates in our accrued research and development expenses include the costs incurred for services performed by contract research organizations , or cros , in connection with research and development activities for which we have not yet been invoiced . we base our expenses related to cros on our estimates of the services received and efforts expended pursuant to contracts with cros that conduct research and development on our behalf . the financial terms of these agreements are subject to negotiation , vary from contract to contract and may result in uneven payment flows . there may be instances in which payments made to our cros will exceed the level of services provided and result in a prepayment of the research and development expense . in accruing service fees , we estimate the time period over which services will be performed and the level of effort to be expended in each period . if the actual timing of the performance of services or the level of effort varies from our estimate , we adjust the accrual or prepaid expense accordingly .
| results of operations comparison of the years ended december 31 , 2020 and 2019 the following table summarizes our results of operations for the years ended december 31 , 2020 and 2019 , together with the dollar change in those items ( in thousands ) : replace_table_token_2_th research and development expenses research and development expenses increased by $ 7.3 million to $ 25.4 million for the year ended december 31 , 2020 from $ 18.3 million for the year ended december 31 , 2019 , an increase of 40 % . the increase in research and development expenses was attributable to activities associated with conducting the phase 3 polarisdmd clinical trial , the galaxydmd open label extension , and regulatory and manufacturing preparations for advancing the edasalonexent program prior to receiving the phase 3 results . the $ 7.3 million increase consisted of a $ 5.4 million increase in direct program costs to support our edasalonexent program , a $ 1.1 million increase in employee expenses , a $ 0.5 million increase in consulting and professional services , a $ 0.2 million increase in the research and development portion of facilities expense and a $ 0.1 million increase in the research and development portion of other miscellaneous office expenses . general and administrative expenses general and administrative expenses increased by $ 3.1 million to $ 11.9 million for year ended december 31 , 2020 from $ 8.8 million for the year ended december 31 , 2019 , an increase of 35 % . the 79 increase in general and administrative expenses was attributable to a $ 1.8 million increase in consulting and professional services primarily related to an increase in preparations for potential commercialization of edasalonexent , a $ 0.6 million increase in employee expenses , a $ 0.3 million increase in insurance expense , a $ 0.2 million increase in the general and administrative portion of facilities expense , and a $ 0.2 million increase in other miscellaneous office expenses .
| 6,800 |
net loss per common share basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of the company 's common stock assumed to be outstanding during the period of computation . diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential shares of common stock had been issued and if the additional shares of common stock were dilutive . for all periods presented , basic and diluted loss per share are the same , as any additional common stock equivalents would be anti-dilutive . potentially dilutive shares of common stock have been excluded from the calculation of the weighted average number of dilutive shares of common stock as follows : replace_table_token_14_th income taxes income taxes are recorded in accordance with asc topic 740 , income taxes , which provides for deferred taxes using an asset and liability approach . the company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns . 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 reverse . valuation allowances are provided , if based upon the weight of available evidence , it is more likely than not that some or all of the deferred tax assets will not be realized . the company accounts for uncertain tax positions in accordance with the provisions of asc 740. when uncertain tax positions exist , the company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized . the determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances . as of june 30 , 2016 , the company 's tax years prior to june 30 , 2013 are no longer subject to examination by the tax authorities . the company is not currently under examination by any u.s. federal or state jurisdictions . as of june 30 , 2016 and 2015 , the company does not have any significant uncertain tax positions . f- 13 sevion therapeutics , inc. and subsidiaries notes to consolidated financial statements revenue recognition the company has received certain nonrefundable upfront fees in exchange for the transfer of the company 's technology to licensees . upon delivery of the technology , the company had no further obligations to the licensee with respect to the basic technology transferred and , accordingly , recognized revenue at that time . the company story_separator_special_tag . the discussion in “ management 's discussion and analysis of financial condition and results of operations ” contains trend analysis , estimates and other forward-looking statements within the meaning of section 27a of the securities act of 1933 , as amended , and section 21e of the securities exchange act of 1934 , as amended . these forward-looking statements include , without limitation , statements containing the words “ believes , ” “ anticipates , ” “ expects , ” “ continue , ” and other words of similar import or the negative of those terms or expressions . such forward-looking statements are subject to known and unknown risks , uncertainties , estimates and other factors that may cause our actual results , performance or achievements , or industry results , to be materially different from any future results , performance or achievements expressed or implied by such forward-looking statements . actual results could differ materially from those set forth in such forward-looking statements as a result of , but not limited to , the “ risk factors ” described in part i , item 1a . you should read the following discussion and analysis along with the “ selected financial data ” and the financial statements and notes attached to those statements included elsewhere in this report . overview we do not expect to generate significant revenues for several years , during which time we will engage in significant research and development efforts . our protein biologics technology comprises ( i ) a platform to discover and engineer human antibodies directly on the cell surface , ( ii ) antibodies derived from cows that contain ultralong binding regions that may be useful in binding certain therapeutic epitopes , and ( iii ) a chimerasome nanocage capable of encapsulating therapeutic payloads for drug delivery . our preclinical antibody development program comprises an antibody against the ion channel kv1.3 , which is an important molecule in regulating t-cell activation in a number of autoimmune diseases . we have performed experiments showing that this antibody potently blocks activation of human t-cells in vitro . future development efforts will include a phase i clinical trial . consistent with our commercialization strategy , we may license our technology as the opportunities may arise , that may result in additional license fees , revenues from contract research and other related revenues . successful future operations will depend on our and our partners ' ability to transform our research and development activities into a commercially feasible technology . 23 critical accounting policies and estimates revenue recognition we record revenue under technology license and development agreements related to the following . actual fees received may vary from the recorded estimated revenues . story_separator_special_tag if the goals have been achieved or are probable of being achieved , then the amount of compensation expense determined on the date of grant related to those specific goals is charged to compensation expense at such time . 25 patent costs we expense patent related costs as incurred as research and development costs in the consolidated statements of operations . prior to the fourth quarter of fiscal 2015 , certain patent related costs were capitalized . we concluded , based upon historical write offs of patent costs , that the future beneficial value of our patent assets were uncertain and as such made a change to our accounting policy . this change is considered a change in estimate for accounting purposes and is reflected on a prospective basis beginning in the fourth quarter of fiscal 2015. accordingly , we incurred approximately $ 508,205 expense impact from expensing patent-related assets during the fourth quarter of fiscal 2015 as a result of this change in estimate and our basic and diluted earnings per share for fiscal 2015 decreased by $ 0.03. patent expense incurred during fiscal year 2016 was $ 421,287. goodwill and intangible assets goodwill represents the excess of purchase price over the fair value of net assets acquired by the company . goodwill is not amortized , but assessed for impairment on an annual basis or more frequently if impairment indicators exist . intangible assets include in-process research and development ( ipr & d ) of pharmaceutical product candidates . ipr & d are considered indefinite-lived intangible assets and are assessed for impairment annually or more frequently if impairment indicators exist . if the associated research and development effort is abandoned , the related assets will be written-off and the company will record a non-cash impairment loss on its consolidated statement of operations . for those compounds that reach commercialization , the ipr & d assets will be amortized over their estimated useful lives . the impairment model prescribes a two-step method for determining impairment . the first step compares a reporting unit 's fair value to its carrying amount to identify potential goodwill impairment . if the carrying amount of a reporting unit exceeds the reporting unit 's fair value , the second step of the impairment test must be completed to measure the amount of the reporting unit 's goodwill impairment loss , if any . step two requires an assignment of the reporting unit 's fair value to the reporting unit 's assets and liabilities to determine the implied fair value of the reporting unit 's goodwill and intangible assets . the implied fair value of the reporting unit 's goodwill and intangible assets is then compared with the carrying amount of the reporting unit 's goodwill and intangible assets to determine the impairment loss to be recognized , if any . for the fiscal year ended june 30 , 2016 , the company determined that there was impairment to goodwill and intangible assets . the company recorded an adjustment to goodwill in the amount of $ 5,780,951 , reducing the balance of goodwill to zero . in addition , the company determined that there was impairment to in process research and development in the amount of $ 1,700,000 for the year ended june 30 , 2016. warrant liability and stock rights the fair value of warrant liability and stock rights are estimated using a monte carlo valuation model . the unobservable input used by the company is the estimation of the likelihood of a reset occurring on the warrants and the anti-dilutive rights . these estimates of the likelihood of completing an equity raise that would meet the criteria to trigger the reset provisions and anti-dilutive rights are based on numerous factors , including the remaining term of the financial instruments and the company 's overall financial condition . changes in these assumptions may materially affect the amount of the warrant liability recorded on our consolidated balance sheet . 26 liquidity and capital resources overview for the fiscal year ended june 30 , 2016 , net cash of $ 3,676,215 was used in operating activities primarily due to a net loss of $ 8,267,929 which was reduced by non-cash expenses of $ 4,740,656 and increased by changes in operating assets and liabilities in the amount of $ 148,942. the $ 148,942 change in operating assets and liabilities was the result of a decrease in accounts payable , accrued expenses and deferred revenue in the amount of $ 372,224 due to the timing of expenses and payments , which was partially offset by an increase in prepaid expenses of $ 232,282. during the fiscal year ended june 30 , 2016 , there was no cash used by investing activities . cash provided by financing activities during the fiscal year ended june 30 , 2016 amounted to $ 1,152,397 , as a result of the issuance of common stock , preferred stock and warrants . as of june 30 , 2016 , our cash balance totaled $ 810,808 , and we had working capital of $ 613,637. presently , with no further financing , we project that the company will run out of funds as of october 31 , 2016. we currently do not have any additional financing in place . if we are unable to raise additional funds , we could be required to reduce our workforce , sell some or all of our assets , cease operations or even declare bankruptcy . there can be no assurance that we can obtain financing , if at all , or raise such additional funds , on terms acceptable to us .
| results of operations fiscal year ended june 30 , 2016 revenue during the fiscal year ended june 30 , 2016 , revenue in the amount of $ 75,000 represented the amortization of deferred revenue for a collaboration and option agreement . operating expenses replace_table_token_3_th general and administrative expenses general and administrative expenses consist of the following : replace_table_token_4_th · payroll and benefits for the fiscal year ended june 30 , 2016 was lower than for the fiscal year ended june 30 , 2015 as a result of onetime severance payments previously paid to employees terminated in connection with the closing of our new jersey office in november 2014 . 29 · professional fees for the fiscal year ended june 30 , 2016 was higher than for the fiscal year ended june 30 , 2015 as a result of an increase in accounting costs associated with additional bookkeeping , consulting and auditing fees related to our financing efforts in june and july of 2015 . · stock-based compensation for the fiscal years ended june 30 , 2016 and june 30 , 2015 consisted of the amortized portion of the black-scholes value of options and warrants granted to directors , employees and consultants . during the fiscal years ended june 30 , 2016 and 2015 , 485,682 and 1,203,676 options , respectively , were granted to such individuals . in addition , during the fiscal years ended june 30 , 2016 and 2015 , 195,363 and 556,061 options , respectively , expired or were forfeited . stock-based compensation for the fiscal year ended june 30 , 2016 was lower than the fiscal year ended june 30 , 2015 primarily due to fewer options issued during the fiscal year ended june 30 , 2016 .
| 6,801 |
our consolidated financial statements and the accompanying notes included elsewhere in this annual report on form 10-k contain additional information that should be referred to when reviewing this material . statements in this discussion may be forward-looking . these forward-looking statements involve risks and uncertainties , including those discussed below , which could cause actual results to differ from those expressed . overview we are an independent energy company focused on the acquisition , production , exploration and development of onshore liquids-rich oil and natural assets in the united states . we were incorporated in delaware on february 5 , 2004 and were recapitalized on february 8 , 2012 , as described more fully herein . historically , our producing properties have been located in basins with long histories of oil and natural gas operations . during 2012 , we focused our efforts on the acquisition of unevaluated leasehold and producing properties in selected prospect areas . we now have an extensive drilling inventory in multiple basins that we believe allow for multiple years of profitable production growth and provides us with broad flexibility to direct our capital resources to projects with the greatest potential returns . at december 31 , 2012 , our estimated total proved oil and natural gas reserves , as prepared by our independent reserve engineering firm , netherland , sewell & associates , inc. ( netherland , sewell ) , were approximately 108.8 mmboe , consisting of 87.4 mmbbls of oil , 5.4 mmbbls of natural gas liquids , and 96.1 bcf of natural gas . approximately 47 % of our proved reserves were classified as proved developed . we maintain operational control of approximately 93 % of our proved reserves . production for the fourth quarter of 2012 averaged 18,348 boe/d . full year 2012 production averaged 9,404 boe/d compared to 4,121 boe/d in 2011. our total operating revenues for 2012 were approximately $ 247.9 million compared to $ 103.7 million in 2011. our oil and natural gas assets consist of a combination of undeveloped acreage positions in unconventional liquids-rich basins/fields and mature liquids-weighted reserves and production in more conventional basins/fields . we have mature oil and natural gas reserves located primarily in texas , north dakota , louisiana , oklahoma and montana . we have acquired acreage and may acquire additional acreage in the utica / point pleasant formations in ohio and pennsylvania , the woodbine / eagle ford formations in east texas , the bakken / three forks formations in north dakota and montana , the tuscaloosa marine shale formation in louisiana , the midway / navarro formations in southeast texas and the wilcox formation in texas and louisiana as well as several other undisclosed locations . 45 our average daily production increased 128 % year over year . the increase in production compared to the prior year period was driven by our acquisitions of georesources , inc. ( georesources ) , the east texas assets ( defined below ) and the williston basin assets ( defined below ) , partially offset by a slight production decline from existing properties . the acquisition of georesources , the east texas assets and the williston basin assets combined to contribute approximately 5,320 boe/d of the increase . in 2012 , we participated in the drilling of 192 gross ( 88.2 net ) wells of which 189 gross ( 85.3 net ) wells were completed and capable of production , and 3 gross ( 2.9 net ) wells were dry holes . we also drilled and completed 6 gross ( 5.0 net ) salt water disposal wells . our financial results depend upon many factors , but are largely driven by the volume of our oil and natural gas production and the price that we receive for that production . our production volumes will decline as reserves are depleted unless we expend capital in successful development and exploration activities or acquire properties with existing production . the amount we realize for our production depends predominantly upon commodity prices and our related commodity price hedging activities , which are affected by changes in market demand and supply , as impacted by overall economic activity , weather , pipeline capacity constraints , inventory storage levels , basis differentials and other factors . accordingly , finding and developing oil and natural gas reserves at economical costs is critical to our long-term success . for the twelve months ended december 31 , 2012 we incurred capital expenditures for drilling , completions and leasehold costs of approximately $ 1.3 billion as compared to a budget of $ 1.1 billion . capital spending was more than budgeted primarily because of increased drilling and completion activity in the bakken / three forks formations related to the acquisition of the williston basin assets in addition to increased leasing activity in the utica / point pleasant formations . we expect to spend approximately $ 1.2 billion on drilling and completion capital expenditures during 2013. while this amount represents the vast majority of our expected capital expenditures in 2013 , we will also incur additional capital expenditures associated with ongoing leasing efforts , transportation , infrastructure and seismic and other expenditures . of the $ 1.2 billion budget for drilling and completions , approximately $ 475 million is planned for the bakken / three forks formations in north dakota , approximately $ 490 million is budgeted for woodbine / eagle ford formations in east texas , approximately $ 200 million is planned for the utica / point pleasant formations in ohio and pennsylvania with the remaining amount planned for various other project areas . our 2013 drilling and completion budget contemplates six to eight operated rigs running in the bakken / three forks , five to seven operated rigs running in the woodbine / eagle ford and two to three operated rigs running in the utica / point pleasant . our drilling and completion budget for 2013 is based on our current view of market conditions and current business plans , and is subject to change . story_separator_special_tag on june 28 , 2012 , we acquired a working interest in approximately 27,000 net acres in eastern ohio that we believe is prospective for the utica / point pleasant formations . the purchase price in the transaction was approximately $ 164.0 million . we funded the acquisition with cash on hand . no oil or natural gas production or proved reserves were attributable to the acquired assets . in addition to the forgoing acquisitions , during 2012 we incurred approximately $ 915.6 million in capital expenditures on unevaluated oil and gas leaseholds through numerous leasing and acquisition transactions . no oil or natural gas production or proved reserves were attributable to the acquired unevaluated leasehold assets which were primarily located in texas , louisiana , ohio and pennsylvania . our financial results depend upon many factors , but are largely driven by the volume of our oil and natural gas production and the price that we receive for that production . our production volumes will decline as reserves are depleted unless we expend capital in successful development and exploration activities or acquire properties with existing production . the amount we realize for our production depends predominately upon commodity prices and our related commodity price hedging activities , which are affected by changes in market demand and supply , as impacted by overall economic activity , weather , pipeline capacity constraints , inventory storage levels , basis differentials and other factors . accordingly , finding and developing oil and natural gas reserves in an economical manner is critical to our long-term success . other recent developments offering of additional 8.875 % senior notes on january 14 , 2013 , we completed the issuance of an additional $ 600 million aggregate principal amount of our 8.875 % senior unsecured notes due 2021 ( the additional 2021 notes ) . the additional 2021 notes were issued at 105 % of par and provided net proceeds of approximately $ 619.5 million ( after deducting offering fees ) . the net proceeds from this offering were used to repay all of the outstanding borrowings under our senior credit agreement and for general corporate purposes , including funding a portion of our 2013 capital expenditures program . there was no borrowing base reduction to our senior credit agreement as a result of the issuance of the additional 2021 notes . common stock purchase agreement on december 6 , 2012 , we received net proceeds of approximately $ 294.0 million from the private placement of 41.9 million shares of our common stock with canada pension plan investment board ( cppib ) , which acquired the shares for a purchase price of approximately $ 7.16 per share . offering of 8.875 % senior notes on november 6 , 2012 , we completed a private offering of $ 750 million aggregate principal amount of our 8.875 % senior notes due 2021 ( the 2021 notes ) . the 2021 notes were issued at 99.247 % of par and provided net proceeds of approximately $ 725.6 million ( after deducting offering fees and expenses ) . the net proceeds from this offering were used to fund a portion of the cash consideration paid in our acquisition of the williston basin assets . 48 offering of 9.75 % senior notes on july 16 , 2012 , we completed a private offering of $ 750.0 million aggregate principal amount of 9.75 % senior unsecured notes due 2020 ( the 2020 notes ) . the 2020 notes were issued at 98.646 % of par and provided net proceeds of approximately $ 723.1 million ( after deducting offering fees and expenses ) . the net proceeds from this offering were used to fund a portion of the cash consideration paid in the merger and east texas assets acquisition . preferred stock offering on march 5 , 2012 , we sold in a private placement 4,444.4511 shares of 8 % automatically convertible preferred stock ( preferred stock ) , par value $ 0.0001 per share , each share of which automatically converted into 10,000 shares of our common stock on april 17 , 2012. we received gross proceeds of approximately $ 400.0 million , or $ 9.00 per share of common stock , before offering expenses . no cash dividends were paid on the preferred stock as it converted into common stock before may 31 , 2012. the preferred stock was considered to have a beneficial conversion feature because the proceeds per share , approximately $ 9.00 per share of common stock , were less than the fair value of our common stock of $ 10.99 per common share on the commitment date . the estimated fair value allocated to the beneficial conversion feature was $ 88.4 million and was recorded to additional paid-in capital , creating a discount on the preferred stock ( the discount ) . the discount resulting from the allocation of value to the beneficial conversion feature was required to be amortized over the 71-month contractual period from issuance to required redemption , or fully amortized upon an accelerated date of redemption or conversion , by increasing preferred stock and recording the offsetting amount as a deemed non-cash preferred stock dividend . during the three months ended march 31 , 2012 , we amortized the discount and recorded a non-cash preferred dividend of $ 1.1 million . due to the conversion date occurring on april 17 , 2012 , the remaining $ 87.3 million of the discount amortization was accelerated to the conversion date and reflected as a non-cash preferred dividend in april 2012. recapitalization on february 8 , 2012 , halres llc , formerly , halcón resources , llc ( halres ) , a newly-formed limited liability company led by floyd c. wilson , recapitalized us with a $ 550.0 million investment structured as the purchase of $ 275.0 million in new common stock , a $ 275.0 million five-year 8.0 % convertible note and warrants for the purchase of an additional 36.7 million shares of our common stock at an exercise price of $ 4.50 per share ( recapitalization )
| results of operations below for a review of the impact of prices and volumes on sales . replace_table_token_13_th operating activities . net cash flows provided by operating activities were $ 118.2 million , $ 29.8 million and $ 37.9 million for the years ended december 31 , 2012 , 2011 and 2010 , respectively . key drivers of net operating cash flows are commodity prices , production volumes and operating costs . net loss for the year ended december 31 , 2012 was $ 53.9 million . non-cash items , including $ 90.3 million of depreciation , depletion and accretion , $ 9.4 million of non-cash interest and amortization and $ 6.2 million of amortization and write-off of deferred loan costs served to offset this net loss . the recapitalization , including change in control and related activities which occurred during february 2012 , the merger and acquisition transaction costs and the impact of additional personnel and facilities in support of the rapidly expanding business base , drove a significant increase in general and administrative expenditures , which adversely affected operating cash flows . the remaining improvement in operating cash flows is largely attributable to a favorable mix in working capital changes . net cash flows provided by operating activities decreased in 2011 primarily due to our 30 % decrease in our average daily production volumes , which was partially offset by a 34 % increase in our average realized boe price compared to the same period in 2010 . 52 investing activities . the primary driver of cash used in investing activities is capital spending , specifically the acquisition of unevaluated leaseholds in our targeted areas , the merger and the acquisitions of the east texas assets and the williston basin assets . net cash used in investing activities was $ 2.9 billion and $ 25.4 million for the years ended december 31 , 2012 and 2011 , respectively .
| 6,802 |
allocations of nrg corporate expenses were $ 3 million for the period from january 1 , 2013 , through july 22 , 2013. in connection with the initial public offering , the company entered into a management services agreement with nrg for various services , including human resources , accounting , tax , legal , information systems , treasury , and risk management . costs incurred by the company under this agreement were $ 3 million for the period from july 23 , 2013 , through december 31 , 2013 , $ 6 million for the year ended december 31 , 2014 and $ 8 million for the year ended december 31 , 2015 , which included certain direct expenses incurred by nrg on behalf of the company . for the period prior to the initial public offering , members ' equity represents the combined equity of the company 's subsidiaries , including adjustments necessary to present the company 's financial statements as if the company were in existence as of the beginning of the periods presented . member 's equity represents nrg 's story_separator_special_tag 39 replace_table_token_11_th ( a ) the company began paying dividends on class a common stock after the initial public offering on july 22 , 2013. the company began paying dividends on class c common stock after the recapitalization on may 14 , 2015 . 40 item 7 — management 's discussion and analysis of financial condition and the results of operations the following discussion analyzes the company 's historical financial condition and results of operations , which were recast to include the effect of the june 2014 drop down assets , the january 2015 drop down assets and the november 2015 drop down assets , which were acquired on june 30 , 2014 , january 2 , 2015 , and november 3 , 2015 , respectively . as further discussed in item 15 — note 1 , nature of business , to the consolidated financial statements , the purchases of these assets were accounted for in accordance with asc 805-50 , business combinations - related issues , whereas the assets and liabilities transferred to the company relate to interests under common control by nrg and , accordingly , were recorded at historical cost . the difference between the cash proceeds and historical value of the net assets was recorded as a distribution to/from nrg and offset to the noncontrolling interest . the guidance requires retrospective combination of the entities for all periods presented as if the combination has been in effect since the inception of common control . accordingly , the company prepared its consolidated financial statements to reflect the transfers as if they had taken place from the beginning of the financial statements period ( january 1 , 2013 ) , or from the date the entities were under common control ( if later than the beginning of the financial statements period ) . the financial statements reflect the transfers as if they had taken place on may 13 , 2013 , for kansas south , march 28 , 2013 , for ta high desert and april 1 , 2014 , for the january 2015 drop down assets and the majority of the november 2015 drop down assets , which represents the date these entities were acquired by nrg . the company reduces net income attributable to its class a and class c common stockholders by the pre-acquisition net income for the drop down assets , as it is not available to the stockholders . in addition , for all periods prior to the initial public offering , the discussion reflects the company 's accounting predecessor , nrg yield , the financial statements of which were prepared on a `` carve-out '' basis from nrg and are intended to represent the financial results of the contracted renewable energy and conventional generation and thermal infrastructure assets in the u.s. that were acquired by nrg yield llc on july 22 , 2013. for all periods subsequent to the initial public offering , the discussion reflects the company 's consolidated financial results . as you read this discussion and analysis , refer to the company 's consolidated statements of operations to this form 10-k , which present the results of operations for the years ended december 31 , 2015 , 2014 and 2013 . also refer to item 1 — business and item 1a — risk factors , which include detailed discussions of various items impacting the company 's business , results of operations and financial condition . the discussion and analysis below has been organized as follows : executive summary , including a description of the business and significant events that are important to understanding the results of operations and financial condition ; results of operations , including an explanation of significant differences between the periods in the specific line items of the consolidated statements of operations ; financial condition addressing liquidity position , sources and uses of cash , capital resources and requirements , commitments , and off-balance sheet arrangements ; known trends that may affect the company 's results of operations and financial condition in the future ; and critical accounting policies which are most important to both the portrayal of the company 's financial condition and results of operations , and which require management 's most difficult , subjective or complex judgment . 41 story_separator_special_tag 12-year contract , with the option for a 7-year extension . story_separator_special_tag environmental matters and regulatory matters details of environmental matters and regulatory matters are presented in item 1 — business , regulatory matters and item 1a— risk factors . details of some of this information relate to costs that may impact the company 's financial results . trends affecting results of operations and future business performance wind and solar resource availability wind and solar resource availability can affect the company 's results . the company 's results were impacted by lower than normal wind resource availability in 2015. while the company 's wind facilities were available , adverse weather had a negative impact on wind resources . the company can not predict wind and solar resource availability and their related impacts on future results . capital market conditions the company and its peer group have recently experienced difficult conditions in the capital markets . the company 's growth strategy depends on its ability to identify and acquire additional conventional and renewable facilities from nrg and unaffiliated third parties . a prolonged disruption in the equity capital market conditions could make it difficult for the company to successfully acquire attractive projects from nrg or third parties and may also limit the company 's ability to obtain debt or equity financing to complete such acquisitions . if the company is unable to raise adequate proceeds when needed to fund such acquisitions , the ability to grow its project portfolio may be limited , which could have a material adverse effect on the company 's ability to implement its growth strategy . a full description of the risks applicable to the company 's business is presented in item 1a , risk factors . 44 consolidated results of operations 2015 compared to 2014 the following table provides selected financial information : replace_table_token_12_th replace_table_token_13_th ( a ) volumes sold do not include the mwh generated by the company 's equity method investments . 45 management 's discussion of the results of operations for the years ended december 31 , 2015 , and 2014 as described in item 15 — note 3 , business acquisitions , the company completed the following acquisitions from nrg during the year ended december 31 , 2015 : on november 3 , 2015 , the company acquired 75 % of the class b interests of nrg wind te holdco , or the november 2015 drop down assets , which owns a portfolio of 12 wind facilities totaling 814 net mw , from nrg for total cash consideration of $ 209 million . in february 2016 , nrg made a final working capital payment of $ 2 million , reducing total cash consideration to $ 207 million . on january 2 , 2015 , the company acquired the laredo ridge , tapestry , and walnut creek projects , or the january 2015 drop down assets , for total cash consideration of $ 489 million , plus assumed project-level debt of $ 737 million . the january 2015 drop down assets and the november 2015 drop down assets ( other than elbow creek ) were originally acquired by nrg from eme on april 1 , 2014 , and are collectively referred to as `` eme assets '' throughout this discussion . the company prepared its consolidated financial statements for the periods ending december 31 , 2015 , and 2014 , to reflect the acquisitions as if they had taken place from the date the entities were under common control , which was april 1 , 2014 for the eme assets . accordingly , the results presented herein reflect the company 's ownership of the eme assets for the full year ended december 31 , 2015 , compared to the nine months from april 1 , 2014 , through december 31 , 2014. economic gross margin the company evaluates its operating performance using the measure of economic gross margin , which is not a gaap measure and may not be comparable to other companies ' presentations or deemed more useful than the gaap information provided elsewhere in this report . the company believes that economic gross margin is useful to investors as it is a key operational measure reviewed by the company 's chief operating decision maker . economic gross margin is defined as energy and capacity revenue less cost of fuels . economic gross margin does not include mark-to-market gains or losses on economic hedging activities or contract amortization . the following tables present the composition of economic gross margin for the years ended december 31 , 2015 and 2014 : replace_table_token_14_th economic gross margin increased by $ 170 million during the year ended december 31 , 2015 , compared to the same period in 2014 , driven by : replace_table_token_15_th 46 contract amortization contract amortization increased by $ 25 million during the year ended december 31 , 2015 , compared to the same period in 2014 , due primarily to the amortization of the ppas acquired in the acquisition of the alta wind portfolio in august 2014. mark-to-market for economic hedging activities mark-to-market results for the years ended december 31 , 2015 , and 2014 represent the unrealized losses and gains , respectively , on forward contracts with an nrg subsidiary hedging the sale of power from the elbow creek wind facility extending through the end of 2015 , as further described in item 15 — note 7 , accounting for derivative instruments and hedging activities , to the consolidated financial statements .
| executive summary introduction and overview the company is a dividend growth-oriented company formed to serve as the primary vehicle through which nrg owns , operates and acquires contracted renewable and conventional generation and thermal infrastructure assets . the company believes it is well positioned to be a premier company for investors seeking stable and growing dividend income from a diversified portfolio of lower-risk high-quality assets . the company owns a diversified portfolio of contracted renewable and conventional generation and thermal infrastructure assets in the u.s. the company 's contracted generation portfolio collectively represents 4,435 net mw . each of these assets sells substantially all of its output pursuant to long-term offtake agreements with creditworthy counterparties . the average remaining contract duration of these offtake agreements was approximately 17 years as of december 31 , 2015 , based on cafd . the company also owns thermal infrastructure assets with an aggregate steam and chilled water capacity of 1,315 net mwt and electric generation capacity of 124 net mw . these thermal infrastructure assets provide steam , hot water and or chilled water , and in some instances electricity , to commercial businesses , universities , hospitals and governmental units in multiple locations , principally through long-term contracts or pursuant to rates regulated by state utility commissions . government incentives government incentives can enhance the economics of the company 's generating assets or investments by providing , for example , loan guarantees , cash grants , favorable tax treatment , favorable depreciation rules , or other incentives . certain changes in law enhance federal incentives for renewable generation — including through the extensions of the wind power ptc and the solar power itc — and could incentivize the development of additional renewable energy projects that would fit within the company 's asset portfolio . in addition , direct cash incentives may encourage additional renewable energy development by entities that can not presently benefit from tax credits .
| 6,803 |
the estimated useful lives by story_separator_special_tag this annual report on form 10-k contains forward-looking statements within the meaning of the private securities litigation reform act of 1995 ( “ pslra ” ) , section 27a of the securities act of 1933 , as amended , ( the “ securities act ” ) , and section 21e of the securities exchange act of 1934 , as amended , ( the “ exchange act ” ) , about our expectations , beliefs , or intentions regarding our product development efforts , business , financial condition , results of operations , strategies and prospects . you can identify forward-looking statements by the fact that these statements do not relate to historical or current matters . rather , forward-looking statements relate to anticipated or expected events , activities , trends or results as of the date they are made . because forward-looking statements relate to matters that have not yet occurred , these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements . many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements . these factors include those contained in “ item 1a — risk factors ” of this annual report on form 10-k. we do not undertake any obligation to update forward-looking statements except as required by applicable law . we intend that all forward-looking statements be subject to the safe harbor provisions of pslra . these forward-looking statements are only predictions and reflect our views as of the date they are made with respect to future events and financial performance . overview we are a diversified healthcare company that seeks to establish industry-leading positions in large and rapidly growing medical markets . our diagnostics business includes bioreference laboratories ( “ bioreference ” ) , one of the nation 's largest full service laboratories with a core genetic testing business and an almost 300-person sales and marketing team to drive growth and leverage new products , including the 4kscore test . our pharmaceutical business features rayaldee , an fda-approved treatment for secondary hyperparathyroidism ( “ shpt ” ) in adults with stage 3 or 4 chronic kidney disease ( “ ckd ” ) and vitamin d insufficiency ( launched in november 2016 ) , opk88004 , a selective androgen receptor modulator which we are exploring for various potential indications , and opk88003 , a once or twice weekly oxyntomodulin for type 2 diabetes and obesity which is a clinically advanced drug candidate among the new class of glp-1 glucagon receptor dual agonists ( phase 2b ) . our pharmaceutical business also features hgh-ctp , a once-weekly human growth hormone injection for which we have partnered with pfizer and successfully completed a phase 3 study in august 2019. we operate established pharmaceutical platforms in spain , ireland , chile and mexico , which are generating revenue and from which we expect to generate positive cash flow and facilitate future market entry for our products currently in development . we have a development and commercial supply pharmaceutical company , as well as a global supply chain operation and holding company in ireland , which we expect will play an important role in the development , manufacturing , distribution and approval of a wide variety of drugs with an emphasis on high potency products . we also own a specialty active pharmaceutical ingredients ( “ apis ” ) manufacturer in israel , which we expect will facilitate the development of our pipeline of molecules and compounds for our proprietary molecular diagnostic and therapeutic products . recent developments on february 25 , 2020 , we entered into a credit agreement with an affiliate of dr. frost , pursuant to which the lender committed to provide us with an unsecured line of credit in the amount of $ 100 million . borrowings under the line of credit will bear interest at a rate of 11 % per annum and may be repaid and reborrowed at any time . the credit agreement includes various customary remedies for the lender following an event of default , including the acceleration of repayment of outstanding amounts under line of credit . the line of credit matures on february 25 , 2025. the line of credit also calls for a commitment fee equal to 0.25 % per annum of the unused portion of the line . on february 25 , 2020 , bioreference and certain of its subsidiaries entered into amendment no . 11 to the credit agreement , which amended the credit agreement to provide that the fixed charge coverage ratio requirement set forth in the credit agreement would not be tested for the quarter ended december 31 , 2019 , with respect to availability calculated on january 29 , 2020 and january 30 , 2020 , subject , in the case of testing for the quarter ended december 31 , 2019 , to ( i ) there having been no event of default occurring and ( ii ) availability under the revolving facility exceeding 10 % of the total revolving commitment , for at least 30 consecutive days for the period ended on december 31 , 2019 , excluding december 18 , 2019. the other terms of the credit agreement remain unchanged . on november 15 , 2019 , we announced that novitas solutions , inc. issued its final local coverage determination for medicare payments for the 4kscore prostate cancer test with defined coverage criteria , effective december 30 , 2019. on november 4 , 2019 , bioreference and certain of its subsidiaries entered into amendment no . 10 to the credit agreement , which amended certain definitions in the credit agreement and further amended the credit agreement to extend 68 the maturity date to 2021 and reduce the commitment from $ 100 million to $ 75 million . story_separator_special_tag amortization expense reflects the amortization of acquired intangible assets with defined useful lives . our indefinite lived ipr & d assets will not be amortized until the underlying development programs are completed . upon obtaining regulatory approval by the fda , the ipr & d assets will be accounted for as a finite-lived intangible asset and amortized on a straight-line basis over its estimated useful life . asset impairment charges . asset impairment charges were $ 92.4 million and $ 21.8 million , respectively , for the years ended december 31 , 2019 and 2018 . asset impairment charges for the year ended december 31 , 2019 is primarily related to an impairment charge of $ 44.8 million to write our ipr & d assets for opk88003 ( oxyntomodulin ) and curna 's platform technology for oligonucleotide therapeutics down to their estimated fair values , a goodwill impairment charge of $ 26.2 million to write the carrying amount of the opko diagnostics , curna and transition therapeutics reporting units down to their estimated fair values , and an impairment charge of $ 20.7 million to write our intangible asset for the claros analyzer down to its estimated fair value . the asset impairment charges for the year ended december 31 , 2019 , resulted from liquidity constraints , longer than expected development timelines and changes in the competitive landscape , which resulted in changes to our estimates and assumptions of the expected future cash flows associated with the claros analyzer , opk88003 and curna 's platform technology . asset impairment charges for the year ended december 31 , 2018 is related to an impairment charge of $ 10.1 million to write our ipr & d assets for alpharen and opk88004 down to their estimated fair values and a goodwill impairment charge of $ 11.7 million to write the carrying amount of the finetech reporting unit down to its estimated fair value . interest income . interest income for the years ended december 31 , 2019 and 2018 , was not significant as our cash investment strategy emphasizes the security of the principal invested and fulfillment of liquidity needs . 71 interest expense . interest expense for the years ended december 31 , 2019 and 2018 , was $ 21.5 million and $ 11.9 million , respectively . interest expense was principally related to interest incurred on the 2025 notes , the 2023 convertible notes , our 3.0 % senior notes due 2033 ( the “ 2033 senior notes ” ) , and bioreference 's outstanding debt under its credit facility . the increase in interest expense for the year ended december 31 , 2019 was primarily due to interest incurred on the 2025 notes and 2023 convertible notes . fair value changes of derivative instruments , net . fair value changes of derivative instruments , net for the years ended december 31 , 2019 and 2018 , were $ 0.2 million and $ 3.0 million of income , respectively . derivative income for the year ended december 31 , 2018 principally related to the change in fair value of warrants to purchase additional shares of neovasc . other income and ( expense ) , net . other income and ( expense ) , net for the years ended december 31 , 2019 and 2018 , was $ 11.3 million of expense and $ 1.5 million of income , respectively . other expense for the year ended december 31 , 2019 primarily consisted of net unrealized losses recognized during the period on our investments in eloxx pharmaceuticals , inc. and vbi vaccines inc. other income for the year ended december 31 , 2018 primarily consisted of net unrealized gains recognized during the period on equity securities . income tax benefit ( provision ) . our income tax benefit ( provision ) for the years ended december 31 , 2019 and 2018 was $ ( 7.1 ) million , and $ 38.7 million , respectively . for the year ended december 31 , 2019 , our effective tax rate differed from the u.s. federal statutory rate of 21 % primarily due to the relative mix in earnings and losses in the u.s. versus foreign tax jurisdictions , the impact of certain discrete tax events and operating results in tax jurisdictions which do not result in a tax benefit . the income tax benefit for the year ended december 31 , 2018 included benefits related to discrete events which did not recur during 2019. loss from investments in investees . we have made investments in other early stage companies that we perceive to have valuable proprietary technology and significant potential to create value for us as a shareholder or member . we account for these investments under the equity method of accounting , resulting in the recording of our proportionate share of their losses until our share of their loss exceeds our investment . until the investees ' technologies are commercialized , if ever , we anticipate they will report a net loss . loss from investments in investees was $ 2.9 million and $ 14.5 million for the years ended december 31 , 2019 and 2018 , respectively . for the years ended december 31 , 2018 and december 31 , 2017 effective january 1 , 2018 , we adopted accounting standards codification topic 606 , revenue from contracts with customers , using the full retrospective transition method . under this method , we have revised our consolidated financial statements for the year ended december 31 , 2017 , as if topic 606 had been effective for those periods . replace_table_token_6_th revenue from services for the year ended december 31 , 2018 increased approximately $ 30.5 million compared to the year ended december 31 , 2017. the increase in revenue from services is attributable to reduced adjustments to estimated collection amounts from third-party payors as discussed in the paragraph below .
| results of operations for the years ended december 31 , 2019 and december 31 , 2018 replace_table_token_2_th revenue from services for the year ended december 31 , 2019 decreased approximately $ 96.8 million compared to the year ended december 31 , 2018. revenue from services for the year ended december 31 , 2019 was negatively affected by decreased reimbursement for our clinical testing of $ 49.2 million and from our genomics testing of $ 21.2 million , as a result of an increase in denial rates and changes to payor pricing , policy and procedural requirements , the impact of pama , and a decline in 4kscore revenue due to the non-coverage decision issued by novitas , which became effective on march 21 , 2019. subsequent to the effective date of the non-coverage determination , in november 2019 , novitas issued its final lcd for medicare payments for the 4kscore test , effective december 30 , 2019. under the final lcd , medicare will reimburse the test for patients who meet defined criteria . revenue from services for the year ended december 31 , 2019 was also negatively affected by $ 13.8 million as a result of a reduction in clinical test volumes , which was offset by higher volume in our genomics testing of $ 13.0 million . estimated collection amounts are subject to the complexities and ambiguities of billing , reimbursement regulations and claims processing , as well as considerations unique to medicare and medicaid programs , and require us to consider the potential for retroactive adjustments when estimating variable consideration in the recognition of revenue in the period the related services are rendered . for the years ended december 31 , 2019 and 2018 , we recognized revenue reductions due to 69 changes in estimates of implicit price concessions for performance obligations satisfied in prior periods of $ 24.8 million and $ 22.8 million , respectively .
| 6,804 |
pawn lending the company offers secured non-recourse loans , commonly referred to as pawn loans , as its primary line of business . the company also offered pawn loans in mexico through august 2014 , when it sold its mexico-based pawn operations . see “ recent developments—divestiture of mexico-based pawn operations ” for a discussion of the sale of the company 's foreign retail services business . pawn loans are short-term loans made on the pledge of tangible personal property . pawn loan fees and service charges are generated from the company 's pawn loan portfolio . a related activity of the pawn lending operations is the disposition of collateral from forfeited pawn loans and the liquidation of a smaller volume of merchandise purchased directly from customers or from third parties . consumer loan activities another component of the company 's business is originating , arranging , guaranteeing or purchasing consumer loans in some of its locations . consumer loans provide customers with cash , typically in exchange for an obligation to repay the amount advanced plus fees and any applicable interest . consumer loans include short-term loans ( commonly referred to as payday loans ) and installment loans . short-term consumer loans include unsecured short-term loans written by the company or by a third-party lender through the company 's cso programs that the company guarantees . installment consumer loans are longer-term , multi-payment loans that generally require the pay-down of portions of the outstanding principal balance in multiple installments . installment loans include unsecured loans and loans secured by a customer 's vehicle written by the company or by a third-party lender through the cso programs that the company guarantees . through the company 's cso programs , the company provides services related to a third-party lender 's consumer loan products in some markets by acting as a credit services organization or credit access business on behalf of consumers in accordance with applicable state laws . services offered under the cso programs include credit-related services such as arranging cso loans with third-party lenders . under the cso programs , the company guarantees consumer loan payment obligations to the third-party lender in the event that the customer defaults on the loan . cso loans are not included in the company 's financial statements , but the company has established a liability for the estimated losses in support of the guarantee on these loans in its consolidated balance sheets . check cashing and other financial services another small component of the company 's business includes the offering of check cashing and other ancillary products and services through some of its company-owned lending locations . the ancillary products and services include money orders , wire transfers , prepaid debit cards and auto insurance . most of these ancillary products and services offered are provided through third-party vendors . in addition , the company 's franchised check cashing business offers check cashing services through its franchised check cashing centers . segment information the company has one reportable operating segment through which it offers the services described above . the company previously had two segments : retail services and e-commerce . the retail services segment included all of the operations of the company 's retail services division , which was composed of both domestic and foreign storefront locations . the e-commerce segment was comprised of all of the operations of enova . in the fourth quarter of 2014 , following the enova spin-off in november 2014 and the sale of the company 's mexico-based pawn operations in august 2014 , the company re-assessed its segment structure and determined that the retail services segment is the only reportable segment and includes all of the company 's operations . information 37 previously reported separately in corporate operations , which represents corporate expenses and other miscellaneous income , has been combined with the information previously included in the retail services segment because all of the company 's corporate expenses and other miscellaneous income support the company 's sole operating segment . prior year financial amounts shown for the company have been reclassified to reflect the company 's current segment structure . additional financial information regarding the company 's operating segment and each of the geographic areas in which the company conducted business during 2014 , 2013 and 2012 is provided in “ item 8. financial statements and supplementary data—note 19. ” locations see “ item 1. business—overview—general ” for details of the company 's owned and franchised locations offering pawn lending , consumer lending and other services as of december 31 , 2014 , 2013 and 2012 . recent developments enova spin-off on november 13 , 2014 , the company completed the separation of its online lending business that comprised its e-commerce division , enova , through the distribution of approximately 80 percent of the outstanding shares of enova common stock to the company 's shareholders , which was structured with the intent that it would be a tax-free distribution . the company distributed to its shareholders 0.915 shares of enova common stock for every one share of the company 's common stock held as of the close of business on november 3 , 2014 , which was the record date for the enova spin-off . the company received a private letter ruling from the irs , an opinion from the company 's tax counsel and a solvency opinion from an independent financial advisor prior to approval of the enova spin-off by the company 's board of directors . as a result of the enova spin-off , enova is now an independent public company , and its common stock is listed on the new york stock exchange under the ticker symbol “ enva. story_separator_special_tag the preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities , and disclosure of contingent assets and liabilities , at the dates of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods . on an on-going basis , management evaluates its estimates and judgments , including those related to revenue recognition on pawn loan fees and service charges , allowance for losses on merchandise held for disposition and consumer loans , goodwill , long-lived and intangible assets , income taxes , contingencies and litigation . management bases its estimates on historical experience , empirical data and on various other assumptions that are believed to be reasonable under the circumstances , the results of which form the basis for making judgments about the carrying values of assets and liabilities . actual results may differ from these estimates . the development and selection of the critical accounting policies and the related disclosures below have been reviewed with the audit committee of the board of directors of the company . management believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements . pawn loan fees and service charges pawn loans and pawn loan fees and service charges receivable pawn loans are short-term loans made on the pledge of tangible personal property . the maximum pawn loan amount is generally assessed as a percentage of the personal property 's estimated disposition value . the typical loan term is 30 to 90 days and , in many cases , an additional grace period ( typically 10 to 60 days ) may be available to the borrower . a pawn loan is considered delinquent if the customer does not repay or , where allowed by law , renew or extend the loan on or prior to its contractual maturity date plus any applicable grace period . pawn loan fees and service charges do not accrue on delinquent pawn loans . when a pawn loan is considered delinquent , any accrued pawn loan fees and service charges are reversed and no additional pawn loan fees and service charges are accrued . pawn loans written during each calendar month are aggregated and tracked for performance . this empirical data allows the company to analyze the characteristics of its outstanding pawn loan portfolio and assess the collectability of the principal balance in addition to pawn loan fees and service charges . revenue recognition—pawn lending pawn loan fees and service charges revenue is accrued ratably over the term of the loan for the portion of those pawn loans estimated to be collectible . if the future actual performance of the loan portfolio differs significantly ( positively or negatively ) from estimates , revenue for the next reporting period would be likewise affected . at the end of 2014 and based on the revenue recognition method described above , the company had accrued $ 53.6 million of pawn loan fees and service charges receivable . assuming the 2014 accrual of pawn loan fees and service charges revenue was overestimated or underestimated by 10 % , pawn loan fees and service charges revenue would decrease or increase by approximately $ 5.4 million in 2014 and net income attributable to the company would decrease or increase by approximately $ 3.4 million , net of taxes . 40 consumer loans and allowance and liability for estimated losses on consumer loans allowance and liability for estimated losses on consumer loans the company monitors the performance of its consumer loan portfolio and maintains either an allowance or liability for estimated losses on consumer loans ( including fees and interest ) at a level estimated to be adequate to absorb credit losses inherent in the portfolio . the allowance for losses on the company 's owned consumer loans reduces the outstanding loan balance in the consolidated balance sheets . the liability for estimated losses related to loans guaranteed under the cso programs is included in “ accounts payable and accrued expenses ” in the consolidated balance sheets . in determining the allowance or liability for estimated losses on consumer loans , the company applies a documented systematic methodology . in calculating the allowance or liability for loan losses , outstanding loans are divided into discrete groups of short-term loans and installment loans and are analyzed as current or delinquent . increases in either the allowance or the liability , net of charge-offs and recoveries , are recorded as a “ consumer loan loss provision ” in the consolidated statements of income . the allowance or liability for short-term loans classified as current is based on historical loss rates adjusted for recent default trends for current loans . for delinquent short-term loans , the allowance or liability is based on a six-month rolling average of loss rates by stage of collection . for installment loan portfolios , the company generally uses a migration analysis to estimate losses inherent in the portfolio . the allowance or liability calculation under the migration analysis is based on historical charge-off experience and the loss emergence period , which represents the average amount of time between the first occurrence of a loss event to the charge-off of a loan . the factors the company considers to assess the adequacy of the allowance or liability include past due performance , historical behavior of monthly vintages , underwriting changes and recent trends in delinquency in the migration analysis . the company fully reserves or charges off consumer loans once the loan or a portion of the loan has been classified as delinquent for 60 consecutive days . if a loan is estimated to be uncollectible before it is fully reserved , it is charged off at that point . consumer loans classified as delinquent generally have an age of one to 59 days from the date any portion of the loan became delinquent , as defined above .
| highlights the company 's financial results for 2014 continuing operations , including the significant events described above and under “ recent developments , ” are summarized below . total revenue was $ 1.1 billion , representing an increase of $ 64.2 million , or 6.2 % , for 2014 compared to 2013. net revenue increased $ 3.0 million , or 0.5 % , to $ 589.6 million , in 2014 compared to 2013. the increase was primarily due to an $ 18.6 million , or 3.7 % , increase in pawn-related net revenue , which consists of pawn loan fees and services charges and proceeds from disposition of merchandise , net of cost of disposed merchandise . consumer loan fees , net of the loss provision , partially offset the pawn-related net revenue increase . income from operations decreased $ 28.2 million , or 46.1 % , to $ 33.0 million in 2014 compared to $ 61.2 million in 2013. consolidated income from operations for 2014 includes expense items totaling $ 13.3 million related to the 2014 reorganization , losses on divestitures and certain charges incurred in 2014 related to the 2013 litigation settlement . expenses in 2013 included $ 16.9 million related to the 2013 litigation settlement , the texas consumer loan store closures and the regulatory penalty , partially offset by the ohio adjustment . net loss from continuing operations was $ 10.4 million in 2014 compared to net income from continuing operations of $ 59.2 million in 2013. diluted net loss per share from continuing operations was $ 0.36 in 2014 compared to net income per share of $ 1.93 in 2013. in addition to the expenses noted above for 2014 , net income from continuing operations in 2014 included early extinguishment of debt charges of $ 14.2 million net of taxes ( $ 0.48 per share ) . see “ overview — non-gaap disclosure—adjusted earnings measures ” and “ overview — non-gaap disclosure—adjusted ebitda ” for additional information .
| 6,805 |
26 74,974 — — story_separator_special_tag unless the context otherwise requires , “ g-iii ” , “ us ” , “ we ” and “ our ” refer to g-iii apparel group , ltd. and its subsidiaries . references to fiscal years refer to the year ended or ending on january 31 of that year . for example , our fiscal year ended january 31 , 2017 is referred to as “ fiscal 2017. ” the following presentation of management 's discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with our financial statements , the accompanying notes and other financial information appearing elsewhere in this report . acquisition of donna karan international inc. in december 2016 , we acquired all of the outstanding capital stock of donna karan international inc. ( “ dki ” ) from lvmh moet hennessy louis vuitton inc. ( “ lvmh ” ) for a total purchase price of approximately $ 669.8 million , after taking into account certain adjustments . we believe that donna karan owns some of the world 's most iconic and recognizable power brands , including dkny , donna karan and dkny jeans . the acquisition of donna karan fits squarely into our strategy to diversify and expand our business . we intend to focus on the expansion of the dkny brand , while also re-establishing dkny jeans , donna karan and other associated brands . we believe that we can also capitalize on significant , untapped global licensing potential in a number of men 's categories , as well as in home and jewelry . we believe that our strong track record of driving organic growth , identifying and integrating acquisitions and developing talent throughout the organization makes the potential of the dkny and donna karan brands especially appealing . overview g-iii designs , manufactures and markets an extensive range of apparel , including outerwear , dresses , sportswear , swimwear , women 's suits and women 's performance wear , as well as women 's handbags , footwear , small leather goods , cold weather accessories and luggage . we sell our products under our own proprietary brands , which include dkny , donna karan , vilebrequin , g.h . bass , weejuns andrew marc , marc new york , eliza j and jessica howard , as well as under licensed brands and private retail labels . while our products are sold at a variety of price points through a broad mix of retail partners and our own stores , a majority of our sales are concentrated with our ten largest customers . sales to our ten largest customers comprised 58.4 % of our net sales in 2015 , 63.5 % of our net sales in fiscal 2016 and 64.1 % of our net sales in fiscal 2017. we operate in fashion markets that are intensely competitive . our ability to continuously evaluate and respond to changing consumer demands and tastes , across multiple market segments , distribution channels and geographic areas is critical to our success . although our portfolio of brands is aimed at diversifying our risks in this regard , misjudging shifts in consumer preferences could have a negative effect on our business . our success in the future will depend on our ability to design products that are accepted in the marketplace , source the manufacture of our products on a competitive basis , and continue to diversify our product portfolio and the markets we serve . segments starting with the first quarter of fiscal 2016 , we began reporting based on two segments : wholesale operations and retail operations . the wholesale operations segment consists of our former licensed products and non-licensed products segments and includes sales of products under brands licensed by us from third parties , as well as sales of products under our own brands and private label brands . wholesale sales and revenues from license agreements related to the donna karan business are included in the wholesale operations segment . the retail operations segment consists of our wilsons leather , g.h . bass and dkny stores , as well as a limited number of calvin klein performance stores . see note k to our consolidated financial statements for financial information with respect to these segments . recent acquisitions we have expanded our portfolio of proprietary and licensed brands through acquisitions and by entering into license agreements for new brands or for additional products under previously licensed brands . 38 our acquisitions have helped to broaden our product offerings , expand our ability to serve different tiers of distribution and add a retail component to our business . acquisitions are part of our strategy to expand our product offerings and increase the portfolio of proprietary and licensed brands that we offer through different tiers of retail distribution . as noted above , in december 2016 , we acquired the donna karan business , including its dkny , donna karan and related brands . we intend to focus on the expansion of the dkny brand , while also re-establishing dkny jeans , donna karan and other associated brands . we believe that we can also capitalize on significant , untapped global licensing potential in a number of men 's categories , as well as in home and jewelry . in march 2017 , we entered into an agreement with macy 's under which macy 's will serve , beginning february 2018 , as the exclusive u.s. department store for sales of dkny women 's apparel and accessories . the agreement also plans for increased and enhanced dkny shop-in-shops in many macy 's stores . g-iii and macy 's are committed to making dkny the premier fashion and lifestyle brand . story_separator_special_tag retailers are seeking to expand the differentiation of their offerings by devoting more resources to the development of exclusive products , whether by focusing on their own private label products or on products produced exclusively for a retailer by a national brand manufacturer . retailers are placing more emphasis on building strong images for their private label and exclusive merchandise . exclusive brands are only made available to a specific retailer , and thus customers loyal to their brands can only find them in the stores of that retailer . a number of retailers are experiencing financial difficulties , which in some cases has resulted in bankruptcies , liquidations and or store closings . the financial difficulties of a retail customer of ours could result in reduced business with that customer . we may also assume higher credit risk relating to receivables of a retail customer experiencing financial difficulty that could result in higher reserves for doubtful accounts or increased write-offs of accounts receivable . we attempt to mitigate credit risk from our customers by closely monitoring accounts receivable balances and shipping levels , as well as the ongoing financial performance and credit standing of customers . sales of apparel over the internet continue to increase . we are addressing the increase in online shopping by developing additional marketing initiatives over the internet , our web sites and social media . we have attempted to respond to trends in our industry by continuing to focus on selling products with recognized brand equity , by attention to design , quality and value and by improving our sourcing capabilities . we have also responded with the strategic acquisitions made by us and new license agreements entered into by us that added to our portfolio of licensed and proprietary brands and helped diversify our business by adding new product lines , expanding distribution channels and developing the retail component of our business . we believe that our broad distribution capabilities help us to respond to the various shifts by consumers between distribution channels and that our operational capabilities will enable us to continue to be a vendor of choice for our retail partners . use of estimates and critical accounting policies the preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and 40 liabilities at the date of the financial statements and revenues and expenses during the reporting period . significant accounting policies employed by us , including the use of estimates , are presented in the notes to our consolidated financial statements . critical accounting policies are those that are most important to the portrayal of our financial condition and our results of operations , and require management 's most difficult , subjective and complex judgments , as a result of the need to make estimates about the effect of matters that are inherently uncertain . our most critical accounting estimates , discussed below , pertain to revenue recognition , accounts receivable , inventories , income taxes , goodwill and intangible assets and equity awards . in determining these estimates , management must use amounts that are based upon its informed judgments and best estimates . we continually evaluate our estimates , including those related to customer allowances and discounts , product returns , bad debts and inventories , and carrying values of intangible assets . we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances . the results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources . actual results may differ from these estimates under different assumptions and conditions . revenue recognition goods are shipped to retailers in accordance with specific customer orders . we recognize wholesale sales when the risks and rewards of ownership have transferred to the customer , determined by us to be when title to the merchandise passes to the customer . in addition , we act as an agent in brokering sales between customers and overseas factories . on these transactions , we also recognize commission fee income on sales that are financed by and shipped directly to our customers . title to goods shipped by overseas vendors , transfers to customers when the goods have been delivered to the customer . net sales take into account reserves for returns and allowances . we estimate the amount of reserves and allowances based on current and historical information and trends . sales are reported net of returns , discounts and allowances . discounts , allowances and estimates of future returns are recognized when the related revenues are recognized . we recognize commission income upon the completion of the delivery by our vendors to the customer . we recognize retail sales upon customer receipt of our merchandise , generally at the point of sale . our retail sales are recorded net of applicable sales tax . accounts receivable in the normal course of business , we extend credit to our wholesale customers based on pre-defined credit criteria . accounts receivable , as shown on our consolidated balance sheet , are net of allowances and anticipated discounts . in circumstances where we are aware of a specific customer 's inability to meet its financial obligation ( such as in the case of bankruptcy filings , extensive delay in payment or substantial downgrading by credit sources ) , a specific reserve for bad debts is recorded against amounts due to reduce the net recognized receivable to the amount reasonably expected to be collected . for all other wholesale customers , an allowance for doubtful accounts is determined through analysis of the aging of accounts receivable at the date of the financial statements , assessments of collectability based on historical trends and an evaluation of the impact of economic conditions . an allowance for discounts is based on reviews of open invoices where concessions have been extended to customers .
| results of operations the following table sets forth selected operating data as a percentage of our net sales for the fiscal years indicated below : 2017 2016 2015 net sales 100.0 % 100.0 % 100.0 % cost of goods sold 64.8 64.2 64.2 gross profit 35.2 35.8 35.8 selling , general and administrative expenses 29.5 26.8 27.0 depreciation and amortization 1.4 1.1 1.0 assets impairment 0.4 — — operating profit 3.9 7.9 7.8 other income — — 0.5 interest and financing charges , net ( 0.6 ) ( 0.3 ) ( 0.4 ) income before income taxes 3.3 7.6 7.9 interest and financing charges , net 1.1 2.8 2.8 net income 2.2 4.8 5.1
| 6,806 |
in february 2009 , the directors agreed to temporarily forgo the director fees as part of our overall efforts to control costs . our board of directors does not have a compensation committee or other committee performing equivalent functions . during 2009 , mr. lundin was the only officer or employee who participated in the board 's deliberations concerning executive officer compensation . during 2009 , none of the executive officers served on the compensation committee or board of directors of any other company of which any other member of the board of directors was an executive officer . audit committee our board of directors has established an audit committee to assess , report and make recommendations to the board of directors regarding our independent auditors , financial statements , internal audit activities and legal compliance . our audit committee consists of messrs. hoak , kern and lundquist with mr. lundquist serving as the chair . the board of directors has determined that each of messrs. hoak and lundquist is an audit committee financial expert as defined by the rules of the sec . finance code of professional conduct we have adopted a finance code of professional conduct applicable to our chief executive officer , chief financial officer , corporate controller and all other employees of our finance organization which satisfies the sec 's requirements for a code of ethics. a copy of the our finance code of professional conduct has been incorporated by reference as an exhibit to this report . 42 item 11. executive compensation . this section provides information regarding the compensation program in place for our executive officers for 2009. it includes information regarding the overall objectives of the compensation program and each element of compensation provided . our board of directors believes that compensation for our executive officers should reward superior performance that creates long-term investor value and encourage executives who deliver that performance to remain with our company and to continue that level of performance . compensation is reviewed and approved by our board of directors during regularly scheduled board meetings . during 2009 , all of the compensation received by our executive officers was in the form of cash compensation . this reflects the view of our board of directors that additional equity ownership of our company was not needed to align the interests of our executive officers with stockholders due to the fact that each of the executive officers already holds substantial equity in our company . the elements of our executive compensation program are : salary base salary for each of our officers is specified in their respective employment agreements . in 2006 , the employment agreements of mr. lundin , ms. loughran and mr. young were amended to increase each officer 's base salary effective as of october 1 , 2006. these amendments to the employment agreements represented the first increase in base salary for these officers since their employment agreements were entered into on april 5 , 2004. in determining to increase the salaries of these officers , our board of directors considered our strong performance during that time . mr. lundin , ms. loughran , and mr. young agreed to take salary reductions of $ 50,000 , $ 25,000 and $ 25,000 respectively , in 2009 as part of our overall efforts to control costs . bonus bonuses for mr. lundin , ms. loughran and mr. young are awarded at the discretion of the board of directors . bonus amounts are based on our overall performance during the year as well as individual performance . factors considered by our board of directors in making its bonus determinations include revenue , operating cash flow and cost efficiencies realized . however , bonus targets are not set in advance , and no particular factor carries greater weight than any other factor . our board of directors also considers the recommendations of mr. lundin in determining the bonuses to be paid to ms. loughran and mr. young . in 2009 , our board of directors granted discretionary bonuses , in part , to partially offset reduced or stagnant salary levels . stock options we occasionally grant nonqualified stock options to certain employees , including the executive officers , pursuant to the da-lite screen company , inc. 1999 stock option plan . the purposes of this plan are ( i ) to align the interests of our stockholders and the recipients of options under this plan by increasing the proprietary interest of those recipients in our growth and success , ( ii ) to advance our best interests by attracting and retaining key employees and ( iii ) to motivate recipients of options to act in the long-term best interests of our company and our stockholders . options under the plan generally vest one-fifth each year from the anniversary date of grant and expire on the tenth anniversary of the date of grant . no options were granted in 2009 . 43 perquisites the board of directors does not believe that perquisites should be a significant part of the compensation of our executive officers . in 2009 , the only perquisite we provided to our executive officers was a car allowance . retirement benefits the da-lite screen company , inc. 401 ( k ) retirement plan ( the 401 ( k ) plan ) covers all full-time employees who meet certain service requirements . each of the executive officers participates in the 401 ( k ) plan . story_separator_special_tag as a result of the aforementioned factors , net income decreased $ 1.3 million from $ 27.8 million in 2007 to $ 26.5 million in 2008. liquidity and capital resources we expect to be able to fund our working capital requirements , interest expense , capital expenditures and our distributions to stockholders with cash generated from operations , although there can be no assurances in this regard . the financial results for 2009 showed a substantial reduction from the results reported for 2008 , reflecting difficult economic conditions . as a result , we have been seeking to conserve resources . in this regard , we discontinued making cash distributions to our stockholders ( other than distributions to pay estimated taxes ) after having made a distribution of $ 137.50 per share in april of 2009. our bank debt and 9 1 / 2 % senior notes become due in may of 2011. although we expect that we will be able to generate cash from operations to pay or prepay a portion of this indebtedness , we expect that we will need to refinance most of this indebtedness on or before the respective maturity dates . credit market conditions , as well as other economic conditions are difficult . there is no assurance that such new financing will be available when needed or as to the cost or other terms of this financing . we are exploring alternatives to issue new debt or establish new financing arrangements in the near future , which could be used to retire all or part or our outstanding 9 1 / 2 % senior notes . no assurance can be given as to the availability or terms of any such potential financing or whether we will elect to go forward with any financing alternatives that may be available . in 2009 , we repurchased $ 21.7 million of the outstanding principal amount of our 9 1 / 2 % senior notes in the open market for an aggregate purchase price of $ 19.4 million . we retired these notes and wrote-off the related deferred financing costs and recorded a gain of $ 2.3 million in 2009 relating to the repurchases . depending on our expected cash needs , the prevailing prices of our 9 1 / 2 % senior notes and other factors , we may continue to repurchase some amount of our outstanding 9 1 / 2 % senior notes from time to time in the open market or otherwise . management believes the principal indicators of our liquidity are our cash position ( total cash and cash equivalents ) , remaining availability under our bank credit facilities and our excess working capital . at january 1 , 2010 , our cash position was $ 0.6 million , a decrease of $ 1.0 million from december 26 , 2008. additionally , we have an unsecured revolving credit facility , with maximum possible borrowings equal to $ 19.5 million , which expires in may 2011. this facility is subject to and cross-defaulted with the terms , conditions and covenants relating to our 9 1 / 2 % senior notes . interest on any outstanding borrowings related to this line of credit is calculated at the prime rate , subject to a floor of 4.00 % . as the prime rate is below the floor , the interest rate in effect as of january 1 , 2010 was 4.00 % . at january 1 , 2010 , we had a $ 2.0 million outstanding balance under this line of credit . our working capital position decreased to $ 13.5 million ( including $ 0.6 million of total cash and cash equivalents ) at january 1 , 2010 , from $ 25.1 million ( including $ 1.6 million of total cash and cash equivalents ) at december 26 , 2008. our dutch subsidiary , projecta , has an overdraft line of credit , with maximum possible borrowings equal to 1.5 million euros . interest on outstanding borrowings in europe related to projecta 's overdraft line of credit is calculated at the fortis basic rate plus 1.50 % , the sum of which was 6.35 % on january 1 , 2010. at january 1 , 2010 , projecta had no outstanding balances under this credit facility . 19 cash flows cash provided by operating activities in 2009 was $ 29.1 million , as compared to $ 30.4 million in 2008 , a decrease of $ 1.3 million or 4.4 % reflecting reduced net income that was partially offset by a decrease in inventory levels . cash used in investing activities was $ 2.1 million in 2009 , as compared to $ 0.3 million in 2008. cash used in investing activities in 2009 resulted from capital expenditures of $ 2.0 million . cash used in investing activities in 2008 resulted from a reduction in short-term investments of $ 2.6 million which was offset by capital expenditures of $ 1.9 million and the payments for purchase of minority shares of $ 1.0 million . cash used in financing activities was $ 28.3 million in 2009 , as compared to $ 34.0 million in 2008. the decrease in cash used for financing activities in 2009 was related to a decrease in distributions to shareholders of $ 14.6 million that was partially offset by an increase in payments to retire senior notes of $ 12.5 million . our primary uses of cash provided by operating activities over the next twelve months are expected to consist of disbursements related to tax distributions to shareholders and capital expenditures .
| results of operations year ended january 1 , 2010 , compared with year ended december 26 , 2008 net sales . net sales were $ 130.3 million for 2009 , as compared to net sales of $ 166.2 million for 2008 , a decrease of $ 35.9 million or 21.6 % . net sales by our united states ( u.s. ) operations decreased 19.8 % . in the u.s. , electric screen sales decreased $ 8.3 million , wall screen sales decreased $ 4.6 million , portable screens sales decreased $ 9.4 million and other products decreased $ 4.8 million , reflecting primarily decreases in volume . sales were impacted by a slowdown in the economy , including the housing , business/it and hospitality markets . portable screen sales , in particular , were affected by declining demand from the rental and staging markets within the broader hospitality market . results also reflected increased competition in the small screen market from imports and larger flat-panel displays . net sales from our european subsidiaries decreased by $ 8.9 million or 30.3 % . sales in europe were also impacted by a slowdown in the economy . the stronger dollar resulted in a decrease of $ 1.1 million in net sales . cost of sales . cost of sales were $ 83.9 million for 2009 , as compared to $ 104.5 million for 2008 , a decrease of $ 20.6 million or 19.7 % . as a percentage of net sales , the cost of sales represented 64.4 % and 62.9 % for 2009 and 2008 , respectively . this constitutes a 1.5 percentage point reduction in margin , which is attributable primarily to lower volumes , which was partially offset by cost cutting measures such as sourcing lower-cost materials and components internationally and increased adoption of lean manufacturing techniques .
| 6,807 |
on maturity , we may , at our option , satisfy our repayment obligation by paying the principal amount of the 5 % convertible debentures in cash or , subject to certain limitations , by issuing that number of our common shares obtained by dividing the principal amount of the 5 % convertible debentures outstanding by 95 % of the weighted average trading price of our common shares on the nyse mkt for the 20 consecutive trading days ending five trading days preceding the maturity date ( story_separator_special_tag the following discussion is designed to provide information that we believe necessary for an understanding of our financial condition , changes in financial condition and results of our operations . the following discussion and analysis should be read in conjunction with the accompanying audited consolidated financial statements and related notes . the financial statements have been prepared in accordance with united states generally accepted accounting principles ( `` u.s. gaap '' ) . this management 's discussion and analysis of financial condition and results of operations includes information available to march 4 , 2013 . non-gaap financial measures in this form 10-k , we use the terms `` cash operating costs '' , `` cash operating cost per ounce ” and `` cash generated before working capital changes '' . “ cost of sales ” as found in our statements of operations , includes all mine-site operating costs , including the costs of mining , ore processing , maintenance , work-in-process inventory changes , mine-site overhead as well as production taxes , royalties , mine site depreciation , depletion , amortization , asset retirement obligation accretion and by-product credits , but excludes exploration costs , property holding costs , corporate office general and administrative expenses , foreign currency gains and losses , impairment charges , corporate business development costs , gains and losses on asset sales , interest expense , gains and losses on derivatives , gains and losses on investments and income tax expense/benefit . “ cash operating cost per ounce ” for a period is equal to “ cost of sales ” for the period less mining related depreciation , depletion and amortization costs , royalties , production taxes , accretion of asset retirement obligation costs , costs that meet the definition of a stripping activity asset under international financial reporting standards ( `` ifrs '' ) and operations-related foreign currency gains and losses for the period , divided by the number of ounces of gold sold during the period . 46 replace_table_token_13_th replace_table_token_14_th replace_table_token_15_th we use cash operating cost per ounce as a key operating indicator . we monitor this measure monthly , comparing each month 's values to prior periods ' values to detect trends that may indicate increases or decreases in operating efficiencies . we provide this measure to our investors to allow them to also monitor operational efficiencies of our mines . we calculate this measure for both individual operating units and on a consolidated basis . 47 since cash operating costs do not incorporate revenues , changes in working capital and non-operating cash costs , they are not necessarily indicative of operating profit or cash flow from operations as determined under gaap . changes in numerous factors including , but not limited to , mining rates , milling rates , ore grade , gold recovery , costs of labor , consumables and mine site general and administrative activities can cause these measures to increase or decrease . we believe that these measures are similar to the measures of other gold mining companies , but may not be comparable to similarly titled measures in every instance . `` cash generated before working capital changes '' is calculated by subtracting the `` changes in working capital '' from `` net cash provided by operating activities '' as found in our statements of cash flows . we calculate this non-gaap measure to assist users of the data to better understand the cash generating results of our mining operations . all these measures should be considered as non-gaap financial measures as defined in sec regulation s-k item 10 and in applicable canadian securities laws and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with gaap . there are material limitations associated with the use of such non-gaap measures . trends and events for the year ended december 31 , 2012 management changes and head office relocation plans it was announced on december 13 , 2012 , that golden star resources plans to relocate its corporate headquarters from denver colorado , united states to toronto ontario , canada by the middle of 2013. several management changes were also announced in conjunction with the office relocation including the following : tom mair , ceo , elected to remain in denver and resign from his officer position and board seat effective december 31 , 2012 ; sam coetzer , formerly chief operating officer for golden star , was appointed as president and ceo effective january 1 , 2013. additionally , mr. coetzer was named to the company 's board of directors effective december 14 , 2012. chris thompson elected to remain as a board member but relinquished his chairman role effective december 31 , 2012. tim baker , formerly chief operating officer of kinross gold corporation , joined the board as executive chairman effective january 1 , 2013. mr. baker , who grew up in kenya , has extensive experience in operating mines and projects around the world , including chile , africa and the dominican republic for placer dome and kinross gold . jeff swinoga was appointed as executive vice president and chief financial officer effective january 7 , 2013. mr. swinoga has extensive mining industry experience as a cfo with hudbay minerals and north american palladium . roger palmer , previously the cfo , became vice president and treasurer on january 7 , 2013. golden star 's new toronto headquarters are located at 150 king street west , toronto , canada . story_separator_special_tag in addition , many governments around the world have increased mineral royalties , fees and income tax rates in recent years . mining is an energy intensive industry using large quantities of electricity and fuel in the mining , transport , crushing , grinding and processing of ores , and as a result , a mine 's cost structure is sensitive to changes in fuel and electric power costs . increases in crude oil prices from $ 45 per barrel in early 2009 , to in excess of $ 100 per barrel in 2012 have thus contributed to higher mining costs worldwide in recent years . increasing fuel costs have also resulted in higher electric power costs in many areas including ghana . the resource mining boom of recent years has constrained the availability of skilled mining personnel , which in turn has put upward pressure on labor costs . it has also contributed to increases in mining equipment costs and longer lead times for new orders for large equipment . despite the higher costs , our mining and processing costs per tonne have remained relatively flat since early 2011 reflecting our efforts to control operating costs . 49 increases in taxation and regulations increases in taxation in the first quarter of 2012 , the government of ghana enacted three changes to tax rules which apply to mining companies operating in ghana and further announced its intent to implement two additional changes . changes enacted in 2012 : 1. rate increase : a 10 % increase in income tax rates from 25 % in 2011 to 35 % in 2012 resulted in an increase in our deferred tax liability of approximately $ 9.6 million as our deferred future income tax liabilities as of december 31 , 2011 were raised to reflect the future impact of the new higher rate . 2. tax depreciation limits : prior to 2012 , a mining company could add 80 % of the cost of its annual qualified capital spending to a tax asset pool known as `` capital allowances '' , which were immediately available , on an unlimited basis , to reduce taxable income . once taxable income was reduced to zero in a given year , the remaining balance of the capital allowance pool was available for use in subsequent years . under the new rule , only 20 % of a new year 's capital spending can be added to the capital allowance pool , and one fourth of the remaining 80 % is added to the pool in each of the subsequent four years . this new rule delays the availability of capital allowances and could result in a smaller amount of available capital allowance in a given year which could result in a higher taxable income and accelerated cash taxes . 3. ring fencing : the government 's new rules disallow the use of expenditures in one mining area as a deduction from revenues in a separate mining area leased by the same company in determining the company 's taxable income . while no details have been released for the application of this new rule , the company expects this to have an immaterial impact on the calculation of tax expense in 2013. additional changes announced but not yet enacted : 4. windfall profit tax : the government of ghana has stated its intention to implement a 10 % windfall profit tax on mining companies . the government held hearings on this new development during the second and third quarters of 2012 , but has not yet finalized this new tax . 5. stability agreement renegotiations : the government has established a tax stability renegotiation team that is reviewing the existing tax stability agreements of mining companies operating in ghana . while our subsidiaries do not have tax stability agreements , it is not clear if the tax stability renegotiation team will also review our deeds of warranty which specify certain tax agreements for our properties . since its inception , gswl has not paid income tax in ghana because ghana tax law allowed a deduction for the cost of past capital investments ( capital allowances ) when gswl calculated its taxable income . during 2012 , gswl 's capital allowance pool was largely depleted and the tax law changes effective in 2012 placed new restrictions on use of capital allowances to offset taxable income . as a result , wassa incurred taxable income in 2012 for the first time , and it is expected that gswl will pay approximately $ 12 million of taxes to the government of ghana in 2013 related to gswl 's 2012 taxable income . we expect wassa will continue to generate taxable income going forward and more specifically , it is expected that gswl will make provisional tax payments on its 2013 income . recent changes in ghana mining laws the ghana minerals commission has announced changes in the regulations governing mining and exploration activities and mining operations in ghana including , among other things , health , safety and environmental standards of mining , incentives for local procurement of mining supplies and equipment , revised rules on employment of expatriate workers , compensation for land used in mining , mine inspections , mine and exploration permitting , use of explosives , mine closure and rehabilitation , stakeholder concerns , employees training , tailings storage facilities and working conditions . the ghana chamber of mines is currently engaged in discussions designed to clarify the goals , intent and application of the new regulations as they will be implemented . pending the outcome of the discussions , we are not in the position to evaluate their impact on golden star . reserves and development activities increase in wassa/hbb reserves golden star 's main exploration focus for 2012 was delineation drilling on the wassa main deposit . exploration during the first half of 2012 utilized our own drilling fleet , consisting of two multi-purpose drill rigs .
| consolidated results consolidated 2011 financial results included a net loss attributable to golden star of $ 2.1 million or 0.01 per share which was improved over a net loss attributable to golden star of $ 11.2 million or $ 0.04 per share in 2010. while the number of ounces sold was down from 2010 's level and operating costs were higher , rising gold prices during 2011 yielded an increase in revenues that exceeded the impact of lower ounces and higher operating costs . realized gold prices averaged $ 1,564 per ounce during 2011 , up 28 % from $ 1,219 per ounce in 2010. lower ore grades and less tonnes of ore processed at both bogoso and at wassa contributed to the 2011 loss , as did higher cash operating costs at both operations . consolidated 2011 cash operating costs totaled $ 319.8 million , up 18 % from $ 272.0 million in 2010. the increase in cash operating costs reflects significant increases in prices of many of our key operating inputs including the prices paid for electric 54 power , labor , cyanide , fuel , and other reagents used in processing plants . higher cash operating costs also reflect an increase in waste mining activities in 2011 as compared to 2010. see bogoso 's operational discussion below for more details on cost increases . depreciation charges in 2011 were down $ 29.1 million from 2010 due to lower ounces sold at bogoso and at wassa , and due to the decrease in depreciation and amortization expense per ounce from the increase in gold reserves at the end of 2010. gold hedging activities during 2011 resulted in a loss of $ 19.5 million , up from a $ 1.1 million loss in 2010. most of these losses were related to forward gold price contracts which lost value during the year as gold prices rose .
| 6,808 |
slp is not subject to federal and state income taxes , since all income , gains and losses are passed through to its partners . slp is , however , subject to new york city unincorporated business tax . with respect to the company 's incorporated entities , story_separator_special_tag overview we are a full-service wealth management firm focused on providing financial advisory and related family office services to ultra-high net worth individuals and institutional investors . in addition to a wide range of investment capabilities , we offer a full suite of complementary and customized family office services for families seeking a comprehensive oversight of their financial affairs . during the twelve months ended december 31 , 2017 , our assets under management grew 14.5 % from $ 18.6 billion to $ 21.3 billion . on june 30 , 2015 , we acquired $ 0.7 billion of assets under management in connection with the jamison acquisition ( as defined herein ) . the business includes the management of funds of funds , and other investment funds , collectively referred to as the “ silvercrest funds ” . silvercrest l.p. has issued restricted stock units exercisable for 486,098 class b units which entitle the holders thereof to receive distributions from silvercrest l.p. to the same extent as if the underlying class b units were outstanding . net profits and net losses of silvercrest l.p. will be allocated , and distributions from silvercrest l.p. will be made , to its current partners pro rata in accordance with their respective partnership units ( and assuming the class b units underlying all restricted stock units are outstanding ) . the historical results of operations discussed in this management 's discussion and analysis of financial condition and results of operations include those of silvercrest l.p. and its subsidiaries . as the general partner of silvercrest l.p. , we control its business and affairs and , therefore , consolidate its financial position and results with ours . the interests of the limited partners ' collective 38 % partnership interest in silvercrest l.p. as of december 31 , 2017 are reflected in non-controlling interests in our consolidated financial statements . key performance indicators when we review our performance , we focus on the indicators described below : replace_table_token_6_th ( 1 ) ebitda , a non-gaap measure of earnings , represents net income before provision for income taxes , interest income , interest expense , depreciation and amortization . we define adjusted ebitda as ebitda without giving effect to items , including but not limited to professional fees associated with acquisitions or financing transactions , gains on extinguishment of debt or other obligations related to acquisitions , losses on disposals or abandonment of assets and leaseholds , severance and other similar expenses , but including partner incentive allocations , prior to our initial public offering , as an expense . we use this non-gaap financial measure to assess the strength of our business . these adjustments and the non-gaap financial measures that are derived from them provide supplemental information to analyze our business from period to period . investors should consider these non-gaap financial measures in addition to , and not as a substitute for financial measures in accordance with gaap . see “ supplemental non-gaap financial information ” for a reconciliation of non-gaap financial measures . ( 2 ) adjusted ebitda margin , a non-gaap measure of earnings , is calculated by dividing adjusted ebitda by total revenue . ( 3 ) we have computed average assets under management by averaging assets under management at the beginning of the applicable period and assets under management at the end of the applicable period . 39 revenue we generate revenue from management and advisory fees , performance fees and family office services fees . our management and advisory fees are generated by managing assets on behalf of separate accounts and acting as investment adviser for various investment funds . our performance fees relate to assets managed in external investment strategies in which we have a revenue sharing arrangement and in funds in which we have no partnership interest . our management and advisory fees and family office services fees income is recognized through the course of the period in which these services are provided . income from performance fees is recorded at the conclusion of the contractual performance period when all contingencies are resolved . in certain arrangements , we are only entitled to receive performance fees and allocations when the return on assets under management exceeds certain benchmark returns or other performance targets . the discretionary investment management agreements for our separately managed accounts do not have a specified term . rather , each agreement may be terminated by either party at any time , unless otherwise agreed with the client , upon written notice of termination to the other party . the investment management agreements for our private funds are generally in effect from year to year , and may be terminated at the end of any year ( or , in certain cases , on the anniversary of execution of the agreement ) ( i ) by us upon 30 or 90 days ' prior written notice and ( ii ) after receiving the affirmative vote of a specified percentage of the investors in the private funds that are not affiliated with us , by the private fund on 60 or 90 days ' prior written notice . the investment management agreements for our private funds may also generally be terminated effective immediately by either party where the non-terminating party ( i ) commits a material breach of the terms subject , in certain cases , to a cure period , ( ii ) is found to have committed fraud , gross negligence or willful misconduct or ( iii ) becomes bankrupt , becomes insolvent or dissolves . each of our investment management agreements contains customary indemnification obligations from us to our clients . story_separator_special_tag these expenses may fluctuate due to a number of factors , including the following : variations in the level of total compensation expense due to , among other things , bonuses , awards of equity to our employees and partners of silvercrest l.p. , changes in our employee count and mix , and competitive factors ; and the level of management fees from funds that utilize sub-advisors will affect the amount of sub-advisory fees . 41 compensation and benefits expense our largest expense is compensation and benefits , which includes the salaries , bonuses , equity-based compensation and related benefits and payroll costs attributable to our principals and employees . our compensation methodology is intended to meet the following objectives : ( i ) support our overall business strategy ; ( ii ) attract , retain and motivate top-tier professionals within the investment management industry ; and ( iii ) align our employees ' interests with those of our equity owners . we have experienced , and expect to continue to experience , a general rise in compensation and benefits expense commensurate with growth in headcount and with the need to maintain competitive compensation levels . the components of our compensation and benefits expenses for the years ended december 31 , 2017 , 2016 and 2015 are as follows : replace_table_token_9_th ( 1 ) for the years ended december 31 , 2017 , 2016 and 2015 , $ 24,940 , $ 20,868 and $ 18,535 of partner incentive payments were included in cash compensation and benefits expense , respectively . on february 29 , 2012 , february 28 , 2011 and february 24 , 2010 , silvercrest l.p. and silvercrest gp llc , our predecessor , granted equity-based compensation awards to certain of their principals based on the fair value of the equity interests of silvercrest l.p. and silvercrest gp llc . each grant included a deferred equity unit and performance unit , subject to forfeiture and acceleration of vesting . as a result of the reorganization of silvercrest l.p. and the initial public offering , each 100 deferred equity units represent the unsecured right to receive 100 class b units of silvercrest l.p. , subject to vesting over a four-year period beginning on the first anniversary of the date of grant . each deferred equity unit , whether vested or unvested , entitles the holder to receive distributions from silvercrest l.p. as if such holder held such unit . upon each vesting date , a holder may receive the number of units vested or a combination of the equivalent cash value of some of the units and units , but in no event may the holder receive more than 50 % of the aggregate value of the vested units in cash . to the extent that holders elect to receive up to 50 % of the aggregate value of the vested units in cash , we could have less cash to utilize . we have accounted for the distributions on the portion of the deferred equity units that are subject to forfeiture as compensation expense . equity-based compensation expense has been recognized on the february 29 , 2012 grant date of the deferred equity unit and performance unit awards through february 29 , 2016. each performance unit represents the right to receive one class b unit of silvercrest l.p. for each two units of silvercrest l.p. issued upon vesting of the deferred equity units awarded to the employee , in each case subject to the achievement of defined performance goals . although performance units will only vest upon the achievement of the performance goals , they are expensed over the same vesting period as the deferred equity units with which they are associated because there is an explicit service period . during 2016 and 2015 , silvercrest l.p. granted restricted stock units ( “ rsu ” ) to existing class b unit holders , certain members of the board of directors , and a certain employee . information regarding restricted stock units can be found in note 16 . “ equity based compensation ” in the “ notes to consolidated financial statements ” in “ — item 8. financial statements and supplementary data ” of this filing . general and administrative expenses general and administrative expenses include occupancy-related costs , professional and outside services fees , office expenses , depreciation and amortization , sub-advisory fees and the costs associated with operating and maintaining our research , trading and portfolio accounting systems . our costs associated with operating and maintaining our research , trading and portfolio accounting systems and professional services expenses generally increase or decrease in relative proportion to the number of employees retained by us and the overall size and scale of our business operations . sub-advisory fees will fluctuate based on the level of management fees from funds that utilize sub-advisors . 42 other income other income is derived primarily from investment income arising from our investments in various private investment funds that were established as part of our investment strategies . we expect the investment components of other income , in the aggregate , to fluctuate based on market conditions and the success of our investment strategies . performance fees earned from those investment funds in which we have a partnership interest have been earned over the past few years as a result of the achievement of various high water marks depending on the investment fund . these performance fees are recorded based on the equity method of accounting . the majority of our performance fees over the past few years have been earned from our fixed income-related funds . non-controlling interests we are the general partner of silvercrest l.p. and control its business and affairs and , therefore , consolidate its financial results with ours . in light of the limited partners ' interest in silvercrest l.p. , we reflect their partnership interests as non-controlling interests in our consolidated financial statements . provision for income tax we are subject to taxes applicable to c-corporations .
| operating results revenue our revenues for the years ended december 31 , 2017 , 2016 and 2015 are set forth below : replace_table_token_10_th replace_table_token_11_th 43 the growth in our assets under management from january 1 , 201 5 to december 31 , 201 7 is described below : replace_table_token_12_th ( 1 ) less than 5 % of assets under management generate performance fees . 44 replace_table_token_13_th 1 returns are based upon a time weighted rate of return of various fully discretionary equity portfolios with similar investment objectives , strategies and policies and other relevant criteria managed by silvercrest asset management group llc ( “ samg llc ” ) , a subsidiary of silvercrest . performance results are gross of fees and net of commission charges . an investor 's actual return will be reduced by the advisory fees and any other expenses it may incur in the management of the investment advisory account . samg llc 's standard advisory fees are described in part 2 of its form adv . actual fees and expenses will vary depending on a variety of factors , including the size of a particular account . returns greater than one year are shown as annualized compounded returns and include gains and accrued income and reinvestment of distributions . past performance is no guarantee of future results . this report contains no recommendations to buy or sell securities or a solicitation of an offer to buy or sell securities or investment services or adopt any investment position . this report is not intended to constitute investment advice and is based upon conditions in place during the period noted . market and economic views are subject to change without notice and may be untimely when presented here . readers are advised not to infer or assume that any securities , sectors or markets described were or will be profitable .
| 6,809 |
'' this annual report provides additional information regarding the company , our services , industry outlook and forward-looking statements that involve risks and uncertainties . the forward-looking statements are not historical facts , but rather are based on current expectations , estimates , assumptions and projections about our industry , business and future financial results . our actual results could differ materially from the results contemplated by these forward-looking statements . see `` forward-looking statement information '' for further information regarding forward-looking statements . amounts presented in and throughout this item 7 are rounded and , as such , rounding differences could occur in period over period changes and percentages reported . forward-looking statement information this annual report on form 10-k and certain information incorporated herein by reference contain forward-looking statements within the meaning of section 21e of the exchange act , and section 27a of the securities act , and the private securities litigation reform act of 1995 and , as such , may involve risks and uncertainties . all statements included or incorporated by reference in this report , other than statements that are purely historical , are forward-looking statements . forward-looking statements generally can be identified by the use of forward-looking terminology such as “ may , ” “ will , ” “ expect , ” “ intend , ” “ estimate , ” “ anticipate , ” “ believe , ” “ could , ” “ potential , ” “ continue ” or similar terminology . these statements are based on the beliefs and assumptions of our management based on information currently available to management . forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements . the forward-looking statements included or incorporated by reference in this report are subject to additional risks and uncertainties further discussed under item 1a . “ risk factors ” and are based on information available to us on the filing date of this report . readers are cautioned not to place undue reliance on forward-looking statements , which speak only as of the date 32 of this report . new risks and uncertainties arise from time to time , and we can not predict those events or how they may affect us . we undertake no obligation to update any forward-looking statements , whether as a result of new information , future events or otherwise , except as required by law . in addition , forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the company 's historical experience and our present expectations or projections . these risks and uncertainties include , but are not limited to : the continued impact of covid-19 on the global economy ; our ability to submit proposals for and or win all potential opportunities in our pipeline ; our ability to retain and renew our existing contracts ; our ability to compete with other companies in our market ; security breaches and other disruptions to our information technology and operation ; our mix of cost-plus , cost- reimbursable , and firm-fixed-price contracts ; maintaining our reputation and relationship with the u.s. government ; protests of new awards ; our recent acquisitions of hhb and zenetex and their integration into our business ; economic , political and social conditions in the countries in which we conduct our businesses ; changes in u.s. or international government defense budgets ; government regulations and compliance therewith , including changes to the dod procurement process ; changes in technology ; intellectual property matters ; governmental investigations , reviews , audits and cost adjustments ; contingencies related to actual or alleged environmental contamination , claims and concerns ; delays in completion of the u.s. government 's budget ; our success in extending , deepening , and enhancing our technical capabilities ; our success in expanding our geographic footprint or broadening our customer base ; our ability to realize the full amounts reflected in our backlog ; impairment of goodwill ; misconduct of our employees , subcontractors , agents , prime contractors and business partners ; our ability to control costs ; our level of indebtedness and terms of our credit agreement ; interest rate risk ; subcontractor performance ; economic and capital markets conditions ; our ability to maintain safe work sites and equipment ; our ability to retain and recruit qualified personnel and to maintain good relationships with our workforce ; our teaming relationships with other contractors ; changes in our accounting estimates ; the adequacy of our insurance coverage ; volatility in our stock price ; changes in our tax provisions or exposure to additional income tax liabilities ; risks and uncertainties relating to the spin-off ; changes in u.s. generally accepted accounting principles ( gaap ) ; and other factors described in item 1a , “ risk factors , ” and elsewhere in this report and described from time to time in our future reports filed with the sec . overview vectrus is a leading provider of global service solutions to the u.s. government worldwide . we operate as one segment and offer facility and base operations , supply chain and logistics services , information technology mission support , and engineering and digital integration services . our primary customer is the u.s. department of defense , with a high concentration in the u.s. army . for the years ended december 31 , 2020 , 2019 and 2018 , we had total revenue of $ 1.4 billion , $ 1.4 billion and $ 1.3 billion , respectively , substantially all of which was derived from u.s. government customers . for the years ended december 31 , 2020 , 2019 and 2018 , we generated approximately 69 % , 69 % and 73 % , respectively , of our total revenue from the u.s. army . story_separator_special_tag u.s. government contracts are multi-year contracts and typically include an initial period of one year or less with annual one-year ( or less ) option periods for the remaining contract period . the number of option periods vary by contract , and there is no guarantee that an option period will be exercised by the u.s. government . the right to exercise an option period is at the sole discretion of the u.s. government . the u.s. government may also extend the term of a program by issuing extensions or bridge contracts , typically for periods of one year or less . the k-bosss contract currently is exercised through september 28 , 2021. k-bosss , our largest base operations support services contract , supports geographically-dispersed locations within the state of kuwait , including several camps and a range training complex . the k-bosss contract was re-competed as a task order under the logcap v contract vehicle , which was awarded april 12 , 2019. the k-bosss contract contributed $ 475 million and $ 495 million of revenue for the years ended december 31 , 2020 and 2019 , respectively . on december 29 , 2020 , the us army announced that vectrus systems corporation ( vsc ) , our wholly-owned subsidiary , was awarded an $ 882.5 million cost-plus-fixed-fee contract to continue operations , maintenance and defense of army communications in southwest asia and central asia ( omdac-swaca ) . work will be based in kuwait with additional locations throughout southwest asia . the estimated completion date is december 26 , 2025. the omdac-swaca contract contributed $ 198 million and $ 216 million of revenue for the years ended december 31 , 2020 and 2019 , respectively . 34 backlog total backlog includes remaining performance obligations , consisting of both funded backlog ( firm orders for which funding is contractually authorized and appropriated by the customer ) and unfunded backlog ( firm orders for which funding is not currently contractually obligated by the customer and unexercised contract options ) . total backlog excludes potential orders under idiq contracts and contracts awarded to us that are being protested by competitors with the gao or in the u.s. court of federal claims . the value of the backlog is based on anticipated revenue levels over the anticipated life of the contract . actual values may be greater or less than anticipated . total backlog is converted into revenue as work is performed . the level of order activity related to programs can be affected by the timing of government funding authorizations and their project evaluation cycles . year-over-year comparisons could , at times , be impacted by these factors , among others . our contracts are multi-year contracts and typically include an initial period of one year or less with annual one-year ( or less ) option periods for the remaining contract period . the number of option periods vary by contract , and there is no guarantee that an option period will be exercised . the right to exercise an option period is at the sole discretion of the u.s. government when we are the prime contractor or of the prime contractor when we are a subcontractor . the u.s. government may also extend the term of a program by issuing extensions of bridge contracts , typically for periods of one year or less . we expect to recognize a substantial portion of our funded backlog as revenue within the next 12 months . however , the u.s. government or the prime contractor may cancel any contract at any time through a termination for convenience . most of our contracts have terms that would permit us to recover all or a portion of our incurred costs and fees for work performed in the event of a termination for convenience . total backlog increased by $ 2.3 billion in the year ended december 31 , 2020 , which includes an increase of $ 827.4 million from the acquisitions of zenetex and hhb . as of december 31 , 2020 , total backlog ( funded and unfunded ) was $ 5.1 billion as set forth in the following table : replace_table_token_4_th funded orders ( different from funded backlog ) represent orders for which funding was received during the period . we received funded orders of $ 1.8 billion during the year ended december 31 , 2020 , which was an increase of $ 536.0 million compared to the year ended december 31 , 2019. economic opportunities , challenges and risks the u.s. government 's investment in services and capabilities in response to changing security challenges creates a complex and fluid business environment for vectrus and other firms in this market segment . the pace and depth of u.s. government acquisition reform and cost savings initiatives , combined with increased industry competitiveness to win long-term positions on key programs , could add pressure to revenue levels and profit margins going forward . however , we expect the u.s. government will continue to place a high priority on national security and will continue to invest in affordable solutions for its facilities , logistics , equipment , operational technology , and communication needs , which aligns with our services and strengths . further , the dod budget remains the largest in the world and management believes our addressable portion of the dod budget offers substantial opportunity for growth . over the past several years , u.s. defense spending has been mandated by the budget control act . the budget control act establishes spending caps over a 10-year period through 2021 , including a sequester mechanism that would impose additional defense cuts if an annual defense appropriations bill is enacted above the spending cap . the u.s. government 's fy begins on october 1 and ends on september 30. on august 2 , 2019 , the bipartisan budget act of 2019 was enacted , which increased the spending limits for both defense and non-defense discretionary funding for the u.s. government in fy 2020 and 2021 and reduced budget uncertainty associated with the budget control act .
| discussion of financial results year ended december 31 , 2020 , compared to year ended december 31 , 2019 selected financial highlights are presented in the table below : replace_table_token_5_th revenue our revenue increased by $ 13.0 million , or 0.9 % , for the year ended december 31 , 2020 compared to the year ended december 31 , 2019. the increase in revenue was attributable mainly to increases from our u.s. programs of $ 29.2 million ( which includes $ 20.7 million from our 2019 acquisition of advantor ) , and our european programs of $ 17.0 million , partially offset by a decrease from our middle east programs of $ 33.2 million . cost of revenue the increase in cost of revenue of $ 16.8 million , or 1.3 % , for the year ended december 31 , 2020 , as compared to the year ended december 31 , 2019 , was primarily due to higher revenue as described above and a contract adjustment to one of our european programs . selling , general & administrative ( sg & a ) expenses for the year ended december 31 , 2020 , sg & a expenses of $ 80.7 million increased by $ 2.4 million , or 3.0 % , as compared to the year ended december 31 , 2019. the increase was due primarily to increased merger and acquisition costs of $ 2.2 million , partially offset by decreases to other miscellaneous expenses . 36 operating income operating income for the year ended december 31 , 2020 decreased by $ 6.2 million , or 12.4 % , as compared to the year ended december 31 , 2019. this decrease was primarily due to decreases of $ 4.6 million from our middle east programs , $ 0.8 million from our u.s. programs , and $ 0.7 million from our european programs .
| 6,810 |
an impairment is deemed an otti if ( i ) we intend to sell the security , ( ii ) it is more likely than not that we will be required to sell the security before recovering our cost basis , or ( iii ) we do not expect to recover the entire amortized cost basis of the security even if we do not intend to sell the security or do not believe it is more likely than not that we will be required to sell the security before recovering our cost basis . if the impairment is deemed to be an otti , the resulting accounting treatment depends on the factors causing the otti . if the otti has resulted from ( i ) our intention to sell the security , or ( ii ) our judgment that it is more likely than not that we will be required to sell the security before recovering our cost basis , an impairment loss is recognized in earnings equal to the entire difference between our amortized cost basis and fair value . whereas , if the otti has resulted from our conclusion that we will not recover our cost basis even if we do not intend to sell the security or do story_separator_special_tag financial condition and results of operations . this “ management 's discussion and analysis of financial condition and results of operations ” of the company should be read in conjunction with item 6 , “ selected financial data , ” and our accompanying consolidated financial statements included in item 8 of this annual report on form 10 ‑k ( this “ form 10 ‑k ” ) . certain statements we make under this item 7 constitute “ forward ‑looking statements ” under the private securities litigation reform act of 1995. see “ special note regarding forward ‑looking statements ” preceding part i of this form 10 ‑k . you should consider our forward ‑looking statements in light of our consolidated financial statements and other financial information appearing elsewhere in this form 10 ‑k and our other filings with the sec . business objectives and outlook our objective is to provide attractive risk ‑adjusted returns to our investors over the long ‑term , primarily through dividends and secondarily through capital appreciation . we intend to achieve this objective by originating and acquiring target assets to create a diversified investment portfolio that is financed in a manner that is designed to deliver attractive returns across a variety of market conditions and economic cycles . we are focused on our three core competencies : transaction access , asset analysis and selection , and identification of attractive relative values within the real estate debt and equity markets . in the initial 18 months following our ipo in august 2009 , we capitalized on the dislocation in the credit markets and depressed levels of available capital by acquiring real estate debt assets from distressed sellers at historically high risk ‑adjusted returns , and to a lesser extent by originating new loans in a marketplace with lower levels of competition . as the real estate and capital markets have recovered , we have evolved from a company focused on opportunistic acquisitions to that of a full ‑service commercial real estate finance platform that is primarily focused on the origination and acquisition of real estate debt and equity investments across the capital structure , in both the u.s. and europe . with the starwood brand , market presence , and lending/asset management platform that we have developed , we are focused primarily on the following opportunities : ( 1 ) continue to expand our investment activities in subordinate cmbs and revenues from special servicing ; ( 2 ) continue to expand our market presence in the medium ‑sized commercial real estate lending market ( loans in the $ 10 million to $ 50 million range ) by leveraging our investing and servicing segment 's sourcing and credit underwriting capabilities . this will significantly expand our overall footprint in the commercial real estate debt markets ; ( 3 ) continue to expand our market presence as a leading provider of acquisition , refinance , development and expansion capital to large real estate projects ( greater than $ 75 million ) in infill locations , and other attractive market niches where our size and scale give us an advantage to provide a “ one ‑stop ” lending solution for real estate developers , owners and operators ; ( 4 ) continue to expand our capabilities in syndication and securitization , which serve as a source of attractively priced , matched ‑term financing ; and ( 5 ) expand our investment activities in targeted real estate equity investments . there can be no assurance that we will continue to find appropriate investment opportunities . 56 recent developments developments during the fourth quarter of 2015 woodstar portfolio acquisition during the fourth quarter , we acquired 18 of the 32 affordable housing communities which comprise our “ woodstar portfolio. ” the woodstar portfolio in it s entirety is comprised of 8,948 units concentrated primarily in the tampa , orlando and west palm bea ch metropolitan areas and are 98 % occupied . due to the lack of supply and resulting high demand for affordable housing product generally , coupled with the fact that these properties represent some of the highest quality low income properties in the state , we expect occupancy levels in this portfol io to remain high . the 18 affordable housing communities acquired during the fourth quarter comprise 5,238 units for an aggregate acquisition price of $ 324.0 million . financing of $ 257.6 million was utilized to fund these acquisitions which includes third party debt of $ 248.6 million and assumed state sponsored financing of $ 9.0 million . twelve of the remaining 14 properties not acquired during the fourth quarter of 2015 were acquired prior to february 25 , 2016 , with the acquisitions of the remaining two properties expected to close during the first quarter of 2016 , subject to customary closing conditions . story_separator_special_tag · repurchased 2,340,246 shares of common stock at a total cost of $ 48.7 million and $ 118.6 million par value of our 4.00 % convertible senior notes due 2019 ( the “ 2019 notes ” ) for $ 136.3 million , recognizing a loss on extinguishment of debt of $ 5.9 million . · executed various new and amended debt agreements which resulted in a net increase of $ 2.7 billion to our maximum borrowing capacity . subsequent events refer to note 25 to the consolidated financial statements for disclosure regarding significant transactions that occurred subsequent to december 31 , 2015 . story_separator_special_tag style= '' margin:0pt ; text-indent:36pt ; font-family : times new roman , times , serif ; font-size : 10pt ; '' > for the year ended december 31 , 2015 , revenues of our property segment of $ 25.4 million consisted of rental income of $ 19.2 million relating to our ireland portfolio and $ 6.2 million relating to our woodstar portfolio . costs and expenses for the year ended december 31 , 2015 , costs and expenses of our property segment of $ 36.2 million consisted of $ 9.0 million of acquisition and investment pursuit costs , of which $ 3.4 million and $ 3.2 million relate to the acquisitions of the ireland portfolio and woodstar portfolio , respectively , and $ 27.2 million of other rental related costs , including $ 15.0 million of depreciation and amortization and $ 5.6 million of interest expense on our secured financing for the ireland portfolio and the woodstar portfolio . other income for the year ended december 31 , 2015 , other income of our property segment of $ 16.7 million consisted primarily of $ 10.1 million of equity in earnings from the retail fund and a $ 7.0 million gain on foreign currency 62 contracts that economically hedge our euro currency exposure with respect to the ireland portfolio , partially offset by a $ 1.9 million loss on interest rate derivatives related to the debt financing for the ireland portfolio . for the year ended december 31 , 2014 , other income of $ 2.2 million consisted solely of equity in earnings from the retail fund . corporate for the year ended december 31 , 2015 , corporate expenses increased $ 23.5 million to $ 235.7 million , compared to $ 212.2 million for the year ended december 31 , 2014. the increase was primarily due to a $ 14.5 million increase in interest expense related to our october 2014 issuance of our 3.75 % convertible senior notes due 2017 ( the “ 2017 notes ” ) and an $ 8.1 million increase in management fees . the increase in management fees reflects the impacts of ( i ) higher levels of invested capital which resulted in an increased base management fee and ( ii ) higher levels of core earnings ( see “ non-gaap financial measures ” section below ) which resulted in an increased incentive fee . corporate other loss of $ 5.9 million for the year ended december 31 , 2015 represents a loss on the repurchase of $ 118.6 million principal amount of our 2019 notes . year ended december 31 , 2014 compared to year ended december 31 , 2013 lending segment revenues for the year ended december 31 , 2014 , revenues of our lending segment increased $ 96.3 million to $ 489.8 million , compared to $ 393.5 million for the year ended december 31 , 2013. this increase was primarily due to ( i ) an $ 85.6 million increase in interest income from loans , which reflects a $ 1.4 billion net increase in loan investments of our lending segment between december 31 , 2013 and 2014 , mainly resulting from new loan originations and ( ii ) a $ 10.5 million increase in interest income from investment securities principally related to a preferred equity investment we originated in the fourth quarter of 2013. costs and expenses for the year ended december 31 , 2014 , costs and expenses of our lending segment increased $ 9.7 million to $ 93.7 million , compared to $ 84.0 million for the year ended december 31 , 2013. the increase was primarily due to higher legal fees principally associated with the administration of our financing facilities and higher compensation expense . net interest income ( amounts in thousands ) replace_table_token_15_th for the year ended december 31 , 2014 , net interest income of our lending segment increased $ 95.2 million to $ 423.1 million compared to $ 327.9 million for the year ended december 31 , 2014. the increase primarily reflects a $ 1.4 billion net increase in investments of our lending segment between december 31 , 2013 and 2014 which was funded in part by unallocated corporate-level debt . during the year ended december 31 , 2014 , the weighted average unlevered and levered yields on the lending segment 's loans and investment securities were 8.2 % and 10.6 % , respectively . during the year ended december 31 , 2013 , the weighted average unlevered and levered yields on the lending segment 's loans and investment securities were 8.5 % and 10.6 % , respectively . the slight decrease in the weighted average unlevered yields is primarily due to a gradual tightening of interest rate spreads in credit markets during 2014. corresponding decreases in our borrowing rates resulted in weighted average levered yields remaining unchanged . 63 other income for the year ended december 31 , 2014 , other income of our lending segment decreased $ 3.7 million to $ 22.2 million , from $ 25.9 million for the year ended december 31 , 2013. this decrease was primarily due to a $ 12.2 million decrease in gain on sales of investments , partially offset by a $ 2.7 million increase in earnings from unconsolidated entities .
| results of operations the discussion below is based on gaap and therefore reflects the elimination of certain key financial statement line items related to the consolidation of vies , particularly within revenues and other income , as discussed in note 2 to the consolidated financial statements . for a discussion of our results of operations excluding the impact of asc 810 as it relates to the consolidation of vies , refer to the non ‑gaap financial measures section herein . 59 the following table compares our summarized results of operations for the years ended december 31 , 2015 , 2014 and 2013 by business segment ( amounts in thousands ) : replace_table_token_13_th ( 1 ) allocations of certain prior period costs and expenses among segments have been reclassified to a newly-established separate presentation for corporate overhead to conform to our current period presentation of both gaap and non-gaap financial measures . refer to note 23 of our consolidated financial statements for further information . year ended december 31 , 2015 compared to year ended december 31 , 2014 lending segment revenues for the year ended december 31 , 2015 , revenues of our lending segment increased $ 39.6 million to $ 529.4 million , compared to $ 489.8 million for the year ended december 31 , 2014. this increase was primarily due to an increase in interest income from loans resulting from higher average loan balances during 2015 and higher loan fee income driven by increased levels of loan prepayments during 2015 .
| 6,811 |
for a more complete description of the risks noted above and other risks that could cause our actual results to materially differ from our current expectations , please see item 1a . risk factors of this report . we assume no obligation to update or revise publicly any forward-looking statements , whether as a result of new information , future events or otherwise , unless required by law . introduction we were the eighth largest etp sponsor in the world ( based on aum ) , with aum of $ 52.4 billion globally as of december 31 , 2015. an etp is a pooled investment vehicle that holds a basket of securities , financial instruments or other assets and generally seeks to track ( index-based ) or outperform ( actively managed ) the performance of a broad or specific equity , fixed income or alternatives market segment , commodity or currency ( or an inverse or multiple thereof ) . etps are listed on an exchange with their shares traded in the secondary market at market prices , generally at approximately the same price as the net asset value of their underlying components . etp is an umbrella term that includes etfs , exchange-traded notes and exchange-traded commodities . through our operating subsidiaries , we provide investment advisory and other management services to the wisdomtree etfs and boost etps collectively offering etps covering equity , fixed income , currency , alternatives and commodity asset classes . in exchange for providing these services , we receive advisory fee revenues based on a percentage of the etps ' average daily aum . our expenses are predominantly related to selling , operating and marketing our etps . we have contracted with third parties to provide certain operational services for the etps . we distribute our etps through all major channels within the asset management industry , including brokerage firms , registered investment advisers , institutional investors , private wealth managers and discount brokers primarily through our sales force . our sales efforts are not directed towards the retail segment but rather are directed towards financial or investment advisers that act as intermediaries between the end-client and us . executive summary our u.s. listed aum , which makes up the vast majority of our global aum , has increased significantly over the last three fiscal years , from $ 18.3 billion at the end of 2012 to $ 51.6 billion at the end of 2015. the significant growth in aum was a result of record net inflows in 2013 and 2015. we experience particularly strong inflows when our products align with market sentiment . the significant inflows we experienced in 2013 were in our currency hedged japanese equity etf ( dxj ) . political and economic policy changes in japan , in particular the japanese government 's desire to implement policies that have decreased the value of the yen , drove increased investor interest in the region and in our japanese hedged equity etf . in 2015 , our currency hedged european equity etf ( hedj ) comprised the vast majority of our net inflows and offset the outflows we experienced in emerging markets as the aggressive monetary policy of the european central bank weakened the euro , potentially stimulating the equity markets . we believe our increasing inflow levels and aum are a result of our innovative product offerings and new product launches to further diversify our product offering , as well as a longer track record for the funds we launched in 2006 and 2007. our growth strategy seeks to increase our market share of etf industry inflows through continued product diversification and execution of our marketing and sales strategies . our strong operating results have translated into record financial results . our revenues increased significantly from $ 149.5 million in 2013 to $ 298.9 million in 2015 primarily due to higher aum . pre-tax income increased from $ 51.5 million in 2013 to $ 137.2 million in 2015. other business highlights for 2015 include the following : we continued to invest in strategic growth initiatives in 2015 to better position us for longer term success . we launched 17 u.s. listed etfs capitalizing on macro-investment themes and diversifying our product offerings . we invested in marketing and sales related initiatives to support our existing etfs as well as new etf launches . we added 36 new employees in the u.s. , predominantly in sales and functions supporting sales , including research and marketing . we executed on our global growth plans by establishing an office in japan , creating a new distribution relationship in israel and strengthening our existing distribution relationships in latin america , australia and new zealand . we also continued to build out our european business with the successful launch of 14 new boost etps and six new wisdomtree etfs , as well as the launch of multiple currency-hedged share classes . to further expand and diversify our product offering , in october 2015 , we announced our agreement to acquire the greenhaven family of commodity etfs , which was completed in january 2016. due to our growing scale and cash generation as a result of record net inflows , we returned approximately $ 100 million to our stockholders through our ongoing quarterly cash dividend , a special cash dividend in the fourth quarter of 2015 and stock buybacks . 31 the following charts reflect key operating and financial metrics for our business : background market environment the economic environment and markets have generally improved over the last three years ; however , the markets continue to experience volatility . the following chart reflects the annual returns of the broad based equity indexes over the last three years : source : bloomberg . as the chart reflects , the broad based equity market indexes generally have been increasing since 2012 , with the exception of emerging markets . in addition , volatility increased beginning in the second half of 2015 . story_separator_special_tag there also may be a significant cost in obtaining such etf shareholder approval . we do not need etf shareholder approval to lower our advisory fee . from time to time , we implement voluntary waivers of a portion of our advisory fee . these waivers may expire without shareholder approval needing to be obtained . in addition , we earn a fee based on daily aggregate aum of our etfs in exchange for bearing certain fund expenses not covered by our advisory fee . our etf advisory fee revenues may fluctuate based on general stock market trends , which include market value appreciation or depreciation , currency fluctuations against the u.s. dollar and level of inflows or outflows from our etfs . in addition , these revenues may fluctuate due to increased competition or a determination by the independent trustees of the wisdomtree etfs to terminate or significantly alter the funds ' investment management agreements with us . other income other income includes interest income from investing our corporate cash and fees from licensing our indexes to third parties . these revenues are immaterial to our financial results and we do not expect them to be material in the near term . components of expenses our operating expenses consist primarily of costs related to selling , operating and marketing our etfs as well as the infrastructure needed to run our business . compensation and benefits employee compensation and benefits expenses are expensed when incurred and include salaries , incentive compensation , and related benefit costs . virtually all our employees receive incentive compensation that is based on our operating results as well as their individual performance . therefore , a portion of this expense will fluctuate with our business results . in order to attract and retain qualified personnel , we must maintain competitive employee compensation and benefit plans . in normal circumstances , we expect to experience a general rise in employee compensation and benefit expenses over the long term as we grow ; however , the rate of increase should be less than the rate of increase in our revenues . also included in compensation and benefits are costs related to equity awards granted to our employees . our executive management and board of directors strongly believe that equity awards are an important part of our employees ' overall compensation package and that incentivizing our employees with equity in the company aligns the interest of our employees with that of our stockholders . we use the fair value method in recording compensation expense for equity based awards . under the fair value method , compensation expense is measured at the grant date based on the estimated fair value of the award and is recognized as an expense over the vesting period . we intend to continue to increase our headcount in 2016 to support our growth and expect our compensation and benefits expense for our u.s. based employees will be between 24 % to 28 % of u.s. listed revenues in 2016 . 34 fund management and administration fund management and administration expenses are expensed when incurred and are comprised of costs we pay third party service providers to operate our etfs . under our advisory agreement with the wisdomtree trust , the trustees have approved us and other third parties to provide essential management and administrative services to the trust and each etf in exchange for an advisory fee . the costs include : portfolio management of our etfs ( sub-advisory ) ; fund accounting and administration ; custodial services ; transfer agency ; accounting and tax services ; printing and mailing of stockholder materials ; index calculation ; distribution fees ; legal and compliance services ; exchange listing fees ; trustee fees and expenses ; preparation of regulatory reports and filings ; insurance ; certain local income taxes ; and other administrative services . we are not responsible for extraordinary expenses , taxes and certain other expenses . bny mellon acts as sub-adviser for the majority of our etfs and , prior to april 2014 , also provided fund administration , custody and accounting related services for all the wisdomtree etfs . in april 2014 , we transferred our fund administration , custody and accounting related services to state street . the fees we pay bny mellon , our other sub-advisers and state street have minimums per fund which range from $ 25,000 to $ 50,000 per year with additional fees ranging between 0.015 % and 0.18 % of average daily aum at various breakpoint levels depending on the nature of the etf . in addition , we pay certain costs based on transactions in our etfs or based on inflow levels . the fees we pay for accounting , tax , transfer agency , index calculation and exchange listing are based on the number of etfs we have . the remaining fees are based on a combination of both aum and number of funds , or as incurred . marketing and advertising marketing and advertising expenses are recorded when incurred and include the following : advertising and product promotion campaigns that are initiated to promote our existing and new etfs as well as brand awareness ; development and maintenance of our website ; and creation and preparation of marketing materials . our discretionary advertising comprises the largest portion of this expense and we expect these costs to increase in the future as we continue to execute our growth strategy and compete against other etf sponsors . in addition , we may incur expenditures in certain periods to attract inflows , the benefit of which may or may not be recognized from increases to our aum in future periods . however , due to the discretionary nature of some of these costs , they can generally be reduced if there were a decline in the markets .
| quarterly results the following tables set forth our unaudited consolidated quarterly statement of operations data , both in dollar amounts and as a percentage of total revenues , and our unaudited consolidated quarterly operating data for the quarters in 2014 and 2015. in our opinion , this unaudited information has been prepared on substantially the same basis as the consolidated financial statements appearing elsewhere in this report and includes all adjustments ( consisting of normal recurring adjustments ) necessary for a fair statement of the unaudited consolidated quarterly data . the unaudited consolidated quarterly data should be read together with the consolidated financial statements and related notes included elsewhere in this report . the results for any quarter are not necessarily indicative of results for any future period , and you should not rely on them as such . replace_table_token_16_th 45 replace_table_token_17_th 46 replace_table_token_18_th * * * as of april 15 , 2014 * * * * ucits first launched october 24 , 2014 47 liquidity and capital resources the following table summarizes key data regarding our liquidity , capital resources and use of capital to fund our operations : replace_table_token_19_th replace_table_token_20_th liquidity we consider our available liquidity to be our liquid assets less our liabilities . liquid assets consist of cash and cash equivalents , current receivables and investments . cash and cash equivalents include cash on hand and non-interest-bearing and interest-bearing deposits with financial institutions . accounts receivable primarily represents advisory fees we earn from the wisdomtree etfs which is collected by the fifth business day of the month following the month earned . investments represent debt instruments of u.s. government and agency securities . our liabilities consist primarily of payments owed to vendors and third parties in the normal course of business , accrued year end incentive compensation for employees as well as consideration owed in connection with our acquisition of boost in april 2014.
| 6,812 |
in addition , the section of this management 's discussion and analysis of financial condition and results of operations generally discusses 2020 and 2019 items and year-to-year comparisons between 2020 and 2019. discussions of 2018 items and year-to-year comparisons between 2019 and 2018 that are not included in this annual report on form 10-k can be found in “ management 's discussion and analysis of financial condition and results of operations ” in part ii item 7 of the company 's annual report on form 10-k for the fiscal year ended december 31 , 2019 , filed with the sec on march 12 , 2020. overview we are a clinical-stage immunotherapy company developing a novel class of t cell engagers that harness the power of the body 's immune system to treat patients suffering from cancer and other diseases . t cell engagers are engineered proteins that direct a patient 's own t cells to kill target cells that express specific proteins , or antigens , carried by the target cells . using our proprietary tritac platform , we are developing a pipeline of novel t cell engagers , or tritacs , initially focused on the treatment of solid tumors and hematologic malignancies . we have also nominated our first clinical candidate using our proprietary protritac platform , a prodrug version of our tritac platform , designed to expand the target space for t cell engagers and bring the tritac benefits to a broader number of patients . we currently have four tritac product candidates in clinical development . hpn424 is currently in a phase 1/2a clinical trial for the treatment of metastatic castration-resistant prostate cancer , or mcrpc . hpn536 is currently in a phase 1/2a clinical trial for the treatment of ovarian cancer and other mesothelin- , or msln- , expressing solid tumors . hpn217 is currently in a phase 1/2 clinical trial targeting b-cell maturation antigen , or bcma , for the treatment of multiple myeloma . hpn328 , a tritac product candidate targeting delta-like canonical notch ligand 3 , or dll3 , for the treatment of sclc and other dll3-expressing tumors . tritac pipeline update hpn424 : in december 2020 , we provided a clinical update on our ongoing phase 1/2a clinical trial , at the time of the data cutoff , 69 patients had been dosed across 14 cohorts at fixed doses of 1.3 to 160ng/kg and in step dosing cohorts up to 300ng/kg administered as a weekly intravenous infusion . enrolled patients had a median of 6 prior systemic therapies , and 76 % of patients had prior chemotherapy in the metastatic castration-resistant setting . ten of 44 patients ( 23 % ) with treatment start dates at least 6 months ago remained on study treatment for more than 24 weeks . at the highest fixed dose tested to date , 160ng/kg , one patient out of 7 has experienced a confirmed partial response with tumor lesion reduction of 43 % . 3 of 7 patients have had serum psa declines from baseline , one of which was a psa reduction of 50 % . hpn424 was generally well tolerated and cytokine-related adverse events have been manageable . reported grade 3 or higher adverse events have included cytokine release syndrome ( crs ) ( 10 % ) , alt increase ( 11 % ) and ast increase ( 11 % ) . crs events and transaminitis have been transient and have not resulted in treatment discontinuation . dose-limiting toxicities ( dlts ) have been observed and have not limited escalation . a maximum tolerated dose ( mtd ) has not been identified . presentation of phase 1 data and initiation of an expansion cohort is planned for the first half of 2021. interim data from this expansion cohort is anticipated by the end of 2021. hpn536 : hpn536 is a msln-targeting t cell engager , and we are currently enrolling patients in a phase 1/2a clinical trial for ovarian , pancreatic and other msln-expressing solid tumors . the study is collecting data to evaluate the safety , tolerability , pharmacokinetics and activity of hpn536 . in december 2020 , we provided a clinical update on our ongoing phase 1/2a clinical trial , at the time of the data cutoff , dosing had occurred across 9 fixed-dose cohorts of 6 to 280ng/kg and 1 step dose cohort up to 600ng/kg . tumor types treated included late-stage ovarian and pancreatic cancers and peritoneal mesothelioma . enrolled patients had a median of four prior systemic therapies , and 66 % of patients had progressive disease as best response to their most recent prior therapy . pharmacokinetic analysis shows median half-life of more than 70 hours . among the relapsed/refractory ovarian cancer patients with at least one post-baseline scan , 8 of 12 ( 67 % ) patients showed stability of target lesions . hpn536 appears to be well tolerated . one crs grade 3 occurred in the absence of dexamethasone premedication treatment . the crs resolved , and the patient continued on study with dexamethasone premedication . as of december 1 , 2020 , no dlts had been observed . initiation of an expansion cohort is anticipated in the second half of 2021 , with a presentation of phase 1 data by year end 2021 . 79 hpn217 : in april 2020 , we announced that the first patient was dosed with hpn217 in a phase 1/2 clinical trial focused on relapsed/refractory multiple myeloma , or rrmm . in december 2020 , we provided a clinical update on our ongoing phase 1/2 clinical trial , at the time of the data cutoff , r elapsed/refractory multiple myeloma patients ha d been treated across 6 single-patient fixed dose cohorts of 5 to 810µg , reflecting a more than 100-fold increase in dose in 8 months . hpn217 ha d been well-tolerated , and no dlts ha d been observed as of the december 1 , 2020 cutoff date . in january 2021 , hpn217 received orphan drug designation for the treatment of multiple myeloma . story_separator_special_tag furthermore , we expect to incur additional costs associated with operating as a public company , including significant legal , accounting , investor relations and other expenses that we did not incur as a private company . in february 2019 , we closed the ipo of our common stock , in which we issued and sold an aggregate of 5,769,201 shares of our common stock at a price of $ 14.00 per share for net proceeds of approximately $ 70.7 million ( inclusive of a partial exercise of the underwriters ' option ) , after deducting underwriting discounts , commissions and offering costs payable by us . in january 2021 , we closed a follow on public offering of 6,764,704 shares of our common stock , including 882,352 shares sold pursuant to the exercise in full by the underwriters of their overallotment option at $ 17.00 per share . the net proceeds to us were approximately $ 108.1 million , after deducting underwriting discounts and commissions and offering costs payable by us . in october and november 2020 , pursuant to our sales agreement with cantor fitzgerald , we received approximately $ 3.0 million in net proceeds from the sale of shares of our common stock . covid-19 update in december 2019 , there was an outbreak of a novel strain of coronavirus ( “ covid-19 ” ) . in march 2020 , the world health organization declared covid-19 a pandemic . the current covid-19 pandemic has presented a substantial public health and economic challenge around the world and is affecting our employees , patients , communities and business operations , as well as the u.s. economy and financial markets . the full extent to which the covid-19 pandemic will directly or indirectly impact our business , results of operations and financial condition will depend on future developments that are highly uncertain and can not be accurately predicted , including new information that may emerge concerning covid-19 , the actions taken to contain it or mitigate its impact and the economic impact on local , regional , national and international markets . o ur assessment to date continues to support that we have not experienced any material delays or significant financial impacts directly related to the pandemic other than some minor disruptions to clinical operations , including patient enrollment in some of our clinical trials . we will continue to monitor the overall impact of the covid-19 pandemic on our business , assets and operations , including our personnel , programs , expected timelines , expenses , third-party contract manufacturing , contract research organizations and clinical trials . while we are currently continuing our clinical trials we have underway in sites in the united states , the united kingdom , and europe , we expect that covid-19 precautions may directly or indirectly impact the timeline for some of our clinical trials , as a result of potential delays or difficulties in enrolling or assessing patients in our clinical trials , clinical site initiation , diversion of healthcare resources away from the conduct of clinical trials , interruption of key clinical trial activities , among other factors . while our third-party contract manufacturers continue to operate at or near normal levels and while we currently do not anticipate any interruptions to our contract manufacturers ' processes , it is possible that the pandemic and response efforts may have an impact in the future on our third-party contract manufacturers ' ability to produce quantities of our product candidates for preclinical testing and clinical trials . in addition , we rely on contract research organizations or other third parties to assist us with clinical trials , and we can not guarantee that they will continue to perform their contractual duties in a timely and satisfactory manner as a result of the pandemic . certain of our clinical trial sites have experienced , and others may experience in the future , delays in collecting , receiving and analyzing data from patients enrolled in our clinical trials for due to limited staff at such sites , limitation or suspension of on-site visits by patients , or patients ' reluctance to visit the clinical trial sites during the pandemic . we and our contract research organizations may also need to make certain adjustments to the operation of our clinical trials in an effort to ensure the monitoring and safety of patients and minimize risk to trial integrity during the pandemic and generally . we could also see an impact on our ability to interact with regulators , ethics committees or other important agencies due to limitations in regulatory authority , personnel resources or otherwise . 81 in addition , in response to the ongoing spread of covid-19 , we have established testing protocols for personnel access to our headquarter offices and laboratory , although substantially all of our employees and contractors that continue to telecommute . the effects of the covid-19 pandemic could adversely impact our business , assets , operations and clinical trials , particularly if the covid-19 pandemic continues and persists for an extended period of time . see “ risk factors—our business could be adversely affected by the effects of health epidemics , including the recent outbreak of the novel coronavirus . a covid-19 pandemic is ongoing in many parts of the world and may result in significant disruptions which could materially affect our operations , including at our headquarters in the san francisco bay area and at our clinical trial sites. ” for more information regarding the potential impact of the covid-19 pandemic on our business and operations . we continue to actively monitor this situation and the possible effects on our business and operations . collaborations with abbvie development and option agreement on november 20 , 2019 , we entered into a development and option agreement , which we refer to , as amended , as the development and option agreement , with abbvie in connection with our hpn217 program , which targets b cell maturation antigen , or bcma .
| results of operations comparison of years ended december 31 , 2020 and 2019 replace_table_token_2_th revenue collaboration and license revenue increased by $ 11.7 million , or 202 % , for the year ended december 31 , 2020 compared to the year ended december 31 , 2019. the increase was primarily due to a $ 12.1 million increase in revenue recognized related to the development and option agreement which was entered into in november 2019 , for research and development services performed , partially offset by a decrease of $ 0.4 million revenue recognized for research and development services performed under the restated collaboration agreement . research and development the following table summarizes our research and development expenses incurred during the respective periods : replace_table_token_3_th 85 research and development expenses increased by $ 11.0 million , or 26 % , in 2020 compared to 2019. the increase was primarily due to a $ 6.5 million increase in personnel-related expenses due to an increase in headcount , $ 3.8 million increase in product and clinical development expense and pharmacology services due to development of four identified product candidates , which includes conducting preclinical and clinical studies to support ongoing clinical development , a $ 1.0 million increase in consulting expenses primarily due to preparation of our hpn424 , hpn536 , hpn217 and hpn328 clinical trials , which was offset by a $ 0.3 million decrease in facility and other allocated expenses . general and administrative general and administrative expenses decreased by $ 6.2 million , or 28 % , in 2020 compared to 2019. the decrease was primarily due to a $ 8.4 million decrease in legal fees and related expenses associated with the maverick therapeutics , inc. , or maverick , litigation incurred in 2019 , offset by a $ 2.2 million increase in personnel-related expenses due to an increase in headcount .
| 6,813 |
further , a significant portion of quaker 's revenues is derived from sales to customers in the u.s. steel and automotive industries , where a number of bankruptcies have occurred during recent years and companies have experienced financial difficulties . when a bankruptcy occurs , quaker must judge the amount of proceeds , if any , that may ultimately be received through the bankruptcy or liquidation process . these matters may increase the company 's exposure , should a bankruptcy occur , and may require a write down or a disposal of certain inventory due to its estimated obsolescence or limited marketability . reserves for customers filing for bankruptcy protection are generally dependent on the company 's evaluation of likely proceeds from the bankruptcy process . large and or financially distressed customers are generally reserved for on a specific review basis , while a general reserve is maintained for other customers based on historical experience . the company 's consolidated allowance for doubtful accounts was $ 4.6 million and $ 4.3 million at december 31 , 2011 and december 31 , 2010 , respectively . further , the company recorded provisions for doubtful accounts of $ 0.9 million , $ 0.9 million and $ 1.4 million in 2011 , 2010 and 2009 , respectively . an increase of 10 % to the recorded provisions would have decreased the company 's pre-tax earnings by approximately $ 0.1 million in 2011 , 2010 and 2009 , respectively . 2. environmental and litigation reserves—accruals for environmental and litigation matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated . accrued liabilities are exclusive of claims against third parties and are not discounted . environmental costs and remediation costs are capitalized if the costs extend the life , increase the capacity or improve the safety or efficiency of the property from the date acquired or constructed , and or mitigate or prevent contamination in the future . estimates for accruals for environmental matters are based on a variety of potential technical solutions , governmental regulations and other factors , and are subject to a large range of potential costs for remediation and other actions . a considerable amount of judgment is required in determining the most likely estimate within the range of total costs , and the factors determining this judgment may vary over time . similarly , reserves for litigation and similar matters are based on a range of potential outcomes and require considerable judgment in determining the most probable outcome . if no amount within the range is considered more probable than any other amount , the company accrues the lowest amount in that range in accordance with generally accepted accounting principles . see note 22 of notes to consolidated financial statements which appears in item 8 of this report . 3. realizability of equity investments—quaker holds equity investments in various foreign companies , whereby it has the ability to influence , but not control , the operations of the entity and its future results . quaker records an impairment charge to an investment when it believes a decline in value that is other than temporary has occurred . future adverse changes in market conditions , poor operating results of underlying investments , or devaluation of foreign currencies could result in losses or an inability to recover the carrying value of the investments . these indicators may result in an impairment charge in the future . the carrying amount of the company 's equity investments at december 31 , 2011 was $ 7.9 million and comprised three investments totaling $ 6.2 million in nippon quaker chemical , ltd. ( japan ) at 50 % , $ 1.5 million in kelko quaker chemical , s.a. ( venezuela ) at 50 % and $ 0.2 million in kelko quaker chemical , s.a. ( panama ) at 50 % , respectively . see note 6 of notes to consolidated financial statements which appears in item 8 of this report . 4. tax exposures , valuation allowances and uncertain tax positions—quaker records expenses and liabilities for taxes based on estimates of amounts that will be ultimately determined to be deductible in tax returns filed in various jurisdictions . the filed tax returns are subject to audit , which often occur several years subsequent to the date of the financial statements . disputes or disagreements may arise during audits over the timing or validity of certain items or deductions , which may not be resolved for extended periods of time . quaker applies the provisions of fasb 's guidance regarding uncertain tax positions . the guidance applies to all income tax positions taken on previously filed tax returns or expected to be taken on a future tax return . the guidance prescribes a benefit recognition model with a two-step approach , a more-likely-than-not recognition criterion , and a measurement attribute that measures the position as the largest amount of tax benefit that is greater than 50 % likely of being realized upon effective settlement . the guidance further requires that the amount of interest expense and income to be recognized related to uncertain tax positions be computed by applying the applicable statutory rate of interest to the difference between the tax position recognized in accordance with the guidance , including timing differences , and the amount previously taken or expected to be taken in a tax return . quaker also records valuation allowances when necessary to reduce its deferred tax assets to the amount that is more likely than not to be realized . while quaker has considered future taxable income and employs prudent and feasible tax planning strategies in assessing the need for a valuation allowance , in the event quaker were to determine that it would be able to realize its deferred tax assets in the future in excess of its net recorded amount , an adjustment to the deferred tax asset would increase income in the period such determination was made . story_separator_special_tag comprehensive income will be required to be presented with the consolidated statement of income or as a separate financial statement immediately following the consolidated statement of income . presentation of comprehensive income will no longer be presented as part of the statement of shareholders ' equity . the guidance is effective for annual and interim fiscal periods beginning after december 15 , 2011. the company is currently evaluating the effect of this guidance . 16 the fasb updated its guidance in may 2011 regarding disclosures pertaining to assets and liabilities measured at fair value . the guidance requires quantitative measures regarding unobservable inputs for level 3 assets and liabilities to be disclosed . additionally , the guidance requires a sensitivity analysis be performed and disclosed regarding those inputs . the guidance is effective for annual and interim fiscal periods beginning after december 15 , 2011. the company is currently evaluating the effect of this guidance . liquidity and capital resources quaker 's cash and cash equivalents decreased to $ 16.9 million at december 31 , 2011 from $ 25.8 million at december 31 , 2010. the $ 8.9 million decrease was the net result of $ 19.7 million of cash provided by operating activities , $ 35.4 million of cash used in investing activities , $ 9.1 million of cash provided by financing activities and a $ 2.3 million decrease from the effect of exchange rates on cash . net cash flows provided by operating activities were $ 19.7 million in 2011 , compared to $ 37.5 million provided by operating activities in 2010. the company 's increase in net income was more than offset by increased investment in working capital . as business volumes and raw material prices continued to escalate from 2010 to 2011 , the company 's need for working capital investment correspondingly increased . net cash flows used in investing activities were $ 35.4 million in 2011 , compared to $ 41.0 million of cash used in 2010. lower payments for acquisitions in 2011 were the primary driver in the change in cash flows used in investing activities . in the fourth quarter of 2011 , the company completed its acquisition of g.w . smith & sons , inc. for approximately $ 14.5 million and , in the third quarter of 2011 , the company completed its acquisition of the remaining 60 % ownership interest in tecniquimia mexicana de c.v. for approximately $ 10.5 million . during the third quarter of 2010 , the company completed the acquisition of d.a . stuart 's u.s. aluminum hot rolling business from houghton international for $ 6.8 million and , in the fourth quarter of 2010 , the company acquired summit lubricants , inc. for $ 29.1 million , and finalized the purchase with a working capital adjustment of $ 0.7 million in 2011. these decreases were partially offset by higher investments in the company 's new york and china facilities , as well as the company 's global erp system . in addition , the receipt of the final payment in the first quarter of 2010 from the company 's insurance settlement ( discussed below ) and decreases in the company 's construction fund , related to the company 's middletown , oh expansion , also affected the investing cash flow comparisons . in the first quarter of 2007 , an inactive subsidiary of the company reached a settlement agreement and release with one of its insurance carriers for $ 20.0 million . the proceeds of the settlement are restricted and can only be used to pay claims and costs of defense associated with this subsidiary 's asbestos litigation . the payments were structured to be received over a four-year period with annual installments of $ 5.0 million , the final installment of which was received in the first quarter of 2010. during the third quarter of 2007 , the same inactive subsidiary and one of its insurance carriers entered into a claim handling and funding agreement , under which the carrier will pay 27 % of the defense and indemnity costs incurred by or on behalf of the subsidiary in connection with asbestos bodily injury claims for a minimum of five years beginning july 1 , 2007. the agreement continues until terminated and can only be terminated by either party by providing the other party with a minimum of two years prior written notice . net cash flows provided by financing activities were $ 9.1 million in 2011 , compared with $ 4.3 million provided by financing activities in 2010. the company 's second quarter 2011 offering of approximately 1.3 million shares of its common stock resulted in net cash proceeds of approximately $ 48.1 million , which was used to repay a portion of the outstanding borrowings on the company 's revolving credit line . in 2010 , the company had net borrowings , which supplemented its cash flow from operations , to fund acquisition activity and working capital requirements . during 2011 , the company recorded $ 0.1 million of excess tax benefits related to stock options exercises in capital in excess of par on its condensed consolidated balance sheet , and as a cash flow from financing activities in its condensed consolidated statement of cash flows . during 2010 , the company recorded approximately $ 2.6 million of these benefits on its consolidated balance sheet , and as a cash inflow from financing activities in its consolidated statement of cash flows , related to stock option exercises which occurred over prior years . prior to 2010 , the company 's actual taxable income in affected jurisdictions was not sufficient to recognize these benefits , while the company 's 2010 taxable income was sufficient to recognize the benefits . also , higher stock option exercise activity in the prior year and higher dividend payments affected the financing cash flow comparisons . the company 's primary credit line is a $ 175.0 million syndicated multicurrency credit agreement with bank of america , n.a .
| executive summary quaker chemical corporation is a leading global provider of process chemicals , chemical specialties , services and technical expertise to a wide range of industries – including steel , aluminum , automotive , mining , aerospace , tube and pipe , coatings and construction materials . our products , technical solutions and chemical management services ( “ cms ” ) enhance our customers ' processes , improve their product quality and lower their costs . the company 's 26 % revenue growth during 2011 as compared to 2010 was due to a 13 % increase in volumes , including acquisitions , and a 10 % increase in price and selling mix , with the remaining increase attributable to foreign exchange rate translation . while gross profit increased $ 29.9 million , or 15 % compared to 2010 , the company experienced significantly higher raw material costs during 2011 , which drove a decrease in our gross margin from 35.4 % in 2010 to 32.6 % in 2011. the company implemented price increases throughout 2011 to help restore margins , but experienced a lag effect between the rise in raw material costs and their recovery through price increases . selling , general and administrative expenses ( “ sg & a ” ) increased 18 % during 2011 primarily due to higher selling , inflationary and other costs on increased business activity , acquisition-related activity , foreign exchange rate translation , as well as investments in key growth initiatives , while overall incentive compensation costs were lower . sg & a as a percentage of sales decreased from 26 % in 2010 to 24 % in 2011. in october 2011 , the company acquired g.w . smith & sons , inc. , a leading manufacturer and distributor of high quality die casting lubricants and distributor of metalworking fluids , for approximately $ 14.5 million . in july 2011 , the company also completed its purchase of the remaining 60 % ownership interest in its mexican equity affiliate , tecniquimia mexicana , s.a. de c.v. , for approximately $ 10.5
| 6,814 |
our strategy is to do what we do bestto discover and develop unique antisense drugs . the efficiency and broad applicability of our drug discovery platform allows us to discover and develop antisense drugs to treat a wide range of diseases , including severe and rare , cardiovascular , neurologic and metabolic diseases and cancer . the efficiency of our drug discovery technology allows us to employ a unique business strategy designed to maximize the value of our drugs and technology while maintaining an effective cost structure that limits our cash needs . our flagship product , kynamro ( mipomersen sodium ) injection , is on the market in the united states for patients with homozygous familial hypercholesterolemia , or hofh . patients with hofh are at high cardiovascular risk and can not reduce their low-density lipoprotein cholesterol , or ldl-c , sufficiently with currently available lipid-lowering therapies . in january 2013 , the u.s. food and drug administration , or fda , approved the marketing application for kynamro for patients with hofh . genzyme , a sanofi company , has also obtained marketing approval in other countries , including mexico , argentina and south korea , and is pursuing marketing approval in other countries . genzyme has substantial expertise in successfully marketing drugs in the united states and internationally for severe and rare diseases and is leveraging this expertise to reach patients with hofh , who are in desperate need of new treatment options . genzyme is concentrating marketing and sales efforts on lipid specialists , and physicians who refer hofh patients to these specialists , to reach patients with hofh in the united states and other countries . to maximize the value of our drugs and technologies , we have a multifaceted partnering strategy . our partnering strategy provides us the flexibility to license each of our drugs at an optimal time to maximize the near- and long-term value for each drug . in this way , we can expand our and our partners ' pipelines with antisense drugs that we design to address significant medical needs while remaining small and focused . we form traditional partnering alliances that enable us to discover and conduct early development of new drugs , outlicense our drugs to partners , such as genzyme , and build a base of license fees , milestone payments , profit share and royalty income . we also form preferred partner transactions that provide us with a vested partner , such as astrazeneca , biogen idec , gsk and roche , early in the development of a drug . typically , the drugs we partner early in development are in therapeutic areas of high risk , like severe neurological diseases , or in areas where phase 2 results would likely not provide a significant increase in value , like cancer . these preferred partner transactions allow us to develop select drugs that could have significant commercial potential with a knowledgeable and committed partner with the financial resources to fund later-stage clinical studies and expertise to complement our own development efforts . we benefit from this strategy because it allows us to expand and broaden our drug discovery efforts to new disease targets . for example , through our broad strategic partnership with biogen idec , we are capitalizing on biogen idec 's extensive resources and expertise in neurological diseases to create a franchise of novel treatments for neurological disorders . similar to our other partnerships , with our preferred partner transactions we benefit financially from upfront payments , milestone payments , licensing fees and royalties . we also work with a consortium of smaller companies that can exploit our drugs and technology . we call these smaller companies our satellite companies . we benefit from the disease-specific expertise of our satellite company partners , who are advancing drugs in our pipeline in areas that are outside of our core focus . we also maintain our broad rna technology leadership through collaborations with satellite companies . all of these different types of relationships are part of our partnership strategy , which allow us to maximize the value of our assets , minimize the development risks of a broad pipeline of novel new drugs , and provide us with significant reliable near-term revenue . the broad applicability of our drug discovery technology and the clinical successes of the drugs in our pipeline continue to create new partnering opportunities . since january 2012 , we have initiated six new partnerships that involve antisense drugs for the treatment of neurological diseases or cancer , including four strategic alliances with biogen idec to discover and develop antisense drugs for the treatment of neurologic diseases , a strategic alliance with astrazeneca to discover and develop antisense drugs to treat cancer and a strategic alliance with roche to discover and develop antisense drugs to treat huntington 's disease . we have received more than $ 230 million in upfront payments and have the potential to earn nearly $ 6 billion in future milestone payments and licensing fees from these partnerships . in addition , we have the potential to earn nearly $ 3 billion in future milestone payments and licensing fees from our other partnered programs . we also have the potential to share in the future commercial success of our inventions and drugs resulting from our partnerships through earn out , profit sharing , or royalty arrangements . since 2007 , our partnerships have generated an aggregate of more than $ 1.1 billion in payments from upfront and licensing fees , equity purchase payments , milestone payments and research and development funding . 58 as an innovator in rna-targeting drug discovery and development , we design and execute our patent strategy to provide us with extensive protection for our drugs and our technology . with our ongoing research and development , we continue to add to our substantial patent estate . our patents not only protect our key assetsour technology and our drugsthey also form the basis for lucrative licensing and partnering arrangements . story_separator_special_tag in addition , if astrazeneca exercises its option for any drugs resulting from the research program , astrazeneca will assume global development , regulatory and commercialization responsibilities for such drug . since this agreement has multiple elements , we evaluated the deliverables in this arrangement and determined that certain deliverables , either individually or in combination , have stand-alone value . below is a list of the four separate units of accounting under our agreement : · the exclusive license we granted to astrazeneca to develop and commercialize isis-stat3 rx for the treatment of cancer ; · the development services we are performing for isis-stat3 rx ; · the exclusive license we granted to astrazeneca to develop and commercialize isis-ar rx and the research services we are performing for isis-ar rx ; and · the option to license up to three drugs under a research program and the research services we will perform for this program . we determined that the isis-stat3 rx license had stand-alone value because it is an exclusive license that gives astrazeneca the right to develop isis-stat3 rx or to sublicense its rights . in addition , isis-stat3 rx is currently in development and it is possible that astrazeneca or another third party could conduct clinical trials without assistance from us . as a result , we consider the isis-stat3 rx license and the development services for isis-stat3 rx to be separate units of accounting . we recognized the portion of the consideration allocated to the isis-stat3 rx license immediately because we delivered the license and earned the revenue . we are recognizing as revenue the amount allocated to the development services for isis-stat3 rx over the period of time we perform services . the isis-ar rx license is also an exclusive license . because of the early stage of research for isis-ar rx , we believe that our knowledge and expertise with antisense technology is essential for astrazeneca or another third party to successfully develop isis-ar rx . as a result , we concluded that the isis-ar rx license does not have stand-alone value and we combined the isis-ar rx license and related research services into one unit of accounting . we are recognizing revenue for the combined unit of accounting over the period of time we perform services . we determined that the options under the research program did not have stand-alone value because astrazeneca can not develop or commercialize drugs resulting from the research program until astrazeneca exercises the respective option or options . as a result , we considered the research options and the related research services as a combined unit of accounting . we are recognizing revenue for the combined unit of accounting over the period of our performance . we determined that the initial allocable arrangement consideration was the $ 25 million upfront payment because it was the only payment that was fixed and determinable when we entered into the agreement . in june 2013 , we increased the allocable consideration to $ 31 million when we received the $ 6 million payment . there was considerable uncertainty at the date of the agreement as to whether we would earn the milestone payments , royalty payments , payments for manufacturing clinical trial materials or payments for finished drug product . as such , we did not include those payments in the allocable consideration . we allocated the allocable consideration based on the relative besp of each unit of accounting . we engaged a third party , independent valuation expert to assist us with determining besp . we estimated the selling price of the licenses granted for isis-stat3 rx and isis-ar rx by using the relief from royalty method . under this method , we estimated the amount of income , net of taxes , for each drug . we then discounted the projected income for each license to present value . the significant inputs we used to determine the projected income of the licenses included : · estimated future product sales ; · estimated royalties on future product sales ; · contractual milestone payments ; · expenses we expect to incur ; · income taxes ; and · an appropriate discount rate . 60 we estimated the selling price of the research and development services by using our internal estimates of the cost to perform the specific services , marked up to include a reasonable profit margin , and estimates of expected cash outflows to third parties for services and supplies over the expected period that we will perform research and development . the significant inputs we used to determine the selling price of the research and development services included : · the number of internal hours we will spend performing these services ; · the estimated number and cost of studies we will perform ; · the estimated number and cost of studies that we will contract with third parties to perform ; and · the estimated cost of drug product we will use in the studies . as a result of the allocation , we recognized $ 9.3 million of the $ 25 million upfront payment for the isis-stat3 rx license in december 2012 and we recognized $ 2.2 million of the $ 6 million payment for the isis-stat3 rx license in june 2013. we are recognizing the remaining $ 19.5 million of the $ 31 million over the estimated period of our performance . assuming a constant selling price for the other elements in the arrangement , if there was an assumed ten percent increase or decrease in the estimated selling price of the isis-stat3 rx license , we determined that the revenue we would have allocated to the isis-stat3 rx license would change by approximately seven percent , or $ 750,000 , from the amount we recorded . typically , we must estimate our period of performance when the agreements we enter into do not clearly define such information .
| results of operations years ended december 31 , 2013 and december 31 , 2012 revenue total revenue for the year ended december 31 , 2013 was $ 147.3 million compared to $ 102.0 million for 2012. our revenue fluctuates based on the nature and timing of payments under agreements with our partners , including license fees , milestone-related payments and other payments . in 2013 , we earned $ 83 million in revenue from milestone and licensing payments including : · $ 26.5 million from gsk because we advanced isis-ttr rx , isis-gsk3 rx and isis-gsk4 rx in development ; · $ 25 million from genzyme when the fda approved the kynamro nda ; · $ 10 million when astrazeneca added a second development candidate , isis-ar rx , to our collaboration ; · $ 17 million from biogen idec because we advanced the phase 2 study of isis-smn rx in infants and for selecting and advancing isis-dmpk rx in development ; and · $ 3.5 million when xenon licensed xen701 . our revenue in 2013 also included $ 64 million primarily from the amortization of upfront fees and manufacturing services performed for our partners . research and development revenue under collaborative agreements research and development revenue under collaborative agreements for the year ended december 31 , 2013 was $ 144.2 million compared to $ 96.4 million for 2012. the increase in 2013 was primarily due to an increase in revenue from milestone payments we received and amortization of upfront fees .
| 6,815 |
long-lived and intangible assets – long-lived assets and certain identifiable definite life intangibles to be held and used by the company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable . the company continuously evaluates the recoverability of its long-lived assets based on estimated future cash flows and the estimated liquidation value of such long-lived assets , and provides for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the long-lived assets . if impairment exists , an adjustment is made to write the asset down to its fair value , and a loss is recorded as the difference between the carrying value and fair value . fair values are determined based on quoted market values , discounted cash flows or internal and external appraisals , as applicable . assets to be disposed of are carried at the lower of carrying value or estimated net realizable value . no impairment was recorded during the years ended december 31 , 2012 or 2011. recently enacted accounting standards – the fasb established the accounting standards codification ( “ codification ” or “ asc ” ) as the source of authoritative accounting principles recognized by the fasb to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the united states ( “ gaap ” ) . rules and interpretive releases of the securities and exchange commission ( “ sec ” ) issued under authority of federal securities laws are also sources of gaap for sec registrants . existing gaap was not intended to be changed as a result of the codification , and accordingly the change did not impact our financial statements . the asc does change the way the guidance is organized and presented . accounting standards update ( “ asu ” ) asu 's no . 2009-2 through asu no . 2013-05 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued . these updates have no current applicability to the company or their effect on the financial statements would not have been significant . cash equivalents - the company considers all highly liquid investments with an original maturity of three months or less at date of purchase to be cash equivalents . concentration of credit risk - the company maintains its cash in bank deposit accounts , which , at times , may exceed federally insured limits . the company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents . f- 8 organization expenditures – organizational expenditures are expensed as incurred for securities exchange commission ( sec ) filings , but capitalized and amortized for income tax purposes . stock based compensation – the company recognizes compensation costs to employees under asc topic no . 718 , “ compensation – stock compensation . ” under asc topic no . 718 , companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services . share based compensation arrangements include stock options , restricted share plans , performance based awards , share appreciation rights and employee share purchase plans . as such , compensation cost is measured on the date of grant at their fair value . such compensation amounts , if any , are amortized over the respective vesting periods of the option grant . equity instruments issued to other than employees are recorded on the basis of the fair value of the instruments , as required by asc topic no . 505 , “ equity based payments to non-employees . ” in general , the measurement date is when either ( a ) a performance commitment , as defined , is reached or ( b ) the earlier of ( i ) the non-employee performance is complete or ( ii ) the instruments are vested . the measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the fasb accounting standards codification . amortization - utility patents are amortized over a 17 year period . patents which are pending are not amortized . customer contacts intangible asset is being amortized over a 3 year period . accounting estimates - the preparation of financial statements in conformity with generally accepted accounting principles in the united states requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities , the disclosures of contingent assets and liabilities at the date of the financial story_separator_special_tag critical accounting policies 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 assets , liabilities , sales and expenses in the accompanying financial statements . critical accounting policies are those that require the most subjective and complex judgments , often employing the use of estimates about the effect of matters that are inherently uncertain . such critical accounting policies , including the assumptions and judgments underlying them , are disclosed in note 1 to the consolidated financial statements included in this annual report . however , we do not believe that there are any alternative methods of accounting for our operations that would have a material affect on our financial statements . recent acquisition of sumner and la mancha on december 31 , 2011 , we acquired 100 % of the outstanding capital stock of sumner & lawrence limited ( dba sumner associates , inc. ) ( `` sumner '' ) and la mancha company . we paid an aggregate of $ 350,000 for sumner and la mancha , through the issuance of an aggregate story_separator_special_tag long-lived and intangible assets – long-lived assets and certain identifiable definite life intangibles to be held and used by the company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable . the company continuously evaluates the recoverability of its long-lived assets based on estimated future cash flows and the estimated liquidation value of such long-lived assets , and provides for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the long-lived assets . if impairment exists , an adjustment is made to write the asset down to its fair value , and a loss is recorded as the difference between the carrying value and fair value . fair values are determined based on quoted market values , discounted cash flows or internal and external appraisals , as applicable . assets to be disposed of are carried at the lower of carrying value or estimated net realizable value . no impairment was recorded during the years ended december 31 , 2012 or 2011. recently enacted accounting standards – the fasb established the accounting standards codification ( “ codification ” or “ asc ” ) as the source of authoritative accounting principles recognized by the fasb to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the united states ( “ gaap ” ) . rules and interpretive releases of the securities and exchange commission ( “ sec ” ) issued under authority of federal securities laws are also sources of gaap for sec registrants . existing gaap was not intended to be changed as a result of the codification , and accordingly the change did not impact our financial statements . the asc does change the way the guidance is organized and presented . accounting standards update ( “ asu ” ) asu 's no . 2009-2 through asu no . 2013-05 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued . these updates have no current applicability to the company or their effect on the financial statements would not have been significant . cash equivalents - the company considers all highly liquid investments with an original maturity of three months or less at date of purchase to be cash equivalents . concentration of credit risk - the company maintains its cash in bank deposit accounts , which , at times , may exceed federally insured limits . the company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents . f- 8 organization expenditures – organizational expenditures are expensed as incurred for securities exchange commission ( sec ) filings , but capitalized and amortized for income tax purposes . stock based compensation – the company recognizes compensation costs to employees under asc topic no . 718 , “ compensation – stock compensation . ” under asc topic no . 718 , companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services . share based compensation arrangements include stock options , restricted share plans , performance based awards , share appreciation rights and employee share purchase plans . as such , compensation cost is measured on the date of grant at their fair value . such compensation amounts , if any , are amortized over the respective vesting periods of the option grant . equity instruments issued to other than employees are recorded on the basis of the fair value of the instruments , as required by asc topic no . 505 , “ equity based payments to non-employees . ” in general , the measurement date is when either ( a ) a performance commitment , as defined , is reached or ( b ) the earlier of ( i ) the non-employee performance is complete or ( ii ) the instruments are vested . the measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the fasb accounting standards codification . amortization - utility patents are amortized over a 17 year period . patents which are pending are not amortized . customer contacts intangible asset is being amortized over a 3 year period . accounting estimates - the preparation of financial statements in conformity with generally accepted accounting principles in the united states requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities , the disclosures of contingent assets and liabilities at the date of the financial story_separator_special_tag critical accounting policies 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 assets , liabilities , sales and expenses in the accompanying financial statements . critical accounting policies are those that require the most subjective and complex judgments , often employing the use of estimates about the effect of matters that are inherently uncertain . such critical accounting policies , including the assumptions and judgments underlying them , are disclosed in note 1 to the consolidated financial statements included in this annual report . however , we do not believe that there are any alternative methods of accounting for our operations that would have a material affect on our financial statements . recent acquisition of sumner and la mancha on december 31 , 2011 , we acquired 100 % of the outstanding capital stock of sumner & lawrence limited ( dba sumner associates , inc. ) ( `` sumner '' ) and la mancha company . we paid an aggregate of $ 350,000 for sumner and la mancha , through the issuance of an aggregate
| results of operations year ended december 31 , 2012 compared to the year ended december 31 , 2011 we expect to generate revenues primarily by marketing and deploying our technology solutions to businesses that seek to improve their production processes and or manipulate and improve the most functional characteristics of the materials and other input components used in their business operations . during the fiscal year ended december 31 , 2011 , b6 sigma generated $ 797,354 in revenues , as compared to $ 986,499 in revenues that were generated by b6 sigma and sumner during the fiscal year ended december 31 , 2012 ( `` fiscal 2012 '' ) . the revenues we generated during fiscal 2011 and fiscal 2012 were primarily generated from engineering consulting services we provided to third parties during these periods . in fiscal 2011 , b6 sigma generated $ 797,354 in revenues from consulting contracts . specifically , we generated : · $ 30,149 in revenues in connection with consulting contracts with honeywell international , inc. concerning the application of our ipqa technology to the development of next-generation manufacturing technology of aero-engine components ; · $ 421,087 in revenues in connection with a consulting contract with the us air force concerning the application of our ipqa technology to additive manufacturing using aero-frame materials ; · $ 77,050 in revenues with respect to a consulting contract with the us navy concerning the application of our ipqa technology to additive manufacturing for aero-frame components ; · $ 9,196 in revenues in connection with a consulting agreement with alcoa , inc. concerning the application of our ipqa technology to the development of next-generation joining technology for oil and gas materials ; · $ 99,487 in revenues in connection with a contract with aerojet , a gencorp inc. ( nyse : gy ) company to supply reactive materials for development testing of munition case liners for the us army ; · $
| 6,816 |
a company 's internal control over financial reporting includes those policies and procedures that ( 1 ) pertain to the maintenance of records that , in reasonable detail , accurately and fairly reflect the transactions and dispositions of the assets of the company ; ( 2 ) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles , and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company ; and ( 3 ) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition , use , or disposition of the company 's assets that could have a material effect on the financial statements . f-3 because of its inherent limitations story_separator_special_tag overview during 2020 , the company reported net income of $ 262.0 million , or $ 3.77 per diluted share , compared with $ 161.4 million , or $ 2.75 per diluted share , in 2019. the company 's net income as a percentage of average assets for 2020 and 2019 was 1.36 % and 1.10 % , respectively , while the company 's net income as a percentage of average shareholders ' equity was 10.35 % and 8.19 % , respectively . reported net income for the year ended december 31 , 2019 includes $ 73.1 million in merger and conversion charges , primarily related to the acquisition of fidelity . highlights of the company 's performance in 2020 include the following : growth in adjusted net earnings 1 of $ 77.6 million , representing a 34.8 % increase over 2019 organic growth in loans of $ 1.66 billion , or 13.0 % ( and $ 834.8 million , or 6.5 % exclusive of ppp loans ) adjusted return on average assets 1 of 1.56 % , compared with 1.52 % in 2019 adjusted return on average tangible common equity 1 of 19.77 % , compared with 18.74 % in 2019 net interest margin of 3.70 % during 2020 , down 18 basis points from 2019 amid challenging interest rate environment growth in tangible book value per share 1 of 13.8 % , from $ 20.81 at the end of 2019 to $ 23.69 at the end of 2020 improvement in deposit mix with noninterest bearing deposits representing 36.3 % of total deposits at the end of 2020 increase in total revenue of 54.2 % to $ 1.08 billion annualized net charge-offs of 0.31 % of average total loans continued management of nonperforming assets , down 8 basis points to 0.48 % of total assets compared with 2019 1 a reconciliation of non-gaap financial measures can be found in following table . 32 adjusted net income reconciliation year ended december 31 , ( dollars in thousands except per share data ) 2020 2019 net income available to common shareholders $ 261,988 $ 161,441 adjustment items : merger and conversion charges 1,391 73,105 restructuring charge 1,513 245 servicing right impairment 40,067 507 expenses related to sec and doj investigation 3,058 463 natural disaster and pandemic expenses ( note 1 ) 3,296 ( 39 ) gain on boli proceeds ( 948 ) ( 3,583 ) loss on sale of premises 624 6,021 tax effect of adjustment items ( note 2 ) ( 10,488 ) ( 16,065 ) after-tax adjustment items 38,513 60,654 tax expense attributable to merger related compensation and acquired boli — 849 adjusted net income $ 300,501 $ 222,944 average assets $ 19,240,493 $ 14,621,185 reported return on average assets 1.36 % 1.10 % adjusted return on average assets 1.56 % 1.52 % average common equity $ 2,531,419 $ 1,970,780 average tangible common equity $ 1,520,303 $ 1,189,493 reported return on average common equity 10.35 % 8.19 % adjusted return on average tangible common equity 19.77 % 18.74 % total shareholders ' equity $ 2,647,088 $ 2,469,582 less : goodwill 928,005 931,637 other intangibles , net 71,974 91,586 total tangible shareholders ' equity $ 1,647,109 $ 1,446,359 period end number of shares 69,541,481 69,503,833 book value per share $ 38.06 $ 35.53 tangible book value per share $ 23.69 $ 20.81 note 1 : pandemic charges include `` thank you '' pay for certain employees , additional sanitizing expenses at our locations , protective equipment for our employees and branch locations , and additional equipment required to support our remote workforce . note 2 : a portion of the merger and conversion charges for both periods are nondeductible for tax purposes . critical accounting policies and estimates ameris has established certain accounting and financial reporting policies to govern the application of accounting principles generally accepted in the united states of america ( “ gaap ” ) in the preparation of its financial statements . our significant accounting policies are described in note 1 to the consolidated financial statements . 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 these 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 . because of the nature of the judgments and assumptions made by management , actual results could differ from the judgments and estimates adopted by management which could have a material impact on the carrying values of assets and liabilities and the results of our operations . we believe the following accounting policies applied by ameris represent critical accounting policies . allowance for credit losses we believe the allowance for credit losses ( `` acl '' ) is a critical accounting policy that requires significant judgments and estimates used in the preparation of our consolidated financial statements . the acl is a valuation allowance estimated at each 33 balance sheet date in accordance with gaap that is deducted from financial assets measured at amortized cost to present the net amount expected to be collected on those assets . story_separator_special_tag in the event of an impairment , the amount by which the carrying amount exceeds the fair value is charged to earnings . the company performs its annual impairment testing of goodwill in the fourth quarter of each year . intangible assets include core deposit premiums from various past bank acquisitions as well as intangible assets recorded in connection with the uspf acquisition for insurance agent relationships , the `` us premium finance '' trade name and a non-compete agreement . core deposit premiums acquired in various past bank acquisitions are based on the established value of acquired customer deposits . the core deposit premium is initially recognized based on a valuation performed as of the acquisition date and is amortized over an estimated useful life of seven to ten years . the insurance agent relationships , the `` us premium finance '' trade name and non-compete agreement intangible assets acquired in the uspf acquisition are based on the established values as of the acquisition date and are being amortized over estimated useful lives of eight years , seven years and three years , respectively . the valuation of intangible assets involves significant forward looking assumptions such as economic conditions , market interest rates , asset growth rates , credit losses , etc . changes in any of these assumptions could materially affect the valuation of the intangible assets . amortization periods for intangible assets are reviewed annually in connection with the annual impairment testing of goodwill . servicing assets we sell residential mortgage and sba loans with servicing retained . we have also assumed servicing of loans sold with servicing retained , primarily indirect automobile loan pools , in prior acquisitions . when the contractual servicing fees on loans sold with servicing retained are expected to be more than adequate compensation to a servicer for performing the servicing , a capitalized servicing asset is recognized . servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into non-interest income in proportion to , and over the period of , the estimated future net servicing income of the underlying loans . management makes certain estimates and assumptions related to costs to service varying types of loans and pools of loans , the projected lives of loans and pools of loans sold , and discount factors used in calculating the present values of servicing fees projected to be received . no less frequently than quarterly for mortgage servicing rights and semi-annually for all other servicing rights , management reviews the status of all loans and pools of loans sold with related capitalized servicing assets to determine if there is any impairment to those assets due to such factors as earlier than estimated repayments or significant prepayments . any impairment identified in these assets will result in reductions in their carrying values through a valuation allowance and a corresponding increase in operating expenses . net income and earnings per share the company 's net income during 2020 was $ 262.0 million , or $ 3.77 per diluted share , compared with $ 161.4 million , or $ 2.75 per diluted share , in 2019 , and $ 121.0 million , or $ 2.80 per diluted share , in 2018. for the fourth quarter of 2020 , the company recorded net income of $ 94.3 million , or $ 1.36 per diluted share , compared with $ 61.2 million , or $ 0.88 per diluted share , for the quarter ended december 31 , 2019 , and $ 43.5 million , or $ 0.91 per diluted share , for the quarter ended december 31 , 2018 . 35 earning assets and liabilities average earning assets were approximately $ 17.37 billion in 2020 , compared with approximately $ 13.13 billion in 2019. the earning asset and interest-bearing liability mix is regularly monitored to maximize the net interest margin and , therefore , increase return on assets and shareholders ' equity . the following statistical information should be read in conjunction with the remainder of “ management 's discussion and analysis of financial condition and results of operation ” and the consolidated financial statements and related notes included elsewhere in this annual report and in the documents incorporated herein by reference . the following tables set forth the amount of average balance , interest income or interest expense , and average interest rate for each category of interest-earning assets and interest-bearing liabilities , net interest spread and net interest margin on average interest-earning assets . federally tax-exempt income is presented on a taxable-equivalent basis assuming a 21 % federal tax rate . replace_table_token_5_th 36 story_separator_special_tag and $ 28.8 million , or 0.34 % , at december 31 , 2019 and 2018 , respectively . the increase in the allowance for credit losses on loans as a percentage of loans compared with december 31 , 2019 was primarily attributable to the adoption impact of cecl which increased the allowance for credit losses on loans $ 78.7 million and the provision recorded during 2020. the company 's provision for unfunded commitments during 2020 amounted to $ 19.1 million , compared with no such provision for 2019 and 2018. subsequent to the adoption of cecl , the allowance for unfunded commitments on off-balance sheet credit exposures is estimated by loan segment at each balance sheet date under the current expected credit loss model using the same methodologies as portfolio loans , taking into consideration the likelihood that funding will occur as well as any third-party guarantees . the company recorded provision for other credit losses during 2020 totaling $ 830,000 , compared with no such provision for 2019 and 2018 . 38 noninterest income following is a comparison of noninterest income for 2020 , 2019 and 2018. replace_table_token_7_th 2020 compared with 2019. total noninterest income in 2020 was $ 446.5 million , compared with $ 198.1 million in 2019 , reflecting an increase of 125.4 % , or $ 248.4 million .
| results of operations net interest income net interest income represents the amount by which interest income on interest-earning assets exceeds interest expense incurred on interest-bearing liabilities . net interest income is the largest component of our income and is affected by the interest rate environment and the volume and composition of interest-earning assets and interest-bearing liabilities . our interest-earning assets include loans , investment securities , other investments , interest-bearing deposits in banks , federal funds sold and time deposits in other banks . our interest-bearing liabilities include deposits , securities sold under agreements to repurchase , other borrowings and subordinated deferrable interest debentures . 2020 compared with 2019. for the year ended december 31 , 2020 , interest income was $ 726.5 million , an increase of $ 90.1 million , or 14.2 % , compared with the same period in 2019. average earning assets increased $ 4.24 billion , or 32.3 % , to $ 17.37 billion for the year ended december 31 , 2020 , compared with $ 13.13 billion for 2019. yield on average earning assets on a taxable equivalent basis decreased during 2020 to 4.21 % , compared with 4.88 % for the year ended december 31 , 2019. average yields on all interest-earning asset categories decreased from 2019 to 2020 as market interest rates declined . interest expense on deposits and other borrowings for the year ended december 31 , 2020 was $ 88.8 million , a decrease of $ 42.5 million , or 32.4 % , compared with $ 131.2 million for the year ended december 31 , 2019. during 2020 average interest-bearing liabilities were $ 11.25 billion as compared with $ 9.13 billion for 2019 , an increase of $ 2.12 billion , or 23.2 % .
| 6,817 |
5. prepaid expenses and story_separator_special_tag summary we are a global design , marketing and distribution company that specializes in consumer fashion accessories . our principal offerings include an extensive line of men 's and women 's fashion watches and jewelry , handbags , small leather goods , belts , sunglasses , soft accessories and clothing . in the watch and jewelry product categories , we have a diverse portfolio of globally recognized owned and licensed brand names under which our products are marketed . our products are distributed globally through various distribution channels including wholesale in countries where we have a physical presence , direct to the consumer through our retail stores and commercial websites and through third-party distributors in countries where we do not maintain a physical presence . our products are offered at varying price points to meet the needs of our customers , whether they are value-conscious or luxury oriented . based on our extensive range of accessory products , brands , distribution channels and price points , we are able to target style-conscious consumers across a wide age spectrum on a global basis . domestically , we sell our products through a diversified distribution network that includes department stores , specialty retail locations , specialty watch and jewelry stores , company-owned retail and outlet stores , mass market stores and through our fossil website . our wholesale customer base includes , among others , dillard 's , jcpenney , kohl 's , macy 's , neiman marcus , nordstrom , saks fifth avenue , target and wal-mart . in the united states , our network of company-owned stores included 123 retail stores located in premier retail sites and 119 outlet stores located in major outlet malls as of december 28 , 2013. in addition , we offer an extensive collection of our fossil brand products on our website , www.fossil.com , as well as proprietary and licensed watch and jewelry brands through other managed and affiliated websites . internationally , our products are sold to department stores , specialty retail stores and specialty watch and jewelry stores in approximately 150 countries worldwide through 25 company-owned foreign sales subsidiaries and through a network of over 60 independent distributors . internationally , our network of company-owned stores included 214 retail stores and 87 outlet stores as of december 28 , 2013. our products are also sold through licensed and franchised fossil retail stores , retail concessions operated by us and kiosks in certain international markets . in addition , we offer an extensive collection of our fossil brand products on our websites in certain countries . our consolidated gross profit margin is impacted by our diversified business model that includes but is not limited to : ( i ) a significant number of product categories we distribute , ( ii ) the multiple brands we offer within several product categories , ( iii ) the geographical presence of our businesses , and ( iv ) the different distribution channels we sell to or through . the components of this diversified business model produce varying ranges of gross profit margin . generally , on a historical basis , our fashion branded watch , jewelry and sunglass offerings produce higher gross profit margins than our leather goods offerings . in addition , in most product categories that we offer , brands with higher retail price points generally produce higher gross profit margins compared to those of lower retail priced brands . from a segment standpoint , our direct to consumer business generally produces the highest gross profit margin as a result of these sales being direct to the ultimate consumer . gross profit margins related to sales in our international wholesale segments are historically lower than our direct to consumer segment , but historically higher than our north america wholesale segment primarily due to the following factors : ( i ) premiums charged in comparison to retail prices on products sold in the u.s. ; ( ii ) the product sales mix in our international wholesale segments , in comparison to our north america wholesale segment , are comprised more predominantly of watches and jewelry that generally produce higher gross profit margins than leather goods ; ( iii ) the watch sales mix in our international wholesale segments , in comparison to our north america wholesale segment , are comprised more 43 predominantly of higher priced licensed brands ; and ( iv ) concessions sales in our asia pacific wholesale segment where we capture the full retail price . our business is subject to the risks inherent in global sourcing supply . certain key components in our products come from limited sources of supply , which exposes us to potential supply shortages that could disrupt the manufacture and sale of our products . any interruption or delay in the supply of key components could significantly harm our ability to meet scheduled product deliveries to our customers and cause us to lose sales . interruptions or delays in supply may be caused by a number of factors that are outside of our and our contractor manufacturers ' control . this discussion should be read in conjunction with our consolidated financial statements and the related notes included therewith . critical accounting policies and estimates the preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the united states of america requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period . on an ongoing basis , we evaluate our estimates and judgments , including those related to product returns , bad debt , inventories , long-lived asset impairment , impairment of goodwill and trade names , income taxes , warranty costs , hedge accounting , litigation reserves and stock-based compensation . we base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances . story_separator_special_tag we evaluate trade names by comparing the fair value of the asset to its recorded value annually as of the end of the fiscal year and whenever events or conditions indicate that the carrying value of the trade name may not be recoverable . the fair value of the asset is estimated using discounted cash flow methodologies . the michele trade name represented approximately 22 % of our total trade name balances at the end of fiscal years 2013 and 2012 , and 98 % of our total trade name balances at the end of fiscal year 2011. the skagen trade name represented approximately 77 % of our total trade name balance at the end of fiscal years 2013 and 2012. we performed the required annual impairment test and recorded no impairment charges in fiscal years 2013 , 2012 and 2011. as of december 28 , 2013 , the fair values of the michele and skagen trade names both exceeded their carrying values by over 25 % . due to the inherent uncertainties involved in making the estimates and assumptions used in the fair value analysis , actual results may differ which could alter the fair value of the trade names and possibly cause impairment charges to occur in future periods . 45 income taxes . we record valuation allowances against our deferred tax assets , when necessary , in accordance with asc 740 , income taxes ( `` asc 740 '' ) . realization of deferred tax assets ( such as net operating loss carryforwards ) is dependent on future taxable earnings and is therefore uncertain . at least quarterly , we assess the likelihood that our deferred tax asset balance will be recovered from future taxable income . to the extent we believe that recovery is not likely , we establish a valuation allowance against our deferred tax asset , increasing our income tax expense in the period such determination is made . in addition , we have not recorded u.s. income tax expense for foreign earnings that we have determined to be indefinitely reinvested outside the u.s. on an interim basis , we estimate what our effective tax rate will be for the full fiscal year . the estimated annual effective tax rate is then applied to the year-to-date pre-tax income excluding unusual or infrequently occurring items , to determine the year-to-date tax expense . the income tax effects of infrequent or unusual items are recognized in the interim period in which they occur . as the fiscal year progresses , we continually refine our estimate based upon actual events and earnings by jurisdiction during the year . this continual estimation process periodically results in a change to our expected effective tax rate for the fiscal year . when this occurs , we adjust the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision equals the expected annual rate excluding the impact of infrequent or unusual items . our continuing practice is to recognize interest and penalties related to income tax matters in income tax expense . as required under applicable accounting rules , we accrue an amount for our estimate of additional income tax liability which we believe we are more likely than not to incur as a result of the ultimate resolution of tax audits ( `` uncertain tax positions '' ) . we review and update the estimates used in the accrual for uncertain tax positions as more definitive information becomes available from taxing authorities , upon completion of tax audits , upon expiration of statutes of limitation , or upon occurrence of other events . the results of operations and financial position for future periods could be impacted by changes in assumptions or resolutions of tax audits . warranty costs . our fossil watch products sold in the u.s. are covered by a limited warranty against defects in materials or workmanship for a period of 11 years from the date of purchase . relic watch products sold in the u.s. are covered by a comparable 12 year limited warranty , while all other watch brands sold in the u.s. are covered by a comparable two year limited warranty . skagen branded watches are covered by a lifetime warranty against defects due to faulty material or workmanship , subject to normal conditions of use . generally , all of our watch products sold in canada , europe and asia are covered by a comparable two year limited warranty . we determine our warranty liability using historical warranty repair experience . as changes occur in sales volumes and warranty experience , the warranty accrual is adjusted as necessary . the year end warranty liability for fiscal years 2013 , 2012 and 2011 was $ 15.7 million , $ 13.4 million and $ 11.0 million , respectively . hedge accounting . we operate in foreign countries , which exposes us to market risk associated with foreign currency exchange rate fluctuations . we have entered into certain foreign currency forward contracts ( `` forward contracts '' ) to hedge the risk of foreign currency rate fluctuations . our objective is to hedge the variability in forecasted cash flows due to the foreign currency risks primarily associated with certain anticipated inventory purchases . changes in the fair value of forward contracts designated as cash flow hedges are recorded as a component of accumulated other comprehensive income within stockholders ' equity , and are recognized in other income ( expense ) -net in the period which approximates the time the hedged inventory is sold . also , the company has entered into an interest rate swap agreement to effectively convert a portion of variable rate debt obligations from a floating rate to a fixed rate . changes in the fair value of the interest rate swap are recorded as a component of accumulated other comprehensive income within stockholders ' equity , and are recognized in interest expense in the period in which the payment is settled .
| executive summary during fiscal year 2013 , sales rose 14 % representing growth across each of our geographic regions as compared to fiscal year 2012. each of our core businesses contributed to the growth , with our fossil and skagen lifestyle brands increasing 7 % and 41 % , respectively , and our global watch portfolio rising 17 % . our fossil brand growth was led by the continued strength of watches combined with favorable responses to our new jewelry line , while leathers experienced only a slight increase . our acquisition of skagen designs on april 2 , 2012 contributed $ 29.1 million towards overall sales in fiscal 2013 prior to anniversarying . the skagen brand continued to benefit from integration into our global network , with stronger overall sales and expanded distribution through new doors in europe , asia and north america . our direct to consumer business grew during fiscal year 2013 as we expanded our owned store base globally . fiscal 2013 global comps in our owned retail stores were relatively flat , driven by the challenging retail environment in the u.s. , which offset increases in our international stores highlighted by improved store productivity in europe . even though we experienced lower traffic in our u.s. full price stores , conversion rates were up showing the strength of our assortment . our retail store expansion continued with an emphasis on outlets , where we introduced `` made for '' product as we looked to present a consistent brand image across channels . building on our sales growth , gross margins and operating margins also expanded .
| 6,818 |
our expertise , global reach , market insight and trusted brand provide us with a unique and leading position in the used equipment market . we primarily sell equipment for our customers through unreserved auctions held on a worldwide basis . in addition , during 2013 we launched equipmentone , an online used equipment marketplace , to reach a broader customer base . these two complementary exchange solutions provide different value propositions to equipment owners and allow us to meet the needs and preferences of a wide spectrum of equipment sellers . ritchie bros. focuses on the sale of heavy machinery . through our unreserved auctions and online marketplaces , we sell a broad range of used and unused industrial assets , including equipment and other assets used in the construction , agricultural , transportation , energy , mining , forestry , material handling and marine industries . the majority of the assets sold through our sales channels represent construction machinery . we operate from 44 permanent and regional auction sites in over 15 countries worldwide . our world headquarters are located in burnaby , canada . on november 4 , 2015 , we acquired a 75 % interest in xcira llc ( “ xcira ” ) , a florida-based company specializing in software and technology solutions related to online auction bidding and sales . ritchie bros. was one of xcira 's first customers , and has worked very closely with xcira over the past 14 years to customize xcira 's solutions to meet our needs . xcira primarily operates in the industrial auction space , but also offers solutions to auto , art , and other luxury item auctioneers . overview the following discussion and analysis summarizes significant factors affecting our consolidated operating results and financial condition for the years ended december 31 , 2015 , 2014 , and 2013. this discussion and analysis should be read in conjunction with the “ cautionary note regarding forward-looking statements ” , “ item 6. selected financial data ” , and the consolidated financial statements and the notes thereto included in “ item 8. financial statements and supplementary data ” presented in our annual report on form 10-k , which is available on our website at www.rbauction.com , on edgar at www.sec.gov , or on sedar at www.sedar.com . none of the information on our website , edgar , or sedar is incorporated by reference into this document by this or any other reference . this discussion and analysis contains forward-looking statements that involve risks and uncertainties . our actual results could differ materially from those expressed or implied in any forward-looking statements as a result of various factors , including those set forth under “ part i , item 1a . risk factors ” in our annual report on form 10-k. the date of this discussion is as of february 25 , 2016. we prepare our consolidated financial statements in accordance with united states generally accepted accounting principles ( “ us gaap ” ) . except for gross auction proceeds ( “ gap ” ) , which is a measure of operational performance and not a measure of financial performance , liquidity , or revenue , the amounts discussed below are based on our consolidated financial statements and are presented in united states ( “ u.s. ” ) dollars . unless indicated otherwise , all tabular dollar amounts , including related footnotes , presented below are expressed in thousands of dollars . we make reference to various non-gaap performance measures throughout this discussion and analysis . these measures do not have a standardized meaning , and are therefore unlikely to be comparable to similar measures presented by other companies . ritchie bros. 35 consolidated highlights 2015 highlights key fiscal year 2015 financial results include : · record annual gap grew 1 % over fiscal 2014 , with 8 % growth calculated in local currencies · revenues grew 7 % over fiscal 2014 and revenue rate ( as described below ) increased 72 basis points to 12.14 % primarily through disciplined execution of underwritten commission contracts · operating margin of 33.9 % increased 730 basis points reflecting increases in revenue rate , controlled operating costs and a gain on disposal of excess property · we achieved diluted earnings per share ( “ eps ” ) attributable to stockholders of $ 1.27 , an increase of 49 % over 2014 , and diluted adjusted eps attributable to stockholders ( as defined below ) of $ 1.13 , 22 % higher than 2014 · net cash flows provided by operating activities was $ 196.4 million · we returned $ 111.8 million to stockholders through dividends and share repurchases strategy the following discussion highlights how we acted on the three main drivers to our strategy during 2015. grow revenues and net income our revenues are comprised of : · commissions earned at our auctions where we act as an agent for consignors of equipment and other assets , as well as online marketplace sales ; and · fees that include administrative and documentation fees on the sale of certain lots , advertising fees , financing fees , and technology service fees . commissions from sales at our auctions represent the percentage we earn on gap . gap represents the total proceeds from all items sold at our auctions and the gross transaction value ( “ gtv ” ) of all items sold through our online marketplaces 1 . gtv represents total proceeds from all items sold at our online marketplaces , as well as a buyers ' premium component applicable only to our online marketplace transactions . the majority of commissions are earned as a pre-negotiated fixed rate of the gross selling price . other commissions are earned from underwritten commission contracts , when we guarantee a certain level of proceeds to a consignor or purchase inventory to be sold at auction . we believe that revenues are best understood by considering their relationship to gap . story_separator_special_tag ritchie bros. 37 optimize our balance sheet in march 2015 , we repurchased 1.9 million of our common shares at a total cost of $ 47.5 million in order to address option dilution consistent with our capital allocation priorities . we have made an application with the toronto stock exchange ( “ tsx ” ) to renew our normal course issuer bid ( “ ncib ” ) upon expiry of our existing ncib on march 2 , 2016. this renewal will , subject to tsx acceptance , provide us with the ability to continue pursuing share repurchases through both the new york stock exchange ( “ nyse ” ) and the tsx . we intend to continue using our share repurchase program primarily to neutralize dilution from options . full details of the new ncib will be announced upon tsx acceptance . also during 2015 we paid dividends of $ 64.3 million to our stockholders and , on august 5 , 2015 , we announced a dividend increase of 14 % . in total we returned $ 111.8 million to our stockholders as we executed on our capital allocation strategy during 2015. we also managed our net capital spending such that it remains well below our target of 10 % of our revenues on a rolling 12-month basis . annual review of the used equipment market the used equipment market was stable throughout 2015 ; however , pricing in the second , third , and fourth quarters of 2015 remained lower than the used equipment valuation peak that occurred in the first quarter of 2015. some asset classes performed significantly better than others , such as forestry equipment , which held equipment values well . construction equipment valuations varied depending on the asset . comparatively , oil and gas specific assets and assets tied to commodities , such as mining assets , faced some price deterioration . overall , we continued to see an improvement in the overall age of equipment coming to market relative to recent years ; a trend that we believe results from the increase in original equipment manufacturer production that began in 2010 and is generating more transactions in the current used equipment marketplace , as well as creating larger pools of used equipment for future transactions . we continue to closely monitor new equipment production models , dealer and rental sales performance , and pricing actions in light of pressures in the broader industrial equipment sector . in terms of equipment values , canada and the united states were our strongest geographical regions in 2015 , responding most favorably to changes in their overall economic environments , including , but not limited to , softening of the oil and gas industries , and strengthening in the residential and non-residential construction sectors . ritchie bros. 38 story_separator_special_tag style= '' font : 10pt times new roman , times , serif ; margin : 0pt 0 '' > our fee income earned in 2014 was 2.42 % of gap compared to 2.44 % of gap in 2013. the decrease was primarily due to the mix of equipment sold at our auctions , partially offset by an increase in financing fees resulting from the improved performance of our value-added services . financing fees from rbfs increased 68 % to $ 7.4 million in 2014 from $ 4.4 million in 2013. revenue grew in canada in 2014 compared to 2013 , primarily as a result of an increase in gap in that region . 2014 revenues would have been $ 12.7 million higher , resulting in a 6 % increase over 2013 , if foreign exchange rates had remained consistent with those in the same period in 2013. ritchie bros. 41 direct expense rate our direct expense rate was 1.32 % , 1.37 % , and 1.41 % in 2015 , 2014 , and 2013 , respectively . this continual decrease is primarily due to an increase in the number of auctions held at our permanent and regional auction sites each year , which typically have lower direct expense rates . also contributing to the decrease in the direct expense rate is the increase in gtv from equipmentone , for which there are no corresponding direct expenses . although the number of auctions held at our permanent and regional auction sites increased , the proportion of gap earned at those sites slightly decreased . during 2015 , 85 % of our gap was attributable to auctions held at our permanent and regional auction sites , including those located in frontier regions , compared to 86 % in 2014 and 2013. this slight decrease is primarily due to the performance of our offsite auctions , and in particular , our generation of gap in excess of $ 54 million at our casper , wyoming , offsite auction in the first quarter of 2015. selling , general and administrative ( “ sg & a ” ) expenses sg & a expenses by nature are presented below : replace_table_token_9_th 2015 performance our sg & a expenses increased $ 6.8 million , or 3 % , in 2015 compared to 2014 , less than half the rate of our revenue growth . foreign exchange rates had a positive impact on sg & a expenses in 2015 as a significant portion of administration expenses are in canada and the netherlands . 2015 sg & a expenses would have been $ 22.4 million higher , resulting in a 12 % increase over 2014 , if foreign exchange rates had remained consistent with those in 2014. employee compensation expenses were positively impacted by foreign exchange rates by $ 14.5 million , offset by the following changes presented gross of foreign exchange impacts : $ 12.0 million higher incentive compensation , 4 % net growth of our headcount , annual merit increases , $ 2.1 million in termination benefits resulting from the separation agreement with our former chief sales officer , $ 0.8 million from xcira , and $ 0.7 million higher stock option compensation and share unit expenses .
| results of operations replace_table_token_6_th direct expense rate referenced in the table above is calculated by dividing direct expenses , excluding depreciation and amortization , by gap . gross auction proceeds 2015 performance gap was $ 4.2 billion for the year ended december 31 , 2015 , an annual record and a 1 % increase over 2014. included in 2015 gap is $ 120.0 million of gtv from our online marketplaces , which represents a 13 % increase over gtv of $ 106.1 million in 2014. the increase in gap is primarily due to an increase in the number of core auction lots year-over-year . the total number of lots at industrial and agricultural auctions grew 10 % , increasing to 390,300 in 2015 from 355,200 in 2014. however , core auction gap decreased 9 % on a per-lot basis to $ 10,600 in 2015 from $ 11,600 in 2014. gap , on a u.s. dollar basis , grew in the united states and canada in 2015 compared to 2014. however , this growth was partially offset by reductions in gap in europe and the rest of the world year-over-year . 2015 gap would have been $ 319.4 million higher , resulting in an 8 % increase over 2014 , if foreign exchange rates had remained consistent with those in 2014. this adverse effect on gap is primarily due to the declining value of the canadian dollar and the euro relative to the u.s. dollar . during 2015 , we continued to actively pursue the strategic use of underwritten commission contracts . the volume of underwritten commission contracts decreased to 29 % of our gap in 2015 from 31 % in 2014. straight commission contracts continue to account for the majority of our gap .
| 6,819 |
actual results could differ significantly from those estimates . a material estimate that is particularly susceptible to significant change relates to the determination of the allowance for loan losses . the allowance for loan losses is established through provisions for loan losses charged against income . loans deemed to be uncollectible are charged against the allowance for loan losses , and subsequent recoveries , if any , are credited to the allowance . the allowance for loan losses is maintained at a level by management which represents the evaluation of known and inherent risks in the loan portfolio at the consolidated balance sheet date that are both probable and reasonable to estimate . management 's periodic evaluation of the adequacy of the allowance is based on the company 's past loan loss experience , known and inherent risks in the portfolio , adverse situations that may affect the borrower 's ability to repay , the estimated value of any underlying collateral , the composition of the loan portfolio , current economic conditions , and other relevant factors . this evaluation is inherently subjective , as it requires material estimates that may be susceptible to significant change , including the amounts and timing of future cash flows expected to be received on impaired loans . in addition , 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 recognize additions to the allowance for loan losses based on their judgments about information available to them at the time of their examinations . the allowance calculation methodology includes segregation of the total loan portfolio into segments . the company 's loans receivable portfolio is comprised of the following segments : residential mortgage ; commercial real estate ; construction ; consumer and commercial and industrial . some segments of the company 's loan receivable portfolio are further disaggregated into classes which allows management to better monitor risk and performance . the residential mortgage loan segment is disaggregated into two classes : one-to four-family loans , which are primarily first liens , and home equity loans , which consist of first and second liens . the commercial real estate loan segment consists of both owner and non-owner occupied loans which have medium risk due to historical activity on these type loans . the construction loan segment is further disaggregated into two classes : one-to four-family owner occupied , which includes land loans , whereby the owner is known and there is less risk , and other , whereby the property is generally under development and tends to have more risk than the one-to four-family owner occupied loans . the commercial and industrial loan segment consists of loans made for the purpose of financing the activities of commercial customers . the majority of commercial and industrial loans are secured by real estate and thus carry a lower risk than traditional commercial and industrial loans . the consumer loan segment consists primarily of installment loans ( direct and indirect ) and overdraft lines of credit connected with customer deposit accounts . 30 the allowance consists of specific , general and unallocated components . the specific component is related to loans that are classified as impaired . for loans classified as impaired , an allowance is established when the discounted cash flows ( or collateral value or observable market price ) of the impaired loan is lower than the carrying value of that loan . the general component covers pools of loans by loan class and is based on historical loss experience adjusted for qualitative factors . these qualitative risk factors include : 1. lending policies and procedures , including underwriting standards and collection , charge-off , and recovery practices . 2. national , regional , and local economic and business conditions as well as the condition of various market segments , including the value of underlying collateral for collateral dependent loans . 3. nature and volume of the portfolio and terms of loans . 4. experience , ability , and depth of lending management and staff . 5. volume and severity of past due , classified and nonaccrual loans as well as and other loan modifications . 6. quality of the company 's loan review system , and the degree of oversight by the company 's board of directors . 7. existence and effect of any concentrations of credit and changes in the level of such concentrations . 8. effect of external factors , such as competition and legal and regulatory requirements . each factor is assigned a value to reflect improving , stable or declining conditions based on management 's best judgment using relevant information available at the time of the evaluation . the 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 portfolio . a loan is considered impaired when , based on current information and events , it is probable that the company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement . factors considered by management in determining impairment include payment status , collateral value and the probability of collecting scheduled principal and interest payments when due . loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired . management determines the significance of payment delays and payment shortfalls on a case-by-case basis , taking into consideration all of the circumstances surrounding the loan and the borrower , including the length of the delay , the reasons for the delay , the borrower 's prior payment record and the amount of the shortfall in relation to the principal and interest owed . story_separator_special_tag deposits increased by $ 99.7 million while fhlb advances decreased by $ 10.0 million and other liabilities decreased approximately $ 616,000. the ratio of average interest-earning assets to average-interest bearing liabilities was 131.9 % for the year ended december 31 , 2016 as compared to 126.8 % for the year ended december 31 , 2015. stockholders ' equity decreased by $ 3.2 million , or 4.2 % , to $ 73.2 million at december 31 , 2016 compared to $ 76.4 million at december 31 , 2015 primarily due to $ 3.2 million in stock repurchases , partially offset by earnings of $ 1.2 million for 2016. loans . loans receivable , net , increased $ 105.7 million , or 40.3 % , from $ 262.3 million at december 31 , 2015 to $ 368.0 million at december 31 , 2016. the bank 's commercial and multi-family real estate loan portfolio grew by $ 65.0 million , or 109.0 % , since december 2015 , aided in part by the closing of $ 34.7 million in purchased and participation loans . the commercial and industrial portfolio increased by $ 35.0 million on stronger loan demand , while the construction loan portfolio increased approximately $ 3.7 million as a result of new projects . the residential mortgage portfolio increased $ 3.2 million to $ 192.8 million from $ 189.6 million as of year-end 2015. all remaining portfolios were consistent with prior year-end levels . securities . the securities held to maturity portfolio totaled $ 44.1 million at december 31 , 2016 compared to $ 79.0 million at december 31 , 2015. maturities , calls and principal repayments during 2016 totaled $ 34.8 million and no additional securities were purchased during 2016 compared to $ 10.5 million of maturities , calls and principal repayments and $ 11.1 million of purchases during 2015. deposits . total deposits at december 31 , 2016 increased to $ 362.3 million from $ 262.6 million at december 31 , 2015. overall , deposits increased by $ 99.7 million with non-interest bearing balances increasing by $ 16.2 million and interest bearing deposits increasing $ 83.5 million since december 31 , 2015 as the company focused on deposit pricing and the development of deeper commercial and small business relationships . borrowings . total borrowings were $ 22.7 million at december 31 , 2016 compared to $ 32.7 million at december 31 , 2015. there were no overnight advances with the fhlb of new york at december 31 , 2016 or december 31 , 2015. equity . stockholders ' equity was $ 73.2 million at december 31 , 2016 compared to $ 76.4 million at december 31 , 2015 , a decrease of $ 3.2 million or 4.2 % . the decrease in shareholders ' equity was primarily due to the purchase of common stock for the company 's equity plan and repurchase of common stock which resulted in a reduction of $ 4.7 million to equity . this reduction was partially offset by a $ 1.2 increase in retained earnings related to net income . comparison of operating results for the years ended december 31 , 2016 and 2015 story_separator_special_tag loan losses as a percentage of total loans was 1.18 % and 1.33 % at december 31 , 2016 and december 31 , 2015 , respectively , while the allowance for loan losses as a percentage of non-performing loans increased slightly to 64.13 % at december 31 , 2016 from 58.09 % at december 31 , 2015. non-performing loans to total loans were 1.84 % at december 31 , 2016 compared to 2.29 % at december 31 , 2015. annualized net charge-offs to average loans outstanding ratios were ( 0.02 ) % for the year ended december 31 , 2016 compared to 0.06 % for the year ended december 31 , 2015. non-interest income . this category includes fees derived from checking accounts , atm transactions , debit card use and other fees . it also includes increases in the cash-surrender value of our bank owned life insurance . overall , non-interest income was $ 1.0 million for the year ended december 31 , 2016 compared to $ 714,000 for the year ended december 31 , 2015 , an increase of $ 327,000 or 45.8 % . income from fees and service charges totaled $ 333,000 for the year ended december 31 , 2016 compared to $ 363,000 for the year ended december 31 , 2015 , a decrease of $ 30,000 or 8.3 % . the decrease was partially attributable to lower services fees charged during the year . income on bank owned life insurance was $ 316,000 and $ 222,000 for the year ended december 31 , 2016 and 2015 , while other non-interest income was $ 392,000 and $ 129,000 for the year ended december 31 , 2016 and 2015 , respectively . bank owned life insurance income rose due to the purchase of $ 6.0 million in new life insurance policies . in addition , other non-interest income rose due to a $ 350,000 recovery in 2016 related to a wire fraud loss recorded in 2014. non-interest expenses . total non-interest expenses increased by $ 366,000 , or 3.7 % , during the year ended december 31 , 2016 and totaled $ 10.4 million as compared to $ 10.0 million for the year ended december 31 , 2015. salaries and employee benefits expense increased by $ 704,00,0 or 14.0 % , to $ 5.7 million for the year ended december 31 , 2016 compared to $ 5.0 million for the year ended december 31 , 2015. salary and benefits increased due to an increase in incentive compensation and stock option and restricted stock awards granted during the second quarter of 2016 as well as normal increases in salaries and benefits expenses and additions to staff .
| general . our results of operations depend primarily on our net interest income . net interest income is the difference between the interest income we earn on our interest-earning assets and the interest we pay on our interest-bearing liabilities . it is a function of the average balances of loans and investments versus deposits and borrowed funds outstanding in any one period and the yields earned on 33 those loans and investments and the cost of those deposits and borrowed funds . our results of operations are also affected by our provision for loan losses , non-interest income and non-interest expense . non-interest income includes service fees and charges , and income on bank owned life insurance . non-interest expense includes salaries and employee benefits , occupancy and equipment expense and other general and administrative expenses such as service bureau fees and advertising costs . the company reported net income of $ 1,161,000 for december 31 , 2016 compared to net income of $ 443,000 for the year ended december 31 , 2015 , representing an increase of $ 718,000 or 162.1 % . this increase was largely driven by $ 1.9 million increase in net interest income as well as $ 350,000 related to the recovery of a wire fraud loss from 2014. offsetting this were an increase in the provision for loan losses of $ 687,000 and an increase in non-interest expense of $ 366,000. income tax expense increased $ 469,000 for the year ended december 31 , 2016 versus 2015 due to the increase in pre-tax income . net interest income .
| 6,820 |
in addition , the amendments provide for potential increases to the original coupon rates ranging from 0 to 125 basis points depending on the asset coverage and leverage ratios at the end of the respective quarterly period , as defined in the note agreements . these potential increases lapse when the company maintains a leverage ratio between 3.0 to 1.0 for two consecutive fiscal quarters ending on or after december 31 , 2017 or receives an investment grade rating by s & p or moody 's . as of december 31 , 2015 , based on the company 's asset coverage and leverage ratios , there were no interest rate adjustments required for the company 's senior notes . the note agreements continue to include a minimum annual coverage ratio of consolidated cash flow to interest story_separator_special_tag the following discussion is intended to assist you in understanding our results of operations and our present financial condition . our consolidated financial statements and the accompanying notes to the consolidated financial statements included elsewhere in this form 10-k contain additional information that should be referred to when reviewing this material . overview operating overview operating results for the year ended december 31 , 2015 compared to the year ended december 31 , 2014 are as follows : equivalent production in 2015 increase d 70.7 bcfe , or 13 % , from 531.8 bcfe , or 1.5 bcfe per day , in 2014 to 602.5 bcfe , or 1.7 bcfe per day , in 2015 . natural gas production increase d 57.9 bcf , or 11 % , from 508.0 bcf in 2014 to 566.0 bcf in 2015 , primarily the result of higher production in the marcellus shale associated with our drilling program in pennsylvania . crude oil/condensate/ngl production increase d 2.1 mmbbls , or 54 % , from 4.0 mmbbls in 2014 to 6.1 mmbbls in 2015 , as a result of higher production associated with our oil-focused eagle ford shale drilling program in south texas and production associated with the south texas asset acquisitions in the fourth quarter of 2014. average realized natural gas price for 2015 was $ 2.15 per mcf , 34 % lower than the $ 3.28 per mcf price realized in 2014 . average realized crude oil price for 2015 was $ 45.72 per bbl , 48 % lower than the $ 88.50 per bbl price realized in 2014 . drilled 142 gross wells ( 132.8 net ) with a success rate of 100.0 % in 2015 compared to 200 gross wells ( 176.5 net ) with a success rate of 99.5 % in 2014 . total capital spending was approximately $ 776.9 in 2015 compared to $ 1.6 billion ( excluding the south texas asset acquisitions ) in 2014 . average rig count during 2015 was approximately 3.5 rigs in the marcellus shale and approximately 1.9 rigs in the eagle ford shale , compared to an average rig count in the marcellus shale of approximately 6.0 rigs and approximately 2.8 rigs in the eagle ford shale during 2014 . market conditions and commodity prices our financial results depend on many factors , particularly the price of natural gas and crude oil and our ability to market our production on economically attractive terms . commodity prices are affected by many factors outside of our control , including changes in market supply and demand , which are impacted by weather conditions , pipeline capacity constraints , inventory storage levels , basis differentials and other factors . in addition , our realized prices are further impacted by our derivative and hedging activities . as a result , we can not accurately predict future commodity prices and , therefore , we can not determine with any degree of certainty what effect increases or decreases in these prices will have on our capital program , production volumes or revenues . location differentials have increased in certain regions , such as in the appalachian region , resulting in further declines in natural gas prices . we expect natural gas and crude oil prices to remain volatile . in addition to production volumes and commodity prices , finding and developing sufficient amounts of natural gas and crude oil reserves at economical costs are critical to our long-term success . see `` risk factors—natural gas and oil prices fluctuate widely , and low prices for an extended period would likely have a material adverse impact on our business '' and `` risk factors—our future performance depends on our ability to find or acquire additional natural gas and oil reserves that are economically recoverable '' in item 1a . we account for our derivative instruments on a mark-to-market basis with changes in fair value recognized in operating revenues in the consolidated statement of operations . as a result of these mark-to-market adjustments associated with our derivative instruments , we will likely experience volatility in our earnings due to commodity price volatility . refer to “ impact of derivative instruments on operating revenues ” below and note 6 to the consolidated financial statements for more information . commodity prices continued to decline during 2015 compared to 2014. as a result of the continued decline in commodity prices , we tested the recoverability of the carrying value of all of our oil and gas properties and recorded an impairment charge of approximately $ 114.9 million associated with certain non-core fields in south texas , east texas and louisiana . based on the results of our impairment test in the fourth quarter of 2015 , we do not believe that further impairment of our oil and gas 37 properties is reasonably likely to occur in the near future ; however , in the event that commodity prices significantly decline from current levels , additional impairments of our oil and gas properties may be required . story_separator_special_tag the decrease in operating revenues was primarily due to a decrease in realized natural gas and crude oil prices , partially offset by an increase in equivalent production . average realized natural gas and crude oil prices decrease d by 34 % and 48 % , respectively , for 2015 compared to 2014 . equivalent production volumes increase d by 13 % for 2015 over 2014 as a result of higher natural gas production in the marcellus shale and higher oil production in the eagle ford shale . net cash provided by operating activities in 2014 increased by $ 211.9 million over 2013. this increase was primarily due to higher operating revenues , partially offset by higher operating expenses ( excluding non-cash expenses ) and an increase in working capital . the increase in operating revenues was primarily due to an increase in equivalent production , partially offset by a decrease in realized natural gas and crude oil prices . equivalent production volumes increased by 29 % for 2014 compared to 2013 as a result of higher natural gas in the marcellus shale and oil production in the eagle ford shale . average realized natural gas and crude oil prices decreased by 8 % and 12 % , respectively , for 2014 compared to 2013. see `` results of operations '' for additional information relative to commodity price , production and operating expense fluctuations . we are unable to predict future commodity prices and , as a result , can not provide any assurance about future levels of net cash provided by operating activities . investing activities . cash flows used in investing activities decrease d by $ 671.5 million from 2014 to 2015 due to a decrease of $ 524.0 million in capital expenditures , $ 198.4 million lower acquisition costs and a $ 9.0 million decrease in capital contributions associated with our equity method investments . these decreases were partially offset by a $ 31.8 million decrease in proceeds from the sale of assets and $ 28.1 million of changes in restricted cash balances . cash flows used in investing activities increased by $ 746.6 million from 2013 to 2014 due to an increase of $ 284.9 million in capital expenditures , a decrease of $ 284.0 million in proceeds from the sale of assets , a $ 214.7 million increase in acquisition expenditures related to the acquisitions of eagle ford shale assets that closed in the fourth quarter of 2014 , and a $ 19.2 million increase in capital contributions associated with our equity method investments . partially offsetting the increases was a $ 56.2 million decrease in restricted cash related to the release of funds by our qualified intermediary due to a lapse in the statutory holding period and the funding of oil and gas lease acquisitions during 2014 associated with like-kind exchange transactions pursuant to section 1031 of the internal revenue code . financing activities . cash flows provided by financing activities decrease d by $ 193.8 million from 2014 to 2015 due to $ 332.0 million of lower net borrowings and an increase in cash paid for capitalized debt issuance costs of $ 2.2 million related to the amendment of our credit facility in april 2015. these decreases were partially offset by lower treasury stock repurchases 39 of $ 138.9 million as no shares were repurchased in 2015 and a decrease of $ 1.4 million in tax benefits associated with our stock-based compensation . cash flows provided by financing activities increased by $ 539.6 million from 2013 to 2014 due to $ 545.0 million of higher net borrowings and a decrease in share repurchases of $ 25.8 million , partially offset by a decrease of $ 20.3 million in tax benefits associated with our stock-based compensation , an $ 8.0 million increase in dividends paid and an increase in cash paid for capitalized debt issuance costs of $ 2.9 million . capitalization information about our capitalization is as follows : replace_table_token_11_th _ ( 1 ) includes $ 20.0 million of current portion of long-term debt at december 31 , 2015 and $ 413.0 million and $ 140.0 million of borrowings outstanding under our revolving credit facility at december 31 , 2015 and 2014 , respectively . in 2015 , we did not repurchase any shares of common stock . for the year ended december 31 , 2014 , we repurchased 4.3 million shares for a total cost of $ 138.9 million . during 2015 and 2014 , we also paid dividends of $ 33.1 million ( $ 0.08 per share ) and $ 33.3 million ( $ 0.08 per share ) on our common stock , respectively . capital and exploration expenditures on an annual basis , we generally fund most of our capital expenditures , excluding any significant property acquisitions , with cash generated from operations and , if required , borrowings under our revolving credit facility . we budget these expenditures based on our projected cash flows for the year . in 2015 , capital expenditures exceeded our cash flow from operations , requiring us to fund a portion of our capital expenditures through borrowings under our revolving credit facility . the following table presents major components of our capital and exploration expenditures : replace_table_token_12_th _ ( 1 ) exploration expenditures include $ 3.3 million , $ 7.8 million and $ 0.4 million of exploratory dry hole expenditures in 2015 , 2014 and 2013 , respectively . we plan to drill approximately 30 gross wells ( 30.0 net ) in 2016 compared to 142 gross wells ( 132.8 net ) drilled in 2015 . in 2016 , our drilling program includes approximately $ 325.0 million in total capital expenditures . we will continue to assess the natural gas and crude oil price environment along with our liquidity position and may increase or decrease our capital 40 expenditures accordingly . due to the current commodity price environment , our overall capital spending in 2016 is expected to be lower than our expenditures in 2015 .
| results of operations 2015 and 2014 compared we reported a net loss for 2015 of $ 113.9 million , or $ 0.28 per share , compared to net income for 2014 of $ 104.5 million , or $ 0.25 per share . the decrease in net income was primarily due to lower operating revenues , higher operating and interest expenses and a decrease in gain on sale of assets . these decreases were partially offset by lower impairments on oil and gas properties . 45 revenue , price and volume variances our revenues vary from year to year as a result of changes in commodity prices and production volumes . below is a discussion of revenue , price and volume variances . replace_table_token_14_th replace_table_token_15_th _ ( 1 ) prices in 2014 include the impact of cash flow hedge settlements during the period , which decreased the price by $ 0.28 per mcf . there was no impact in 2015 . ( 2 ) prices in 2014 include the impact of cash flow hedge settlements during the period , which decreased the price by $ 0.17 per bbl . there was no impact in 2015 . natural gas revenues the decrease in natural gas revenues of $ 565.6 million was due to lower natural gas prices , partially offset by higher production associated with the positive results of our marcellus shale drilling program in pennsylvania . crude oil and condensate revenues the decrease in crude oil and condensate revenues of $ 65.7 million was due to lower crude oil prices , partially offset by higher production .
| 6,821 |
subject to the terms set forth therein , the amendment to the license agreement also provides that the company will pay ikaria a story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and related notes appearing elsewhere in this annual report on form 10-k. some of the information contained in this discussion and analysis or set forth elsewhere in this annual report on form 10-k , including information with respect to our plans and strategy for our business and related financing , includes forward-looking statements that involve risks and uncertainties and should be read together with the “ risk factors ” section of this annual report on form 10-k for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis . overview business we are a clinical-stage therapeutics company focused on developing innovative products that address significant unmet medical needs in the treatment of cardiopulmonary diseases . our focus is the continued development of our nitric oxide therapy for patients with pulmonary hypertension , or ph , using our proprietary pulsatile nitric oxide delivery platform , inopulse . in 2016 , we began developing inopulse for the treatment of pulmonary hypertension associated with interstitial lung disease ( ph-ild ) , which includes ph associated with idiopathic pulmonary fibrosis ( ph-ipf ) as well as other pulmonary fibrosing diseases . during may 2017 , we announced completion of our phase 2 clinical trial using inopulse therapy to treat ph-ipf . the clinical data showed that inopulse was associated with clinically meaningful improvements in hemodynamics and exercise capacity in difficult-to-treat ph-ipf patients . the ph-ipf trial was a proof of concept study ( n=4 ) designed to evaluate the ability of pulsed inhaled nitric oxide , or ino , to provide selective vasodilation as well as to assess the potential for improvement in hemodynamics and exercise capacity in ph-ipf patients . the clinical trial met its primary endpoint showing an average of 15.3 % increase in blood vessel volume ( p < 0.001 ) during acute inhalation of ino as well as showing a significant association between ventilation and vasodilation , demonstrating the ability of inopulse to provide selective vasodilation to the better ventilated areas of the lung . the trial showed consistent benefit in hemodynamics with a clinically meaningful average reduction of 14 % in systolic pulmonary arterial pressure ( spap ) with acute exposure to ino . the study assessed both the ino 75 and ino 30 dose , supporting ino 30 as a potentially safe dose . during august 2017 , we announced fda acceptance of our ind for our phase 2b ( ino-pf ) clinical trial using inopulse therapy in a broad population of patients with pulmonary fibrosis , or pf , at both low and intermediate/high risk of ph . in january 2018 , we announced the first patient enrollment in our ino-pf phase 2b trial . in october 2018 , we announced the enrollment completion of the planned 40 subjects , or cohort 1 , in our ino-pf study . in addition , we announced the expansion of the trial with the addition of cohort 2 and cohort 3 , to evaluate a higher ino 45 and ino 75 dose as well as a longer 16 week evaluation period . in january 2019 , we announced top-line results from cohort 1 of our ino-pf study . the results showed statistically significant improvements in multiple clinically meaningful activity parameters as measured by a wearable medical-grade activity monitor : subjects on ino demonstrated an increase of 8 % in moderate activity versus a 26 % decrease for subjects on placebo ( p=0.04 ) and subjects on ino showed no decline in their overall activity levels versus a 12 % decline for subjects on placebo ( p=0.05 ) . in addition , clinically meaningful improvements were also demonstrated in the following key areas : subjects on ino showed an increase of 15 % in nt-probnp versus a 42 % increase for subjects on placebo ( nt-probnp is a peptide marker of right ventricular failure , with higher levels indicative of disease worsening ) and subjects on ino demonstrated improved oxygen saturation by 9 % versus a worsening of 11 % for placebo . in addition , ino was well-tolerated with no safety concerns supporting the continuation into cohort 2. actigraphy ( medical wearable continuous activity monitoring ) provides highly sensitive objective real-world physical activity data that correlates to clinically meaningful patient functional abilities and health outcomes . we are currently utilizing actigraphy to evaluate multiple clinically meaningful activity parameters in the ino-pf study . actigraphy is currently being utilized as the primary endpoint in multiple late-stage clinical programs in various cardiopulmonary diseases such as heart failure and copd . we completed a randomized , placebo-controlled , double-blind , dose-confirmation phase 2 clinical trial of inopulse for pulmonary hypertension associated with chronic obstructive pulmonary disease , or ph-copd , in july 2014. the results from this trial showed that ino 30 was a potentially safe and effective dose for treatment of ph-copd . based on the results of this trial , we completed further phase 2 testing to assess the targeted vasodilation provided by inopulse in this patient population . we presented the results of this trial in september 2015 at the european respiratory society international congress 2015 in amsterdam . the data showed that inopulse improved vasodilation in patients with ph-copd . in july 2016 , the results were published in the international journal of copd in an article entitled “ pulmonary vascular effects of pulsed inhaled nitric oxide in copd patients with pulmonary hypertension. ” during september 2017 , we shared the results of our phase 2a 68 ph-copd study designed to evaluate the acute effects of pulsed inhaled nitric oxide , or ino , on vasodilation as well as the chronic effect on hemodynamics and exercise tolerance . story_separator_special_tag if we fail to complete the development of any of our product candidates currently in clinical development or any future product candidates in a timely manner , or to obtain regulatory approval for such product candidates , our ability to generate future revenue , and our business , results of operations , financial condition and cash flows and future prospects would be materially adversely affected . research and development expenses research and development expenses consist of costs incurred in connection with the development of our product candidates , including upfront and development milestone payments , related to in-licensed product candidates and technologies . research and development expenses primarily consist of : employee-related expenses , including salary , benefits and stock-based compensation expense ; expenses incurred under agreements with contract research organizations , investigative sites that conduct our clinical trials and consultants that conduct a portion of our pre-clinical studies ; expenses relating to vendors in connection with research and development activities ; the cost of acquiring and manufacturing clinical trial materials ; facilities , depreciation and allocated expenses ; lab supplies , reagents , active pharmaceutical ingredients and other direct and indirect costs in support of our pre-clinical and clinical activities ; device development and drug manufacturing engineering ; license fees related to in-licensed products and technology ; and costs associated with non-clinical activities and regulatory approvals . we expense research and development costs as incurred . conducting a significant amount of research and development is central to our business model . product candidates in late 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 late-stage clinical trials . subject to the availability of requisite financing , we plan to increase our research and development expenses for ongoing clinical programs for the foreseeable future as we seek to continue multiple clinical trials for our product candidates , including to potentially advance inopulse for ph-copd , and seek to identify additional early-stage product candidates . we track external research and development expenses and personnel expenses on a program-by-program basis . we use our employee and infrastructure resources , including regulatory , quality , clinical development and clinical operations , across our clinical development programs and have included these expenses in research and development infrastructure . research and development laboratory expenses are also not allocated to a specific program and are included in research and development infrastructure . engineering activities related to inopulse and the manufacture of cylinders related to inopulse are included in inopulse engineering . inopulse for ph-ild we initiated our clinical program in ph-ild in 2016. during may 2017 , we announced completion of our phase 2 study using inopulse therapy to treat ph-ipf . after reaching agreement with the fda , we initiated and are currently conducting our phase 2b trial in ph-ild . in january 2018 , we announced the first patient enrollment in our ino-pf phase 2b trial . in october 2018 , we announced the enrollment completion of the planned 40 subjects , or cohort 1 , in our ino-pf study . 70 in addition , we announced the expansion of the trial with the addition of cohort 2 and cohort 3 , to evaluate higher doses of ino as well as a longer 16 week evaluation period . in january 2019 , we announced top-line results from cohort 1 of our ino-pf study . the results showed statistically significant improvements in multiple clinically meaningful activity parameters as measured by a wearable medical-grade activity monitor . inopulse for ph-copd we completed and received results from a randomized , placebo-controlled , double-blind , dose-confirmation phase 2a clinical trial of inopulse for ph-copd in july 2014. during september 2017 , we shared results of our phase 2a ph-copd study designed to evaluate the acute effects of pulsed inhaled nitric oxide , or ino , on vasodilation as well as the chronic effect on hemodynamics and exercise tolerance . in may 2018 , we announced that we reached agreement with the fda on the design of our planned phase 2b study of inopulse for treatment of ph-copd . we are currently evaluating alternatives for the funding and timing of this program . inopulse for pah we initiated a phase 3 clinical trial of inopulse for pah in june 2016. as agreed upon with the fda , a pre-specified interim analysis was conducted by the data monitoring committee , or dmc , in august 2018 , after half of the planned subjects completed 16 weeks of blinded treatment . the data showed inopulse provided clinically meaningful improvements in pulmonary vascular resistance ( 18 % ) , cardiac output ( 0.7 l/min ) and nt pro-bnp . in addition , subjects on pah background mono-therapy showed a 23 meter improvement in 6mwd , while subjects that were not on prostanoid background therapy showed a 17 meter improvement in 6mwd . however , the dmc determined that the overall change in 6mwd , the primary endpoint of the trial , was insufficient to support the continuation of the study . accordingly , based on the dmc 's recommendation , we discontinued the trial in august 2018. the trial results showed 6mwd was improved when subjects were on less background therapies and more patients deteriorated in 6mwd on placebo as compared to ino . in addition , inopulse was well tolerated and there were no safety concerns . drug and delivery system costs drug and delivery system costs include cartridge procurement , cartridge filling , delivery system manufacturing and delivery system servicing . these costs relate to all indications that utilize the inopulse delivery system . during the three months ended september 2017 , we began to incur drug and delivery system costs for our phase 2b study using inopulse therapy in a broad population of patients with pf . historically , drug and deliver system costs were primarily for our studies of inopulse for pah .
| results of operations comparison of years ended december 31 , 2018 and 2017 the following table summarizes our results of operations for the years ended december 31 , 2018 and 2017 , together with the changes in these items in dollars and as a percentage . replace_table_token_3_th total operating expenses . total operating expenses for the year ended december 31 , 2018 were $ 27.9 million compared to $ 24.6 million for the year ended december 31 , 2017 , an increase of $ 3.3 million , or 13 % . this increase was primarily due to increased research and development expenses pertaining to our ph-ild and pah clinical trials as well as an increase in general and administration expenses . research and development expenses . total research and development expenses for the year ended december 31 , 2018 were $ 20.3 million compared to $ 17.9 million for the year ended december 31 , 2017 , an increase of $ 2.4 million , or 13 % . total research and development expenses consisted primarily of the following : ph-ild and ph-copd research and development expenses for the year ended december 31 , 2018 were $ 2.1 million compared to $ 0.5 million for the year ended december 31 , 2017 , an increase of $ 1.7 million , or 349 % . the increase was primarily due to start up fees associated with these programs and due to increased spending on our ph-ild phase 2b trial . pah research and development expenses for the year ended december 31 , 2018 were $ 6.9 million compared to $ 6.1 million for the year ended december 31 , 2017 , an increase of $ 0.8 million , or 13 % . the increase was primarily driven by increased spending and closeout cost in the pah phase 3 trial .
| 6,822 |
actual amounts of consideration ultimately received may differ from the company 's estimates . if actual results in the future vary from the company 's estimates , the company will adjust these estimates , which would affect net product revenue and earnings in the period such variances become known . the following table summarizes activity in each of the company 's product revenue provision and allowance categories for the years ended december 31 , 2020 and 2019 : replace_table_token_11_th ( 1 ) trade discounts , allowances and chargebacks include fees for distribution service fees , prompt pay and other discounts , and chargebacks story_separator_special_tag you should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes thereto appearing at the end of this annual report on form 10-k. some of the information contained in this discussion and analysis or set forth elsewhere in this annual report on form 10-k , including information with respect to our plans and strategy for our business and related financing , includes forward-looking statements that involve risks and uncertainties . see “ special note regarding forward-looking statements and industry data. ” because of many factors , including those factors set forth in the “ risk factors ” section of this annual report on form 10-k , our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis . overview we are a biopharmaceutical company focused on the discovery , development and commercialization of innovative therapies for diseases of the eye . we have worldwide rights to a portfolio of innovative products and product candidates that include two marketed therapies utilizing our proprietary mucus penetrating particle , or mpp , drug delivery technology , which we refer to as our ampplify ® technology , to address medical needs for the front of the eye , and a pipeline of proprietary new chemical entities , or nces , targeted to address front and back of the eye diseases . our two marketed products are eysuvis ( loteprednol etabonate ophthalmic suspension ) 0.25 % , for the short-term ( up to two weeks ) treatment of the signs and symptoms of dry eye disease , and inveltys ® ( loteprednol etabonate ophthalmic suspension ) 1 % , a topical twice-a-day ocular steroid for the treatment of post-operative inflammation and pain following ocular surgery . both products apply our ampplify technology to loteprednol etabonate , or le , a corticosteroid designed for ocular applications . the ampplify ® technology , uses selectively sized nanoparticles that each have a proprietary coating . we believe that these two key attributes enable even distribution of drug particles on mucosal surfaces and significantly increase drug delivery to target tissues by enhancing mobility of drug particles through mucus and preventing drug particles from becoming trapped and eliminated by mucus . we have retained worldwide commercial rights for eysuvis , inveltys and our preclinical development programs . starting with fda approval of inveltys , we have built a commercial infrastructure with our own focused , specialty sales force which now includes 91 territory sales managers , or tsms , 14 regional sales leaders , two area sales leaders and three directors of national accounts . in 2021 , we plan to increase our sales force from 91 tsms to approximately 125 tsms , pending the status of the covid-19 pandemic . our sales representatives promote both eysuvis and inveltys . we expect to commercialize in the united states any of our product candidates that receive marketing approval as well . we also expect to explore commercialization of eysuvis for the treatment of dry eye disease in certain markets outside the united states , including the european union , or eu , utilizing a variety of collaboration , distribution and other marketing arrangements with one or more third parties . since the initial public offering of our common stock , or ipo , we have financed our operations primarily through common stock offerings pursuant to a shelf registration statement on form s-3 that was declared effective by the sec on august 27 , 2018 , or the 2018 shelf registration , and sales of our common stock pursuant to a sales agreement , or the 2018 sales agreement , with jefferies , llc , or jefferies , under which we were able to issue and sell , from time to time , common stock in at-the-market offerings , or the atm offering , through jefferies , as a sales agent . on march 10 , 2020 , we notified jefferies that we were suspending and terminating the prospectus related to the 2018 sales agreement . under the 2018 shelf registration , we have issued an aggregate of 30,549,976 shares of common stock , including under the atm offering , resulting in aggregate gross proceeds to us of $ 231.7 million . on may 7 , 2020 , we filed a shelf registration statement on form s-3 with the sec , which was declared effective on may 19 , 2020 , or the 2020 shelf registration . under the 2020 shelf registration , we may offer and sell up to $ 350.0 million of a variety of securities including common stock , preferred stock , warrants , depositary shares , debt securities or units during the three-year period that commenced upon the 2020 shelf registration becoming effective . in connection with the filing of the 2020 shelf registration , we entered into an amended and restated sales agreement with jefferies pursuant to which we may issue and sell , from time to time , up to an aggregate of $ 75.0 million of our common stock under our atm offering through jefferies , as a sales agent . during the fourth quarter of 2020 , we issued an 101 aggregate of 2,821,059 shares of our common stock under the atm offering , resulting in net proceeds to us of $ 20.6 million . story_separator_special_tag beginning in march 2020 and continuing through most of the second quarter of 2020 , prescriptions of inveltys and revenue had been adversely affected by the ongoing covid-19 pandemic as federal , state and local governments implemented restrictions on elective procedures , which included most ocular surgeries . while many deferred ocular surgeries have been rescheduled as individual states have released restrictions on elective procedures , and inveltys prescriptions have returned to quarterly growth , we are unable to project the specific timing or potential impact on future revenues given the continued uncertainty around the impact and duration of the restrictions related to covid-19 . we also can not project the potential impact that covid-19 may have on the full promotional launch and commercialization of eysuvis . cost of product revenues cost of product revenues consists primarily of materials , third-party manufacturing costs , freight and distribution costs , royalty expense , allocation of labor , quality control and assurance , reserves for defective inventory , reserves for excess and obsolete inventory and other manufacturing overhead costs . we expensed cost of product revenues related to inveltys as research and development expenses prior to u.s. regulatory approval , which we received on august 22 , 2018. we expensed cost of product revenues related to eysuvis as research and development expenses prior to the determination that fda approval was probable and before the future economic benefit was expected to be realized . with respect to the ongoing covid-19 pandemic , we expect that the cost of product revenues will be impacted consistent with the negative impact to product revenues , net . however , we are unable to predict the specific timing or specific impact on cost of product revenues given the continued uncertainty around the impact and duration of the restrictions related to covid-19 . selling , general and administrative expenses selling , general and administrative expenses consist primarily of salaries , benefits , commissions , stock-based compensation and travel expenses related to our commercial infrastructure and our executive , finance , human resources , legal , information technology and business development functions . selling , general and administrative expenses also includes external costs related to marketing , costs to manufacture sample units and professional fees for auditing , tax , information technology , consultants , legal services and allocated facility-related costs not otherwise included in research and development expenses . we anticipate that our selling , general and administrative expenses will increase in the future as we continue to build our commercial infrastructure to support the full promotional launch and commercialization of eysuvis and the commercialization of inveltys or of any product candidates for which we obtain marketing approval . we also anticipate that our selling , general and administrative expenses will increase if and as we increase our administrative headcount to support our continued research activities and development of our product candidates . with respect to the ongoing covid-19 pandemic , certain selling , general and administrative expenses were favorably impacted during the year ended december 31 , 2020 by the restrictions including those on the activities of our sales force , which had previously suspended substantially all in-person interactions with physicians and customers . our sales force has resumed substantially all in-person interactions in the field . if we are forced to suspend all or some in-person sales force interactions again in the future as a result of the covid-19 pandemic , selling , general and administrative expenses could again be favorably impacted by a reduction in certain expenses associated with the restriction in activities for our sales 103 force and other employees . we are unable to predict the specific amount of this impact if we are forced to resume such restrictions . research and development expenses research and development expenses consist of costs associated with our research activities , including compensation and benefits for full-time research and development employees , an allocation of facilities expenses , overhead expenses and other outside expenses . our research and development expenses include : ● employee-related expenses , including salaries , related benefits , travel and stock-based compensation ; ● expenses incurred for the preclinical and clinical development of our product candidates and under agreements with contract research organizations , or cros , including costs of manufacturing product candidates prior to the determination that fda approval of a drug candidate is probable and before the future economic benefit of the drug is expected to be realized ; and ● facilities , depreciation and other expenses , which include direct and allocated expenses for rent and maintenance of facilities and supplies . we expense research and development costs as they are incurred . we expense costs relating to the production of inventory for our product candidates , as research and development expenses within our consolidated statements of operations and comprehensive loss in the period incurred , unless we believe regulatory approval and subsequent commercialization of the product candidate is probable and we expect the future economic benefit from sales of the drug to be realized . research and development costs that are paid in advance of performance are capitalized as a prepaid expense until incurred . we track outsourced development costs by development program but do not allocate personnel costs , payments made under our license agreements or other costs to specific product candidates or development programs . these costs are included in employee-related costs and other research and development costs in the line items in the tables under “ results of operations ” . we expect that our total research and development costs will decrease in 2021 as compared to the year ended december 31 , 2020 as a result of the completion of our phase 3 clinical trial of eysuvis , or stride 3 , and as a result of the capitalization of eysuvis manufacturing costs as inventory beginning in the third quarter of 2020. we expect that research and development costs will increase if and as we continue to advance our preclinical development programs , identify product candidates and conduct preclinical studies and clinical trials .
| results of operations comparison of the years ended december 31 , 2020 and 2019 the following table summarizes the results of our operations for the years ended december 31 , 2020 and 2019 : replace_table_token_3_th 108 product revenues , net product revenues , net was $ 6.4 million for the year ended december 31 , 2020 compared to $ 6.1 million for the year ended december 31 , 2019. the increase in product revenues , net of $ 0.3 million is primarily the result of the first sales of eysuvis , which we began shipping to wholesalers in the united states in late december 2020 , as well as a higher per unit gross selling price of inveltys . these increases were partially offset by higher estimated reserves per unit related to the year ended december 31 , 2020 as compared to those estimated during the year ended december 31 , 2019 and a decrease in the total units of inveltys sold in the year ended december 31 , 2020 as compared to those sold during the year ended december 31 , 2019 , which we attribute to the reductions in elective surgeries as a result of the restrictions related to covid-19 . we expect product revenues to increase if and as we increase our market share and obtain and maintain coverage and adequate reimbursement for eysuvis and inveltys from third-party payors ; however , revenues could continue to be negatively impacted in 2021 as a result of the covid-19 pandemic .
| 6,823 |
this rule , which became effective on february 10 , 2021 , adopts amendments to modernize , simplify and enhance certain financial disclosure requirements in regulation s-k. specifically , the amendments eliminate the requirement for selected financial data , streamline the requirement to disclose supplementary financial information , and amend our management 's discussion and analysis of financial condition and results of operations ( “ md & a ” ) . we early adopted the amendments to two items resulting in the elimination of item 301 , selected financial data , and the omission of item 302 ( a ) , supplementary financial information . the amendments to item 303 ( a ) ( b ) md & a , will be adopted in our form 10-k for the year ended december 31 , 2021. covid-19 pandemic our business has been adversely affected by the ongoing covid-19 pandemic . in march 2020 , our “ non-essential ” retail tenants were ordered to temporarily close and although substantially all re-opened in the latter part of june 2020 , there are limitations on occupancy and other restrictions that affect their ability to resume full operations . in limited circumstances , we have agreed to and may continue to agree to rent deferrals and abatements for certain of our tenants . we have made the policy election available to us based on the financial accounting standards board 's ( “ fasb ” ) guidance for leases during the covid-19 pandemic , which allows us to continue recognizing rental revenue for rent deferral agreements and to recognize rent abatements as a reduction to rental revenue in the period granted . see note 3 - summary of significant accounting policies , to our consolidated financial statements in this annual report on form 10-k for additional information . overall , we have collected approximately 95 % of rent billed for the quarter ended december 31 , 2020 ( 96 % including rent deferrals under agreements which generally require repayment in monthly installments over a period of time not to exceed twelve months ) , including 100 % for our office tenant , approximately 90 % for our retail tenants ( 91 % including rent deferrals ) and approximately 98 % for our residential tenants . on september 10 , 2020 , century 21 , which leased 135,000 square feet at our rego park ii shopping center ( $ 6,400,000 of annual revenue ) , filed for chapter 11 bankruptcy and closed its store on december 7 , 2020. based on our assessment of the probability of collecting rent from certain tenants , we have written off as uncollectible tenant receivables of $ 4,122,000 during the year ended december 31 , 2020 , resulting in a reduction of rental revenues . of this amount , $ 2,716,000 is attributable to century 21. in addition , we have written off receivables arising from the straight-lining of rents related to these tenants of $ 10,837,000 during the year ended december 31 2020 , resulting in a reduction of rental revenues . of this amount , $ 5,919,000 is attributable to century 21. prospectively , revenue recognition for these tenants will be based on actual amounts received . 27 overview - continued year ended december 31 , 2020 financial results summary net income for the year ended december 31 , 2020 was $ 41,939,000 or $ 8.19 per diluted share , compared to $ 60,075,000 , or $ 11.74 per diluted share for the year ended december 31 , 2019. funds from operations ( “ ffo ” ) ( non-gaap ) for the year ended december 31 , 2020 was $ 82,509,000 , or $ 16.11 per diluted share , compared to $ 99,670,000 , or $ 19.47 per diluted share for the year ended december 31 , 2019. quarter ended december 31 , 2020 financial results summary net income for the quarter ended december 31 , 2020 was $ 18,432,000 , or $ 3.60 per diluted share , compared to $ 14,434,000 , or $ 2.82 per diluted share for the quarter ended december 31 , 2019. ffo ( non-gaap ) for the quarter ended december 31 , 2020 was $ 25,407,000 , or $ 4.96 per diluted share , compared to $ 24,626,000 , or $ 4.81 per diluted share for the quarter ended december 31 , 2019. square footage , occupancy and leasing activity as of december 31 , 2020 , our portfolio was comprised of seven properties aggregating 2,444,000 square feet , of which 2,366,000 square feet was in service and 78,000 square feet ( a portion of our rego park i shopping center ) was out of service due to redevelopment . the in service square feet was 97 % occupied as of december 31 , 2020. financing activity on february 14 , 2020 , we reduced our participation in our rego park ii shopping center loan to $ 50,000,000 and received cash proceeds of approximately $ 145,000,000. on september 14 , 2020 , we amended and extended the $ 350,000,000 mortgage loan on the retail condominium of our 731 lexington avenue property . under the terms of the amendment , we paid down the loan by $ 50,000,000 to $ 300,000,000 , extended the maturity date to august 2025 and guaranteed the interest payments and certain leasing costs . the principal of the loan is non-recourse to us . the interest-only loan is at libor plus 1.40 % ( 1.55 % as of december 31 , 2020 ) which is subject to an interest rate swap with a fixed rate of 1.72 % . story_separator_special_tag change in fair value of marketable securities was an expense of $ 8,757,000 in the prior year , resulting from a decrease in macerich 's share prices of $ 16.36 on 535,265 shares owned . 31 results of operations – year ended december 31 , 2019 compared to december 31 , 2018 rental revenues rental revenues were $ 226,350,000 in the year ended december 31 , 2019 , compared to $ 232,825,000 in the prior year , a decrease of $ 6,475,000. this decrease was primarily due to the sears vacancy effective october 2018 at our rego park i property . operating expenses operating expenses were $ 89,738,000 in the year ended december 31 , 2019 , compared to $ 93,775,000 in the prior year , a decrease of $ 4,037,000. this decrease was primarily due to bad debt expense in 2018 of $ 4,459,000 , primarily due to the sears bankruptcy and lease termination . depreciation and amortization depreciation and amortization was $ 31,351,000 in the year ended december 31 , 2019 , compared to $ 33,089,000 in the prior year , a decrease of $ 1,738,000. this decrease was primarily due to acceleration of depreciation and amortization in 2018 related to the toys “ r ” us , inc. bankruptcy and lease termination at our rego park ii property . general and administrative expenses general and administrative expenses were $ 5,772,000 in the year ended december 31 , 2019 , compared to $ 5,343,000 in the prior year , an increase of $ 429,000. this increase was primarily due to higher professional fees . interest and other income , net interest and other income , net was $ 8,244,000 in the year ended december 31 , 2019 , compared to $ 12,546,000 in the prior year , a decrease of $ 4,302,000. this decrease was primarily due to ( i ) $ 7,126,000 of interest income in 2018 from our rego park ii loan participation ( on december 12 , 2018 , we refinanced our $ 252,544,000 rego park ii shopping center mortgage loan and gaap required that our loan participation be treated as an extinguishment of debt ) , partially offset by ( ii ) $ 1,364,000 of higher interest income due to an increase in average interest rates and ( iii ) $ 1,600,000 of expense in 2018 from a litigation settlement . interest and debt expense interest and debt expense was $ 38,901,000 in the year ended december 31 , 2019 , compared to $ 44,533,000 in the prior year , a decrease of $ 5,632,000. this decrease was primarily due to $ 7,178,000 of lower interest expense due to the refinancing of our rego park ii shopping center loan , partially offset by $ 1,810,000 of higher interest expense resulting from an increase in average interest rates . change in fair value of marketable securities change in fair value of marketable securities was an expense of $ 8,757,000 in the year ended december 31 , 2019 , resulting from macerich 's closing share prices of $ 26.92 and $ 43.28 as of december 31 , 2019 and 2018 , respectively , on 535,265 shares owned . change in fair value of marketable securities was an expense of $ 11,990,000 in the prior year , resulting from macerich 's closing share prices of $ 43.28 and $ 65.68 as of december 31 , 2018 and 2017 , respectively . loss from discontinued operations loss from discontinued operations was $ 23,797,000 in the year ended december 31 , 2018. the loss was due to an expense for potential additional real property transfer taxes from the 2012 sale of the kings plaza regional shopping center ( “ kings plaza ” ) . see note 7 – discontinued operations , to our consolidated financial statements in this annual report on form 10-k. 32 related party transactions vornado as of december 31 , 2020 , vornado owned 32.4 % of our outstanding common stock . we are managed by , and our properties are leased and developed by , vornado , pursuant to various agreements , which expire in march of each year and are automatically renewable . these agreements are described in note 5 – related party transactions , to our consolidated financial statements in this annual report on form 10-k. steven roth is the chairman of our board of directors and chief executive officer , the managing general partner of interstate properties ( “ interstate ” ) , a new jersey general partnership , and the chairman of the board of trustees and chief executive officer of vornado . as of december 31 , 2020 , mr. roth , interstate and its other two general partners , david mandelbaum and russell b. wight , jr. ( who are also directors of the company and trustees of vornado ) owned , in the aggregate , 26.1 % of our outstanding common stock , in addition to the 2.3 % they indirectly own through vornado . matthew iocco , our chief financial officer , is the executive vice president - chief accounting officer of vornado . liquidity and capital resources rental revenue is our primary source of cash flow and is dependent on a number of factors , including the occupancy level and rental rates of our properties , as well as our tenants ' ability to pay their rents . our properties provide us with a relatively consistent stream of cash flow that enables us to pay our operating expenses , interest expense , recurring capital expenditures and cash dividends to stockholders . as a result of the covid-19 pandemic , in limited circumstances , we have agreed to and may continue to agree to rent deferrals and abatements for certain of our tenants .
| summary of significant accounting policies , to the consolidated financial statements in this annual report on form 10-k. 28 critical accounting policies and estimates - continued real estate real estate is carried at cost , net of accumulated depreciation and amortization . as of december 31 , 2020 and 2019 , the carrying amount of our real estate , net of accumulated depreciation and amortization , was $ 720,921,000 and $ 716,843,000 , respectively . maintenance and repairs are generally expensed as incurred . depreciation requires an estimate by management of the useful life of each property and improvement as well as an allocation of the costs associated with a property to its various components . if we do not allocate these costs appropriately or incorrectly estimate the useful lives of our real estate , depreciation expense may be misstated . we capitalize all property operating expenses directly associated with and attributable to , the development and construction of a project , including interest expense . the capitalization period begins when development activities are underway and ends when it is determined that the asset is substantially complete and ready for its intended use , which is typically evidenced by the receipt of a temporary certificate of occupancy . general and administrative costs are expensed as incurred . our properties , including properties to be developed in the future , are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable . an impairment exists when the carrying amount of an asset exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset , including an estimated terminal value calculated using an appropriate capitalization rate . estimates of future cash flows are based on our current plans , intended holding periods and available market information at the time the analyses are prepared .
| 6,824 |
impaired – a loan is considered story_separator_special_tag this discussion presents management 's analysis of the financial condition of the company as of december 31 , 2011 and december 31 , 2010 , and the results of operations for each of the years in the three-year period ended december 31 , 2011. the discussion should be read in conjunction with the consolidated financial statements of the company and the notes related thereto presented elsewhere in this form 10-k annual report ( see item 8 below ) . statements contained in this report or incorporated by reference that are not purely historical are forward looking statements within the meaning of section 21e of the securities exchange act of 1934 as amended , including the company 's expectations , intentions , beliefs , or strategies regarding the future . all forward-looking statements concerning economic conditions , growth rates , income , expenses , or other values which are included in this document are based on information available to the company on the date noted , and the company assumes no obligation to update any such forward-looking statements . it is important to note that the company 's actual results could materially differ from those in such forward-looking statements . risk factors that could cause actual results to differ materially from those in forward-looking statements include but are not limited to those outlined previously in item 1a . critical accounting policies the company 's financial statements are prepared in accordance with accounting principles generally accepted in the united states . the financial information and disclosures contained within those statements are significantly impacted by management 's estimates and judgments , which are based on historical experience and various other assumptions that are believed to be reasonable under current circumstances . actual results may differ from those estimates under divergent conditions . critical accounting policies are those that involve the most complex and subjective decisions and assessments , and have the greatest potential impact on the company 's stated results of operations . in management 's opinion , the company 's critical accounting policies deal with the following areas : the establishment of the company 's allowance for loan losses , as explained in detail in note 2 to the consolidated financial statements and in the “ provision for loan losses ” and “ allowance for loan and lease losses ” sections of this discussion and analysis ; the valuation of impaired loans and foreclosed assets , as discussed in note 2 to the consolidated financial statements ; income taxes and deferred tax assets and liabilities , especially with regard to the ability of the company to recover deferred tax assets as discussed in the “ provision for income taxes ” and “ other assets ” sections of this discussion and analysis ; goodwill , which is evaluated annually for impairment based on the fair value of the company and for which it has been determined that no impairment exists , as discussed in note 2 to the consolidated financial statements and in the “ other assets ” section of this discussion and analysis ; and equity-based compensation , which is discussed in greater detail in note 2 to the consolidated financial statements contained herein . critical accounting areas are evaluated on an ongoing basis to ensure that the company 's financial statements incorporate the most recent expectations with regard to these areas . story_separator_special_tag is increased by the amount of the loan loss provision , and decreased by the amount of net loan charge-offs . we experienced net charge-offs totaling $ 15.855 million in 2011. since a sizeable portion of those charge-offs were against reserves that had been established in prior periods for specifically-identified losses on certain impaired loans , net charge-offs exceeded the $ 12.000 million provision for loan losses in 2011 and the allowance declined . our allowance also fell to 2.28 % of total loans at december 31 , 2011 from 2.62 % at december 31 , 2010 . 30 · nonperforming assets ended 2011 with a balance of $ 71 million , an increase of $ 5 million , or 7 % , for the year but still well below the peak balance of $ 80 million reported at september 30 , 2009. the balance of non-performing assets had been trending down for most of 2011 , but ultimately increased due to some large additions to non-accruing loans in the fourth quarter . the net increase for the year is comprised of a $ 10 million increase in loans on non-accrual status , partially offset by a $ 5 million reduction in foreclosed assets . nonperforming assets also increased as a percentage of total loans plus oreo , to 9.23 % at december 31 , 2011 from 8.07 % at december 31 , 2010 . · total deposits increased by $ 34 million , or 3 % , during 2011 , and non-maturity deposits were up $ 57 million , or 8 % , for the year . non-maturity deposits increased due in part to aggressive deposit acquisition programs and an intensified focus on business relationships . total deposits did not increase to the same extent as non-maturity deposits primarily because we have not aggressively pursued the renewal of certain time deposits managed by our treasury department . · total shareholders ' equity increased by $ 9 million , or 6 % , during the year . our capital ratios continued their upward trend during 2011 , as well , and as of december 31 , 2011 our consolidated total risk-based capital ratio was 21.72 % , our tier 1 risk-based capital ratio was 20.46 % , and our tier 1 leverage ratio was 14.11 % . results of operations the company earns income from two primary sources . the first is net interest income , which is interest income generated by earning assets less interest expense on deposits and other borrowed money . the second is non-interest income , which primarily consists of customer service charges and fees but also comes from non-customer sources such as bank-owned life insurance . story_separator_special_tag helping offset the negative factors impacting the company 's rate variance were a $ 41 million reduction in average interest-bearing liabilities facilitated by increases in average non-interest bearing demand deposits and average equity , and a $ 3 million drop in the average balance of nonperforming loans . furthermore , net interest reversals were only $ 189,000 in 2011 as compared to $ 566,000 in 2010. the company 's net interest margin , which is tax-equivalent net interest income as a percentage of average interest-earning assets , is affected by the same factors discussed above relative to rate and volume variances . our net interest margin was 4.59 % in 2011 , a decline of 31 basis points relative to 2010. the principle negative factors impacting our net interest margin in 2011 were a shift from average loan balances into lower-yielding investment balances , and lower loan yields resulting from increased competition for quality loans . having a favorable effect on our net interest margin were a shift in average balances from higher-cost liabilities into lower-cost non-maturity deposits , a reduced reliance on interest-bearing liabilities , and a drop in average non-accruing loan balances . we expect that our net interest margin could continue to experience slight contraction due to heightened competitive pressures on loan yields , and that effect will be exacerbated if the negative trends in outstanding loan balances and nonperforming loans are not reversed . for 2010 relative to 2009 , net interest income declined due to the fact that average interest-earning assets were $ 11 million lower and our net interest margin fell by 10 basis points . the principal negative pressures on our net interest margin in 2010 came from a $ 418,000 increase in net interest reversals and an unfavorable shift in average asset balances . having a positive impact for the 2010 over 2009 comparison were increases of $ 25 million in average equity and $ 17 million in average non-interest bearing demand deposit balances , which reduced our reliance on interest-bearing liabilities . 34 provision for loan and lease losses credit risk is inherent in the business of making loans . the company sets aside an allowance for loan and lease losses , a contra-asset account , through periodic charges to earnings which are reflected in the income statement as the provision for loan and lease losses . these charges are in amounts sufficient to achieve an allowance for loan and lease losses that , in management 's judgment , is adequate to absorb probable loan losses related to specifically-identified impaired loans , as well as probable incurred loan losses in the remaining loan portfolio . specifically identifiable and quantifiable losses are immediately charged off against the allowance . the loan loss provision is also impacted by the level of loan charge-offs , since charge-offs affect historical loss factors used in determining general reserves in the allowance and could necessitate reserve replenishment . net loans charged off in 2011 totaled $ 15.855 million , relative to $ 19.257 million in 2010 and $ 12.953 million in 2009. charge-offs were higher in 2011 and 2010 , because reserves that had been established in previous periods for specifically-identified losses on certain impaired loans were determined to be uncollectible and written off . the company 's policies for monitoring the adequacy of the allowance and determining loan amounts that should be charged off , and other detailed information with regard to changes in the allowance , are discussed below under “ allowance for loan and lease losses. ” the process utilized to establish an appropriate allowance for loan and lease losses can result in a high degree of variability in the company 's loan loss provision , and consequently in our net earnings . despite a relatively high level of charge-offs , the company 's loan loss provision was reduced by $ 4.680 million , or 28 % , in 2011 relative to 2010 , and was also reduced by $ 4.894 million , or 23 % , in 2010 relative to 2009 , since many of the charge-offs in 2011 and 2010 were against reserves that were already reflected in the allowance at the beginning of those respective years , as noted above . our loan loss provision in 2011 and 2010 was primarily utilized to provide specific reserves for loans that migrated into impaired status , build general reserves for performing loans due to higher historical loss factors , and replenish reserves subsequent to loan charge-offs . the principal reason for the relatively high loan loss provision in 2009 was a rising level of impaired loans requiring greater specific reserves . the severity of economic challenges has contributed to much higher provisions for the past four years than recorded in prior periods of strong economic growth , due to the negative impact of recessionary conditions on many of our borrowers and the resulting credit challenges in our loan portfolio . non-interest revenue and operating expense the following table sets forth the major components of the company 's non-interest revenue and operating expense , along with relevant ratios , for the years indicated : 35 replace_table_token_6_th the overhead efficiency ratio in the table above represents total operating expense divided by the sum of fully tax-equivalent net interest and non-interest income , with the provision for loan losses , investment gains and losses , and other extraordinary gains and losses excluded from the equation . since total revenue declined by a proportionately greater amount than other operating expense in 2011 ( excluding investment gains and other extraordinary items ) , our efficiency ratio increased by 103 basis points relative to 2010. our efficiency ratio rose by 895 basis points in 2010 in comparison to 2009 , due to a drop in revenue relative to a large increase in operating expense .
| summary of performance there are signs of improvement in the national economy and in certain regions of california , but the economy in our market areas remains under considerable stress . in fact , recessionary conditions have led to higher credit costs , declining loan balances , and associated earnings pressures at the company for the past four years . industry-wide regulatory pressures on certain components of non-interest income have exacerbated the negative impact of economic conditions on our financial performance . the company recognized net income of $ 7.780 million in 2011 relative to $ 7.363 million in 2010 , representing the first year-over-year increase in net income since 2007 but still well below levels achieved in pre-recession years . net income per diluted share was $ 0.55 for 2011 , as compared to $ 0.60 in 2010 and $ 0.86 in 2009. the company 's return on average assets was 0.59 % and return on average equity was 4.73 % in 2011 , as compared to 0.56 % and 5.16 % , respectively in 2010 , and 0.68 % and 7.56 % , respectively for 2009. the following are major factors impacting the company 's results of operations in recent years : 29 · net interest income declined by $ 3.225 million , or 6 % , in 2011 relative to 2010 , and reflects a decrease of $ 1.787 million , or 3 % , in 2010 relative to 2009. the decline in 2011 is the result of a 31 basis point net interest margin decline partially offset by a $ 12 million increase in average interest-earning assets , while the decline in 2010 is due to a 10 basis point slide in our net interest margin and an $ 11 million drop in the average balance of interest-earning assets .
| 6,825 |
charles liang and his wife , also an officer of the company , collectively own approximately 10.5 % of ablecom , while steve liang and other family members own approximately 35.9 % of story_separator_special_tag the following discussion should be read in conjunction with the consolidated financial statements and related notes which appear elsewhere in this annual report on form 10-k. this discussion contains forward-looking statements that involve risks and uncertainties . our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors , including those discussed below and elsewhere in this annual report on form 10-k , particularly under the heading “ risk factors. ” overview we are a global leader in high-performance , high-efficiency server technology and green computing innovation . we develop and provide end-to-end green computing solutions for enterprise it , datacenter , cloud computing , hpc and embedded systems worldwide . our solutions include a range of complete rackmount , workstation , blade , storage , gpu systems , networking devises and full rack solutions , as well as subsystems and accessories which can be used by distributors , oems and end customers to assemble server systems . to date , we have generated the majority of our net sales from subsystems . in recent years our growth in net sales has been driven by the growth in the market for application optimized server systems . for fiscal years 2012 , 2011 and 2010 , net sales of optimized servers were $ 447.0 million , $ 351.3 million and $ 245.2 million , respectively , and net sales of subsystems and accessories were $ 566.9 million , $ 591.3 million and $ 476.2 million , respectively . the increase in our net sales in fiscal year 2012 compared with fiscal year 2011 was primarily due to increased sales in server solutions including complete rack and rackmount and storage solutions . however , our net sales in fiscal year 2012 was adversely impacted by the disruption in the hard disk drive supply chain as a result of the flooding in thailand . we commenced operations in 1993 and have been profitable every year since inception . for fiscal years 2012 , 2011 and 2010 , our net sales were $ 1,013.9 million , $ 942.6 million and $ 721.4 million , respectively , and our net income was $ 29.9 million , $ 40.2 million and $ 26.9 million , respectively . our decrease in profitability in fiscal year 2012 was primarily attributable to the higher operating expenses in research and development costs incurred for new products relating to the sandy bridge processors launched by intel in the third quarter of fiscal year 2012 , costs incurred for fattwin launch and costs related to expansion of our operations overseas and in the united states . the decrease in profitability was offset in part by an increase in our gross profit resulting primarily from an increase in our net sales of server solutions which typically have higher margins . we sell our server systems and subsystems and accessories primarily through distributors and to a lesser extent to oems as well as through our direct sales force . for fiscal years 2012 , 2011 and 2010 , we derived 54.4 % , 56.1 % and 66.7 % , respectively , of our net sales from products sold to distributors , and we derived 45.6 % , 43.9 % and 33.3 % , respectively , from sales to oems and to end customers . none of our customers accounted for 10 % or more of our net sales in fiscal years 2012 , 2011 and 2010 . for fiscal years 2012 , 2011 and 2010 , we derived 58.2 % , 58.3 % and 60.1 % , respectively , of our net sales from customers in the united states . for fiscal years 2012 , 2011 and 2010 , we derived 41.8 % , 41.7 % and 39.9 % , respectively , of our net sales from customers outside the united states . we perform the majority of our research and development efforts in-house . for fiscal years 2012 , 2011 and 2010 , research and development expenses represented 6.3 % , 5.1 % and 5.2 % of our net sales , respectively . we use several suppliers and contract manufacturers to design and manufacture components in accordance with our specifications , with most final assembly and testing performed at our manufacturing facility in san jose , california . during fiscal year 2012 , we continued to invest in expanding our operations both in san jose , california and our subsidiaries in the netherlands and taiwan in order to support our growth . we have increased manufacturing and service operations in the netherlands and taiwan to support our european and asian customers and we have expanded our overseas manufacturing capacity in fiscal year 2012. one of our key suppliers is ablecom , a related party , which supplies us with contract design and manufacturing support . for fiscal years 2012 , 2011 and 2010 , our purchases from ablecom represented 19.9 % , 19.6 % and 20.5 % of our cost of sales , respectively . ablecom 's sales to us constitute a substantial majority of ablecom 's net sales . we continue to maintain our manufacturing relationship with ablecom in asia in an effort to reduce our product costs and do not have any current plans to reduce our reliance on ablecom product purchases . in addition to providing a larger volume of contract manufacturing services for us , ablecom continues to warehouse for us a number of components and subassemblies manufactured by multiple suppliers prior to shipment to our facilities in the united states and europe . we typically negotiate the price of products that we purchase from ablecom on a quarterly basis ; however , either party may re-negotiate the price of products with each order . story_separator_special_tag as with most electronics-based products , average selling prices typically are highest at the time of introduction of new products which utilize the latest technology and tend to decrease over time as such products mature in the market and are replaced by next generation products . cost of sales . cost of sales primarily consists of the costs to manufacture our products , including the costs of materials , contract manufacturing , shipping , personnel and related expenses , equipment and facility expenses , warranty costs and inventory excess and obsolete provisions . the primary factors that impact our cost of sales are the mix of products sold and cost of materials , which include raw material costs , shipping costs and salary and benefits related to production . cost of sales as a percentage of net sales may increase over time if decreases in average selling prices are not offset by corresponding decreases in our costs . our cost of sales , as a percentage of net sales , is generally lower on server systems than on subsystems and accessories . because we do not have long-term fixed supply agreements , our cost of sales is subject to change based on market conditions . research and development expenses . research and development expenses consist of the personnel and related expenses of our research and development teams , and materials and supplies , consulting services , third party testing services and equipment and facility expenses related to our research and development activities . all research and development costs are expensed as incurred . we occasionally receive non-recurring engineering , or nre funding from certain suppliers and customers . under these programs , we are reimbursed for certain research and development costs that we incur as part of the joint development of our products and those of our suppliers and customers . these amounts offset a portion of the related research and development expenses and have the effect of reducing our reported research and development expenses . sales and marketing expenses . sales and marketing expenses consist primarily of salaries and commissions for our sales and marketing personnel , costs for tradeshows , independent sales representative fees and marketing programs . from time to time , we receive cooperative marketing funding from certain suppliers . under these programs , we are reimbursed for certain marketing costs that we incur as part of the joint promotion of our products and those of our suppliers . these amounts offset a portion of the related expenses and have the effect of reducing our reported sales and marketing expenses . similarly , we from time to time offer our distributors cooperative marketing funding which has the effect of increasing our expenses . the timing , magnitude and estimated usage of our programs and those of our suppliers can result in significant variations in reported sales and marketing expenses from period to period . spending on cooperative marketing , either by us or our suppliers , typically increases in connection with significant product releases by us or our suppliers . general and administrative expenses . general and administrative expenses consist primarily of general corporate costs , including personnel expenses , financial reporting , corporate governance and compliance and outside legal , audit and tax fees . provision for litigation loss . loss from litigation relates to an action filed in france by digitechnic , s.a. , a former customer . the company entered into a settlement agreement with digitechnic , pursuant to which the company made a payment of $ 1.1 million in december 2009. interest and other income , net . interest and other income , net represents the net of our interest income on investments or interest expense on the building loans or letters of credit for our owned facilities offset by interest earned on our cash balances . income tax provision . our income tax provision is based on our taxable income generated in the jurisdictions in which we operate , currently primarily the united states and the netherlands and to a lesser extent , taiwan . our effective tax rate differs from the statutory rate primarily due to research and development tax credits and the domestic production activities deduction which were partially offset by the impact of state taxes and stock option expenses . a reconciliation of the federal statutory income tax rate to our effective tax rate is set forth in note 11 of notes to consolidated financial statements . critical accounting policies our discussion and analysis of our financial condition and results of operations are based upon our financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states . the 35 preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets , liabilities , revenues and expenses . we evaluate our estimates on an on-going basis , including those related to allowances for doubtful accounts and sales returns , cooperative marketing accruals , investment valuations , inventory valuations , income taxes , warranty obligations and stock-based compensation . we base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances , the results of which form the basis for making the judgments we make about the carrying values of assets and liabilities that are not readily apparent from other sources . because these estimates can vary depending on the situation , actual results may differ from the estimates . we believe the following are our most critical accounting policies as they require our more significant judgments in the preparation of our financial statements . revenue recognition . we recognize revenue from sales of products , when persuasive evidence of an arrangement exists , shipment has occurred and title has transferred , the sales price is fixed or determinable , collection of the resulting receivable is reasonably assured , and all significant obligations have been met .
| results of operations the following table sets forth our financial results , as a percentage of net sales for the periods indicated : replace_table_token_6_th comparison of fiscal years ended june 30 , 2012 and 2011 net sales . net sales increased by $ 71.3 million , or 7.6 % , to $ 1,013.9 million from $ 942.6 million , for fiscal year 2012 and 2011 , respectively . this increase was due primarily to an increase in the average selling price of our server systems and an increase in unit volumes of our server systems . for fiscal year 2012 , the number of server system units sold increased 8.1 % to 239,000 compared to 221,000 for fiscal year 2011 . the average selling price of server system units increased 18.8 % to $ 1,900 in fiscal year 2012 compared to $ 1,600 in fiscal year 2011 . the average selling prices of our server systems increased primarily due to an increase in average selling prices of hard disk drives caused by the flooding in thailand , higher average selling prices of complete integrated-high-end servers solutions to oem and end customers , rack solutions and superblades offset in part by declines in average selling prices of 6000 series configuration of servers . sales of server systems increased by $ 95.7 million or 27.2 % from fiscal year 2011 to fiscal year 2012 , primarily due to higher sales of complete integrated-high-end servers solutions to oem and end customers and higher sales of rack , storage and superblades solutions . sales of server systems represented 44.1 % of our net sales for fiscal year 2012 compared to 37.3 % of our net sales for fiscal year 2011 . for fiscal year 2012 , the number of subsystems and accessories units sold decreased 5.4 % to 4.3 million compared to 4.6 million for fiscal year 2011 . sales of subsystems and accessories decreased by $ 24.4
| 6,826 |
depreciation is recorded on the straight-line method generally based on estimated useful lives of 30 to 40 years for buildings and three to five years for furniture , fixtures and equipment . the costs of improvements on leased stores are capitalized as leasehold improvements and are depreciated using the straight-line method over the applicable lease period , or useful life , if shorter . maintenance and repairs are charged to expense as incurred and renewals and betterments are charged to the appropriate property and equipment accounts . upon sale or retirement of depreciable assets , the cost and related accumulated depreciation is removed from the accounts story_separator_special_tag general the company is a leading operator of retail-based pawn stores with 2,748 store locations in the u.s. and latin america . the company 's pawn stores generate retail sales primarily from the merchandise acquired through collateral forfeitures and over-the-counter purchases from customers . in addition , the stores help customers meet small short-term cash needs by providing non-recourse pawn loans and buying merchandise directly from customers . personal property , such as jewelry , electronics , tools , appliances , sporting goods and musical instruments , is pledged as collateral for the pawn loans and held by the company over the typical 30-day term of the loan plus a stated grace period . the company recognizes pawn loan fee revenue on a constant-yield basis over the life of the pawn loan for all pawn loans of which the company deems collection to be probable based on historical redemption statistics . if a pawn loan is not repaid prior to the expiration of the loan term , including any extension or grace period , if applicable , the property is forfeited to the company and transferred to inventory at a value equal to the principal amount of the loan , exclusive of accrued pawn fee revenue . the company records merchandise sales revenue at the time of the sale and presents merchandise sales net of any sales or value-added taxes collected . the company does not provide direct financing to customers for the purchase of its merchandise , but does permit its customers to purchase merchandise on an interest-free “ layaway ” plan . should the customer fail to make a required payment pursuant to a layaway plan , the item is returned to inventory and all or a portion of previous payments are typically forfeited to the company . deposits and interim payments from customers on layaway sales are recorded as deferred revenue and subsequently recorded as retail merchandise sales revenue when the merchandise is delivered to the 34 customer upon receipt of final payment or when previous payments are forfeited to the company . some jewelry inventory is melted and processed at third-party facilities and the precious metal and diamond content is sold at either prevailing market commodity prices or a previously agreed upon price with a commodity buyer . the company records revenue from these wholesale scrap jewelry transactions when a price has been agreed upon and the company ships the commodity to the buyer . operating expenses consist of all items directly related to the operation of the company 's stores , including salaries and related payroll costs , rent , utilities , facilities maintenance , advertising , property taxes , licenses , supplies and security . administrative expenses consist of items relating to the operation of the corporate offices , including the compensation and benefit costs of corporate management , district managers and other operations management personnel , accounting , legal and other administrative costs , information technology costs , liability and casualty insurance , outside legal and accounting fees and stockholder-related expenses . merger and acquisition expenses primarily include incremental costs directly associated with merger and acquisition activities , including professional fees , outside legal expenses , severance , retention and other employee-related costs , contract breakage costs and costs related to consolidation of technology systems and corporate facilities . the company organizes its operations into two reportable segments . the u.s. operations segment consists of all operations in the u.s. and the latin america operations segment consists of all operations in mexico , guatemala , colombia and el salvador . financial information regarding the company 's revenue and long-lived assets by geographic areas is provided in note 15 of notes to consolidated financial statements . stores included in the same-store calculations presented in this report are those stores that were opened or acquired prior to the beginning of the prior-year comparative period and remained open through the end of the reporting period . also included are stores that were relocated during the applicable period within a specified distance serving the same market where there is not a significant change in store size and where there is not a significant overlap or gap in timing between the opening of the new store and the closing of the existing store . the company 's management reviews and analyzes operating results in latin america on a constant currency basis because the company believes this better represents the company 's underlying business trends . constant currency results are non-gaap financial measures , which exclude the effects of foreign currency translation and are calculated by translating current-year results at prior-year average exchange rates . the wholesale scrap jewelry sales in latin america are priced and settled in u.s. dollars , and are not affected by foreign currency translation , as are a small percentage of the operating and administrative expenses in latin america , which are billed and paid in u.s. dollars . amounts presented on a constant currency basis are denoted as such . see “ non-gaap financial information ” for additional discussion of constant currency operating results . business operations in mexico , guatemala and colombia are transacted in mexican pesos , guatemalan quetzales and colombian pesos . the company also has operations in el salvador where the reporting and functional currency is the u.s. dollar . story_separator_special_tag the company performs its indefinite-lived intangible asset impairment assessment annually as of december 31 , and between annual assessments if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount . foreign currency transactions - the company has operations in mexico , guatemala and colombia where the functional currency is the mexican peso , guatemalan quetzal and colombian peso . accordingly , the assets and liabilities of these subsidiaries are translated into u.s. dollars at the exchange rate in effect at each balance sheet date , and the resulting adjustments are accumulated in other comprehensive income ( loss ) as a separate component of stockholders ' equity . revenues and expenses are translated at the average exchange rates occurring during the respective period . prior to translation , u.s. dollar-denominated transactions of the foreign subsidiaries are remeasured into their functional currency using current rates of exchange for monetary assets and liabilities and historical rates of exchange for non-monetary assets and liabilities . gains and losses from remeasurement of dollar-denominated monetary assets and liabilities in mexico , guatemala and colombia are accumulated in loss ( gain ) on foreign exchange in the consolidated statements of income . deferred taxes are not currently recorded on cumulative foreign currency translation adjustments , as the company indefinitely reinvests earnings of its foreign subsidiaries . the company also has operations in el salvador where the reporting and functional currency is the u.s. dollar . 37 story_separator_special_tag pre-tax operating income u.s. store operating expenses decreased 4 % to $ 396.6 million during 2020 compared to $ 412.5 million during 2019 and same-store operating expenses decreased 3 % compared with the prior-year period . the decrease in same-store operating expenses was primarily due to payroll savings realized through normal employee attrition , reduced store operating hours and other cost saving initiatives as a result of covid-19 , partially offset by an increase in store-level incentive based compensation , primarily as a result of the significant increase in retail sales during the second quarter and increased margins as described above . u.s. store depreciation and amortization increased 4 % to $ 21.7 million during 2020 compared to $ 20.9 million during 2019. the u.s. segment pre-tax operating income for 2020 was $ 204.7 million , which generated a pre-tax segment operating margin of 19 % compared to $ 242.1 million and 20 % in the prior year , respectively . the decrease in the segment pre-tax operating income and margin reflected decreases in pawn fee revenue as a result of the decline in pawn loan receivables and net revenue from consumer loan and credit services products as a result of discontinuing consumer lending operations , partially offset by an increase in gross profit from retail sales and a decrease in operating expenses . 41 latin america operations segment the company 's management reviews and analyzes operating results in latin america on a constant currency basis because the company believes this better represents the company 's underlying business trends . constant currency results are non-gaap financial measures , which exclude the effects of foreign currency translation and are calculated by translating current-year results at prior-year average exchange rates . the wholesale scrap jewelry sales in latin america are priced and settled in u.s. dollars and are not affected by foreign currency translation , as are a small percentage of the operating and administrative expenses in latin america , which are billed and paid in u.s. dollars . latin american results of operations for 2020 compared to 2019 were impacted by an 11 % unfavorable change in the average value of the mexican peso compared to the u.s. dollar . the translated value of latin american earning assets as of december 31 , 2020 compared to december 31 , 2019 was also impacted by a 6 % unfavorable change in the end-of-period value of the mexican peso compared to the u.s. dollar . the following table details earning assets , which consist of pawn loans and inventories as well as other earning asset metrics of the latin america operations segment as of december 31 , 2020 as compared to december 31 , 2019 ( dollars in thousands , except as otherwise noted ) : replace_table_token_13_th 42 the following table presents segment pre-tax operating income and other operating metrics of the latin america operations segment for the year ended december 31 , 2020 as compared to the year ended december 31 , 2019 ( dollars in thousands ) . store operating expenses include salary and benefit expense of store-level employees , occupancy costs , bank charges , security , insurance , utilities , supplies and other costs incurred by the stores . replace_table_token_14_th retail merchandise sales operations latin america retail merchandise sales decreased 22 % ( 13 % on a constant currency basis ) to $ 355.2 million during 2020 compared to $ 453.4 million for 2019. same-store retail sales decreased 25 % ( 17 % on a constant currency basis ) . the gross profit margin on retail merchandise sales was 37 % during 2020 compared to 34 % during 2019. inventories in latin america decreased 35 % ( 32 % on a constant currency basis ) from $ 83.9 million at december 31 , 2019 to $ 54.2 million at december 31 , 2020. inventories aged greater than one year in latin america were 2 % at december 31 , 2020 and 1 % at december 31 , 2019 . 43 in general , in most latin american jurisdictions where the company has stores , pawnshops were designated an essential service by federal guidelines and or local regulations and were allowed to remain open during the broad shutdowns in response to covid-19 . however , a regulatory prohibition of retail transactions was enacted in mexico during the last three weeks of may and all stores were closed in colombia and el salvador during much of the second quarter due to broad government shutdowns .
| results of operations 2020 consolidated operating results highlights the following table sets forth revenue , net income , diluted earnings per share , adjusted net income , adjusted diluted earnings per share , ebitda and adjusted ebitda for the year ended december 31 , 2020 as compared to the year ended december 31 , 2019 ( in thousands , except per share amounts ) : replace_table_token_10_th see “ non-gaap financial information—adjusted net income and adjusted diluted earnings per share and —earnings before interest , taxes , depreciation and amortization ( ebitda ) and adjusted ebitda ” below . the following charts present net income , adjusted net income , diluted earnings per share , adjusted diluted earnings per share , ebitda , adjusted ebitda and store count for the years ended december 31 , 2020 , 2019 and 2018 ( in millions , except per share and store count amounts ) : * non-gaap financial measures . see “ non-gaap financial information ” for additional discussion of non-gaap financial measures . 38 operating results for the twelve months ended december 31 , 2020 compared to the twelve months ended december 31 , 2019 in december 2019 , a novel strain of coronavirus ( “ covid-19 ” ) surfaced in china and rapidly spread throughout the world . in march of 2020 , the world health organization declared the outbreak a pandemic . during the end of the first quarter of 2020 and the first part of the second quarter of 2020 , many countries , states and other local government officials reacted by instituting quarantines , shelter-in-place and other orders mandating non-essential business closures , travel restrictions and other measures in an effort to reduce the spread of covid-19 , in addition to instituting broad-based stimulus , relief and forbearance programs in an effort to mitigate the economic impact of the pandemic . the impact of covid-19 on the company 's results of operations in each segment are more fully described in the discussion below .
| 6,827 |
49 lancaster colony corporation and subsidiaries notes to consolidated financial statements ( tabular amounts in thousands , except per share data ) benefit payments estimated for future years are as follows : replace_table_token_70_th the following table summarizes the health care costs trend assumptions for other postretirement benefit measurement purposes : replace_table_token_71_th assumed health care cost rates can have a significant effect on the story_separator_special_tag our fiscal year begins on july 1 and ends on june 30. unless otherwise noted , references to “ year ” pertain to our fiscal year ; for example , 2015 refers to fiscal 2015 , which is the period from july 1 , 2014 to june 30 , 2015 . the following discussion should be read in conjunction with the “ selected financial data ” in item 6 and our consolidated financial statements and the notes thereto in item 8 of this annual report on form 10-k. the forward-looking statements in this section and other parts of this report involve risks , uncertainties and other factors , including statements regarding our plans , objectives , goals , strategies , and financial performance . our actual results could differ materially from the results anticipated in these forward-looking statements as a result of factors set forth under the caption “ forward-looking statements ” and those set forth in item 1a . overview business overview lancaster colony corporation is a manufacturer and marketer of specialty food products for the retail and foodservice markets . we previously manufactured and marketed candles for the food , drug and mass markets until that business was sold on january 30 , 2014. while much less significant , we also previously sold candles , glassware and various other products to customers in certain commercial markets . these commercial product lines were sold in may 2013. the financial results of these operations , previously included in our glassware and candles segment , are reported as discontinued operations for all periods presented herein . consistent with our current acquisition strategy , in march 2015 we acquired all of the issued and outstanding capital stock of flatout holdings , inc. ( “ flatout ” ) , a privately owned manufacturer and marketer of flatbread wraps and pizza crusts based in saline , michigan . the purchase price was $ 92.2 million , net of cash acquired . this transaction is discussed in further detail in note 2 to the consolidated financial statements . we expect that part of our future growth will result from additional acquisitions . we continue to review potential acquisitions that we believe will complement our existing product lines , enhance our gross margins and or offer good expansion opportunities in a manner that fits our overall strategic goals . our operations are organized into one reportable segment : “ specialty foods. ” our sales are predominately domestic . our business has the potential to achieve future growth in sales and profitability due to attributes such as : leading retail market positions in several branded products with a high-quality perception ; recognized innovation in retail products ; a broad customer base in both retail and foodservice accounts ; well-regarded culinary expertise among foodservice accounts ; recognized leadership in foodservice product development ; experience in integrating complementary business acquisitions ; and historically strong cash flow generation that supports growth opportunities . our goal is to grow both retail and foodservice sales over time by : leveraging the strength of our retail brands to increase current product sales ; introducing new retail products and expanding into new channels ; growing our foodservice sales through the strength of our reputation in product development and quality ; and pursuing acquisitions that meet our strategic criteria . in retail markets , we utilize numerous branded products to support growth and maintain market competitiveness . we place great emphasis on our product innovation and development efforts so as to enhance growth by providing distinctive new products or extensions of our current product lines to meet the evolving needs and preferences of consumers . our foodservice sales primarily consist of products sold to restaurant chains , either directly or through distributors . over the long-term , we have experienced broad-based growth in our foodservice sales , as we build on our strong reputation for product development and quality . we have made substantial capital investments to support our existing food operations and future growth opportunities . for example , in 2015 we completed a significant processing capacity expansion at our horse cave , kentucky dressing facility to help meet demand for our dressing products . in 2013 we expanded our crouton manufacturing capacity to provide capacity for potential future sales growth as well as improve operating efficiencies . based on our current plans and expectations , we believe our capital expenditures for 2016 could total approximately $ 15 to $ 20 million . we anticipate we will be able to fund all of our capital needs in 2016 with cash generated from operations . 16 summary of 2015 results consolidated net sales reached $ 1,105 million during 2015 , increasing by 6 % as compared to prior-year net sales of $ 1,041 million , driven by growth in both retail and foodservice markets . flatout was not material to the 2015 results . gross margin increased 4 % to $ 257.7 million from the prior-year total of $ 248.6 million . the benefits of higher sales volumes were somewhat offset by the impact of dressing production capacity constraints , higher freight costs , increased placement costs for new products , certain nonrecurring charges related to flatout and lower foodservice pricing . net income totaled $ 101.7 million in 2015 , or $ 3.72 per diluted share , compared to net income of $ 75.0 million , or $ 2.74 per diluted share , in 2014 , which included an after-tax loss on the sale of our candle manufacturing and marketing operations of $ 29.1 million . net income in 2013 totaled $ 109.2 million , or $ 3.99 per diluted share . story_separator_special_tag diluted net income per share totaled $ 3.72 in 2015 , an in crease from the 2014 total of $ 2.74 per diluted share due primarily to the 2014 loss on the sale of discontinued operations . the 2013 net income per share totaled $ 3.99 per diluted share . financial condition liquidity and capital resources we need to maintain sufficient flexibility in our future capital structure in order to ensure that our capitalization is adequate to support our future internal growth prospects , acquire food businesses consistent with our strategic goals , and maintain cash returns to our shareholders through cash dividends and share repurchases . our balance sheet retained fundamental financial strength during 2015 , and we ended the year with $ 182 million in cash and equivalents , along with shareholders ' equity of $ 581 million and no debt . under our unsecured revolving credit facility ( “ facility ” ) , we may borrow up to a maximum of $ 120 million at any one time . loans may be used for general corporate purposes . we had no borrowings outstanding under this facility at june 30 , 2015 . at june 30 , 2015 , we had $ 4.7 million of standby letters of credit outstanding , which reduced the amount available for borrowing on the facility . the facility expires in april 2017 , and all outstanding amounts are then due and payable . interest is variable based upon formulas tied to libor or an alternative base rate defined in the credit agreement , at our option . we must also pay facility fees that are tied to our then-applicable consolidated leverage ratio . when we have outstanding borrowings under this facility , they will be classified as long-term debt due to the long-term nature of this facility . the facility contains certain restrictive covenants , including limitations on indebtedness , asset sales and acquisitions , and financial covenants relating to interest coverage and leverage . at june 30 , 2015 , we were in compliance with all applicable provisions and covenants of the facility , and we exceeded the requirements of the financial covenants by substantial margins . we currently expect to remain in compliance with the facility 's covenants for the foreseeable future . however , a default under the facility could accelerate the repayment of any outstanding indebtedness and limit our access to additional credit 19 available under the facility . such an event could require a reduction in or curtailment of cash dividends or share repurchases , reduce or delay beneficial expansion or investment plans , or otherwise impact our ability to meet our obligations when due . at june 30 , 2015 , we were not aware of any event that would constitute a default under the facility . we believe that internally generated funds and our existing balances in cash and equivalents , in addition to our currently available bank credit arrangements , should be adequate to meet our cash requirements through 2016 . if we were to borrow outside of our facility under current market terms , our average interest rate may increase significantly and have an adverse effect on our results of operations . cash flows replace_table_token_7_th cash flow provided by operating activities remains the primary source of financing for our internal growth . cash provided by operating activities in 2015 totaled $ 132.8 million , an in crease of 3 % as compared with the 2014 total of $ 129.1 million , which de creased 2 % from the 2013 total of $ 131.7 million . the change in cash provided by operating activities from the prior year was largely influenced by the discontinued operations resulting from the sale of our candle manufacturing and marketing operations , which were sold in january 2014. see note 3 to the consolidated financial statements for further information regarding this sale . the 2014 cash provided by operating activities , as reflective of the discontinued operations , was also impacted by the relative changes in working capital , particularly accounts receivable and accrued liabilities and the change in net income from 2013 . cash used in investing activities totaled $ 112.3 million in 2015 as compared to a source of $ 8.5 million in 2014 and a use of $ 22.4 million in 2013 . the cash used in investing activities in 2015 reflects $ 92.2 million paid for the acquisition of flatout in march 2015 , as well as a higher level of capital expenditures in 2015 , the majority of this being spent on our processing capacity expansion project at our horse cave , kentucky dressing facility which was essentially complete at december 31 , 2014. the 2014 increase in cash provided by investing activities is due to the proceeds from the sale of our candle manufacturing and marketing operations , as well as a decrease in capital expenditures from the 2013 level , which included expenditures for expanded crouton manufacturing capacity . capital expenditures totaled $ 18.3 million in 2015 , compared to $ 16.0 million in 2014 and $ 24.1 million in 2013 . based on our current plans and expectations , we believe our capital expenditures for 2016 could total approximately $ 15 to $ 20 million . financing activities used net cash totaling $ 49.8 million , $ 49.4 million and $ 177.6 million in 2015 , 2014 and 2013 , respectively . the higher level in 2013 was primarily due to the $ 5.00 per share special dividend that was paid in december 2012. the dividend payout rate for 2015 was $ 1.82 per share as compared to $ 1.72 per share in 2014 and $ 1.52 per share , excluding the special dividend , in 2013 . this past fiscal year marked the 52 nd consecutive year in which our dividend rate was increased . cash utilized for share repurchases totaled $ 0.6 million , $ 3.1 million and $ 0.6 million in 2015 , 2014 and 2013 , respectively .
| review of consolidated operations net sales and gross margin replace_table_token_4_th 2015 to 2014 in march 2015 we acquired flatout and its results of operations have been included in our consolidated financial statements from the date of acquisition , but such results were not material to our consolidated financial statements , with flatout contributing $ 13 million in net sales to our 2015 results . consolidated net sales for the year ended june 30 , 2015 increased 6 % to a new record of $ 1,105 million from the prior-year record total of $ 1,041 million . this growth was primarily driven by volume and mix . retail net sales increased 6 % due to higher sales of new york brand ® frozen garlic bread and olive garden ® retail dressings and the impact of flatout , but were offset in part by increased promotional spending on some retail product offerings and by placement costs for new products . foodservice net sales also improved 6 % primarily due to increased sales to national chain restaurants . our overall sales volume , as measured by pounds shipped , improved by 5 % . incremental net sales from flatout accounted for less than 1 % of the volume increase . the influence of a more favorable sales mix was estimated to be less than 1 % . the net impact of pricing for 17 both retail and foodservice was insignificant . as a percentage of net sales , sales of retail products remained relatively unchanged at 51 % . our gross margin as a percentage of net sales declined to 23.3 % in 2015 compared with 23.9 % in 2014 as the benefits from the improved sales volumes and modestly lower material costs were offset by increased operating costs due to capacity constraints in our dressing manufacturing , higher freight expense , increased placement costs for new products and certain nonrecurring charges related to flatout .
| 6,828 |
the company 's results of operations are primarily dependent on the results of the bank , which is a wholly owned subsidiary of the company . our results of operations depend , to a large extent , on net interest income , which is the difference between the income earned on our loan and investment portfolios and interest expense on deposits and borrowings . our net interest income is largely determined by our net interest spread , which is the difference between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities , and the relative amounts of interest-earning assets and interest-bearing liabilities . results of operations are also affected by our provision for loan losses , fee income and other , non-interest income and non-interest expenses . our other , or non-interest , expenses principally consist of compensation and employee benefits , office occupancy and equipment expense , data processing , advertising and business promotion , professional fees , other real estate owned expense and other expense . our results of operations are also significantly affected by general economic and competitive conditions , particularly changes in interest rates , government policies and actions of regulatory authorities . future changes in applicable law , regulations or government policies may materially impact our financial conditions and results of operations . reported amounts are presented in accordance with accounting principles generally accepted in the united states of america ( “ gaap ” ) . the company 's management believes that the supplemental non-gaap information provided in is utilized by market analysts and others to evaluate a company 's financial condition and , therefore , that such information is useful to investors . these disclosures should not be viewed as a substitute for financial results determined in accordance with gaap , nor are they necessarily comparable to non-gaap performance measures presented by other companies . our business strategy currently is focused on improving core earnings , seeking relief from the formal agreement , maintaining low levels of problem assets and conducting our traditional community-oriented banking business . below are certain of the highlights of our business strategy in recent years : improving core earnings . with interest rates falling to historically low levels , it has become increasingly difficult for financial institutions to maintain acceptable levels of net interest income . in recent years , with the bank unable to grow its asset base and loan portfolio , increasing interest income has been a challenge . this lack of growth in the loan portfolio , combined with higher deposit and borrowing costs , have all contributed to a decline in the banks ' net interest margin . in an effort to achieve consistent sustainable earnings , i.e . improve the net interest margin , we are implementing specific product and pricing strategies designed to increase the yield on loans and reduce the cost of funding . during fiscal 2014 , we resumed originating commercial real estate loans and commercial business loans , which have higher yields than single-family residential mortgage loans , on a relatively modest basis in accordance with our business plan and our strengthened loan underwriting and loan administration policies and procedures . we also have established a funding composition plan , which is designed to increase checking accounts , primarily non-interest bearing accounts , as well as savings and money market accounts . we are attempting to increase our core deposits , which we define as all deposit accounts other than certificates of deposit . at september 30 , 2014 , our core deposits amounted to 50.7 % of total deposits ( $ 209.4 million ) , compared to 41.2 % of total deposits ( $ 222.8 million ) at september 30 , 2012. 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 flexible delivery options , such as mobile banking , as part of our efforts to increase core deposits . we expect to increase our commercial checking accounts and we plan to enhance our cross-marketing as part of our efforts to gain additional deposit relationships with our loan customers . 23 seek supervisory relief . we entered into the formal agreement with the occ in october 2014. among other things , the formal agreement requires that we provide the occ with relatively extensive reports and data on our business and operations on a quarterly basis . in light of the numerous reporting requirements and operating restrictions imposed by the formal agreement , we plan to seek relief from the formal agreement that the bank entered into in 2014 as well as the imcrs that the occ has imposed as promptly as practicable . maintain low levels of problem assets . we are continuing in our efforts to maintain low levels of problem assets . at september 30 , 2014 , our total non-performing assets in portfolio were $ 4.4 million or 0.80 % of total assets , reflecting a reduction of $ 16.9 million , or 79.5 % , compared to $ 21.2 million of total non-performing assets at september 30 , 2011 ( when total non-performing assets amounted to 3.19 % of total assets ) . the october 2013 bulk sale of problem loans resulted in a dramatic reduction of the company 's non-performing assets . the bulk sale was undertaken as an efficient mechanism for disposing of non-performing and underperforming assets and improving the bank 's credit quality in the process . as a result of the sale , the company significantly reduced its exposure to sectors that experienced economic weakness and significant declines in collateral valuations and has substantially reduced the amount of non-accruing loans . growing our loan portfolio and resuming commercial real estate and construction and development lending . we have resumed , on a relatively modest basis , the origination of commercial real estate loans and construction and development loans in our market area . story_separator_special_tag 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 portfolio . once all factor adjustments are applied , general reserve allocations for each segment are calculated , summarized and reported on the alll summary . alll final schedules , calculations and the resulting evaluation process are reviewed quarterly . in addition , federal bank regulatory agencies , as an integral part of their examination process , periodically review the company 's allowance for loan losses and may require the company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination , which may not previously have been available to management . based on management 's comprehensive analysis of the loan portfolio , management believes the level of the allowance for loan losses at september 30 , 2014 was appropriate under accounting principles generally accepted in the united states of america ( “ u.s . gaap ” ) . a loan is considered impaired when , based on current information and events , it is probable that the company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement . factors considered by management in determining impairment include payment status , collateral value and the probability of collecting scheduled principal and interest payments when due . loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired . management determines the significance of payment delays and 25 payment shortfalls on a case-by-case basis , taking into consideration all of the circumstances surrounding the loan and the borrower , including the length of the delay , the reasons for the delay , the borrower 's prior payment record and the amount of the shortfall in relation to the principal and interest owed . impairment is measured on a loan by loan basis for commercial and industrial loans , commercial real estate loans and commercial construction loans by either the present value of expected future cash flows discounted at the loan 's effective interest rate or the fair value of the collateral if the loan is collateral dependent . the allowance is adjusted for other significant factors that affect the collectibility of the loan portfolio as of the evaluation date including changes in lending policy and procedures , loan volume and concentrations , seasoning of the portfolio , loss experience in particular segments of the portfolio , and bank regulatory examination results . other factors include changes in economic and business conditions affecting our primary lending areas and credit quality trends . loss factors are reevaluated each reporting period to ensure their relevance in the current economic environment . we review key ratios such as the allowance for loan losses to total loans receivable and as a percentage of non-performing loans ; however , we do not try to maintain any specific target range for these ratios . while management uses the best information available to make loan loss allowance evaluations , adjustments to the allowance may be necessary based on changes in economic and other conditions or changes in accounting guidance . in addition , the occ , as an integral part of its examination processes , periodically reviews our allowance for loan losses . the occ may require the recognition of adjustments to the allowance for loan losses based on their judgment of information available to them at the time of their examinations . to the extent that actual outcomes differ from management 's estimates , additional provisions to the allowance for loan losses may be required that would adversely impact earnings in future periods . 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 . changes in the fair value of assets acquired through foreclosure at future reporting dates or at the time of disposition will result in an adjustment in assets acquired through foreclosure expense or net gain ( loss ) on sale of assets acquired through foreclosure , respectively . fair value measurements . the company uses fair value measurements to record fair value adjustments to certain assets to determine fair value disclosures . investment and mortgage-backed securities available for sale are recorded at fair value on a recurring basis . additionally , from time to time , the company may be required to record at fair value other assets on a nonrecurring basis , such as impaired loans , real estate owned and certain other assets . these nonrecurring fair value adjustments typically involve application of lower-of-cost-or-market accounting or write-downs of individual assets . under the financial accounting standards board ( “ fasb ” ) accounting standards codification ( “ asc ” ) topic 820 , fair value measurements , the company groups its assets at fair value in three levels , based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value . these levels are : level 1 — valuation is based upon quoted prices for identical instruments traded in active markets . level 2 — valuation is based upon quoted prices for similar instruments in active markets , quoted prices for identical or similar instruments in markets that are not active , and model-based valuation techniques for which all significant assumptions are observable in the market . level 3 — valuation is generated from model-based techniques that use significant assumptions not observable in the market . these unobservable assumptions reflect the company 's own estimates of assumptions that market participants would use in pricing the asset .
| general . our net loss was $ 18.8 million for the year ended september 30 , 2013 compared to net income of $ 2.0 million for the year ended september 30 , 2012. on a per share basis , the net loss was $ 2.96 per share for the year ended september 30 , 2013 , compared to net income of $ 0.31 per share ( as adjusted for our “ second-step ” conversion ) for the year ended september 30 , 2012. the reason for the $ 20.8 million difference in our results of operations in fiscal 2013 compared to the prior fiscal year was due to an increase in the provision of loan losses of $ 10.4 million , a $ 2.0 million decrease in net interest income , a $ 3.4 million increase in other expenses , as well as $ 5.4 million increase in income tax expense . our interest rate spread was 2.25 % and our net interest margin was 2.43 % for the year ended september 30 , 2013 , compared to a net interest spread of 2.66 % and a net interest margin of 2.79 % for the year ended september 30 , 2012. interest and dividend income . our interest and dividend income decreased for the year ended september 30 , 2013 by $ 3.5 million or 13.5 % over fiscal 2012 to $ 22.3 million . interest income on loans decreased for the year ended september 30 , 2013 over fiscal 2012 by $ 3.9 million , or 16.1 % . the decrease in interest earned on loans in fiscal 2013 was due to a 49 basis point decrease in the average yield earned on our loan portfolio in fiscal 2013 compared to fiscal 2012 as well as a $ 34.2 million or 7.1 % , decrease in the average balance of our outstanding loan portfolio .
| 6,829 |
each reporting period , changes in the actuarial assumptions resulting from changes in actual claims experience and other trends are incorporated into our workers ' compensation claims cost estimates . during the years ended december 31 , 2015 and 2014 , we reduced accrued workers ' compensation costs by $ 1.3 million and $ 2.9 million , respectively , for changes in estimated losses related to prior reporting periods . workers ' compensation cost estimates are discounted to present value at a rate based upon the u.s. treasury rates that correspond with the weighted average estimated claim payout period ( the average discount rate utilized in both 2015 and 2014 was 1.0 % ) and are accreted over the estimated claim payment period and included as a component of direct costs in our consolidated statements of operations . f-15 the following table provides the activity and balances related to incurred but not reported workers story_separator_special_tag you should read the following discussion in conjunction with our consolidated financial statements and related notes included elsewhere in this annual report . historical results are not necessarily indicative of trends in operating results for any future period . the statements contained in this annual report that are not historical facts are forward-looking statements that involve a number of risks and uncertainties . the actual results of the future events described in such forward-looking statements in this annual report could differ materially from those stated in such forward-looking statements . among the factors that could cause actual results to differ materially are the risks and uncertainties discussed in item 1a . risk factors and the uncertainties set forth from time to time in our other public reports and filings and public statements . overview our long-term strategy is to provide the best small and medium-sized businesses in the united states with our specialized human resources service offering and to leverage our buying power and expertise to provide additional valuable services to clients . our most comprehensive hr services offerings are provided through our workforce optimization ® and workforce synchronization tm solutions ( together , our peo hr outsourcing solutions ) , which encompass a broad range of human resources functions , including payroll and employment administration , employee benefits , workers ' compensation , government compliance , performance management and training and development services . our overall operating results can be measured in terms of revenues , payroll costs , gross profit or operating income per worksite employee per month . we often use the average number of worksite employees paid during a period as our unit of measurement in analyzing and discussing our results of operations . in addition to our peo hr outsourcing solutions , we offer a number of other business performance solutions , including human capital management , payroll services , time and attendance , performance management , organizational planning , recruiting services , employment screening , financial and expense management services , retirement services and insurance services , many of which are offered via desktop applications and cloud-based delivery models . these other products or services are offered separately , as a bundle , or along with our peo hr outsourcing solutions . we ended 2015 averaging 153,144 paid worksite employees in the fourth quarter , which represents a 12.0 % increase over the fourth quarter of 2014 . approximately 23 % of our average paid worksite employees were in our mid-market sector for the years ended december 31 , 2014 and 2015 , which is generally defined as companies with 150 to 2,000 worksite employees . we expect the average number of paid worksite employees per month to be between 155,900 and 157,300 in the first quarter of 2016 . our average gross profit per worksite employee per month was $ 250 in 2015 and $ 257 in 2014 , which included a contribution to average gross profit from our other products and services offerings of $ 17 per worksite employee per month in both 2015 and 2014 . adjusted operating expenses increased 2.1 % in 2015 to $ 360.1 million . on a per worksite employee per month basis , adjusted operating expenses decreased from $ 225 in 2014 to $ 206 in 2015 . our adjusted net income in 2015 was $ 54.5 million , a $ 17.8 million increase compared to 2014 . our adjusted ebitda increased 30.8 % over 2014 to $ 110.0 million . we ended 2015 with working capital of $ 54.3 million . during 2015 , we paid $ 21.2 million in dividends and repurchased shares of our common stock at a cost of $ 67.1 million . revenues we account for our revenues in accordance with accounting standards codification ( “ asc ” ) 605-45 , revenue recognition . our peo hr outsourcing solutions gross billings to clients include the payroll cost of each worksite employee at the client location and a markup computed as a percentage of each worksite employee 's payroll cost . we invoice the gross billings concurrently with each periodic payroll of our worksite employees . revenues , which exclude the payroll cost component of gross billings , and therefore , consist solely of the markup , are recognized ratably over the payroll period as worksite employees perform their service at the client worksite . this markup includes pricing components associated with our estimates of payroll taxes , benefits and workers ' compensation costs , plus a separate component related to our hr services . we - 30 - include revenues that have been recognized but not invoiced in unbilled accounts receivable on our consolidated balance sheets . our revenues are primarily dependent on the number of clients enrolled , the resulting number of worksite employees paid each period and the number of worksite employees enrolled in our benefit plans . story_separator_special_tag the health insurance contract with united provides the majority of our health insurance coverage . as a result of certain contractual terms , we have accounted for this plan since its inception using a partially self-funded insurance accounting model . accordingly , we record the costs of the united plan , including an estimate of the incurred claims , taxes and administrative fees ( collectively the “ plan costs ” ) , as benefits expense in the consolidated statements of operations . the estimated incurred claims are based upon : ( i ) the level of claims processed during the quarter ; ( ii ) estimated completion rates based upon recent claim development patterns under the plan ; and ( iii ) the number of participants in the plan , including both active and cobra enrollees . each reporting period , changes in the estimated ultimate costs resulting from claim trends , plan design and migration , participant demographics and other factors are incorporated into the benefits costs . additionally , since the plan 's inception , under the terms of the contract , united establishes cash funding rates 90 days in advance of the beginning of a reporting quarter . if the plan costs for a reporting quarter are greater than the premiums paid and owed to united , a deficit in the plan would be incurred and we would accrue a liability for the excess costs on our consolidated balance sheets . on the other hand , if the plan costs for the reporting quarter are less than the premiums paid and owed to united , a surplus in the plan would be incurred and we would record an asset for the excess premiums on our consolidated balance sheets . the terms of the arrangement with united require us to maintain an accumulated cash surplus in the plan of $ 9.0 million , which is reported as long-term prepaid insurance . as of december 31 , 2015 , plan costs were less than the premiums paid and owed to united by $ 2.2 million . as this amount is less than the agreed-upon $ 9.0 million surplus maintenance level , the $ 6.8 million difference is included in accrued health insurance costs , a current liability , on our consolidated balance sheets . in addition , the premiums owed to united at december 31 , 2015 , were $ 3.1 million , which is included in accrued health insurance costs , a current liability , on our consolidated balance sheets . - 32 - we believe that recent claims activity is representative of incurred and paid trends during the reporting period . the estimated completion rate and annual trend used to compute incurred but not reported claims involves a significant level of judgment . accordingly , an increase ( or decrease ) in the completion rate or annual trend used to estimate the incurred claims would result in an increase ( or decrease ) in benefits costs and net income would decrease ( or increase ) accordingly . the following table illustrates the sensitivity of changes in the completion rate and annual trend on our estimate of total benefit costs of $ 1.2 billion in 2015 : replace_table_token_8_th workers ' compensation costs – since october 1 , 2007 , our workers ' compensation coverage has been provided through our arrangement with ace . under the ace program , we bear the economic burden for the first $ 1 million layer of claims per occurrence , and effective october 1 , 2010 , we also bear the economic burden for a maximum aggregate amount of $ 5 million per policy year for claim amounts that exceed the first $ 1 million . ace bears the economic burden for all claims in excess of these levels . the ace program is a fully insured policy whereby ace has the responsibility to pay all claims incurred under the policy regardless of whether we satisfy our responsibilities . our coverage from september 1 , 2003 through september 30 , 2007 was provided through selected member insurance companies of american international group , inc. because we bear the economic burden for claims up to the levels noted above , such claims , which are the primary component of our workers ' compensation costs , are recorded in the period incurred . workers ' compensation insurance includes ongoing health care and indemnity coverage whereby claims are paid over numerous years following the date of injury . accordingly , the accrual of related incurred costs in each reporting period includes estimates , which take into account the ongoing development of claims and therefore requires a significant level of judgment . we employ a third-party actuary to estimate our loss development rate , which is primarily based upon the nature of worksite employees ' job responsibilities , the location of worksite employees , the historical frequency and severity of workers ' compensation claims , and an estimate of future cost trends . each reporting period , changes in the actuarial assumptions resulting from changes in actual claims experience and other trends are incorporated into our workers ' compensation claims cost estimates . during the years ended december 31 , 2015 and 2014 , we reduced accrued workers ' compensation costs by $ 1.3 million and $ 2.9 million , respectively , for changes in estimated losses related to prior reporting periods . workers ' compensation cost estimates are discounted to present value at a rate based upon the u.s. treasury rates that correspond with the weighted average estimated claim payout period ( the average discount rate utilized in both 2015 and 2014 was 1.0 % ) and are accreted over the estimated claim payment period and included as a component of direct costs in our consolidated statements of operations . our claim trends could be greater than or less than our prior estimates , in which case we would revise our claims estimates and record an adjustment to workers ' compensation costs in the period such determination is made .
| results of operations year ended december 31 , 2015 compared to year ended december 31 , 2014 . the following table presents certain information related to our results of operations : replace_table_token_10_th ( 1 ) includes non-cash impairment and other charges in the first and second quarters of 2015 of $ 9.8 million and $ 1.3 million , respectively , offset by a reduction of $ 0.6 million in the fourth quarter of 2015. please read note 6 to the consolidated financial statements , “ other asset impairments , ” for additional information . ( 2 ) includes a non-cash impairment charge in the second quarter of 2014 of $ 2.5 million . please read note 5 to the consolidated financial statements , “ goodwill and other intangible assets , ” for additional information . also includes a non-cash charge in the fourth quarter of 2014 of $ 1.2 million . please read note 1 to the consolidated financial statements , “ accounting policies , ” for additional information . ( 3 ) includes the impact of dividends exceeding earnings under the two-class method , resulting in a $ 0.05 earnings per share decrease in 2014. please read note 11 to the consolidated financial statements , “ net income per share , ” for additional information . ( 4 ) please read item 7 . “ management 's discussion and analysis of financial condition and results of operations – non-gaap financial measures ” for a reconciliation of the non-gaap financial measures to their most directly comparable financial measures calculated and presented in accordance with gaap . ( 5 ) gross billings of $ 9,032 and $ 9,044 per worksite employee per month , less payroll cost of $ 7,544 and $ 7,541 per worksite employee per month , respectively .
| 6,830 |
these statements are identified by the use of forward-looking terminology , such as “ anticipates , ” “ plans , ” “ believes , ” “ could , ” “ estimates , ” “ may , ” “ should , ” “ would , ” “ will , ” “ might , ” “ expects , ” “ intends ” or their negatives or other similar terms . the bank cautions that forward-looking statements involve risks or uncertainties that could cause the bank 's actual future results to differ materially from those expressed or implied in these forward-looking statements , or could affect the extent to which a particular objective , projection , estimate , or prediction is realized . as a result , undue reliance should not be placed on such statements . these risks and uncertainties include , without limitation , evolving economic and market conditions , political events , and the impact of competitive business forces . the risks and uncertainties related to evolving economic and market conditions include , but are not limited to , changes in interest rates , changes in the bank 's access to the capital markets , changes in the cost of the bank 's debt , changes in the ratings on the bank 's debt , adverse consequences resulting from a significant regional , national or global economic downturn ( including , but not limited to , reduced demand for the bank 's products and services ) , credit and prepayment risks , changes in the financial health of the bank 's members or non-member borrowers and the ongoing effects from the covid-19 pandemic . among other things , political events could possibly lead to changes in the bank 's regulatory environment or its status as a gse , or to changes in the regulatory environment for the bank 's members or non-member borrowers . risks and uncertainties related to competitive business forces include , but are not limited to , the potential loss of a significant amount of member borrowings through acquisitions or other means or changes in the relative competitiveness of the bank 's products and services for member institutions . for a more detailed discussion of the risk factors applicable to the bank , see item 1a . risk factors . the bank undertakes no obligation to publicly update or revise any forward-looking statements , whether as a result of new information , future events , changed circumstances , or any other reason . overview the bank serves eligible financial institutions in arkansas , louisiana , mississippi , new mexico and texas ( collectively , the ninth district of the fhlbank system ) . the bank 's primary business is lending relatively low cost funds ( known as advances ) to its member institutions , which include commercial banks , savings institutions , insurance companies and credit unions . community development financial institutions that are certified under the community development banking and financial institutions act of 1994 are also eligible for membership in the bank . while not members of the bank , housing associates , including state and local housing authorities , that meet certain statutory criteria may also borrow from the bank . the bank also maintains a portfolio of investments , the vast majority of which are highly rated , for liquidity purposes and to provide additional earnings . additionally , the bank holds interests in a portfolio of predominately conventional mortgage loans that have been acquired through the mpf program administered by the fhlbank of chicago . substantially all of the loans were acquired during the period from 2016 to 2020 and all of those loans are conventional loans . the remainder of the portfolio ( less than one percent of the unpaid principal balance ) is comprised of government-guaranteed/insured and conventional mortgage loans that were acquired during the period from 1998 to mid-2003 . shareholders ' return on their investment includes dividends ( which are typically paid quarterly in the form of capital stock ) and the value derived from access to the bank 's products and services . historically , the bank has balanced the financial rewards to shareholders by seeking to pay a dividend that meets or exceeds the return on alternative short-term money market investments available to shareholders , while lending funds at the lowest rates expected to be compatible with that objective and its objective to build retained earnings over time . the bank 's principal source of funds is debt issued in the capital markets . all 11 fhlbanks issue debt in the form of consolidated obligations through the office of finance as their agent and all 11 fhlbanks are jointly and severally liable for the repayment of all consolidated obligations . the bank conducts its business and fulfills its public purpose primarily by acting as a financial intermediary between its members and the capital markets . the intermediation of the timing , structure , and amount of its members ' credit needs with the investment requirements of the bank 's creditors is made possible by the extensive use of interest rate exchange agreements , including interest rate swaps , swaptions and caps . the bank 's interest rate exchange agreements are accounted for in accordance with the provisions of topic 815 of the financial accounting standards board accounting standards codification entitled “ derivatives and hedging ” ( “ asc 815 ” ) . for a discussion of asc 815 , see the sections below entitled “ financial condition — derivatives and hedging activities ” and “ critical accounting policies and estimates. ” 38 financial market conditions economic growth in the united states expanded moderately during 2019 and 2018. during 2020 , economic growth in the united states was negatively impacted by the novel coronavirus known as covid-19 , which was declared a global pandemic by the world health organization on march 11 , 2020. to date , covid-19 has caused significant economic and financial turmoil both in the u.s. and around the world . story_separator_special_tag one-month and three-month libor rates were 1.56 percent and 1.69 percent , respectively , at the end of 2017. one-month and three-month libor increased to 2.50 percent and 2.81 percent , respectively , at the end of 2018 , and then declined to 1.76 percent and 1.91 percent , respectively , at the end of 2019. relatively stable one-month and three-month libor rates , 39 combined with relatively small spreads between those two indices and between those indices and overnight lending rates , suggest that inter-bank lending markets were reasonably stable during 2018 and 2019. in the weeks before and after the fomc 's early march reduction in the federal funds target rate , interest rates declined significantly . sofr declined by 145 basis points during the first six months of 2020 , from 1.55 percent to 0.10 percent . one-month and three-month libor also declined during the first six months of 2020 , with one-month and three-month libor ending the second quarter at 0.16 percent and 0.30 percent , respectively . during the second half of 2020 , the decline in short-term interest rates abated somewhat . sofr declined by 3 basis points ( to 0.07 percent ) and one-month and three-month libor declined by 2 basis points and 6 basis points , respectively ( to 0.14 percent and 0.24 percent , respectively ) . the following table presents information on various market interest rates at december 31 , 2020 and 2019 and various average market interest rates for the years ended december 31 , 2020 , 2019 and 2018. replace_table_token_6_th ( 1 ) source : bloomberg ( 2 ) source : federal reserve statistical release story_separator_special_tag style= '' color : # 000000 ; font-family : 'times new roman ' , sans-serif ; font-size:10pt ; font-weight:700 ; line-height:120 % '' > advances outstanding by borrower type ( par value , dollars in millions ) replace_table_token_8_th ( 1 ) the figures presented above reflect the advances outstanding to cfis as of december 31 , 2020 , 2019 and 2018 based upon the definitions of cfis that applied as of those dates . the bank 's advances balances ( at par value ) decreased $ 5.0 billion during 2020. after declining during the first two months of 2020 , demand for advances increased markedly in march and the first half of april 2020 in response to the covid-19 outbreak . the bank believes the unsettled nature of the credit markets at that time led some members to increase their borrowings in order to increase their liquidity . as part of a broader covid-19 relief program , the bank made available $ 5.0 billion of below-market rate advances in mid-april . the vast majority of these fixed-rate advances had a term of six months and all were prepayable without a prepayment fee . during the latter part of april , the bank 's advances began to decline and continued to do so through the end of 2020. during this time , the level of liquidity in the financial markets was significantly elevated due in large part to the various initiatives that were undertaken by the federal reserve in response to the pandemic , which in turn dampened demand for the bank 's advances . all of the below-market rate advances referred to above were fully repaid in 2020. further contributing to the decline in the bank 's advances was the repayment of advances by one of the bank 's larger members in connection with a merger transaction . o n november 4 , 2019 , iberiabank and tennessee-based first horizon national corp. announced that they had entered into a definitive merger agreement . with borrowings of $ 1.2 billion as of december 31 , 2019 , iberiabank was the bank 's ninth largest borrower on that date . on july 2 , 2020 ( the same day the merger was completed ) , the bank 's then outstanding advances to iberiabank , totaling $ 1.0 billion , were fully repaid . the combined company is now headquartered in memphis , tennessee and , without a charter in the bank 's district , it is no longer able to conduct future business with the bank . while it is difficult to predict the future level of advances , it is possible that the bank 's advances could continue to fall if the level of liquidity in the financial markets remains elevated . additional u.s. government stimulus in response to the ongoing covid-19 pandemic , such as the recently enacted american rescue plan act , could further increase the already elevated level of liquidity which could , in turn , diminish even further the current subdued demand for the bank 's advances . beyond the elevated level of liquidity , the future level of advances could also be negatively impacted depending upon the duration and severity of the current economic downturn resulting from the covid-19 pandemic . advances ( at par value ) decreased $ 3.8 billion during 2019 due primarily to decreases in overnight and short-term advances . texas capital bank , n.a. , the bank 's largest borrower at december 31 , 2018 , and iberiabank , the bank 's fifth largest borrower 43 at december 31 , 2018 , reduced their advances by $ 1.5 billion and $ 1.0 billion , respectively , in 2019. advances declined broadly across the bank 's membership in 2019 , as almost 70 percent of the bank 's borrowers reduced their borrowings during the year . the bank believes the decline in advances was due in part to increases in members ' liquidity levels , which were primarily the result of growth in their deposits and reduced lending activity . at december 31 , 2020 , advances outstanding to the bank 's five largest borrowers totaled $ 12.3 billion , representing 38.6 % percent of the bank 's total outstanding advances as of that date .
| 2020 in summary the bank ended 2020 with total assets of $ 64.9 billion compared with $ 75.4 billion at the end of 2019. the $ 10.5 billion decrease in total assets was attributable primarily to decreases in the bank 's short-term liquidity portfolio ( $ 4.9 billion ) , advances ( $ 4.6 billion ) , mortgage loans held for portfolio ( $ 0.7 billion ) and its long-term held-to-maturity securities portfolio ( $ 0.3 billion ) . total advances at december 31 , 2020 were $ 32.5 billion , compared to $ 37.1 billion at the end of 2019. mortgage loans held for portfolio decreased from $ 4.1 billion at december 31 , 2019 to $ 3.4 billion at december 31 , 2020. the bank 's net income for 2020 was $ 198.7 million , which represented a return on average capital stock of 8.17 percent . in comparison , the bank 's net income for 2019 was $ 227.3 million , which represented a return on average capital stock of 8.90 percent for that year . for discussion and analysis of the decrease in net income , see the section entitled `` results of operations '' beginning on page 61 of this report . at all times during 2020 , the bank was in compliance with all of its regulatory capital requirements . in addition , the bank 's total retained earnings increased to $ 1.408 billion at december 31 , 2020 from $ 1.233 billion at december 31 , 2019. retained earnings represented 2.2 percent and 1.6 percent of total assets at december 31 , 2020 and 2019 , respectively . at december 31 , 2020 , the balance of the bank 's restricted retained earnings account was $ 233.9 million . in 2020 , the bank paid dividends totaling $ 38.6 million , which , based on the applicable average capital stock balances , equated to an overall blended rate of 1.52 percent for the year .
| 6,831 |
our actual results could differ materially from those discussed in the forward-looking statements . see `` special note regarding forward-looking statements . '' factors that could cause or contribute to these differences include those discussed below and elsewhere in this annual report on form 10-k , particularly in `` risk factors . '' overview we are a life sciences company that has developed next generation , ultra-sensitive digital immunoassay platforms that advance precision health for life sciences research and diagnostics . our platforms are based on our proprietary digital `` simoa '' detection technology . our simoa bead-based and planar array platforms enable customers to reliably detect protein biomarkers in extremely low concentrations in blood , serum and other fluids that , in many cases , are undetectable using conventional , analog immunoassay technologies , and also allow researchers to define and validate the function of novel protein biomarkers that are only present in very low concentrations and have been discovered using technologies such as mass spectrometry . these capabilities provide our customers with insight into the role of protein biomarkers in human health that has not been possible with other existing technologies and enable researchers to unlock unique insights into the continuum between health and disease . we believe this greater insight will enable the development of novel therapies and diagnostics and facilitate a paradigm shift in healthcare from an emphasis on treatment to a focus on earlier detection , monitoring , prognosis and , ultimately , prevention . we are currently focusing on protein detection , which we believe is an area of significant unmet need and where we have significant competitive advantages . however , in addition to enabling new applications and insights in protein analysis , we are also developing our simoa bead-based technology to detect nucleic acids in biological samples . we currently sell all of our products for life science research , primarily to laboratories associated with academic and governmental research institutions , as well as pharmaceutical , biotechnology and contract research companies , through a direct sales force and support organizations in north america and europe , and through distributors or sales agents in other select markets , including australia , brazil , czech republic , china , india , israel , japan , mexico , south korea , lebanon , qatar , singapore and taiwan . we grew our revenue from $ 22.9 million in 2017 to $ 37.6 million in 2018. our instruments are designed to be used either with assays fully developed by us , including all antibodies and supplies required to run the tests , or with `` homebrew '' kits where we supply some of the components required for testing , and the customer supplies the remaining required elements . accordingly , our installed instruments generate a recurring revenue stream . we believe that our recurring consumable revenue is driven by our customers ' ability to extract more valuable data using our platform and to process a large number of samples quickly with little hands-on preparation . we commercially launched our hd-1 instrument in january 2014. the hd-1 is based on our bead-based technology , and assays run on the hd-1 are fully automated . we initiated commercial launch of the sr-x instrument in december 2017. the sr-x utilizes the same simoa bead-based technology and assay kits as the hd-1 analyzer in a compact benchtop form with a lower price point , more flexible assay preparation , and a wider range of applications . while we expect the sr-x to generate lower consumables revenue per instrument than the simoa hd-1 analyzer due to its lower throughput , as the installed base of the simoa instruments increases , total consumables revenue overall is expected to increase . we believe that consumables revenue should be subject to less period-to-period 76 fluctuation than our instrument sales revenue , and will become an increasingly important contributor to our overall revenue . on january 30 , 2018 , we acquired aushon biosystems , inc. for $ 3.2 million in cash , with an additional payment of $ 0.8 million made in july 2018 , six months after the acquisition date . with the acquisition of aushon , we acquired a clia certified laboratory , as well as aushon 's proprietary sensitive planar array detection technology . leveraging our proprietary sophisticated simoa image analysis and data analysis algorithms , we further refined this planar array technology to develop the sp-x instrument to provide the same simoa sensitivity found in our simoa bead-based platform . we initiated an early-access program for the sp-x instrument in january 2019 , with the full commercial launch planned for april 2019. as of december 31 , 2018 , we had cash and cash equivalents of $ 44.4 million . since inception , we have incurred net losses . our net loss was $ 31.5 million , $ 27.0 million , and $ 23.2 million for the years ended december 31 , 2018 , 2017 and 2016 , respectively . as of december 31 , 2018 , we had an accumulated deficit of $ 175.9 million and stockholders ' equity of $ 41.1 million . we expect to continue to incur significant expenses and operating losses at least through the next 24 months . we expect our expenses will increase substantially as we : expand our sales and marketing efforts to further commercialize our products ; strategically acquire companies or technologies that may be complementary to our business ; expand our research and development efforts to improve our existing products and develop and launch new products , particularly if any of our products are deemed by the united states food and drug administration , or fda , to be medical devices or otherwise subject to additional regulation by the fda ; seek premarket approval , or pma , or 510 ( k ) clearance from the fda for our existing products or new products if or when we decide to market products for use in the prevention , diagnosis or treatment of a disease or other condition ; build out our new story_separator_special_tag we believe that the following critical accounting policies involve a greater degree of judgment and complexity than our other significant accounting policies . accordingly , these are the policies we believe are the most critical to understanding and evaluating our consolidated financial condition and results of operations . our significant accounting policies are more fully described in `` significant accounting policies '' ( note 2 ) in the notes to our consolidated financial statements included elsewhere in this annual report on form 10-k. revenue recognition we recognize revenue when ( 1 ) persuasive evidence of an arrangement exists , ( 2 ) shipment and installation , if applicable , has occurred or services have been rendered , ( 3 ) the price to the customer is fixed or determinable and ( 4 ) collection of the related receivable is reasonably assured . we primarily generate revenue from the sale of products and delivery of services , as well as under license and collaboration agreements . our product revenue includes the sale of instruments as well as assay kits and other consumables which are used to perform tests on the instrument . our service revenue is generated from service contracts related to research services performed on behalf of customers and maintenance and support services . 79 product revenue revenue for instrument sales is recognized upon installation at the customer 's location or upon transfer of title to the customer when installation is not required , which is generally the case with sales to distributors . in sales to end-customers , we always provide the installation service and often payment is tied to the completion of the installation service . when installation is required , we account for the instrument and installation service as one unit of accounting and recognize revenue when installation is completed , assuming all other revenue recognition criteria are met . instrument transactions often have multiple elements , as discussed below . included with the purchase of an instrument is a one-year assurance type product warranty assuring that the instrument is free of material defects and will function according to specifications . in addition , the sale of an instrument includes an implied warranty which is promised to the customer during the pre-sales process , at the time that the sales quote is issued to the customer . the implied warranty is provided over the same one-year period as the standard warranty . the services included in the implied warranty are the same as those included in the extended service contracts and include two bi-annual preventative maintenance service visits , minor hardware updates and software upgrades , additional training and troubleshooting , which is beyond the scope of the standard product warranty . the implied warranty has been identified by us as a separate deliverable and unit of accounting . consideration allocated to the implied one-year warranty is recognized over the one year period of performance as service and other revenue as described below . consideration allocated to any other elements is recognized as the goods are delivered or the services are performed . service and other revenue service revenue includes revenue from the implied one-year service type warranty obligation , revenue from extended service contracts , research services performed on behalf of customers in our accelerator laboratory , and other services that may be performed . revenue for extended warranty contracts is recognized ratably over the service period . revenue for the implied one-year service type warranty is initially deferred at the time of instrument revenue recognition and is recognized ratably over a 12-month period starting on the date of instrument installation . revenue for research and development services and other services is generally recognized based on proportional performance of the contract when our ability to complete project requirements is reasonably assured . most of these services are completed in a short period of time from the receipt of the customer 's order . when significant risk exists in our ability to fulfill project requirements , revenue is recognized upon completion of the contract . collaboration and license revenue collaboration and license revenue relates to our agreement with biomérieux , which was terminated in september 2018 , and an agreement with another diagnostic company . for a complete discussion of the accounting policies specific to these collaboration and license agreements , refer to `` collaborations and license arrangements '' ( note 11 ) in the consolidated financial statements included elsewhere in this annual report on form 10-k. multiple element arrangements many of our instrument sales involve the delivery of multiple products and services . the elements of an instrument sale typically include the instruments , installation ( when required ) , an implied one-year service type warranty , and in some cases , assays , consumables and other services . revenue recognition for contracts with multiple deliverables is based on the individual units of accounting determined to exist in the contract . a delivered item is considered a separate unit of accounting when the delivered item has value to the customer on a stand-alone basis . in determining the units of accounting , management evaluates certain criteria , including whether the deliverables have standalone 80 value . items are considered to have stand-alone value when they are sold separately by any vendor or when the customer could resell the item on a stand-alone basis . the consideration received is allocated among the separate units of accounting using the relative selling price method , and the applicable revenue recognition criteria are applied to each of the separate units . we determine the estimated selling price for deliverables within the arrangement using vendor-specific objective evidence ( vsoe ) of selling price , if available . if vsoe is not available , we consider whether third-party evidence is available . if third-party evidence of selling price or vsoe is not available , we use our best estimate of selling price for the deliverable .
| results of operations comparison of the years ended december 31 , 2018 and december 31 , 2017 ( dollars in thousands ) : replace_table_token_9_th revenue revenue increased by $ 14.8 million , or 65 % , to $ 37.6 million for the year ended december 31 , 2018 as compared to $ 22.9 million for the year ended december 31 , 2017. product revenue consisted of sales of instruments totaling $ 9.6 million and sales of consumables and other products of $ 13.8 million for the year ended december 31 , 2018. product revenue consisted of sales of instruments totaling $ 6.5 million and sales of consumables and other products totaling $ 7.6 million for the year ended december 31 , 2017. average sales prices of instruments and consumables did not change materially in the year ended december 31 , 2018 as compared with the year ended december 31 , 2017. the increase in product revenue of $ 9.2 million was primarily due to the sale of more instruments in the 12 months ended december 31 , 2018 and increased sales of consumables . the installed base of instruments 85 increased from december 31 , 2017 to december 31 , 2018 , and as these additional instruments were used by customers , the consumable sales increased . the increase in service and other revenue of $ 4.4 million was primarily due to increased services performed in our accelerator laboratory ; more customers are using these services , and existing customers are using these services more frequently . in addition , an increase in purchased warranties contributed to the service and other revenue increase .
| 6,832 |
our current pipeline includes the following compounds : replace_table_token_6_th ( 1 ) we licensed rights outside the united states to novartis international pharmaceutical ltd. and retained u.s. rights . ( 2 ) we licensed worldwide rights to eli lilly and company and have elected to co-develop with lilly and we retain a co-promotion option . ( 3 ) we licensed worldwide rights to lilly and retained co-development and co-promotion options . ( 4 ) we licensed worldwide rights to novartis and retained co-development and co-promotion options . ( 5 ) several clinical trials in patients with myelofibrosis are ongoing , including long-term extension studies , alternative dosing studies , joint global trials with novartis and trials in patients with low platelet counts . ( 6 ) these studies are investigator-sponsored trials . 48 the therapeutic and commercial value of new medicines is difficult to predict , and conducting clinical trials for our drug candidates in development is a lengthy , time-consuming and expensive process . therefore , if we are unable to successfully commercialize jakafi or develop and commercialize some of our other drug candidates over the next several years , our business , financial condition and results of operations would be adversely impacted . to date , we have not , and we may never , achieve sustained revenues sufficient to offset expenses . we may incur net losses in future periods , and we may never achieve or maintain profitability . we also expect that our operating results may fluctuate from period to period and that those fluctuations may be substantial . license agreements novartis in november 2009 , we entered into a collaboration and license agreement with novartis . under the terms of the agreement , novartis received exclusive development and commercialization rights outside of the united states to ruxolitinib and certain back-up compounds for hematologic and oncology indications , including all hematological malignancies , solid tumors and myeloproliferative diseases . we retained exclusive development and commercialization rights to jakafi ( ruxolitinib ) in the united states and in certain other indications . novartis also received worldwide exclusive development and commercialization rights to our c-met inhibitor compound incb28060 and certain back-up compounds in all indications . we retained options to co-develop and to co-promote incb28060 in the united states . under this agreement , we received an upfront payment and immediate milestone payment totaling $ 210.0 million and were initially eligible to receive additional payments of up to approximately $ 1.1 billion if defined development and commercialization milestones are achieved . in 2012 , 2011 and 2010 , we received $ 40.0 million , $ 25.0 million and $ 50.0 million , respectively , in milestone payments under this agreement . we also could receive tiered , double-digit royalties ranging from the upper-teens to the mid-twenties on future ruxolitinib net sales outside of the united states . in addition , should novartis receive reimbursement and pricing approval for ruxolitinib in a specified number of countries , we will be obligated to pay to novartis tiered royalties in the low single digits on future ruxolitinib net sales within the united states . each company is responsible for costs relating to the development and commercialization of the jak inhibitor compound in its respective territories , with costs of collaborative studies shared equally . novartis is responsible for all costs relating to the development and commercialization of the c-met inhibitor compound after the initial phase i clinical trial . jakafi is sold outside of the united states by novartis under the name jakavi . for the year ended december 31 , 2012 , we recorded $ 3.7 million of product royalty revenues related to novartis net sales of jakavi . the novartis agreement will continue on a program-by-program basis until novartis has no royalty payment obligations with respect to such program or , if earlier , the termination of the agreement or any program in accordance with the terms of the agreement . royalties are payable by novartis on a product-by-product and country-by-country basis until the latest to occur of ( 1 ) the expiration of the last valid claim of the licensed patent rights covering the licensed product in the relevant country , ( 2 ) the expiration of regulatory exclusivity for the licensed product in such country and ( 3 ) a specified period from first commercial sale in such country of the licensed product by novartis or its affiliates or sublicensees . the agreement may be terminated in its entirety or on a program-by-program basis by novartis for convenience . the agreement may also be terminated by either party under certain other circumstances , including material breach . lilly in december 2009 , we entered into a license , development and commercialization agreement with lilly . under the terms of the agreement , lilly received exclusive worldwide development and commercialization rights to baricitinib and certain back-up compounds for inflammatory and autoimmune 49 diseases . we received an initial payment of $ 90.0 million , and were initially eligible to receive additional payments of up to $ 665.0 million based on the achievement of defined development , regulatory and commercialization milestones . in 2012 , we recognized a $ 50.0 million milestone under this agreement , payment of which was received in january 2013 , and in 2010 , we received $ 49.0 million in milestone payments under this agreement . we also could receive tiered , double-digit royalty payments on future global net sales with rates ranging up to 20 % if the product is successfully commercialized . we retained options to co-develop our jak1/jak2 inhibitors with lilly on a compound-by-compound and indication-by-indication basis . lilly will be responsible for all costs relating to the development and commercialization of the compounds unless we elect to co-develop any compounds or indications . if we elect to co-develop any compounds and or indications , we would be responsible for funding 30 % of the associated future global development costs from the initiation of a phase iib trial through regulatory approval . story_separator_special_tag we expect the specialty pharmacies will earn prompt payment discounts and , therefore , we deduct the full amount of these discounts from total product sales when revenues are recognized . service fees are also deducted from product sales as they are earned . rebates : allowances for rebates include mandated discounts under the medicaid drug rebate program . rebate amounts are based upon contractual agreements or legal requirements with public sector ( e.g . medicaid ) benefit providers . rebates are amounts owed after the final dispensing of the product to a benefit plan participant and are based upon contractual agreements or legal requirements with public sector benefit providers . the allowance for rebates is based on statutory discount rates and expected utilization . our estimates for expected utilization of rebates are based in part on third party market research data , and data received from the specialty pharmacies . rebates are generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the 51 current quarter 's activity , plus an accrual balance for known prior quarter 's unpaid rebates . if actual future rebates vary from estimates , we may need to adjust prior period accruals , which would affect revenue in the period of adjustment . chargebacks : chargebacks are discounts that occur when contracted customers purchase directly from a specialty pharmacy , or an intermediary distributor . contracted customers , which currently consist primarily of public health service institutions , non-profit clinics , and federal government entities purchasing via the federal supply schedule , generally purchase the product at a discounted price . the specialty pharmacy or distributor , in turn , charges back to us the difference between the price initially paid by the specialty pharmacy or distributor and the discounted price paid to the specialty pharmacy or distributor by the customer . the allowance for chargebacks is based on known sales to contracted customers . medicare part d coverage gap : medicare part d prescription drug benefit mandates manufacturers to fund 50 % of the medicare part d insurance coverage gap for prescription drugs sold to eligible patients . our estimates for the expected medicare part d coverage gap are based on historical invoices received and in part from data received from the specialty pharmacies . funding of the coverage gap is generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter 's activity , plus an accrual balance for known prior quarters . if actual future funding varies from estimates , we may need to adjust prior period accruals , which would affect revenue in the period of adjustment . co-payment assistance : patients who have commercial insurance and meet certain eligibility requirements may receive co-payment assistance . we accrue a liability for co-payment assistance based on actual program participation and estimates of program redemption using data provided by third-party administrators . product royalty revenues royalty revenues on commercial sales for jakavi by novartis are estimated based on information provided by novartis . we exercise judgment in determining whether the information provided is sufficiently reliable for us to base our royalty revenue recognition thereon . if actual royalties vary from estimates , we may need to adjust prior period which would affect royalty revenue in the period of adjustment . contract and license revenues under agreements involving multiple deliverables , services and or rights to use assets that we entered into prior to january 1 , 2011 , the multiple elements are divided into separate units of accounting when certain criteria are met , including whether the delivered items have stand-alone value to the customer and whether there is objective and reliable evidence of the fair value of the undelivered items . when separate units of accounting exist , consideration is allocated among the separate elements based on their respective fair values . the determination of fair value of each element is based on objective evidence from historical sales of the individual elements by us to other customers . if such evidence of fair value for each undelivered element of the arrangement does not exist , all revenue from the arrangement is deferred until such time that evidence of fair value for each undelivered element does exist or until all elements of the arrangement are delivered . when elements are specifically tied to a separate earnings process , revenue is recognized when the specific performance obligation tied to the element is completed . when revenues for an element are not specifically tied to a separate earnings process , they are recognized ratably over the term of the agreement . we assess whether a substantive milestone exists at the inception of our agreements . for all milestones within our arrangements that are considered substantive , we recognize revenue upon the achievement of the associated milestone . if a milestone is not considered substantive , we would recognize the applicable milestone payment over the remaining period of performance under the 52 arrangement . as of december 31 , 2012 , all remaining potential milestones under our collaborative arrangements are considered substantive . on january 1 , 2011 , updated guidance on the recognition of revenues for agreements with multiple deliverables became effective and applies to any agreements we may enter into on or after january 1 , 2011. this updated guidance ( i ) relates to whether multiple deliverables exist , how the deliverables in a revenue arrangement should be separated and how the consideration should be allocated ; ( ii ) requires companies to allocate revenues in an arrangement using estimated selling prices of deliverables if a vendor does not have vendor-specific objective evidence or third-party evidence of selling price ; and ( iii ) eliminates the use of the residual method and requires companies to allocate revenues using the relative selling price method .
| results of operations years ended december 31 , 2012 and 2011 we recorded net losses for the years ended december 31 , 2012 and 2011 of $ 44.3 million and $ 186.5 million , respectively . on a basic and diluted per share basis , net loss was $ 0.34 and $ 1.49 for the years ended december 31 , 2012 and 2011 , respectively . revenues replace_table_token_7_th our product revenues , net of jakafi for the years ended december 31 , 2012 and 2011 , were $ 136.0 million and $ 2.0 million , respectively . product revenues from the sale of jakafi are recorded net of estimated product returns , which have been de minimis to date , pricing discounts including rebates offered pursuant to mandatory federal and state government programs and chargebacks , prompt pay discounts and distribution fees and co-pay assistance . our revenue recognition policies require estimates of the aforementioned sales allowances each period . prior to the three months ended september 30 , 2012 , we used the sell-through method for revenue recognition as we had limited historical data on product returns . under the sell-through method , we deferred revenue until the patients received jakafi . in the three months ended september 30 , 2012 , we determined that we had sufficient experience with product returns and transitioned to the sell-in method for recognizing revenue , under which we recognize revenue for product sales of jakafi at the time the product is received by our specialty pharmacy customers .
| 6,833 |
we are also the sixth largest pork processor in the united states , with two plants capable of processing approximately 4.5 million hogs per year . in our fiscal year ending march 27 , 2004 , the usda reported that the u.s. pork industry produced 20.2 billion pounds compared to 19.8 billion pounds for the same period the previous year . in spite of this increased supply , average lean hog prices were 24.5 % higher for the period than in the comparable periods of the prior year . also , the usda pork cutout ( the composite wholesale meat price of a market hog after processing ) was 16.9 % higher for the period as compared to the same period last year . strong demand for pork products was the primary driver in these increased prices . generally , our overall revenues follow market prices for wholesale pork and lean hog prices , while our costs are impacted by commodity grain prices , primarily corn and soybean meal . on march 26 , 2004 , the usda issued a hog and pig report that indicated the likelihood of increased pork production in 2004. despite this bearish report , continued strong demand has trended cash prices higher . ongoing strength in hog prices is contingent on increased demand for pork products or a reduced supply of hogs in the future . in the april 21 , 2004 cold storage report , the usda reported that freezer stocks of pork were down 14 % from the previous year , providing further 16 evidence of strong demand for pork products in recent periods . on january 12 , 2004 , the usda issued its crop production annual summary , downwardly revising the 2003/2004 crop carryout estimates for both corn and soybeans . this reduced supply estimate has resulted in an increase of the near-term prices of corn and soybean meal , the primary ingredients in our feed rations . future prices on these ingredients will depend on adjusting demand for these products until the new crop harvest is available in the fall of 2004. we have been experiencing health issues in our texas operations due to porcine reproductive and respiratory syndrome ( prrs ) , which is common in swine herds in the united states . prrs has had a negative effect on reproduction in our texas operations , which has decreased production volume and increased costs . we have had success in eliminating prrs in some of our facilities through depopulation of the facility and repopulation with prrs negative breeding stock , however , we implemented a depopulation/repopulation program in texas in fiscal year 2004 without success . our new plan is to operate a herd health program and production flow that stabilizes a prrs positive herd and reduces the impact of prrs in the system . on december 23 , 2003 , a case of bse ( bovine spongiform encephalopathy ) was confirmed in a dairy cow in the state of washington . it is uncertain what impact this may have on the u.s. pork industry . as an important part of our growth strategy , we evaluate on an ongoing basis potential industry-related acquisitions and joint ventures . other than a joint venture in a small sow processing operation in early fiscal year 2004 , we have not at the present time entered into any definitive agreements contemplating such acquisitions or joint ventures . further , there can be no assurance as to whether or when any negotiations will ultimately culminate in definitive agreements or , if any definitive agreement is reached , whether any acquisition or joint venture will ultimately be consummated . to complete any acquisition or joint venture , we may use our revolving credit facility or other financing alternatives available at the time . our fiscal year is the 52 or 53-week period , which ends on the last saturday in march . our financial statements include activity from the fiscal years ended march 27 , 2004 ( 52 weeks ) , march 29 , 2003 ( 52 weeks ) , and march 30 , 2002 ( 52 weeks ) . net sales our net sales are generated from the sale of pork products to retailers , food service suppliers , further processors , export buyers , and to a lesser extent the sale of market hogs to other pork processors . in fiscal 2004 , sales of pork products accounted for approximately 90 % of our net sales , with the remaining 10 % coming from sales of market hogs . pork product sales are of primal cuts , such as hams , loins , bellies , butts , picnics and ribs , and to a lesser extent of other by-products . primal products are also converted further into boneless items or , in our north carolina operations , further processed into items such as smoked hams , cured hams , and sliced bacon . our processing revenues are primarily driven by the operating rate of our facilities and the value that we extract from the hogs that we process . for our fiscal years ended march 27 , 2004 , march 29 , 2003 and march 30 , 2002 , we processed 4.3 million , 4.1 million and 3.7 million hogs , respectively . our missouri processing plant is currently capable of processing 7,100 hogs per day and our north carolina processing plant is currently capable of processing up to 10,000 hogs per day , depending on seasonality and market conditions . the value that we extract from hogs processed is primarily driven by pork prices , processing yields and to a lesser extent , by product mix , as premium products , boneless and further processed products generate higher prices and operating margins . wholesale pork prices fluctuate seasonally and cyclically due to changes in supply and demand for pork . we believe that our vertical integration allows us to obtain higher prices for our products than our more commodity-driven competitors . story_separator_special_tag operating income decreased by $ 122.6 million , or 206.1 % , to an operating loss of $ 63.1 million fiscal year 2003 from an operating income of $ 59.5 million in fiscal year 2002. the decrease was attributed to the factors mentioned above . pork processing . net sales decreased $ 43.8 million , or 7.3 % , to $ 553.5 million in fiscal year 2003 from $ 597.3 million in fiscal year 2002. the decrease resulted from a 16.2 % decrease in pork product sales prices , partially offset by an 11.1 % increase in volume processed compared to the same period last year . the increase in volume was primarily attributable to the expansion at the north carolina plant completed in late fiscal year 2002 , which increased capacity from 6,500 hogs per day to 10,000 hogs per day . gross profit increased by $ 13.8 million , or 53.1 % , to $ 39.8 million in fiscal year 2003 from $ 26.0 million in fiscal year 2002. the increase primarily resulted from higher margins on pork products due to lower market hog prices coupled with higher volume through the plants . processing costs increased 1.2 % during fiscal year 2003 compared to fiscal year 2002 , primarily the result of increased depreciation expense related to the north carolina processing plant expansion and added emphasis on higher cost value-added products . operating income increased by $ 11.4 million , or 49.6 % , to $ 34.4 million in fiscal year 2003 from $ 23.0 million in fiscal year 2002. the increase was attributed to the factors mentioned above . liquidity and capital resources our primary source of financing has been cash flow from operations and bank borrowings . our ongoing operations will require the availability of funds to service debt , fund working capital and make capital expenditures 21 on our facilities . we expect to finance these activities through cash flow from operations and from amounts available under our revolving credit facility . net cash flow provided by and ( used in ) operating activities was $ 41.7 million , ( $ 17.4 ) million and $ 80.5 million in fiscal years 2004 , 2003 and 2002 , respectively . the increase in fiscal year 2004 was attributed to a decrease in net loss over fiscal year 2003 , the change in deferred taxes and a decrease in working capital requirements partially offset by an increase in non-cash gains on the sales of fixed assets . net cash flow used in investing activities was $ 23.5 million , $ 25.9 million and $ 81.3 million in fiscal years 2004 , 2003 and 2002 , respectively . in fiscal year 2004 , net cash used in investing activities was spent as follows : approximately $ 10 million was spent for continuing improvements of our pork processing facilities ; approximately $ 5 million was spent for continuing improvements of our hog production facilities , and investments to develop and implement new technologies for improved waste handling ; and the remainder was spent for purchases of breedstock . in fiscal year 2004 , 2003 and 2002 , we received proceeds from disposal of property , plant , equipment and breeding stock of $ 18.4 million , $ 11.7 million and $ 14.9 million , respectively . during fiscal years 2004 , 2003 and 2002 , disposal of property , plant , equipment and breeding stock consisted primarily of culled breeding stock . net cash flow ( used in ) and provided by financing activities was ( $ 18.2 ) million , $ 36.1 million and ( $ 0.6 ) million in fiscal years 2004 , 2003 and 2002 , respectively . during fiscal year 2004 , excess cash generated was used to pay down outstanding debt . during fiscal year 2003 , we borrowed money to fund working capital needs and capital expenditures . in the first quarter of fiscal year 2002 , premium standard farms issued $ 175 million of 9-1/4 % senior unsecured notes due 2011 ( 9-1/4 % notes ) , which were used to retire $ 137.9 million of 11 % senior secured payment-in-kind notes ( pik notes ) on july 7 , 2001. an associated 1 % prepayment penalty on these pik notes was also paid on july 7 , 2001. with the remaining proceeds , we also prepaid $ 25 million of bank term debt , made a $ 6.3 million quarterly payment on bank term debt and paid down $ 4.0 million on our revolving credit facility . the 9-1/4 % notes contain customary covenants and are redeemable by premium standard farms under certain circumstances . borrowings for working capital needs were provided under a credit agreement that provided for up to $ 150 million of revolving credit ( with actual credit limit determined monthly by reference to a borrowing base formula ) , including up to $ 15 million of letters of credit , and a term loan facility with $ 43.8 million outstanding at march 27 , 2004. on april 9 , 2004 , we entered into an amended and restated loan and security agreement ( credit agreement ) with our bank group . the credit agreement is a $ 175 million revolving line of credit . the balance of the previous line of credit as well as the outstanding term debt at the date of closing , became the opening balance outstanding under the credit agreement . obligations under the credit agreement are secured by liens on substantially all of our assets . in addition to customary financial covenants , the credit agreement contains restrictions on , among other things , encumbrance or disposal of assets , acquisitions , additional indebtedness , capital investment , payment of subordinated debt and payment of dividends . in addition to fees payable under credit facilities of this type , amounts borrowed under the credit agreement bear interest at fluctuating rates selected by us .
| results of operations the following table presents selected historical financial information for our production and processing segments for the fiscal years ended march 27 , 2004 , march 29 , 2003 and march 30 , 2002. net sales , gross profit and operating income by segment are also presented as a percentage of their respective totals . the columns under year-to-year change show the dollar and percentage change from the respective years ended . intersegment sales are based on market prices . 18 replace_table_token_2_th fiscal year ended march 27 , 2004 compared to the fiscal year ended march 29 , 2003 consolidated net sales . net sales increased by $ 122.3 million , or 20.1 % , to $ 730.7 million in fiscal year 2004 from $ 608.4 million in fiscal year 2003. the increase was attributed to an increase of prices of $ 105.3 million , which includes a $ 3.9 million increase in gains recorded for lean hog futures contracts , combined with an increase in volume of $ 17.0 million . overall , live hog and wholesale pork prices increased compared to the prior period despite an increase in pork produced compared to the prior year . demand for pork products has been very high due to a decrease in production of competing proteins , the discovery of the first case of bse in a cow in the united states , the avian influenza virus affecting the poultry industry , and by trends in diet among americans in general . see segment analysis below for comments on changes in sales by business segment . gross profit . gross profit increased by $ 57.5 million to $ 34.0 million in fiscal year 2004 from a loss of $ 23.5 million in fiscal year 2003. as a percentage of net sales , gross profit increased to 4.7 % from ( 3.9 ) % .
| 6,834 |
compensation costs charged to expense under award programs paid ( or story_separator_special_tag story_separator_special_tag light , sans-serif ; font-size:10pt ; '' > , while unfavorable foreign currency translation decreased sales by $ 9.4 million or 1.9 % . excluding the impact of businesses acquired and unfavorable currency translation impact , sales decreased $ 73.4 million or 14.8 % . sales in our u.s. operations were down $ 120.8 million or 5.4 % , while acquisitions added $ 56.9 million or 2.5 % . excluding the impact of businesses acquired , u.s. sales were down $ 177.7 million or 7.9 % , of which 3.7 % is from our upstream oil and gas-focused operations and 4.2 % is within our traditional core operations . sales from our canadian operations decreased $ 100.8 million or 28.1 % , with unfavorable foreign currency translation decreasing canadian sales by $ 33.6 million or 9.4 % . acquisitions added $ 0.2 million , or less than 1.0 % . prior to the impact of foreign currency translation and excluding businesses acquired , canadian sales were down $ 67.4 million or 18.7 % , of which 15.4 % related to upstream oil and gas operations with the remaining 3.3 % decrease from the traditional core operations . consolidated sales from our other country operations , which include mexico , australia and new 16 zealand , decreased $ 10.5 million or 6.8 % compared to the prior year . unfavorable foreign currency translation decreased other country sales by $ 26.5 million or 17.1 % . prior to the impact of currency translation , other country sales were up $ 16.0 million or 10.3 % compared to the prior year , driven by growth in operations in mexico . the sales product mix for fiscal 2016 was 72.9 % industrial products and 27.1 % fluid power products compared to 73.2 % industrial and 26.8 % fluid power in the prior year . our gross profit margin remained stable at 28.1 % in fiscal 2016 and 28.0 % in fiscal 2015 . the increase is due to the impact of lifo layer liquidations recorded in fiscal 2016 which increased gross profit by $ 2.1 million . selling , distribution and administrative expenses ( sd & a ) consist of associate compensation , benefits and other expenses associated with selling , purchasing , warehousing , supply chain management , and providing marketing and distribution of the company 's products , as well as costs associated with a variety of administrative functions such as human resources , information technology , treasury , accounting , legal , facility related expenses and expenses incurred with acquiring businesses . sd & a decreased $ 31.4 million or 5.4 % during fiscal 2016 compared to the prior year , and as a percent of sales increased to 22.0 % from 21.3 % in fiscal 2015 . changes in foreign currency exchange rates had the effect of decreasing sd & a by $ 14.9 million or 2.5 % compared to the prior year . additional sd & a from businesses acquired in the current year added $ 16.0 million or 2.7 % of sd & a expenses including $ 2.1 million associated with intangibles amortization . further , severance expense and other restructuring charges related to consolidating facilities added $ 5.2 million or 0.9 % of sd & a for the twelve months ended june 30 , 2016 . excluding the impact of businesses acquired , restructuring expenses , and the favorable currency translation impact , sd & a declined $ 37.7 million or 6.5 % during fiscal 2016 compared to fiscal 2015 as a result of continuous efforts to minimize such expenses . these efforts to minimize expense were led by efforts to control headcount . excluding the effect of acquisitions , overall headcount is down by over 400 associates from june 30 , 2015 to june 30 , 2016 . total salaries and wages were down $ 17.0 million for fiscal 2016 compared to fiscal 2015 while all other expenses within sd & a were down $ 14.4 million . during the third quarter of fiscal 2016 , the company performed its annual goodwill impairment test . as a result of this test , the company determined that all of the goodwill associated with the australia/new zealand service center based distribution reporting unit was impaired as of january 1 , 2016. this impairment is the result of the decline in the mining and extraction industries in australia and the resulting reduced customer spending due to a decline in demand throughout asia . further , due to a sustained decline in oil prices and reduced customer spending in canada , the company determined that a portion of the goodwill associated with the canada service center based distribution reporting unit was also impaired as of january 1 , 2016. accordingly , the company recognized a combined non-cash impairment charge of $ 64.8 million for goodwill during fiscal 2016 , which decreased net income by $ 63.8 million and earnings per share by $ 1.62. changes in future results , assumptions , and estimates used in calculating the goodwill impairment test could result in additional impairment charges in future periods . operating income decreased $ 95.8 million , or 51.9 % , to $ 88.8 million during fiscal 2016 from $ 184.6 million during fiscal 2015 , and as a percent of sales , decreased to 3.5 % , primarily due to the non-cash goodwill impairment charge of $ 64.8 million . excluding the goodwill impairment charge , operating income as a percent of sales was 6.1 % , down from 6.7 % in the prior year primarily due to the $ 8.8 million of restructuring charges incurred during fiscal 2016 and lower sales volume . operating income , before the goodwill impairment charge , as a percentage of sales for the service center based distribution segment decreased to 5.2 % in fiscal 2016 from 6.2 % in fiscal 2015 . story_separator_special_tag 18 our gross profit margin was 28.0 % in fiscal 2015 versus 27.9 % in fiscal 2014. the increased margins were attributable to the impact of relatively higher gross margins from acquired operations . selling , distribution and administrative expenses ( sd & a ) consist of associate compensation , benefits and other expenses associated with selling , purchasing , warehousing , supply chain management , and providing marketing and distribution of the company 's products , as well as costs associated with a variety of administrative functions such as human resources , information technology , treasury , accounting , legal , facility related expenses and expenses incurred with acquiring businesses . sd & a increased $ 62.6 million or 12.0 % during fiscal 2015 compared to fiscal 2014 , and as a percent of sales increased to 21.3 % in fiscal 2015 from 21.2 % in fiscal 2014. the acquired businesses added an incremental $ 69.4 million of sd & a expenses , which included an additional $ 13.4 million associated with acquired identifiable intangibles amortization . excluding the $ 11.0 million decline in sd & a from foreign currency translation , the remaining sd & a amounts were similar to fiscal 2014. the increase in sd & a as a percentage of sales was driven by additional intangible asset amortization from businesses acquired . operating income increased $ 20.3 million , or 12.3 % , to $ 184.6 million during fiscal 2015 from $ 164.4 million during fiscal 2014 , and as a percent of sales , remained stable at 6.7 % . the increase in operating income dollars was primarily attributable to our acquired businesses . operating income as a percentage of sales for the service center based distribution segment increased to 6.2 % in fiscal 2015 from 6.0 % in fiscal 2014. this increase was primarily attributable to an increase in gross profit as a percentage of sales , as a result of acquisitions in fiscal 2015 which operated at higher gross profit margins , representing an increase of 0.1 % , along with a decrease in sd & a as a percentage of sales of 0.1 % . operating income as a percentage of sales for the fluid power businesses segment increased to 9.8 % in fiscal 2015 from 9.2 % in fiscal 2014. this increase was primarily attributable to the leveraging of organic sales growth in our u.s. based fluid power businesses , without a commensurate increase in sd & a expenses . segment operating income was impacted by changes in the amounts and levels of expenses allocated to the segments . the expense allocations included corporate charges for working capital , logistics support and other items and impact segment gross profit and operating expense . interest expense , net , increased to $ 7.9 million in fiscal 2015 entirely due to acquisition related borrowing . other expense ( income ) , net , represented certain non-operating items of income and expense . this was $ 0.9 million of expense in fiscal 2015 compared to $ 2.2 million of income in fiscal 2014. fiscal 2015 expense primarily consisted of foreign currency transaction losses of $ 1.3 million offset by unrealized gains on investments held by non-qualified deferred compensation trusts of $ 0.4 million . fiscal 2014 consisted primarily of unrealized gains on investments held by non-qualified deferred compensation trusts of $ 1.7 million as well as $ 1.3 million of income associated with the elimination of the one-month canadian and mexican reporting lags ( see note 1 in item 8 under the caption `` financial statements and supplementary data '' ) , offset by foreign currency transaction losses of $ 0.8 million . income tax expense as a percent of income before taxes was 34.3 % for fiscal 2015 and 32.1 % for fiscal 2014. this increase in the effective rate was due to recording of valuation allowances against certain deferred tax assets for foreign jurisdictions in fiscal 2015 as well as the non-recurrence of a one-time favorable tax benefit in fiscal 2014 in accounting for undistributed earnings of non-u.s. subsidiaries . all undistributed earnings of our foreign subsidiaries were considered to be permanently reinvested at june 30 , 2015 and 2014. as a result of the factors addressed above , net income for fiscal 2015 increased $ 2.7 million or 2.4 % from the prior year . net income per share increased at a slightly higher rate of 4.9 % due to lower weighted-average shares outstanding in fiscal 2015. at june 30 , 2015 , we had a total of 565 operating facilities in the united states , puerto rico , canada , mexico , australia and new zealand , versus 538 at june 30 , 2014. the number of company employees was 5,839 at june 30 , 2015 and 5,472 at june 30 , 2014. liquidity and capital resources our primary source of capital is cash flow from operations , supplemented as necessary by bank borrowings or other sources of debt . at june 30 , 2016 we had total debt obligations outstanding of $ 328.3 million compared to $ 321.0 million at june 30 , 2015 . management expects that our existing cash , cash equivalents , funds available under the revolving credit and uncommitted shelf facilities , cash provided from operations , and the use of operating leases will be sufficient to finance normal working capital needs in each of the countries we operate in , payment of dividends , acquisitions , investments in properties , facilities and equipment , and the purchase of additional company common 19 stock . management also believes that additional long-term debt and line of credit financing could be obtained based on the company 's credit standing and financial strength . the company holds significant cash and cash equivalent balances outside of the united states of america . the following table shows the company 's total cash as of june 30 , 2016 by geographic location ; all amounts are in thousands .
| and results of operations . overview with more than 5,500 employees across north america , australia and new zealand , applied industrial technologies ( “ applied , ” the “ company , ” “ we , ” “ us ” or “ our ” ) is a leading industrial distributor serving mro ( maintenance , repair & operations ) and oem ( original equipment manufacturer ) customers in virtually every industry . in addition , applied provides engineering , design and systems integration for industrial and fluid power applications , as well as customized mechanical , fabricated rubber and fluid power shop services . we have a long tradition of growth dating back to 1923 , the year our business was founded in cleveland , ohio . at june 30 , 2016 , business was conducted in the united states , puerto rico , canada , mexico , australia and new zealand from 559 facilities . the following is management 's discussion and analysis of significant factors that have affected our financial condition , results of operations and cash flows during the periods included in the accompanying consolidated balance sheets , statements of consolidated income , consolidated comprehensive income and consolidated cash flows in item 8 under the caption `` financial statements and supplementary data . '' when reviewing the discussion and analysis set forth below , please note that the majority of skus ( stock keeping units ) we sell in any given year were not sold in the comparable period of the prior year , resulting in the inability to quantify certain commonly used comparative metrics analyzing sales , such as changes in product mix and volume . our fiscal 2016 consolidated sales were $ 2.52 billion , a decrease of $ 232.1 million or 8.4 % compared to the prior year , with acquisitions contributing $ 57.1 million or 2.1 % and unfavorable foreign currency translation of $ 60.1 million decreasing sales by 2.2 % .
| 6,835 |
( 6 ) includes 40,000 common shares held by entrust group inc. fbo rodney james williams ira and options to purchase 100,000 common shares ( 7 ) includes 175,000 options to purchase common shares ( 8 ) includes 43,750 options to purchase common shares 51 equity compensation plan information the table below sets forth certain information with respect to our equity compensation plans as of february 26 , 2021. plan category number of securities to be issued upon outstanding options rights ( a ) weighted-average exercise price outstanding options and rights ( b ) number of securities remaining available for future issuance story_separator_special_tag and results of operation management 's discussion and analysis of financial condition and results of operations is intended to help the reader understand the results of operations and financial condition of the company . the management 's discussion and analysis of financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended december 31 , 2020. in addition to historical information , this annual report on form 10-k contains forward-looking statements within the meaning of section 27a of the securities act of 1933 , as amended , and section 21e of the securities exchange act of 1934 , as amended , and forward-looking information under applicable canadian securities law requirements ( collectively , “ forward-looking statements ” ) which are intended to be covered by the safe harbors created thereby . see “ cautionary note regarding forward-looking statements ” in this annual report on form 10-k. our actual results and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors , including those set forth under the “ part i – item 1a risk factors ” section and elsewhere in this annual report on form 10-k , as well as , in other reports and documents we file with the securities and exchange commission from time to time . except as required by law , we undertake no obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of this annual report on form 10-k. overview we are a veterinary health company creating products for companion animals by focusing on the unmet needs of clinical veterinarians . we expect that our product portfolio will include innovative diagnostics and medical devices that emphasize patient health and practice health . with a team that includes clinical veterinary professionals , our goal is to provide veterinarians the opportunity to increase productivity and grow revenue while better serving the animals in their care . our strategic focus is on the final development and commercialization of our truforma® diagnostic biosensor platform and the first five assays for the detection of adrenal and thyroid disorders in cats and dogs . the truforma® platform uses bulk acoustic wave ( baw ) technology to provide a non-optical and fluorescence free detection system for use at the point-of-care . we believe that baw technology will enable precise and repeatable test results at the point-of-care during a typical veterinary appointment . we believe that the truforma® diagnostic platform does not require pre-market regulatory approval for use with companion animals in the united states . we intend to launch our truforma® platform and our first three assays on or about march 30 , 2021. following the commercial launch of truforma® , we expect to continue the development of another point-of-care diagnostic platform , which is based on miniaturized laser-based raman spectroscopy technology and is designed to detect pathogens in companion animals . we believe this platform will enable the identification of biological and biochemical signatures in complex biological samples and has the potential to achieve reference lab sensitivity/specificity to screen for a wide range of pathogens in companion animal feces , urine , respiratory , and dermatological samples in minutes without the need for extensive sample prep or the use of reagents . the diagnostic platform requires a small fecal sample preparation . additionally , the platform has automated analysis and does not require specialized staff training . we believe that this diagnostic platform does not require pre-market regulatory approval for use with companion animals in the united states . we have performed initial development work on a circulating tumor cell ( ctc ) “ liquid biopsy ” platform for use in a reference lab setting as a canine cancer diagnostic . this platform is intended for use to detect canine cancers faster , more affordably and less invasively compared to existing methods , which can be expensive and cost-prohibitive for pet owners . we have worked on the development of an assay for use with this platform that targets hard-to-diagnose canine cancers , such as hemangiosarcoma and osteosarcoma . consistent with our focus on the development of point-of-care diagnostic platforms , we intend to seek one or more partners for the further development and commercialization of the liquid biopsy platform . 33 through the year ended december 31 , 2020 , we were a development-stage company with no commercialized products , and we did not generate any revenue from product sales . we have incurred significant net losses since our inception . we incurred net losses of approximately $ 16.9 million and $ 19.8 million for the years ended december 31 , 2020 and december 31 , 2019 respectively . these losses have resulted principally from costs incurred in connection with investigating and developing our product candidates , research and development activities , and general and administrative costs associated with our operations . as of december 31 , 2020 , we had an accumulated deficit of approximately $ 69.0 million and cash and cash equivalents of approximately $ 62.0 million . for the foreseeable future , we expect to continue to incur losses , which will increase from historical levels as we commence the commercialization of our truforma® platform , expand our product development activities , and expand our sales and marketing activities . story_separator_special_tag research and development costs related to continued research and development programs are expensed as incurred in accordance with asc topic 730. translation of foreign currencies the functional currency , as determined by management , is u.s. dollars , which is also our reporting currency . transactions denominated in currencies other than u.s. dollars and the monetary value of assets and liabilities are translated at the period end exchange rates . revenue and expenses are measured at rates of exchange prevailing on the transaction dates . all of the exchange gains or losses resulting from these other transactions are recognized in the consolidated statements of operations and comprehensive loss . 35 stock-based compensation we measure the cost of equity-settled transactions by reference to the fair value of the equity instruments at the date at which they are granted if the fair value of the goods or services received by us can not be reliably estimated . we calculate stock-based compensation using the fair value method , under which the fair value of the options at the grant date is calculated using the black-scholes option pricing model , and subsequently expensed over the vesting period of the option using the graded vesting method . the provisions of our stock-based compensation plans do not require us to settle any options by transferring cash or other assets , and therefore we classify the awards as equity . stock-based compensation expense recognized during the period is based on the value of stock-based payment awards that are ultimately expected to vest . we estimate forfeitures at the time of grant and revise these estimates , if necessary , in subsequent periods if actual forfeitures differ from those estimates . volatility is determined based on volatilities of comparable companies when the company does not have its own trading history . the expected term , which represents the period of time that options granted are expected to be outstanding , is estimated based on an average of the term of the options . the risk-free rate assumed in valuing the options is based on the canadian treasury yield curve in effect at the time of grant for the expected term of the option . the expected dividend yield percentage at the date of grant is nil as we are not expected to pay dividends in the foreseeable future . loss per share basic loss per share , or eps , is computed by dividing the loss attributable to common shareholders by the weighted average number of common shares outstanding . diluted eps reflects the potential dilution that could occur from common shares issuable through the exercise or conversion of stock options , restricted stock awards , warrants and convertible securities . in certain circumstances , the conversion of options , warrants and convertible securities are excluded from diluted eps if the effect of such inclusion would be anti-dilutive . the dilutive effect of stock options is determined using the treasury stock method . stock options and warrants to purchase our common shares issued during the period were not included in the computation of diluted eps , as the effect would be anti-dilutive . comprehensive loss we follow asc topic 220. this statement establishes standards for reporting and display of comprehensive ( loss ) income and its components . comprehensive loss is net loss plus certain items that are recorded directly to shareholders ' equity . we currently have no other comprehensive loss items . 36 story_separator_special_tag investing activities net cash from investing activities for the year ended december 31 , 2020 was approximately $ 1.0 million , compared to net cash used of approximately $ 0.7 million for the year ended december 31 , 2019 , an increase of approximately $ 1.7 million , or 246 % . the increase in net cash from investing activities during the current year 2020 related primarily to approximately $ 1.0 million of cash received in connection with the cancellation and buyout of our office lease compared to the prior period in which approximately $ 0.7 million was used in association with our digital data platform , the construction of marketing assets , and the capitalization of integration costs associated with the implementation of an erp system . liquidity and capital resources we have incurred losses and negative cash flows from operations and have not generated any revenue since our inception in may 2015. as of december 31 , 2020 , we had an accumulated deficit of approximately $ 69.0 million . we have funded our working capital requirements primarily through the sale of our common shares and the exercise of stock options and warrants . at december 31 , 2020 , we had cash and cash equivalents of approximately $ 62.0 million . at december 31 , 2020 , the company had cash and cash equivalents of approximately $ 62.0 million , prepaid expenses and deposits of approximately $ 1.7 million , and tax credits receivable of approximately $ 0.1 million . current assets amounted to approximately $ 62.9 million with current liabilities of approximately $ 2.0 million , resulting in a working capital ( defined as current assets minus current liabilities ) of approximately $ 60.9 million . subsequent to december 31 , 2020 , warrants to purchase an aggregate of 200,248,821 common shares were exercised , resulting in cash proceeds of approximately $ 32.0 million . we also completed an underwritten public offering of 105,013,158 common shares , resulting in net cash proceeds of approximately $ 185.4 million . after giving effect to these transactions , as of february 26 , 2021 , we had cash of approximately $ 277.5 million and 947,298,207 common shares issued and outstanding . in the second quarter of 2019 , we sold $ 12,000,000 of our series 1 preferred shares to an accredited investor in a private placement at a purchase price of $ 1,000,000 per series 1 preferred share .
| results of operations year ended december 31 , 2020 compared to year ended december 31 , 2019 our results of operations for the year ended december 31 , 2020 and december 31 , 2019 are as follows : replace_table_token_1_th revenue we did not generate any revenue during the years ended december 31 , 2020 and december 31 , 2019. research and development research and development expense for the year ended december 31 , 2020 was approximately $ 8.0 million , compared to approximately $ 10.3 million for the year ended december 31 , 2019 , a decrease of approximately $ 2.3 million or 22 % . the decrease primarily was due to a reduction in general research and development activity as we focused on truforma® activities , and is more specifically related to lower milestone expenses , contracted expenditures , salaries , bonus and benefits , supplies , and consulting fees as compared to the 2019 year . general and administrative general and administrative expense for the year ended december 31 , 2020 was approximately $ 6.0 million , compared to approximately $ 7.0 million for the year ended december 31 , 2019 , a decrease of approximately $ 1.0 million or 15 % . the decrease was due to a decrease in salaries , bonus and benefits of approximately $ 1.3 million primarily resulting from a reduction in stock compensation expense of approximately $ 0.9 million compared to the 2019 year , along with a general reduction in salaries for marketing and other administrative personnel of approximately $ 0.4 million . other decreases include a reduction of travel and accommodation expense of approximately $ 0.4 million and marketing and investor relations expense of approximately $ 0.2 million . these decreases were partially offset by increases in regulatory fees of approximately $ 0.3 million , rent expense of approximately $ 0.3 million , related to the reclassification of right-of-use asset expense from amortization to rent , office expense of approximately $ 0.2
| 6,836 |
we own or operate over 40 pulp and paper mills and wood products facilities in the u.s. , canada and south korea , and power generation assets in quebec , canada . by capacity , we are the largest producer of newsprint in the world , the largest producer of uncoated mechanical papers in north america and the biggest canadian volume producer of wood products east of the rockies . we are also a significant north american producer in coated papers and market pulp . we are guided by our vision and values , focusing on safety , profitability , accountability , sustainability and teamwork , and we believe that the following elements best define us : competitive cost structure as a result of aggressive cost reductions and mill rationalizations , today we compete as a leading , lower-cost north american producer . when compared to the company that filed for creditor protection in 2009 , today we have dramatically lower fixed costs and a significantly lower breakeven point . synergistic and diversified asset base in implementing our mill rationalization efforts , we operate our best assets , closing or selling the higher cost ones . our harvesting rights and extensive network of canadian sawmills not only makes us a significant lumber producer in eastern north america , but also give us the benefit of integration from the harvested log all the way through the paper roll or pulp bale . in the u.s. , we source primarily from the low-cost southeastern fiber basket . financial strength we make disciplined capital management a priority , and we strive to maintain a conservative capital structure . our business products our 3.1 million metric tons of capacity in newsprint represents approximately 9 % of worldwide capacity and 39 % of north american capacity . we sell newsprint to newspaper publishers all over the world and also to commercial printers in north america for uses such as inserts and flyers . in 2012 , international sales represented 41 % of total newsprint sales . approximately one third of our production of uncoated mechanical papers is high-gloss ( or supercalender ) paper , mainly used for coupons , retail inserts and newspaper supplements . we produce another third of high-bright papers for general commercial printing , educational textbooks , digital printing and tradebooks . the last third includes papers for directories , paperback books and other commercial applications . in total , our 1.3 million metric tons of uncoated mechanical papers capacity makes us the largest producer in north america , and the third largest in the world . we sell uncoated mechanical papers almost exclusively in north america . with 645,000 metric tons of capacity , we are north america 's third largest producer of coated mechanical papers , grades used for magazines , catalogs and advertising inserts . demand for these products is largely tied to consumer spending and advertising . we sell to major commercial printers , publishers , catalogers and retailers in north america . we operate eight pulp mills , five in the u.s. and three in canada , with total capacity of 1.7 million metric tons , making us the fourth largest pulp producer in north america . approximately 80 % of our virgin pulp capacity is softwood-based : northern bleached softwood kraft pulp ( or nbsk ) , southern bleached softwood kraft pulp ( or sbsk ) and fluff pulp . we are also a competitive producer of northern bleached hardwood kraft pulp ( or nbhk ) and southern bleached hardwood kraft pulp ( or sbhk ) , and , with the acquisition of fibrek in 2012 , a leading producer of recycled bleached kraft pulp ( or rbk ) . our market pulp the pulp we produce but do not consume internally is used to make a range of consumer products , like tissue , packaging , specialty paper products , diapers and other absorbent products . approximately 39 % of our 2012 market pulp shipments were exported outside of north america , including significant exports to europe ( 21 % ) and asia ( 11 % ) . 26 our sawmills provide wood chips to our pulp and paper mills in canada and they produce construction-grade lumber that we sell in north america , mostly on the east coast . we also produce i-joists for the construction industry and bed frame components , finger joints and furring strips . replace_table_token_8_th strategy our corporate strategy includes , on the one hand , a gradual retreat from certain paper grades , and on the other , using our strong financial position to act on opportunities to diversify and grow . that strategy focuses on three core themes : operational excellence , disciplined use of capital and strategic initiatives . operational excellence we aim to improve our performance and margins by : ( 1 ) leveraging our lower-cost position ; ( 2 ) maintaining a stringent focus on reducing costs and optimizing our diversified asset base ; ( 3 ) maximizing the benefits of our access to virgin fiber and managing our exposure to volatile recycled fiber ; ( 4 ) pursuing our strategy of managing production and inventory levels and focusing production on our most profitable facilities and machines ; and ( 5 ) capitalizing on our economical access to international markets to compensate for the secular decline in north american newsprint demand . disciplined use of capital we make capital management a priority . building on our focus to reduce manufacturing costs , we will continue our efforts to decrease overhead and spend our capital in a disciplined , strategic and focused manner , concentrated on our most successful sites . reducing debt and associated interest charges is one of our primary financial goals . we believe this improves our financial flexibility and supports the implementation of our strategic objectives . story_separator_special_tag starting in december , we added additional capacity at saint-félicien and dolbeau and began external sales of the power produced . we are in the closing stages of installing our thunder bay facility , and we expect it to become operational by the end of the first quarter of 2013 ; at the corporate level , completed the transfer of the remaining corporate functions from greenville , south carolina , to our montreal head office ; continued to advance on our key sustainability efforts , including in responsible fiber sourcing , carbon footprint reduction , environmental compliance , product stewardship and sustainability disclosure , and achieved fsc certification of approximately 65 % of company-managed forests ; returned $ 67 million to our shareholders through share buybacks , reduced working capital on the balance sheet which we calculate as current assets minus current liabilities , excluding cash and cash equivalents and debt by $ 81 million from the end of 2011 , and redeemed an additional $ 85 million of senior secured notes ; and made significant progress toward optimizing our paper asset base . while preserving our ability to generate cash flow , these steps provide for a leaner and more efficient mill network , including : we idled and subsequently sold our mersey newsprint mill , as part of our efforts to manage exposure to export markets where the relative strength of the u.s. dollar has created difficult conditions for north american producers ; we restarted a high-gloss paper machine in dolbeau . the machine was newly built in 1999 , and we believe that together with the power cogeneration unit , it will be an integrated and highly competitive operation ; we rationalized higher cost capacity by closing a high-gloss paper machine in laurentide and indefinitely idling the pulp mill and high-bright and book paper machine in fort frances ; indeterminately idled a coated paper machine in catawba to improve overall efficiency and reduce labor costs ; and in order to drive better efficiency and lower overall labor costs , we implemented or announced more efficient manning structures at a number of sites . 2013 segment outlook newsprint after two years of stability , the price of newsprint in north america has started to come under pressure , mainly as a result of capacity restarts in eastern canada and lower north american exports to markets where the relative strength of the u.s. dollar has created difficult conditions for north american producers . coated papers the late-year price improvement in north america is fragile , and is under pressure because of demand softness and grade switching to high-gloss grades . we continue the process of restructuring our catawba mill , applying the principles we successfully applied in newsprint and uncoated mechanical papers to remain competitive . uncoated mechanical papers the industry shipment to capacity ratio fell by nearly 10 % in december as a result of a significant capacity addition in eastern canada , and this in turn has increased pressure on pricing , particularly for high-gloss and coated paper grades . pulp recent demand and pricing trends are giving us reason for cautious optimism that the pulp market is gradually improving after difficult conditions in 2012. wood products wood products should continue to show progress as housing starts build on recent improvements . our ongoing growth projects the capacity enhancement in thunder bay , in addition to the announced restart of the ignace , ontario , sawmill and construction of the new atikokan , ontario , sawmill to be completed in 2014 further enhance our position in the segment for the future . 30 r esults of o perations consolidated earnings selected annual financial information replace_table_token_10_th 1. earnings before interest expense , income taxes and depreciation , or ebitda , adjusted ebitda and adjusted ebitda margin are not financial measures recognized under generally accepted accounting principles , or gaap . ebitda is calculated as net ( loss ) income including noncontrolling interests from the consolidated statements of operations , adjusted for interest expense , income taxes and depreciation , amortization and cost of timber harvested . adjusted ebitda means ebitda , excluding special items such as foreign exchange translation gains and losses , employee termination costs , closure costs , impairment and other related charges , inventory write-downs related to closures , start up costs of idled mills , gains and losses on dispositions of assets , post-emergence costs , transaction costs and other charges or credits that are excluded from our segments ' performance from gaap operating income ( loss ) . adjusted ebitda margin is adjusted ebitda expressed as a percentage of sales . we believe that using measures such as ebitda , adjusted ebitda and adjusted ebitda margin is useful because they are consistent with the indicators management uses internally to measure the company 's performance and it allows the reader to more easily compare our ongoing operations and financial performance from period to period . 31 replace_table_token_11_th 2. return on equity , or roe , is a non-gaap financial measure , calculated by dividing net ( loss ) income , excluding the special items identified below , by adjusted shareholders ' equity . roe is a measure of profitability that shows how much profit the company generated as a percentage of shareholder money invested . the calculation of roe as of december 31 , 2010 , has been omitted because , in management 's view , it does not provide a true representation of roe given that net income , excluding special items , and shareholders ' equity are adjusted for fresh start accounting and the application of the plans of reorganization on and as of december 31 , 2010 , and as a result net income does not reflect the performance during the entire year . during the creditor protection and until the application of fresh start accounting , the predecessor company 's shareholders ' equity was negative .
| highlights replace_table_token_14_th 1. net income ( loss ) including noncontrolling interests is equal to operating income ( loss ) in this segment . 2. ebitda , a non-gaap financial measure , is reconciled below . for more information on the calculation and reason we include this measure , see note 1 under results of operations consolidated earnings selected annual financial information above . replace_table_token_15_th 39 industry trends source : pulp & paper products council ( or pppc ) total north american newsprint demand declined 1.2 % in 2012 , reflecting a 20 % increase in demand from other uses , mainly commercial printers , and a 6 % decline in demand from newspapers . accordingly , the average operating rate , on shipment to capacity basis , remained elevated in 2012 , at 92 % . global demand for newsprint was down 3 % in 2012 , including an 11 % decline in western europe , 9 % in india and 5 % in latin america . north american exports were down to western europe ( 30 % ) , asia ( 32 % ) and latin america ( 6 % ) , mainly because the strong u.s. dollar has created difficult conditions for north american producers on export markets . operational performance 40 2012 vs. 2011 operating income variance analysis sales in 2012 , newsprint sales decreased $ 189 million , or 10 % , to $ 1,627 million , primarily as a result of a 262,000 metric ton decrease in shipments ( $ 173 million ) and a $ 6 per metric ton reduction in average transaction price ( $ 15 million ) . shipments were down as a result of our efforts to control finished goods inventory and to manage our exposure to newsprint export markets pressured by the strong u.s. dollar . we took 158,000 metric tons more downtime in 2012 than in 2011 , and we indefinitely idled , and subsequently sold , our export-focused mersey newsprint mill , reducing our annual capacity by approximately 250,000 metric tons .
| 6,837 |
replace_table_token_30_th management considers specific accounts and notes receivable to be impaired if story_separator_special_tag overview we are one of the leading providers of tax preparation services in the united states and canada . as measured by both the number of returns prepared and the number of retail offices , we are the second largest retail preparer of individual tax returns in the united states and the second largest retail preparer of individual tax returns in canada . our tax preparation services and related tax settlement products are offered primarily through franchised locations , although we operate a limited number of company-owned offices each tax season . all of the offices are operated under the liberty tax service and siempretax+ brands . from 2001 through 2015 , we grew our number of tax offices from 508 to 4,328 . see note 1 of the notes to our consolidated financial statements for detail of the u.s. office activity and the number of canadian and company-owned offices for the years ended april 30 , 2015 , 2014 , and 2013 . approximately 58 % of our revenue for fiscal year 2015 was derived from franchise fees , ad fees , royalties , and advertising fees , and for this reason , continued growth in and seasoning of our franchise locations is viewed by management as the key to our future performance . our revenue primarily consists of the following components : franchise fees : our standard franchise fee per territory is $ 40,000 , and we offer our franchisees flexible structures and financing options for franchise fees . franchise fee revenue is recognized when our obligations to prepare the franchisee for operation are substantially complete and as cash is received . ad fees : our fees for ad areas vary based on our assessment of the revenue potential of each ad area , and also depend on the performance of any existing franchisees within the ad area being sold . our ads generally receive 50 % of franchise fees , royalties , and a portion of the interest income derived from territories located in their area . ad fees received are recognized as revenue on a straight-line basis over the initial contract term of each ad agreement , which has historically been ten years , with the cumulative amount of revenue recognized not to exceed the amount of cash received . royalties : our franchise agreements require franchisees to pay us a base royalty typically equal to 14 % of the franchisee 's tax preparation revenue , subject to certain specified minimums . advertising fees : our franchise agreements require all franchisees to pay us an advertising fee of 5 % of the franchisee 's tax preparation revenue , which we use primarily to fund collective advertising efforts . financial products : we offer two types of tax settlement financial products : refund transfer products , which involve providing a means by which a customer may receive his or her refund more quickly and conveniently , and refund-based loans . we earn fees from the sale of these financial products . interest income : we earn interest income from our franchisees and ads related to both indebtedness for the unpaid portions of their franchise fees and ad territory fees , and for other loans we extend to our franchisees related to the operation of their territories . for franchise fees and ad loans upon which the underlying revenue has not been recognized , we recognize the interest income only to the extent of actual payment . tax preparation fees : we earn tax preparation fees , net of discounts , directly from both the operation of company-owned offices and providing tax preparation services through our online tax return products . for purposes of this section and throughout this annual report , all references to `` fiscal 2015 , '' `` fiscal 2014 , '' and `` fiscal 2013 `` refer to our fiscal years ended april 30 , 2015 , 2014 , and 2013 , respectively . for purposes of this section and throughout this annual report , all references to `` year '' or `` years '' are the respective fiscal year or years ended april 30 unless otherwise noted in this annual report , and all references to `` tax season '' refer to the period between january 1 and april 30 of the referenced year . 38 replace_table_token_7_th ( 1 ) previously reported online return counts for fiscal years prior to 2015 have been restated to reflect accepted e-files only . no changes were made to previously reported returns for office counts . ( 2 ) systemwide revenue per office and the net average fee per tax return prepared reflect amounts for our franchised and company-owned offices . ( 3 ) our systemwide revenue represents the total tax preparation revenue generated by our franchised and company-owned offices . it does not represent our revenue because our franchise royalties are derived from the operations of our franchisees . because we maintain an infrastructure to support systemwide operations , we consider growth in systemwide revenue to be an important measurement . in evaluating our performance , management focuses on several metrics that we believe are key to our continued success : net growth in permanent office locations . the change in permanent office locations from year to year is a function of the opening of new offices , offset by locations that our franchisees or we close . opening new permanent offices can be accomplished by the sale of new territories or the opening of permanent offices in previously sold territories . during the 2015 tax season , we stressed the importance of franchisees opening permanent locations in new territories . in fiscal 2015 , on a net basis , our franchisees opened 101 permanent new offices in the u.s. , compared to closing 153 permanent offices in fiscal 2014. prior to the 2015 tax season , walmart substantially changed the way in which it charged rent to our franchisees for walmart kiosk locations . story_separator_special_tag ◦ a reduction in professional fees of $ 0.9 million for advertising-related expenses that occurred in fiscal 2014 , but not in fiscal 2015 . a $ 3.2 million increase in advertising expense caused primarily by the following : ◦ a $ 1.0 million in spending on advertising above the amount required to utilize the advertising fund established by franchisee advertising fees . ◦ a $ 1.0 million increase related to launching the siempretax+ brand and advertising designed to attract new franchisees . ◦ a $ 0.9 million increase in expenses that were spent in professional fees in fiscal 2014 but that were spent in advertising in fiscal 2015 . an increase of $ 0.6 million in depreciation and amortization consisting of a $ 2.1 million depreciation expense related to placing a portion of libpro software program into service , offset by a decrease in amortization expense on company-owned offices , which is now recorded as assets held for sale and no longer amortized . an $ 8.4 million impairment charge related to our online software and acquired customer lists . the online market is increasingly competitive due to aggressive pricing actions and increased advertising by significantly larger competitors . these factors have adversely affected our ability to recover the carrying value of our online software and acquired customer lists . the impairment charge was measured by the amount in which the carrying value exceeded the estimated fair value of the online software and acquired customer lists . see note 5 of the notes to our consolidated financial statements for a description of the impairment related to the company 's online software and acquired online customer lists . income taxes . the following table sets forth certain information regarding our income taxes for the fiscal years ended april 30 , 2015 and 2014 . replace_table_token_11_th the decrease in our income tax rate from fiscal 2014 to fiscal 2015 relates primarily to higher tax deductions for stock option expense coupled with the decline in income before income taxes . net income . our net income decrease d by 60 % in fiscal 2015 over fiscal 2014 , primarily as a result of higher operating expenses associated with our growth initiatives , an $ 8.4 million impairment charge related to our online software and acquired customer lists , and $ 7.6 million in tentative settlements of our class action litigation cases , net of estimated recoveries . 43 fiscal year 2014 compared to fiscal year 2013 revenues . the table below sets forth the components and changes in our revenue for the years ended april 30 , 2014 and 2013 . replace_table_token_12_th our total revenue increased by $ 12.1 million , or 8 % , in fiscal 2014 over fiscal 2013 . this increase was primarily due to the following : the $ 5.3 million increase in royalties and advertising fees driven by both a 5.9 % increase in the average net fee per u.s. tax return filed and a 4.7 % increase in the number of u.s. returns filed by our franchised offices . the $ 4.2 million increase in financial products , reflecting the favorable terms we were able to negotiate with third party financial product vendors . our attachment rate was 51.5 % of funded returns in fiscal 2014 compared to 48.1 % in fiscal 2013 , which had an impact on the increase . the $ 4.1 million increase in tax preparation fees , net of discounts , during fiscal 2014 over fiscal 2013 due to an increase in the number of returns filed though our company-owned offices as well as an increase in the number of online returns filed . the acquisition of certain assets of an online tax preparation software provider in the third quarter of fiscal 2014 favorably impacted the number of online returns filed . these increases in revenue were partially offset by : a $ 1.0 million decrease from fiscal 2013 to fiscal 2014 in ad fees . this decrease resulted primarily from the repurchase of several areas during fiscal 2014 and a decrease in cash received from the remaining ads . a $ 0.9 million decrease in franchise fees primarily attributable to a decrease in the number of franchise sales because we were unable to sell franchises for a portion of the second quarter of fiscal 2014 . however , our fourth quarter franchise sales were up for fiscal 2014 over fourth quarter fiscal 2013 due to a large number of existing franchisee expansions during our spring selling season . operating expenses . the following table details the amounts and changes in our operating expenses in and from fiscal 2014 and fiscal 2013 . replace_table_token_13_th our total operating expenses increased by $ 8.1 million , or 7 % , in fiscal 2014 compared to fiscal 2013 . the largest components of this increase were as follows : 44 a $ 3.5 million increase in selling , general , and administrative expenses during fiscal 2014 over fiscal 2013 caused primarily by the following : ◦ non-recurring expenses of $ 0.9 million related to the restatement of our prior period financial statements incurred during fiscal 2014 . ◦ a $ 0.9 million increase in professional fees during fiscal 2014 over fiscal 2013 caused predominantly by increases in costs related to our marketing initiatives in fiscal 2014 . ◦ a $ 1.6 million increase in bad debt expense during fiscal 2014 over fiscal 2013 due to the increase in terminations during fiscal 2014 . a $ 2.7 million increase in depreciation , amortization , and impairment charges because we put a portion of our libpro tax software into service during the third quarter of fiscal 2014 and incurred $ 1.3 million in depreciation expense . also , we expensed $ 0.7 million more amortization during fiscal 2014 over fiscal 2013 related to the purchase of certain assets of online tax preparation software providers . impairment charges increased by $ 0.6 million predominantly due to the reclassification of company-owned offices to assets held for sale in the fourth quarter of fiscal 2014.
| results of operations fiscal year 2015 compared to fiscal year 2014 revenues . the table below sets forth the components and changes in our revenue for the years ended april 30 , 2015 and 2014 . replace_table_token_9_th our total revenue increase d by $ 2.5 million , or 1.6 % , in fiscal 2015 over fiscal 2014 . this increase was primarily due to the following : a $ 2.5 million increase in financial products , due to our decision to originate a larger portion of financial products through our in-house financial subsidiary , jth financial . in fiscal 2015 we processed 73 % of our 41 financial products in-house , versus 48 % in fiscal 2014 . we receive more revenue on financial products that are originated in-house than we do on those originated by third parties . this increase in revenue was partially offset by a lower attachment rate . our attachment rate was 49.7 % of funded returns in fiscal 2015 compared to 51.5 % in fiscal 2014 , partially because a lower percentage of customers received refunds this year . a $ 2.0 million , or 2.6 % increase in royalties and advertising fees driven by a 3.1 % increase in the average net fee and a 0.9 % increase in the number of returns filed by our franchised offices . this was partially offset by a decline in canadian royalties because 20 previously franchised canadian locations were operated as company-owned offices . these increases in revenue were partially offset by : a $ 1.6 million decrease in franchise fees primarily attributable to receiving lower cash payments on notes from our franchisees in fiscal 2015 . franchise fee revenue is recognized when our obligations to prepare the franchisee for operations are substantially complete and as cash is received .
| 6,838 |
management , development , redevelopment , acquisition and other tenant-related services for a portfolio of office , industrial , retail and mixed-use properties . as of december 31 , 2015 , we owned 179 properties that contain an aggregate of approximately 23.0 million net rentable square feet and consist of 106 office properties , six industrial facilities , three mixed-use properties , one retail property ( 116 core properties ) , 59 properties classified as held for sale , two development properties , one redevelopment property and one re-entitlement property ( collectively , the “ properties ” ) . in addition , as of december 31 , 2015 , we owned economic interests in 16 unconsolidated real estate ventures which own properties that contain approximately 4.3 million net rentable square feet ( collectively , the “ real estate ventures ” ) . as of 43 december 31 , 2015 , we also owned 412 acres of undeveloped land , of which 120 acres are held for sale , and hel d options to purchase a land parcel containing approximately 50 additional acres of undeveloped land . as of december 31 , 2015 , the total potential development that these land parcels could support under current zoning , entitlements or combination thereof , amounted to 7.1 million square feet . the properties and the properties owned by the real estate ventures are located in or near philadelphia , pennsylvania ; metropolitan washington , d.c. ; southern new jersey ; richmond , virginia ; wilmington , delaware ; aust in , texas and oakland and concord california . in addition to managing properties that we own , as of december 31 , 2015 , we were managing approximately 6.5 million net rentable square feet of office and industrial properties for third parties and the real es tate ventures . unless otherwise indicated , all references in this form 10-k to square feet represent rentable area . we do not have any foreign operations and our business is not seasonal . our operations are not dependent on a single tenant or a few tenant s and no single tenant accounted for more than 10 % of our total 2015 revenue . during the year ended december 31 , 2015 , we were managing our portfolio within seven segments : ( 1 ) pennsylvania suburbs , ( 2 ) philadelphia cbd , ( 3 ) metropolitan washington , d.c. , ( 4 ) new jersey/delaware , ( 5 ) richmond , virginia , ( 6 ) austin , texas and ( 7 ) california/other . the pennsylvania suburbs segment includes properties in chester , delaware , and montgomery counties in the philadelphia suburbs . the philadelphia cbd segment includes properties located in the city of philadelphia in pennsylvania . the metropolitan washington , d.c. segment includes properties in the district of columbia , northern virginia and southern maryland . the new jersey/delaware segment includes properties in burlington and camden counties in new jersey and in new castle county in the state of delaware . the richmond , virginia segment includes properties primarily in albemarle , chesterfield , goochland and henrico counties and one property in durham , north carolina . the austin , texas segment includes properties in the city of austin , texas . the california segment includes properties in the city of oakland and city of concord , california . for additional information , see item 1. , “ business - 2015 transactions . ” our corporate group is responsible for cash and investment management , development of certain real estate properties during the construction period , and certain other general support functions . as a result of the och ziff sale that occurred on february 4 , 2016 , we have narrowed our segments to four core markets located in ; ( 1 ) pennsylvania suburbs , ( 2 ) philadelphia central business district ( “ cbd ” ) , ( 3 ) metropolitan washington , d.c. and ( 4 ) austin , texas . the och ziff sale disposed of the entire richmond , virginia segment . subsequent to the och ziff sale , the segments previously defined as new jersey/delaware and california will be managed as a consolidated segment entitled “ other , ” as these geographies no longer provide a significant revenue contribution . accordingly , the chief operating decision maker is revising the management structure and allocating more resources to the four core markets beginning january 1 , 2016. we generate cash and revenue from leases of space at our properties and , to a lesser extent , from the management of properties owned by third parties and from investments in the real estate ventures . factors that we evaluate when leasing space include rental rates , costs of tenant improvements , tenant creditworthiness , current and expected operating costs , the length of the lease term , vacancy levels and demand for office and industrial space . we also generate cash through sales of assets , including assets that we do not view as core to our portfolio , either because of location or expected growth potential , and assets that are commanding premium prices from third party investors . factors that may influence future results of operations global market and economic conditions in the u.s. , market and economic conditions have been improving , characterized by more availability to credit , increasing interest rates and modest growth . while recent economic data reflects modest growth , the cost and availability of credit may be adversely affected by illiquid credit markets and wider credit spreads . volatility in the u.s. and international markets and economies may adversely affect our liquidity and financial condition , and the liquidity and financial condition of our tenants . the continuation of these market conditions may limit our ability , as well as the ability of our tenants , to timely refinance maturing liabilities and access capital markets to meet liquidity needs . story_separator_special_tag in seeking to increase revenue through our operating , financing and investment activities , we also seek to minimize operating risks , including ( i ) tenant rollover risk , ( ii ) tenant credit risk and ( iii ) development risk . tenant rollover risk : we are subject to the risk that tenant leases , upon expiration , will not be renewed , that space may not be relet , or that the terms of renewal or reletting ( including the cost of renovations ) may be less favorable to us than the current lease terms . leases that accounted for approximately 5.8 % of our aggregate final annualized base rents as of december 31 , 2015 ( representing approximately 7.6 % of the net rentable square feet of the properties ) are scheduled to expire without penalty in 2016. we maintain an active dialogue with our tenants in an effort to maximize lease renewals . in our core portfolio the retention rate for the twelve month period ended december 31 , 2015 is 77.1 % compared to a retention rate of 71.4 % for the twelve month period ended december 31 , 2014. rental rates on leases expiring during 2015 did not deviate significantly from market renewal rates in the regions in which we operate . if we are unable to renew leases or relet space under expiring leases , at anticipated rental rates , or if tenants terminate their leases early , our cash flow would be adversely impacted . tenant credit risk : in the event of a tenant default , we may experience delays in enforcing our rights as a landlord and may incur substantial costs in protecting our investment . our management regularly evaluates our accounts receivable reserve policy in light of our tenant base and general and local economic conditions . our accounts receivable allowance was $ 16.2 million or 9.1 % of total receivables ( including accrued rent receivable ) as of december 31 , 2015 compared to $ 15.3 million or 9.1 % of total receivables ( including accrued rent receivable ) as of december 31 , 2014. if poor economic conditions materialize , we may experience increases in past due accounts , defaults , lower occupancy and reduced effective rents . this condition would negatively affect our future net income and cash flows and could have a material adverse effect on our financial condition . 46 development risk : fmc tower at cira centre south on october 31 , 2013 , we determined to proceed with development of the fmc tower at cira centre south ( the “ fmc tower ” ) ( formerly the cira walnut tower ) , designed as a trophy class , mixed-use office tower at 30th and walnut streets in philadelphia , pennsylvania , a 49-story mixed-use office tower on a site ground leased from the university of pennsylvania . we currently expect the fmc tower to be ready for initial occupancy during the third quarter of 2016 and to include approximately 635,000 square feet of office space , 230,000 square feet of residential space consisting of 268 market rate rental apartment units , and 4,000 square feet of retail space , with an additional floor containing a full range of amenities . we have reduced development risk by pre-leasing an aggregate of 61 % of the office square feet of the fmc tower . the anchor tenant for approximately 280,000 square feet of office space is fmc corporation , a diversified chemical company serving agricultural , consumer and industrial markets globally . the lease with fmc corporation has an initial term of sixteen ( 16 ) years from initial occupancy . in addition , we also pre-leased approximately 100,000 square feet of office space to the university of pennsylvania under a 20-year lease . we anticipate the project cost to total $ 385.0 million , of which $ 202.8 million has been funded through december 31 , 2015. we intend to fund remaining development costs through a combination of potential sources , including existing cash balances , availability under our unsecured line of credit , capital raised through one or more joint venture formations , proceeds from asset sales or equity and debt financing . the costs to complete the project will be funded over the construction period , which commenced in the second quarter of 2014 and is scheduled to conclude during the third quarter of 2016. we may joint venture or pre-sell the residential component of the fmc tower . pursuant to this objective , we have executed a property management agreement with a residential development and operating company that contemplates either outcome . our ground lease with the university of pennsylvania has a term through july 2097 , with a variable rent that would provide the university of pennsylvania with a percentage of the cash flow or proceeds of specified capital events subject to receipt of a priority return on the operating partnership 's investment . 1919 ventures on october 27 , 2014 , 1919 ventures , a 50/50 joint venture between lcor and us , announced a planned 29-story , 455,000 square foot contemporary glass tower development at 1919 market street in philadelphia , pennsylvania . the tower has been designed as a mixed-use development consisting of residential , retail and parking components . the residential component of the project will be comprised of 321 luxury apartments . the commercial space will consist of 24,000 square feet and was 100 % pre-leased at december 31 , 2015. the parking component will consist of a 215-car structured parking facility . total project costs are estimated at $ 148.1 million . a portion of the costs are being funded with proceeds of an $ 88.9 million secured construction loan from an unaffiliated institutional lender , and the remaining $ 59.2 million was fully funded with equity contributions from each of us and lcor .
| results of operations comparison of the year ended december 31 , 2014 to the year ended december 31 , 2013 the table below shows selected operating information for the “ same store property portfolio ” and the “ total portfolio. ” the same store property portfolio consists of 188 properties containing an aggregate of approximately 21.1 million net rentable square feet , and represents properties that we owned for the twelve-month periods ended december 31 , 2014 and 2013. the same store property portfolio includes properties acquired or placed in service on or prior to january 1 , 2013 and owned through december 31 , 2014. the total portfolio includes the effects of other properties that were either placed into service , acquired or redeveloped after january 1 , 2013 or disposed prior to december 31 , 2014. a property is excluded from our same store property portfolio and moved into the redevelopment column in the period that we determine that a redevelopment would be the best use of the asset , and when said asset is taken out of service or is undergoing re-entitlement for a future development strategy . this table also includes a reconciliation from the same store property portfolio to the total portfolio net income ( i.e. , all properties owned by us during the twelve-month periods ended december 31 , 2014 and 2013 ) by providing information for the properties which were acquired , placed into service , under development or redevelopment and administrative/elimination information for the twelve-month periods ended december 31 , 2014 and 2013 ( in thousands ) . the total portfolio net income presented in the table is equal to the net income of the parent company and the operating partnership . 57 comparison of year ended december 31 , 2014 to the year ended december 31 , 2013 replace_table_token_18_th explanatory notes ( a ) results include : five assets completed/acquired and placed in service .
| 6,839 |
if suez does not exercise this option , nsc will retain 35 % of story_separator_special_tag overview our primary objective is to provide water services in areas where the supply of potable water is scarce and where the use of reverse osmosis technology to produce potable water is economically feasible . we intend to increase revenues by developing new business opportunities both within our current service areas and in new markets . we expect to maintain operating efficiencies by continuing to properly execute our water production , energy recovery , equipment maintenance and water loss mitigation programs . we believe that many water scarce countries in the caribbean basin and other select markets present opportunities for our business model . our water production operations and activities , and those of our affiliate oc-bvi , are presently conducted at 12 plants in four countries : the cayman islands , the bahamas , the british virgin islands and indonesia . the following table sets forth the comparative combined production capacity of our retail , bulk and affiliate operations as of december 31 of each year . replace_table_token_3_th ( 1 ) in millions of gallons per day . ( 2 ) in february 2019 , we completed the sale ( which was effective as of january 1 , 2019 ) of cw-belize to bwsl . cayman islands we have been operating our business on grand cayman since 1973 and have been using reverse osmosis technology to convert seawater to potable water since 1989. the cayman islands have a limited natural supply of fresh water . we previously had an exclusive license from the cayman islands government to process potable water from seawater and then sell and distribute that water by pipeline to the seven mile beach and west bay areas of grand cayman . this license expired in january 2018 but as discussed in the following paragraph we continue to provide water under the terms of this prior license . our grand cayman operations consist of three company owned and three government-owned seawater reverse osmosis desalination plants which provide water to approximately 6,300 retail residential and commercial customers within a government licensed area and bulk water sales to the water authority-cayman ( “ wac ” ) , respectively . our pipeline system on grand cayman island covers the seven mile beach and west bay areas of grand cayman and consists of approximately 90 miles of potable water pipe . our exclusive license from the cayman islands government was originally scheduled to expire in july 2010 but was extended several times by the cayman islands government in order to provide the parties with additional time to negotiate the terms of a new license agreement . the most recent extension of the license expired on january 31 , 2018. we continue to provide water subsequent to january 31 , 2018 on a month-to-month “ good faith ” basis under the terms of the expired license in order to allow for the continuation of negotiations for a new license without interruption to an essential service . we have been informed during our retail license negotiations that the cayman islands government seeks to restructure the terms of our license in a manner that could significantly reduce the operating income and cash flows we have historically generated from our retail license . our retail license negotiations have also been impacted by the passage of new legislation and the establishment of a new water regulatory body in the cayman islands . see further discussion of this matter at item 7. management 's discussion and analysis of financial condition and results of operations - material commitments , expenditures and contingencies – cayman water retail license . 27 the bahamas cw-bahamas produces potable water from three seawater reverse osmosis desalination plants . two of these plants , the windsor plant and the blue hills plant , are located in nassau , new providence and have a total installed capacity of 14.8 million gallons per day . cw-bahamas supplies water from these plants to the water and sewerage corporation of the bahamas ( “ wsc ” ) under long-term build , own and operate supply agreements . during 2018 , we supplied approximately 3.9 billion gallons ( 2017 : 4.0 billion gallons ) of water to the wsc from these plants . cw-bahamas ' third plant is located in bimini , has a capacity of 115,000 gallons per day , and provides potable water to the bimini sands resort . we have also sold water intermittently to the wsc from our bimini plant when their regular supply was unavailable . from time to time ( including presently ) , cw-bahamas has experienced delays in collecting its accounts receivable . representatives of the bahamas government have informed us that their delays in paying our accounts receivables did/do not reflect any type of dispute with us with respect to the amounts owed . to date , we have not been required to provide an allowance for any delinquent cw-bahamas accounts receivable as such amounts were eventually paid in full . based upon our experience , we believe that the present accounts receivable from the wsc are fully collectible and therefore have not provided any allowance for possible non-payment of these receivables . such accounts receivable balances due from the bahamas government amounted to $ 17.6 million as of december 31 , 2018 , as compared to $ 9.1 million as of december 31 , 2017. see further discussion of this matter at item 7. management 's discussion and analysis of financial condition and results of operations – liquidity and captial resources – cw bahamas liquidity . critical accounting estimates the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the united states of america requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period . our actual results could differ significantly from such estimates and assumptions . story_separator_special_tag conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset , a significant change in the extent or manner in which an asset is used , or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable . for long-lived assets to be held and used , we recognize an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measure the impairment loss based on the difference between the carrying amount and fair value . through our subsidiary , cw-bali , we built and presently operate a seawater reverse osmosis plant with a productive capacity of approximately 264,000 gallons per day located in nusa dua , one of the primary tourist areas of bali , indonesia . since its inception , we have recorded operating losses for cw-bali as the sales volumes for its plant have been insufficient to cover its operating costs . in 2017 and 2016 we determined , based upon probability-weighted scenarios for cw-bali 's future undiscounted cash flows , that the carrying values of cw-bali 's long-lived assets and our investment in cw-bali were not recoverable . we recorded impairment losses of $ 1.6 million and $ 2.0 million , in 2017 and 2016 , respectively , to reduce the carrying values of these assets to their fair values . results of operations the following discussion and analysis of our results of operations should be read in conjunction with our audited consolidated financial statements and accompanying notes included under part ii , item 8. financial statements and supplementary data , of this annual report . in late december 2018 , our board of directors formally approved the sale of our cw-belize subsidiary , which was part of our bulk water operations , to belize water services ltd. ( “ bwsl ” ) and on february 14 , 2019 , we completed the sale ( which was effective as of january 1 , 2019 ) of cw-belize to bwsl . in accordance with u.s. generally accepted accounting principles , cw-belize 's results of operations for 2018 and 2017 have been reflected in our consolidated results of operations as discontinued operations . net income from these discontinued operations for 2018 and 2017 was $ 1,115,825 ( $ 0.07 per share on a fully diluted basis ) and $ 1,041,234 ( $ 0.07 per share on a fully diluted basis ) , respectively . year ended december 31 , 2018 compared to year ended december 31 , 2017 the discussion and analysis of our results of operations that follows refers only to our continuing operations . story_separator_special_tag collapse ; width : 100 % ; font-size : 10pt '' > 30 in august 2018 , the wac accepted oc-cayman 's bid for the new agreement , and the wac and oc-cayman entered into a new five-year contract commencing on february 1 , 2019 for the operation of the north sound and red gate plants . the terms of the new agreement are substantially consistent with those of the prior north sound and red gate water supply agreements , except that ( i ) we have decreased the price we charge for the water supplied ; and ( ii ) under the new agreement the wac pays the energy costs for the operation of these plants directly to the utility company rather than paying oc-cayman a pass-through charge for these costs . the per gallon price we charged for the water supplied under the new agreement in february 2019 , excluding the effect of the pass-through energy charges , was approximately 25 % less than the per gallon rate we charged in february 2018 under the prior agreements . as a result of this price reduction ( and assuming comparable sales volumes ) , the revenues and operating income we generate from the north sound and red gate plants commencing february 1 , 2019 will be less than the revenues and operating income we generated from these plants under the previous agreements . in 2018 , we generated approximately $ 5.1 million in revenues under the north sound and red gate agreements , of which $ 3.2 million consisted of energy pass-through charges . the current operations and maintenance agreement for the nsww plant expires june 2019. pursuant to a public bidding process , in february 2019 we submitted our bid to operate and maintain this plant for a period of seven years after the current contract expires and are awaiting the results of the bidding process and the decision of the wac . we may not be selected for this new agreement . even if we are selected to operate the nsww plant , the rates we have proposed in our bid are less than those we presently charge , thus the revenues and operating income we would generate from a new agreement for this plant will be less than the amounts we have previously generated . in 2018 , we generated approximately $ 2.7 million in revenues under the nsww agreement . services segment : the services segment incurred losses from operations of ( $ 2,622,545 ) and ( $ 3,043,528 ) for 2018 and 2017 , respectively . services segment revenues increased to $ 1,811,372 for 2018 as compared to $ 469,347 for 2017 due to approximately $ 710,000 in revenues for 2018 for a refurbishment project completed for oc-bvi 's bar bay plant and approximately $ 518,000 in revenues for pipeline installations made on grand cayman for a real estate developer . gross profit for the services segment was $ 308,338 for 2018 as compared to a negative gross profit of ( $ 450 ) for 2017. the improvement in the services segment gross profit for 2018 is attributable to the increase in revenues . g & a expenses for the services segment were $ 2,889,703 and $ 3,043,078 for 2018 and 2017 , respectively .
| consolidated results net income for 2018 was $ 11,293,487 ( $ 0.75 per share on a fully-diluted basis ) , as compared to $ 6,144,062 ( $ 0.41 per share on a fully-diluted basis ) for 2017. net income from continuing operations for 2018 was $ 10,177,662 ( $ 0.68 per share on a fully-diluted basis ) , as compared to $ 5,102,828 ( $ 0.34 per share on a fully-diluted basis ) for 2017. the substantial rise in net income for 2018 as compared to 2017 reflects ( i ) an improvement in income from operations of approximately $ 5.7 million , due in part to impairment losses recorded in 2017 that exceeded those recorded for 2018 by almost $ 3 million ; and ( ii ) the litigation settlement received by oc-bvi in september 2018 ( see note 9 of the notes to the consolidated financial statements ) , which is the primary reason for the incremental aggregate income ( i.e . earnings and profit sharing ) from this equity investment of almost $ 2.3 million . 29 total revenues for 2018 increased to $ 65,719,857 from $ 59,367,022 in 2017 as a result of higher revenues for our all our segments . gross profit for 2018 was $ 26,742,287 ( 41 % of total revenues ) as compared to $ 23,998,561 ( 40 % of total revenues ) for 2017. for further discussion of revenues and gross profit see the “ results by segment ” analysis that follows . we recorded an impairment loss for cw-bali of approximately $ 1.7 million in 2017 based upon the operating losses generated by this subsidiary and our projections of its future cash flows . cw-bali did not materially impact our 2018 results of operations .
| 6,840 |
on july 15 , 2008 ( 3 ) incorporated by reference from the registrant 's current report on form 8-k filed on september 24 , 2009 ( 4 ) incorporated by reference from the registrant 's current report on form 8-k filed on october 30 , 2009 ( 5 ) incorporated by reference from the registrant 's current report on form 8-k filed on march 16 , 2010 ( 6 ) incorporated by reference from the registrant 's current report on form 8-k filed on april 14 , 2010 ( 7 ) incorporated by reference from the registrant 's annual report on form 10-k filed on june 29 , 2010 ( 8 ) incorporated by reference from the registrant 's current report on form 8-k filed on november 3 , 2010 ( 9 ) incorporated by reference from the registrant 's quarterly report on form 10-q filed on february 14 , 2011 ( 10 ) incorporated by reference from the registrant 's current report on form 8-k filed on may 17 , 2012 ( 11 ) incorporated by reference from the registrant 's current report on form 8-k filed on november 30 , 2012 ( 12 ) incorporated by reference from the registrant 's current report on form 8-k filed on january 4 , 2013 ( 13 ) incorporated by reference from the registrant 's current report on form 8-k filed on december 12 , 2013 ( 14 ) incorporated by reference from the registrant 's current report on form 10-k filed on june 27 , 2014 ( 15 ) incorporated by reference from the registrant 's current report on form 10-q filed on november 13 , 2014 ( 16 ) incorporated by reference from the registrant 's current report on form 8-k filed on november 24 , 2014 ( 17 ) incorporated by reference from the registrant 's current report on form 8-k filed on july 21 , 2015 ( 18 ) incorporated by reference from the registrant 's current report on form 8-k filed on december 2 , 2015 ( 19 ) incorporated by reference from the registrant 's current report on form 8-k filed on january 4 , 2017 ( 20 ) incorporated by reference from the registrant 's quarterly report on form 10-q filed on february 10 , 2017 ( 21 ) incorporated by reference from exhibit story_separator_special_tag the following discussion and analysis of our results of operations and financial condition for the fiscal years ended march 31 , 2019 and 2018 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 “ risk factors , ” “ cautionary notice regarding forward-looking statements ” and “ description of business ” sections and elsewhere in this report . we use words such as “ anticipate , ” “ estimate , ” “ plan , ” “ project , ” “ continuing , ” “ ongoing , ” “ expect , ” “ believe , ” “ intend , ” “ may , ” “ will , ” “ should , ” “ could , ” “ predict ” and similar expressions to identify forward-looking statements . although we believe the expectations expressed in these forward-looking statements are based on reasonable assumptions within the bound of our knowledge of our business , our actual results could differ materially from those discussed in these statements . factors that could contribute to such differences include , but are not limited to , those discussed in the “ risk factors ” section of this report . we undertake no obligation to update publicly any forward-looking statements for any reason even if new information becomes available or other events occur in the future other than in compliance with the sec rules and regulations . our financial statements are prepared in u.s. dollars and in accordance with accounting principles generally accepted in the united states . see “ exchange rates ” at the end of this section for information concerning the exchanges rates at which renminbi ( “ rmb ” ) were translated into u.s. dollars ( “ usd ” or “ $ ” ) at various pertinent dates and for pertinent periods . overview we currently operate in four business segments in china : ( 1 ) retail drugstores , ( 2 ) online pharmacy , ( 3 ) wholesale of products similar to those that we carry in our pharmacies , and ( 4 ) farming and selling herbs used for traditional chinese medicine ( “ tcm ” ) . 36 our drugstores offer customers a wide variety of pharmaceutical products , including prescription and over-the-counter ( “ otc ” ) drugs , nutritional supplements , tcm , personal and family care products , medical devices , and convenience products , including consumable , seasonal , and promotional items . additionally , we have licensed doctors of both western medicine and tcm on site for consultation , examination and treatment of common ailments at scheduled hours . as of march 31 , 2019 , we had 121 pharmacies in hangzhou city and its adjacent town lin'an under the store brand of “ jiuzhou grand pharmacy. ” since may 2010 , we have also been selling certain otc drugs , medical devices , nutritional supplements and other sundry products online . our online pharmacy sells through several third-party platforms such as alibaba 's tmall , jd.com and amazon.com , and the company 's own platform all over china . story_separator_special_tag 37 there were no material impairment losses for definite-lived intangible assets recognized in any of the years ended march 31 , 2019 and 2018. we currently recorded awarded membership points as accrued expense . the adoption of the policy will require us to deduct the membership rewards directly from our retail revenue . in other words , we will present such amounts in net sales as opposed to our current reduction of operation expense classification . story_separator_special_tag revenue from our farming business . we planted ginkgo trees during the year ended march 31 , 2013. a ginkgo tree may have a growth period of up to twenty years before it is mature enough for harvest . usually , the longer it grows the more valuable it becomes . we plan to continue cultivating the trees in order to maximize their market value in the future . we anticipate that we will continue to grow ginkgo trees and cultivate other herbs in the future . 39 gross profit gross profit increased by $ 4,982,874 or 24.8 % period over period primarily as a result of an increase in gross profit provided by retail stores sale , which increased significantly in the year ended march 31 , 2019. at the same time , gross margin increased from 20.9 % to 23.3 % due to higher retail profit margins . the average gross margins for each of our four business segments are as follows : replace_table_token_3_th retail gross margins increased primarily because of introducing new suppliers , and renegotiating prices with our suppliers continuously . by hiring talented procurement employees , who have decades of experience in the drug sales and purchase industry , we were able to introduce new suppliers and sign brand name products contract to obtain more rebates . as a result , we were able to keep up with our sales profit margin . in addition , we are able to continuously renegotiate with our vendors and press price down to acceptable levels . we expect to keep our profit margin at a reasonable level in the future . gross margin of online pharmacy sales increased primarily due to the increase in our sales via our own official website , as well as a decrease in sales via third-party platforms , which are usually subject to low profit margin . we conduct our business either through certain e-commerce platforms such as tmall and jd.com or via our own official online pharmacy website , www.dada360.com . the sales on our own official website usually have higher profit margins because customers referred by commercial insurance companies are premium customers who can afford premium products with higher profit margins . as described in the above , in the year ended march 31 , 2019 , we achieved more sales from our own official websites . as a result , we incurred higher profit margin . wholesale gross margin decreased primarily due to various products with different profit margin we carried and sold to certain pharmaceutical vendors . in the year ended march 31 , 2019 , we acted as the provincial agent for dong ' e ejiao and distributed significant amount of ejiao in september within zhejiang province . as a result , our gross profit margin was lowered significantly . although we have attempted to market our products to major local hospitals and other pharmacies , we have not been able to make significant progress . until we are able to obtain status as a provincial or national exclusive sale agent for certain popular drugs or have sales access to large local hospitals , we may have to maintain low profit margins in order to drive sales on our wholesale business . selling and marketing expenses sales and marketing expenses increased by $ 5,525,692 or 29.5 % year over year , primarily due to increase in labor and rent related to our store expansions and rising local living cost . we opened over 50 stores at the end of calendar year 2017 and early in calendar year 2018. as a result , we experienced increase of $ 2.9 million labor cost and $ 1.5 million rental cost . excluding the above factors , selling and marketing expenses increased by approximately $ 1.2 million or 6.2 % , which reflects increase in other operating cost . 40 general and administrative expenses general and administrative expenses decreased by $ 16,104,672 or 90.4 % period over period . such expenses as a percentage of revenue decreased to 1.6 % from 18.5 % for the same period a year ago . in fiscal 2019 , in order to use our cash more efficiently , we accelerated collection of advance to suppliers and accounts receivables . specifically , we focused on the collection of aged accounts of advance to suppliers and accounts receivable . as we have collected the amount , our allowance on doubtful accounts decreased by approximately $ 7.7 million . additionally , our stock compensation expense decreased by approximately $ 6.8 million primarily as a result of issuing shares to our key employees in fiscal 2018. excluding such an effect , general and administrative expenses decreased by approximately $ 1.6 million or 9 % , which reflects our improved control of expense such as overall management cash compensation in fiscal year 2019. impairment of long-lived assets we recorded an impairment of long-lived assets of $ 0 and $ 1,583,186 for the year ended march 31 , 2019 and 2018. on march 31 , 2018 , jiuxin medicine started outsourcing its logistics service to astro boy cloud pan ( hangzhou ) storage and logistic co. ltd , jiuxin medicine 's warehouse lease has been terminated . as a result , approximately $ 1,583,186 in unamortized warehouse improvements was recognized as expense in the year ended march 31 , 2018. such impairment was made after we estimated that the implied fair value of long-lived assets was lower than the carrying value .
| results of operations comparison of 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_1_th revenue primarily due to the rise in our retail stores pharmacy business , revenue increased by $ 11,438,306 or 11.9 % for the year ended march 31 , 2019 , as compared to the year ended march 31 , 2018 , partially offset by the decrease in our online sales . revenue by segment the following table breaks down the revenue for our four business segments for the year ended march 31 , 2019 and 2018 : replace_table_token_2_th 38 retail drugstores sales , which accounted for approximately 67.3 % of total revenue for the year ended march 31 , 2019 , increased by $ 10,356,827 , or 16.7 % compared to the year ended march 31 , 2018 , to $ 72,334,409. same-store sales increased by approximately $ 9,465,094 , or 15.9 % , while new stores contributed approximately $ 755,419 in revenue in the year ended march 31 , 2019.excluding the rmb depreciation effect , the same store sales increased by approximately 17.4 % period over period . the increase in our retail drugstore sales is primarily due to consumer-facing benefits such as emphasis on on-site medical care , chronic disease management services , incremental dtp ( direct-to-patient ) business caused by continuous hospital medical reform , promotional campaigns such as our fifteen year anniversary sales , and maturing of stores opened a year ago . convenient on-site medical support at our pharmacies has been our hallmark from the beginning of our business . suitable medical support from our doctors has proven to be critical to our superior store sales . linking doctor care with drug sales has become our business guidance for the future . by adding more doctor-provided services at stores , we have been able to promote our store sales .
| 6,841 |
under the equity method , the company 's investment in the partnership is recorded at cost and is subsequently adjusted to recognize the company 's allocable share of the earnings or losses from the partnership and the amortization of any investment basis differences after the date of acquisition . the company and its consolidated lihtc funds must periodically assess the appropriateness of the carrying amount of its equity method investments to ensure the investment amount is not other-than-temporarily impaired . the lihtc funds use a gross ( undiscounted ) cash flow approach when assessing and measuring their equity investments for impairment . these cash flows include the future tax credits and tax benefits from net operating losses and any residual value of the properties . f- 12 for investments accounted for under the story_separator_special_tag general overview our primary business is the management of our bond portfolio , which consists primarily of tax-exempt bonds issued by state and local government authorities to finance multifamily rental housing developments ( including affordable housing , student housing and senior living facilities ) and community development districts . the multifamily housing bonds comprised 90.5 % of the company 's unpaid bond principal balance at december 31 , 2011 and are secured by mortgages on the underlying properties . we also own community development district bonds that are secured by specific payments or assessments pledged by the issuers or incremental tax revenue generated by the underlying developments . nearly all of our bond interest income is exempt from federal income taxes . however , a significant portion of the tax exempt income from the bonds is subject to inclusion in a shareholder 's alternative minimum tax calculation for u.s. federal income tax purposes . substantially all of the company 's operating cash flow is from the company 's bond portfolio , which is owned by subsidiaries of the company who pass through their income to the company ; however , those subsidiaries have contractual restrictions in place which may limit their ability to distribute cash flow and other assets to the company . we have a majority interest in ihs , a company that was formed to raise funds to invest in affordable housing in overseas markets . ihs 's primary activity to date has been to sponsor , raise capital for and manage the business of the sa fund as the general partner of the sa fund . we expect ihs to sponsor , raise capital for and manage additional funds similar to the sa fund in the future . see “ notes to consolidated financial statements – note 18 , consolidated funds and ventures ” for further details . the company has sold , liquidated or closed down substantially all of its other non-bond related business . 15 current liquidity issues beginning with the capital crisis that started in late 2007 , our business has changed dramatically because of market conditions in general and liquidity issues in our business in particular . as a result of these conditions , we sold various operating businesses at significant losses and dramatically cut our operating expenses in order to reduce our need for capital and to create liquidity . today , our primary business is the management of our bond portfolio which consists primarily of investments in tax exempt bonds secured by affordable housing . the steps we have taken were not adequate to address all of our liquidity issues and we continue to have certain senior debt obligations that have come due and remain payable . however , we have in place various forbearance agreements with , and concessions from , our senior and subordinate debt holders such that none of our lenders are currently pursuing any remedies . while we expect to have adequate liquidity to operate our business and pay our senior debt obligations under these forbearance agreements for at least the next 15 months , we do not have adequate liquidity to pay our subordinate debt obligations in full when various concessions expire , including those where the reduced rate will reset to a higher rate in april and may of 2012. because our subordinate debt is junior in right of payment to our senior debt obligations , as long as certain senior debt obligations that have come due remain payable , we do not believe the subordinate debt holders can pursue any remedies against us if we were unable to pay them . also , our ability to pay our senior debt obligations beyond 15 months from now is highly dependent on future negotiations with certain of our creditors as well as future cash flow generated by our business . the net interest income generated by our bond portfolio is dependent on the performance of the real estate assets which serve as collateral for these bonds . the bond portfolio is owned by various subsidiaries of the company , and the net interest income generated from the bond portfolio is used primarily to fund our operating expenses and make payments on our senior debt and on our other debt obligations . there are contractual restrictions in place which limit the ability of our subsidiaries to distribute cash flow and other assets to us . furthermore , the common stock of our most significant subsidiary is pledged to a senior creditor as collateral . our bond portfolio is leveraged , and the cash generated by the portfolio is subject to interest rate and debt roll-over risk . see “ notes to consolidated financial statements – note 8 , debt ” for more information . if short-term rates rise , we will have lower cash distributions from the subsidiaries that own the bond portfolio . a significant increase in short-term rates could immediately impair our ability to pay even the senior debt of the company . in addition to the leverage on our bond portfolio , our non-bond assets are also substantially leveraged . as a result of these encumbrances , our ability to raise additional capital or issue new debt to generate liquidity is very limited . story_separator_special_tag · if the entity is considered a vie , then the determination of whether we are the primary beneficiary of the vie is needed and requires us to make judgments regarding : ( 1 ) our power to direct the activities of the vie that most significantly impact the vie 's economic performance , and ( 2 ) our obligation to absorb losses of the vie that could potentially be significant to the vie or our right to receive benefits from the vie that could potentially be significant to the vie . these assessments require a significant analysis of all of the variable interests in an entity , any related party considerations and other features that make such an analysis difficult and highly judgmental . · if the entity is required to be consolidated , then upon initial consolidation , we record the assets , liabilities and noncontrolling interests at fair value . substantially all of our consolidated entities are investment entities that own real estate or real estate related investments and as such there are judgments related to the forecasted cash flows to be generated from the investments such as rental revenue and operating expenses , vacancy , replacement reserves and tax benefits ( if any ) . in addition , we must make judgments about discount rates and capitalization rates . income taxes municipal mortgage & equity , llc is the parent entity that owns interests in various entities , some of which are corporations subject to federal and state income taxes and others of which are pass-through entities for tax purposes . pass-through entities do not pay taxes ; they pass their income ( and other tax attributes ) through to the owners of the equity interests in such entities . municipal mortgage & equity , llc is itself a pass-through entity , and therefore , all of its income ( and loss ) , including its share of our pass-through entity subsidiaries ' activity , is allocated to our common shareholders . we do not have a liability for federal and state income taxes related to our pass-through income . however , we operate several business segments through taxable subsidiaries , and as such a portion of our income is subject to federal and state income taxes . asc no . 740 , “ income taxes ” ( “ asc 740 ” ) , establishes financial accounting and reporting standards for the effect of income taxes . the objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current period and deferred tax assets and liabilities for future tax consequences of events that have been recognized in an entity 's financial statements or tax returns . significant judgment is required in determining and evaluating income tax positions , including assessing the relative merits and risks of various tax treatments considering statutory , judicial and regulatory guidance available regarding the tax position . we establish additional provisions for income taxes when there are certain tax positions that could be challenged and it is more likely than not these positions will not be sustained upon review by taxing authorities . 17 judgment is also required in assessing the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns as well as the recoverability of our deferred tax assets . in assessing our ability to realize the benefit of our deferred tax assets we consider information such as forecasted earnings , future taxable income and tax planning strategies in measuring the required valuation allowance . 18 results of operations the following discussion of our consolidated results of operations should be read in conjunction with our financial statements , including the accompanying notes . see “ critical accounting policies and estimates ” for more information concerning the most significant accounting policies and estimates applied in determining our results of operations . the table below summarizes our consolidated financial performance for the years ended december 31 , 2011 and 2010 : replace_table_token_2_th interest income the following table summarizes our interest income for the years ended december 31 , 2011 and 2010 : replace_table_token_3_th bond interest income is our main source of revenue and is primarily affected by the size of the bond portfolio , the interest rates on the bonds in the portfolio and the collection rate on the portfolio . we are actively selling and or working out of the loan portfolio remaining from our taxable lending business and do not expect these assets to be a significant source of future revenue . total interest income decreased by 10.4 % or $ 9.5 million , for the year ended december 31 , 2011 as compared to 2010. interest on bonds decreased $ 4.9 million , mainly as a result of a decline of $ 128.3 million in the weighted average bond unpaid principal balance during 2011 as compared to 2010 due to sale and redemption activity , as well as principal amortization . this decline was partially offset by an increase in the weighted average effective interest rate which increased by 22 basis points ( “ bps ” or “ bp ” ) to 6.24 % . this increase was largely due to the collection of $ 2.2 million of interest income on two bonds that were on non-accrual during 2010 and became performing in 2011 . 19 interest on loans decreased $ 4.6 million , mainly due to a decline of $ 73.6 million in the weighted average loan unpaid principal balance for the year ended december 31 , 2011 as compared to the year ended december 31 , 2010 due to sale and payoff activity .
| summary of cash flows at december 31 , 2011and 2010 , we had cash and cash equivalents of approximately $ 42.1 million and $ 32.5 million , respectively . the following table summarizes the changes in our cash and cash equivalents balances from december 31 , 2010 to december 31 , 2011 : replace_table_token_14_th 27 at december 31 , 2011 and 2010 our unrestricted cash included teb 's unrestricted cash of $ 24.7 million and $ 25.2 million , respectively ; however , distributions of this cash from teb to the company are subject to the limitations set forth in teb 's operating agreement . cash distributions received by the company from teb are further restricted by a forbearance agreement between the company and a counterparty . see item 1a . risk factors . for the twelve months ended december 31 , 2011 , teb generated $ 45.6 million of net operating cash flows . teb 's investing activities also provided cash flow of $ 72.3 million and teb used cash of $ 118.4 million in its financing activities . included in teb 's financing activities are distributions to the company of $ 38.0 million . the company used its distributions from teb to fund operating activities , make repayments on its non-bond related debt obligations , and retire a portion of the preferred equity of teb . operating activities cash flow provided by operating activities was $ 14.4 million and $ 20.5 million for the years ended december 31 , 2011 and 2010 , respectively .
| 6,842 |
group 1 automotive , inc. by : earl j. hesterberg earl j. hesterberg president and chief executive officer pursuant to the requirements of the securities exchange act of 1934 , this report has been signed below by the following persons on behalf of the registrant in the capacities indicated on the 19th day of february , 2019 . signature title earl j. hesterberg president and chief executive officer and director earl j. hesterberg ( principal executive officer ) john c. rickel senior vice president and chief financial officer john c. rickel ( principal financial and accounting officer ) stephen d. quinn chairman and director stephen d. quinn john l. story_separator_special_tag you should read the following discussion in conjunction with part i , including the matters set forth in “ item 1a . risk factors , ” and our consolidated financial statements and notes thereto included elsewhere in this annual report on form 10-k. in the preparation of our financial statements and reporting of our operating results in accordance with united states generally accepted accounting principles ( `` u.s. gaap '' ) , certain non-core business items are required to be presented . examples of items that we consider non-core include non-cash asset impairment charges , gains and losses on dealership , franchise or real estate transactions , and catastrophic events such as hail storms , hurricanes , and snow storms . in order to improve the transparency of our disclosures , provide a meaningful presentation of results from our core business operations and improve period-over-period comparability , we have included certain adjusted financial measures that exclude the impact of non-core business items . these adjusted measures are not measures of financial performance under u.s. gaap , but are instead considered non-gaap financial performance measures . our results , which are reported in u.s. dollars , are impacted by fluctuations in exchange rates relating to our operations in the u.k. and brazil . for example , if the british pound sterling were to weaken against the u.s. dollar , our u.k. results of operations would translate into less u.s. dollar reported results . during the twelve months ended december 31 , 2018 , the british pound sterling strengthened against the u.s. dollar as the average exchange rate increased 3.5 % as compared to the same period in 2017 from 0.78 to 0.75. during the twelve months ended december 31 , 2018 , the brazilian real weakened against the u.s. dollar as the average exchange rate decreased 14.4 % as compared to the same period in 2017 from 3.19 to 3.65. during the twelve months ended december 31 , 2017 , the british pound sterling weakened against the u.s. dollar as the average rate decreased 4.9 % , as compared to the same period in 2016. during the twelve months ended december 31 , 2017 , the brazilian real strengthened against the u.s. dollar as compared to the same period in 2016 as the average rate increased 8.5 % . as such , management evaluates the company 's results of operations on both an as reported and a constant currency basis . the constant currency presentation , which is a non-gaap measure , excludes the impact of fluctuations in foreign currency exchange rates . we believe providing constant currency information provides valuable supplemental information regarding our underlying business and results of operations , consistent with how we evaluate our performance . we calculate constant currency percentages by converting our current period reported results for entities reporting in currencies other than u.s. dollars using comparative period exchange rates rather than the actual exchange rates in effect during the respective periods . the constant currency performance measures should not be considered a substitute for , or superior to , the measures of financial performance prepared in accordance with u.s. gaap . our management uses these adjusted measures in conjunction with u.s. gaap financial measures to assess our business , including communication with our board of directors , investors and industry analysts concerning financial performance . therefore , we believe these adjusted financial measures are relevant and useful to users of the following financial information . for further explanation and reconciliation to the most directly comparable u.s. gaap measures , see `` non-gaap financial measures '' below . overview we are a leading operator in the automotive retail industry . through our dealerships , we sell new and used cars and light trucks ; arrange related vehicle financing ; sell service and other insurance contracts ; provide automotive maintenance and repair services ; and sell vehicle parts . our operations are aligned into three geographic regions : the u.s. region , the u.k. region , and the brazil region . our president of u.s. operations reports directly to our chief executive officer and is responsible for the overall performance of the u.s. region , as well as for overseeing the market directors and dealership general managers . the operations of our two international regions are structured similar to the u.s. region . as such , our three reportable segments are the u.s. , which includes the activities of our corporate office , the u.k. and brazil . as of december 31 , 2018 , we owned and operated 238 franchises , representing 30 brands of automobiles , at 183 dealership locations and 47 collision centers worldwide . we own 152 franchises at 118 dealerships and 29 collision centers in the u.s. , 63 franchises at 47 dealerships and 11 collision centers in the u.k. , and 23 franchises at 18 dealerships and seven collision centers in brazil . our operations are primarily located in major metropolitan areas in alabama , california , florida , georgia , kansas , louisiana , maryland , massachusetts , mississippi , new hampshire , new jersey , new mexico , oklahoma , south carolina and texas in the u.s. , in 32 towns of the u.k. and in key metropolitan markets in the states of sao paulo , parana , mato grosso do sul and santa catarina in brazil . story_separator_special_tag for the years ended december 31 , 2017 and 2016 , total revenues were $ 11.1 billion and $ 10.9 billion , respectively . for the years ended december 31 , 2017 and 2016 , gross profits were $ 1.6 billion and $ 1.6 billion , respectively . we generated net income of $ 157.8 million , or $ 7.83 per diluted common share , for the year ended december 31 , 2018 , compared to $ 213.4 million , or $ 10.08 per diluted share , for the year ended december 31 , 2017 and $ 147.1 million , or $ 6.67 per diluted share , for the year ended december 31 , 2016 . in addition , the following table highlights additional key performance indicators we use to manage our business : consolidated statistical data replace_table_token_7_th in addition to the matters described above , the following factors impacted our financial condition and results of operations in 2018 , 2017 , and 2016 : year ended december 31 , 2018 : non-cash asset impairments : due to our determination that the fair value of indefinite-lived intangible franchise rights related to certain of our franchises did not exceed their carrying value , we recorded a $ 38.7 million pretax non-cash impairment charge , of which $ 38.2 million related to intangible franchise rights in our u.s. reporting unit and $ 0.5 million related to intangible franchise rights in our u.k. reporting unit . in addition , primarily in conjunction with dealership disposition activity , an additional $ 5.1 million of non-cash asset impairments were recognized , related to real estate and other long-term assets . real estate and dealership transactions : we disposed of six franchises : four in the u.s. segment and two in the u.k. segment . primarily as a result of these dispositions , a net pre-tax gain of $ 25.2 million was recognized for the year ended december 31 , 2018. catastrophic events : our results were negatively impacted by several catastrophic events . insurance deductibles and other related expenses totaling $ 5.3 million were recognized as sg & a expenses primarily as a result of vehicle damages from hailstorms in the u.s. during the year . 36 settlement : we recognized a net pre-tax loss of $ 5.0 million associated with legal settlements in our u.s. and brazil segments . year ended december 31 , 2017 : non-cash asset impairments : due to our determination that the fair value of indefinite-lived intangible franchise rights related to certain of our franchises did not exceed their carrying value , we recorded a $ 19.3 million pretax non-cash impairment charge , of which $ 12.6 million related to intangible franchise rights in our u.s. reporting unit and $ 6.7 million related to intangible franchise rights in our brazil reporting unit . catastrophic events : our results were negatively impacted by several catastrophic events . most significantly , insurance deductibles and other related expenses totaling $ 8.8 million were recognized as sg & a expenses and $ 6.6 million of chargeback expense reserves associated with finance and insurance revenues were recognized , as a result of vehicle and property damage suffered from hurricanes harvey and irma in the u.s. oem settlement : we recognized a net pretax gain of $ 1.1 million associated with the audi diesel emissions claims settlement , in connection with our ownership of audi dealerships in the u.s. tax rate changes : we recognized a tax benefit of $ 73.0 million based upon the re-measurement of net deferred tax liabilities associated with the reduction in the corporate income tax rate enacted by the u.s. government , commonly referred to as the tax act . year ended december 31 , 2016 : non-cash asset impairments : due to our determination that the fair value of indefinite-lived intangible franchise rights related to certain of our franchises did not exceed their carrying value , we recorded a $ 30.0 million pretax non-cash impairment charge , of which $ 19.9 million related to intangible franchise rights in our two u.s. reporting units and $ 10.1 million related to intangible franchise rights in our brazil reporting unit . we also recognized a total of $ 2.8 million in pre-tax non-cash asset impairment charges related to impairment of various real estate holdings and other long-lived assets . catastrophic events : our results were negatively impacted by several catastrophic events . insurance deductibles and other related expenses totaling $ 5.9 million were recognized as sg & a expenses as a result of vehicle damage from hailstorms and flooding in the u.s. , during the year . real estate and dealership transactions : we disposed of ten franchises : five in the u.s. segment , four in the brazil segment and one in the u.k. segment . primarily as a result of these dispositions , a net pre-tax gain of $ 2.7 million and net pre-tax losses of $ 0.8 million and $ 0.3 million , respectively , were recognized for the year ended december 31 , 2016. oem settlement : we recognized a net pre-tax gain of $ 11.7 million associated with the volkswagen diesel emissions claims settlement , in connection with our ownership of volkswagen dealerships in the u.s. severance costs : negatively impacting our results was $ 2.0 million of severance costs paid to employees . foreign deferred income tax benefit : we recognized a tax benefit of $ 1.7 million associated with a dealership disposition in brazil . in addition to the key performance indicators presented above , we also reference numerous same store metrics as key indicators of results and trends occurring within our business . those same store metrics , results and trends are discussed in more detail in the “ results of operations ” section that follows . recent accounting pronouncements refer to note 2 , “ summary of significant accounting polices and estimates ” , within our notes to consolidated financial statements for a discussion of those most recent pronouncements that impact us .
| results of operations the “ same store ” amounts presented below include the results of dealerships for the identical months in each period presented in the comparison , commencing with the first full month in which the dealership was owned by us and , in the case of dispositions , ending with the last full month it was owned by us . for example , for a dealership acquired in june 2017 , the results from this dealership will appear in our same store comparison beginning in 2018 for the period july 2018 through december 2018 , when comparing to july 2017 through december 2017 results . depending on the periods being compared , the dealerships included in same store will vary . for this reason , the 2017 same store results that are compared to 2018 differ from those used in the comparison to 2016 . same store results also include the activities of our corporate headquarters . the following table summarizes our combined same store results for the year ended december 31 , 2018 as compared to 2017 and for the year ended december 31 , 2017 compared to 2016 . 38 total same store data ( dollars in thousands , except per unit amount ) replace_table_token_8_th 39 replace_table_token_9_th ( 1 ) see “ non-gaap financial measures ” for more details . the discussion that follows provides explanations for the variances noted above by region ( u.s. , u.k. and brazil ) . in addition , each table presents , by primary income statement line item , comparative financial and non-financial data of our same store locations , those locations acquired or disposed of ( “ transactions ” ) during the periods , and the consolidated company for the years ended december 31 , 2018 , 2017 , and 2016 .
| 6,843 |
story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this annual report on form 10-k. overview we operate as two reportable business segments : good times burgers and frozen custard restaurants ( “ good times ” ) and bad daddy 's burger bar restaurants ( “ bad daddy 's ” ) . all of our good times restaurants compete in the quick service drive-through dining industry while our bad daddy 's restaurants compete in the full-service upscale casual dining industry . we believe that providing this additional financial information for each of our brands will provide a better understanding of our overall operating results . refer to note 9 , segment reporting , in the notes to our consolidated financial statements for more information . the company 's fiscal year ends on the last tuesday of september each year . most of our fiscal years have 52 weeks , however we experience a 53 rd week every five or six years . our discussion for fiscal years 2018 and 2017 , which ended on september 25 , 2018 and september 26 , 2017 , respectively , covers a period of 52 full calendar weeks in fiscal 2018 and fiscal 2017. the following tables present information about our reportable segments for the respective periods , all dollar values are represented in thousands : replace_table_token_4_th ( 1 ) includes direct and allocated corporate general & administrative costs . restaurant operating costs are expressed as a percentage of restaurant sales 23 bad daddy 's restaurants : we currently operate thirty-two company-owned and joint venture bad daddy 's restaurants including one restaurant opened subsequent to the fiscal year-end . we also license one restaurant in north carolina and have a franchise restaurant in south carolina . we expect to open five to six additional bad daddy 's restaurants during fiscal 2019. we anticipate an approximate 2 % to 3 % blended price increase during fiscal 2019 at our bad daddy 's restaurants . good times burgers & frozen custard restaurants : we currently operate twenty-six company-owned and joint venture good times restaurants all in the state of colorado . in addition , we have nine good times franchise restaurants , seven operating in colorado and two in wyoming . our outlook for fiscal 2019 for good times is cautiously optimistic based on the last eight years of positive sales trends ; however , our sales trends are influenced by many factors . we anticipate an approximate 2 % to 4 % price increase during fiscal 2019 at our good times restaurants . we are continuing to manage our marketing communications to balance growth in customer traffic and the average customer expenditure . results of operations for fiscal 2018 compared to fiscal 2017 net revenues : net revenues for fiscal 2018 increased $ 20,160,000 ( +25.5 % ) to $ 99,240,000 from $ 79,080,000 for fiscal 2017. bad daddy 's concept revenues increased $ 19,713,000 while our good times concept revenues increased $ 447,000. bad daddy 's restaurant sales increased $ 19,722,000 to $ 67,428,000 in fiscal 2018 from $ 47,706,000 in fiscal 2017 , primarily attributable to the nine new restaurants opened in fiscal 2018 and a full year of operations for restaurants opened in the prior fiscal year . bad daddy 's same store restaurant sales increased 0.2 % during fiscal 2018 compared to fiscal 2017 , which excludes the impact of fiscal weeks the original bad daddy 's was closed for remodeling during fiscal 2018. excluding the impact of hurricane florence , which occurred during the fourth fiscal quarter , bad daddy 's same store sales increased 0.8 % for the year . bad daddy 's restaurants are included in same store sales after they have been open a full eighteen months . the average menu price increase was 3.83 % in 2018 over 2017. there were seventeen restaurants included in the same store sales base at the end of the fiscal year . additionally , net revenues for fiscal 2018 were reduced by $ 9,000 resulting from lower franchise royalties and license fees compared to fiscal 2017. additional sales data related to bad daddy 's company-owned and joint-venture restaurants : replace_table_token_5_th good times restaurant sales increased $ 447,000 to $ 31,136,000 in fiscal 2018 from $ 30,689,000 in fiscal 2017. same store restaurant sales increased 4.2 % during fiscal 2018 compared to fiscal 2017. restaurants are included in same store sales after they have been open a full eighteen months . restaurant sales increased $ 1,206,000 from the prior year due to the same store sales increase , partially offset by a decrease of $ 759,000 from the prior year due primarily to the closure of two company owned stores in january and april 2018. the average menu price increase in fiscal 2018 over fiscal 2017 was approximately 4.3 % . franchise revenues remained unchanged at $ 324,000 in both fiscal 2018 and fiscal 2017. average good times restaurant sales for company-operated restaurants open the entire fiscal year for fiscal 2017 and 2018 were as follows : story_separator_special_tag fiscal 2018 , up from $ 2,535,000 ( 8.3 % of restaurant sales ) in fiscal 2017. the $ 29,000 increase in other operating costs is primarily attributable to one new restaurant opened in march 2017. new store preopening costs : for fiscal 2018 , we incurred $ 2,784,000 of preopening costs compared to $ 2,588,000 in fiscal 2017. bad daddy 's preopening costs were $ 2,784,000 for fiscal 2018 compared to $ 2,437,000 in fiscal 2017. all of the preopening costs are related to the nine newly developed bad daddy 's restaurants that were opened in fiscal 2018 plus certain preopening costs that were expensed in fiscal 2018 for restaurants that have or will open early in the following year . story_separator_special_tag income ( loss ) from operations : income from operations was $ 372,000 in fiscal 2018 compared to a loss from operations of $ 1,422,000 in fiscal 2017. the change from fiscal 2017 to fiscal 2018 was primarily attributable to the increase in net revenues offset by an increase in preopening expenses and other matters discussed in the `` restaurant operating costs '' , `` general and administrative costs '' , “ advertising costs ” , “ franchise costs ” , “ gain on restaurant asset sales ” and “ asset impairment charges ” sections above . 26 net loss : the net loss was $ 17,000 for fiscal 2018 compared to a net loss of $ 1,605,000 in fiscal 2017. the change from fiscal 2017 to fiscal 2018 was primarily attributable to the matters discussed in the `` net revenues '' , `` food and packaging costs '' , “ payroll and other employee benefits costs , ” `` general and administrative costs '' and `` asset impairment charges `` sections above , offset by an increase in net interest expense of $ 206,000 compared to the same prior year period . income attributable to non-controlling interests : for fiscal 2018 , the income attributable to non-controlling interests was $ 1,017,000 compared to $ 650,000 in fiscal 2017. the non-controlling interest represents the limited partner 's share of income in the good times and bad daddy 's joint venture restaurants . $ 382,000 of the current year income is attributable to the good times joint-venture restaurants , compared to $ 373,000 in the prior year . $ 635,000 of the current year income is attributable to the bad daddy 's joint venture restaurants , compared to $ 277,000 in the prior year . adjusted ebitda ebitda is defined as net income ( loss ) before interest , income taxes and depreciation and amortization . adjusted ebitda is defined as ebitda , adjusted for non-cash stock-based compensation expense , preopening expense , non-recurring acquisition costs , u.s. generally accepted accounting principles ( “ gaap ” ) rent in excess of cash rent , non-cash disposal of assets and non-cash asset impairment charges . adjusted ebitda is intended as a supplemental measure of our performance that is not required by or presented in accordance with gaap . we believe that ebitda and adjusted ebitda provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and operating results . our management uses ebitda and adjusted ebitda ( i ) as a factor in evaluating management 's performance when determining incentive compensation and ( ii ) to evaluate the effectiveness of our business strategies . we believe that the use of ebitda and adjusted ebitda provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the company 's financial measures with other restaurants , which may present similar non-gaap financial measures to investors . in addition , you should be aware when evaluating ebitda and adjusted ebitda that in the future we may incur expenses similar to those excluded when calculating these measures . our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items . our computation of adjusted ebitda may not be comparable to other similarly titled measures computed by other companies , because all companies do not calculate adjusted ebitda in the same fashion . our management does not consider ebitda or adjusted ebitda in isolation or as an alternative to financial measures determined in accordance with gaap . the principal limitation of ebitda and adjusted ebitda is that they exclude significant expenses and income that are required by gaap to be recorded in the company 's financial statements . some of these limitations are : · adjusted ebitda does not reflect our cash expenditures , or future requirements , for capital expenditures or contractual commitments ; · adjusted ebitda does not reflect changes in , or cash requirements for , our working capital needs ; · adjusted ebitda does not reflect the interest expense , or the cash requirements necessary to service interest or principal payments , on our debts ; · although depreciation and amortization are non-cash charges , the assets being depreciated and amortized will often have to be replaced in the future , and adjusted ebitda does not reflect any cash requirements for such replacements ; · stock based compensation expense is and will remain a key element of our overall long-term incentive compensation package , although we exclude it as an expense when evaluating our ongoing performance for a particular period ; · adjusted ebitda does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations ; and · other companies in our industry may calculate adjusted ebitda differently than we do , limiting its usefulness as a comparative measure . because of these limitations , adjusted ebitda should not be considered in isolation or as a substitute for performance measures calculated in accordance with gaap . we compensate for these limitations by relying primarily on our gaap results and using adjusted ebitda only as a supplementary measure . you should review the reconciliation of net loss to ebitda and adjusted ebitda below and not rely on any single financial measure to evaluate our business . 27 the following table reconciles net loss to ebitda and adjusted ebitda ( in thousands ) : replace_table_token_6_th ( a ) depreciation , amortization and preopening expenses are presented net of the share attributable to the non-controlling interest . ( 1 ) represents expenses directly associated with the opening of new restaurants , including preopening rent . ( 2 ) represents non-cash stock-based compensation as described in note 7 to the financial statements . ( 3 ) represents the excess of cash rent incurred over the amount of gaap rent recorded in the financial statements .
| fiscal year 2018 2017 company-operated $ 1,173,000 $ 1,095,000 during fiscal 2018 , company-operated good times restaurants ' sales for restaurants that had been open a full eighteen months ranged from a low of $ 800,000 to a high of $ 2,031,000. food and packaging costs : for fiscal 2018 , food and packaging costs increased $ 5,356,000 from $ 24,900,000 ( 31.8 % of restaurant sales ) in fiscal 2017 to $ 30,256,000 ( 30.7 % of restaurant sales ) . bad daddy 's food and packaging costs were $ 20,048,000 ( 29.7 % of restaurant sales ) in fiscal 2018 , up from $ 14,906,000 ( 31.2 % of restaurant sales ) in fiscal 2017. this increase is due to a greater number of operating weeks resulting from restaurants opened during fiscal 2017 and 2018. the decrease as a percent of sales is due to lower input costs , primarily ground beef . 24 good times food and packaging costs were $ 10,208,000 ( 32.8 % of restaurant sales ) in fiscal 2018 , up from $ 9 , 994,000 ( 32.6 % of restaurant sales ) in fiscal 2017. compared to fiscal 2017 the cost index on our weighted basket of goods remained relatively flat during fiscal 2018. good times uses all-natural beef and did not see the same decline in costs as bad daddy 's . payroll and other employee benefit costs : for fiscal 2018 , payroll and other employee benefit costs increased $ 7,379,000 from $ 28,274,000 ( 36.1 % of restaurant sales ) in fiscal 2017 to $ 35,653,000 ( 36.2 % of restaurant sales ) . bad daddy 's payroll and other employee benefit costs were $ 24,861,000 ( 36.9 % of restaurant sales ) for fiscal 2018 , up from $ 17,725,000 ( 37.2 % of restaurant sales ) in fiscal 2017. the $ 7,136,000 increase was primarily attributable to the nine new restaurants opened in fiscal 2018 and a full year of operations for restaurants opened in the prior fiscal year .
| 6,844 |
mis , the credit rating agency , publishes credit ratings on a wide range of debt obligations and the entities that issue such obligations in markets worldwide . revenue is derived from the originators and issuers of such transactions who use mis ratings in the distribution of their debt issues to investors . the ma segment , which includes all of the company 's non-rating commercial activities , develops a wide range of products and services that support financial analysis and risk management activities of institutional participants in global financial markets . within its rd & a business , ma distributes research and data developed by mis as part of its ratings process , including in-depth research on major debt issuers , industry studies and commentary on topical credit-related events . the rd & a business also produces economic research as well as data and analytical tools such as quantitative credit risk scores . within its ers business ( formerly referred to as rms ) , ma provides software solutions as well as related risk management services . the ps business provides outsourced research and analytical services along with financial training and certification programs . moody 's purchased csi and copal in november 2010 and 2011 , respectively , and their revenues are reported within the ps lob within ma . moody 's purchased b & h in december 2011 , which is currently part of the ers lob within ma . critical accounting estimates moody 's discussion and analysis of its financial condition and results of operations are based on the company 's consolidated financial statements , which have been prepared in accordance with gaap . the preparation of these financial statements requires moody 's to make estimates and judgments that affect reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the dates of the financial statements and revenue and expenses during the reporting periods . these estimates are based on historical experience and on other assumptions that are believed to be reasonable under the circumstances . on an ongoing basis , moody 's evaluates its estimates , including those related to revenue recognition , accounts receivable allowances , contingencies , goodwill and intangible assets , pension and other retirement benefits , utbs and stock-based compensation . actual results may differ from these estimates under different assumptions or conditions . the following accounting estimates are considered critical because they are particularly dependent on management 's judgment about matters that are uncertain at the time the accounting estimates are made and changes to those estimates could have a material impact on the company 's consolidated results of operations or financial condition . revenue recognition revenue is recognized when persuasive evidence of an arrangement exists , delivery has occurred or the services have been provided and accepted by the customer when applicable , fees are determinable and the collection of resulting receivables is considered probable . pursuant to the guidance of asu 2009-13 , when a sales arrangement contains multiple deliverables , the company allocates revenue to each deliverable based on its relative selling price which is determined based on its vendor specific objective evidence if available , third party evidence if vsoe is not available , or estimated selling price if neither vsoe nor tpe is available . the company 's products and services will generally continue to qualify as separate units of accounting under asu 2009-13. the company evaluates each deliverable in an arrangement to determine whether it represents a separate unit of accounting . a deliverable constitutes a separate unit of accounting when it has stand-alone value to the customers and if the arrangement includes a customer refund or return right relative to the delivered item , the delivery and performance of the undelivered item is considered probable and substantially in the company 's control . in instances where the aforementioned criteria are not met , the deliverable is combined with the undelivered items and revenue recognition is determined as one single unit . moody 's 2012 10-k 27 the company determines whether its selling price in a multi-element transaction meets the vsoe criteria by using the price charged for a deliverable when sold separately . in instances where the company is not able to establish vsoe for all deliverables in a multiple element arrangement , which may be due to the company infrequently selling each element separately , not selling products within a reasonably narrow price range , or only having a limited sales history , the company attempts to establish tpe for deliverables . the company determines whether tpe exists by evaluating largely similar and interchangeable competitor products or services in standalone sales to similarly situated customers . however , due to the difficulty in obtaining third party pricing , possible differences in the company 's market strategy from that of its peers and the potential that products and services offered by the company may contain a significant level of differentiation and or customization such that the comparable pricing of products with similar functionality can not be obtained , the company generally is unable to reliably determine tpe . based on the selling price hierarchy established by asu 2009-13 , when the company is unable to establish selling price using vsoe or tpe , the company will establish an esp . esp is the price at which the company would transact a sale if the product or service were sold on a stand-alone basis . the company establishes its best estimate of esp considering internal factors relevant to its pricing practices such as costs and margin objectives , standalone sales prices of similar products , percentage of the fee charged for a primary product or service relative to a related product or service , and customer segment and geography . additional consideration is also given to market conditions such as competitor pricing strategies and market trend . the company reviews its determination of vsoe , tpe and esp on an annual basis or more frequently as needed . story_separator_special_tag contingencies accounting for contingencies , including those matters described in the contingencies section of this md & a , commencing on page 58 is highly subjective and requires the use of judgments and estimates in assessing their magnitude and likely outcome . in many cases , the outcomes of such matters will be determined by third parties , including governmental or judicial bodies . the provisions made in the consolidated financial statements , as well as the related disclosures , represent management 's best estimates of the then current status of such matters and their potential outcome based on a review of the facts and in consultation with outside legal counsel where deemed appropriate . the company regularly reviews contingencies and as new information becomes available may , in the future , adjust its associated liabilities . additionally , for legal defense costs insured by the company 's wholly-owned insurance entity , the company records liabilities for these items based on the estimated total claims expected to be paid and or total projected costs to be incurred to defend a claim over the anticipated duration of a matter . for claims , litigation and proceedings and governmental investigations and inquiries not related to income taxes , where it is both probable that a liability is expected to be incurred and the amount of loss can be reasonably estimated , the company records liabilities in the consolidated financial statements and periodically adjusts these as appropriate . when the reasonable estimate of the loss is within a range of amounts , the minimum amount of the range is accrued unless some higher amount within the range is a better estimate than another amount within the range . in other instances , because of uncertainties related to the probable outcome and or the amount or range of loss , management does not record a liability but discloses the contingency if significant . as additional information becomes available , the company adjusts its assessments and estimates of such matters accordingly . in view of the inherent difficulty of predicting the outcome of litigation , regulatory , governmental investigations and inquiries , enforcement and similar matters and contingencies , particularly where the claimants seek large or indeterminate damages or where the parties assert novel legal theories or the matters involve a large number of parties , the company can not predict what the eventual outcome of the pending matters will be or the timing of any resolution of such matters . the company also can not predict the impact ( if any ) that any such matters may have on how its business is conducted , on its competitive position or on its financial position , results of operations or cash flows . as the process to resolve any pending matters progresses , management will continue to review the latest information available and assess its ability to predict the outcome of such matters and the effects , if any , on its operations and financial condition . however , in light of the large or indeterminate damages sought in some of them , the absence of similar court rulings on the theories of law asserted and uncertainties regarding apportionment of any potential damages , an estimate of the range of possible losses can not be made at this time . the company 's wholly-owned insurance subsidiary insures the company against certain risks including but not limited to deductibles for worker 's compensation , employment practices litigation , employee medical claims and terrorism , for which the claims are not material to the company . in addition , for claim years 2008 and 2009 , the insurance subsidiary insured the company for defense costs related to professional liability claims . for matters insured by the company 's insurance subsidiary , moody 's records liabilities based on the estimated total claims expected to be paid and total projected costs to defend a claim through its anticipated conclusion . the company determines liabilities based on an assessment of management 's best estimate of claims to be paid and legal defense costs as well as actuarially determined estimates . the cheyne siv and rhinebridge siv matters , more fully discussed in the contingencies section of this md & a , are both cases from the 2008/2009 claims period , and accordingly the defense cost for these matters are insured by the company 's insurance subsidiary . defense costs for matters not self-insured by the company 's wholly-owned insurance subsidiary are expensed as services are provided . for income tax matters , the company employs the prescribed methodology of topic 740 of the asc which requires a company to first determine whether it is more-likely-than-not ( defined as a likelihood of more than fifty percent ) that a tax position will be sustained based on its technical merits as of the reporting date , assuming that taxing authorities will examine the position and have full knowledge of all relevant information . a tax position that meets this more-likely-than-not threshold is then measured and recognized at the largest amount of benefit that is greater than fifty percent likely to be realized upon effective settlement with a taxing authority . moody 's 2012 10-k 29 goodwill and other acquired intangible assets moody 's annually evaluates its goodwill for impairment at the reporting unit level , defined as an operating segment or one level below an operating segment . historically , this was performed as of november 30 or more frequently if impairment indicators arose in accordance with asc topic 350. in the second quarter of 2012 , the company changed the date of its annual assessment of goodwill impairment to july 31 of each year . this is a change in method of applying an accounting principle which management believes is a preferable alternative , as the new date of the assessment is more closely aligned with the company 's annual strategic planning process . the change in the assessment date does not delay , accelerate or avoid a potential impairment charge .
| executive summary moody 's revenue in 2011 totaled $ 2,280.7 million , an increase of $ 248.7 million compared to 2010. excluding the favorable impact from changes in fx translation rates , revenue in 2011 increased approximately $ 221 million compared to 2010. total expenses were $ 1,392.3 million , an increase of $ 133.1 million compared to 2010 of which approximately $ 25 million was due to unfavorable changes in fx translation rates . operating income of $ 888.4 million in 2011 increased $ 115.6 million compared to 2010 resulting in an operating margin of 39 % compared to 38 % in the prior year period . adjusted operating income of $ 967.6 million in 2011 increased $ 128.4 million compared to 2011 resulting in an adjusted operating margin of 42.4 % compared to 41.3 % in the prior year . diluted eps of $ 2.49 for 2011 , which included a $ 0.03 benefit related to the favorable resolution of a legacy tax matter as well as other tax benefits totaling $ 0.09 , increased $ 0.34 over 2010 , which included a $ 0.15 tax benefit on foreign earnings that are indefinitely reinvested , foreign tax credits and lower state taxes . excluding the $ 0.03 favorable impact relating to the resolution of legacy tax matters in 2011 , diluted eps of $ 2.46 increased $ 0.33 , or 15 % , from $ 2.13 in 2010 , which excludes a prior year favorable impact of $ 0.02 related to the resolution of a legacy tax matter . moody 's corporation the table below provides a summary of revenue and operating results , followed by further insight and commentary : replace_table_token_15_th ( 1 ) adjusted operating income , adjusted operating margin and proforma diluted eps attributable to moody 's common shareholders are non-gaap financial measures . refer to the section entitled non-gaap financial measures of this md & a for further information regarding these measures .
| 6,845 |
note 6—goodwill the changes in the carrying amount of goodwill for the years ended december 31 , story_separator_special_tag the following management 's discussion and analysis of financial condition and results of operations contains forward-looking statements that involve risks and uncertainties . our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors . you should read this section in conjunction with our consolidated financial statements and the related notes ( included in item 8 ) . critical accounting policies the accompanying consolidated financial statements and supplementary information were prepared in accordance with accounting principles generally accepted in the united states of america . significant accounting policies are discussed in note 2 to the consolidated financial statements , item 8. inherent in the application of many of these accounting policies is the need for management to make estimates and judgments in the determination of certain revenues , expenses , assets and liabilities . as such , materially different financial results can occur as circumstances change and additional information becomes known . the policies with the greatest potential effect on our results of operations and financial position include : allowance for doubtful accounts . our allowance for doubtful accounts is based upon management 's assessment of the business environment , customers ' financial condition , historical collection experience , accounts receivable aging , customer disputes and the collectability of specific customer accounts . if there were a deterioration of a major customer 's creditworthiness , or actual defaults were higher than our historical experience , our estimates of the recoverability of amounts due to us could be overstated , which could have an adverse impact on our operating results . our allowance for doubtful accounts is also affected by the time at which uncollectible accounts receivable balances are actually written off . major customers ' accounts are monitored on an ongoing basis ; more in-depth reviews are performed based upon changes in a customer 's financial condition and or the level of credit being extended . when a significant event occurs , such as a bankruptcy filing by a specific customer , and on a quarterly basis , the allowance is reviewed for adequacy and the balance or accrual rate is adjusted to reflect current risk prospects . revenue recognition . our revenue recognition policy is to recognize revenue when persuasive evidence of an arrangement exists , title transfer has occurred ( product shipment ) , the price is fixed or determinable and collectability is reasonably assured . sales are recorded net of sales returns and discounts , which are estimated at the time of shipment based upon historical data . jakks routinely enters into arrangements with its customers to provide sales incentives and support customer promotions and we provide allowances for returns and defective merchandise . such programs are primarily based upon customer purchases , customer performance of specified promotional activities and other specified factors such as sales to consumers . accruals for these programs are recorded as sales adjustments that reduce gross revenue in the period the related revenue is recognized . goodwill and other indefinite-lived intangible assets . goodwill and indefinite-lived intangible assets are not amortized , but are tested for impairment at least annually at the reporting unit level . factors we consider important that could trigger an impairment review include the following : ● significant underperformance relative to expected historical or projected future operating results ; ● significant changes in the manner of our use of the acquired assets or the strategy for our overall business ; and ● significant negative industry or economic trends . due to the subjective nature of the impairment analysis , significant changes in the assumptions used to develop the estimate could materially affect the conclusion regarding the future cash flows necessary to support the valuation of long-lived assets , including goodwill . the valuation of goodwill involves a high degree of judgment and uncertainty related to our key assumptions . any changes in our key projections or estimates could result in a reporting unit either passing or failing the first step of the impairment model , which could significantly change the amount of any impairment ultimately recorded . based upon the assumptions underlying the valuation , impairment is determined by estimating the fair value of a reporting unit and comparing that value to the reporting unit 's book value . goodwill is tested for impairment annually . if the implied fair value is more than the book value of the reporting unit , an impairment loss is not indicated . if impairment exists , the fair value of the reporting unit is allocated to all of its assets and liabilities excluding goodwill , with the excess amount representing the fair value of goodwill . an impairment loss is measured as the amount by which the book value of the reporting unit 's goodwill exceeds the estimated fair value of that goodwill . 24 the company assessed its goodwill for impairment as of april 1 , 2016 for each of its reporting units by evaluating qualitative factors , including , but not limited to , the performance of each reporting unit , general economic conditions , access to capital , the industry and competitive environment , the interest rate environment . in prior years , the assessment had been performed as of october 1 of each year , however , as of march 31 , 2016 , the company revised its reportable segments based on changes to how the businesses are managed and how resources are allocated to the businesses . in conjunction with the required reallocation of goodwill to the new reportable segments as of march 31 , 2016 , the company performed its annual assessment as of april 1 , 2016. based on the seasonality of its businesses , the company has determined that it is most appropriate to perform future annual assessments as of april 1 after completion of the business cycles of each of its reporting units . the company prepared step-one of its impairment model . story_separator_special_tag related to the stock option grants , we estimate the value of share-based awards on the date of grant using the black-scholes option-pricing model . the determination of the fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price , as well as assumptions regarding a number of complex and subjective variables . these variables include our expected stock price volatility over the term of the awards , actual and projected employee stock option exercise behaviors , cancellations , terminations , risk-free interest rates and expected dividends . related to the restricted stock award grants , we determine the value of each award based on the market value of the underlying common stock at the date of each grant and expense each award over the stipulated service period . recent accounting pronouncements . in may 2014 , the fasb issued asu no . 2014-09 , “ revenue from contracts with customers ” ( “ asu 2014-09 ” ) , which supersedes nearly all existing revenue recognition guidance under u.s. gaap . the core principle of asu 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services . asu 2014-09 defines a five step process to achieve this core principle and , in doing so , more judgment and estimates may be required within the revenue recognition process than are required under existing u.s. gaap . the standard is effective for annual periods beginning after december 15 , 2017 , and interim periods therein , using either of the following transition methods : ( i ) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients , or ( ii ) a retrospective approach with the cumulative effect of initially adopting asu 2014-09 recognized at the date of adoption ( which includes additional footnote disclosures ) . we are currently evaluating the impact of our pending adoption of asu 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2018. in july 2015 , the fasb issued asu 2015-11 , “ inventory ( topic 330 ) : simplifying the measurement of inventory ” ( “ asu 2015-11 ” ) . asu 2015-11 requires inventory accounted for under the fifo or average cost method to be measured using the lower of cost and net realizable value . the amendments are effective prospectively for fiscal years and for interim periods beginning after december 15 , 2016. we are currently evaluating the impact of the pending adoption of asu 2015-11 on our consolidated financial statements . in january 2016 , the fasb issued asu 2016-01 , “ financial instruments - overall : recognition and measurement of financial assets and financial liabilities ” ( “ asu 2016-01 ” ) . the new guidance is intended to improve the recognition and measurement of financial instruments . the asu is effective for fiscal years and interim periods within those years beginning after december 15 , 2017. we are currently assessing the potential impact of this asu on our consolidated financial statements . in february 2016 , the fasb issued asu 2016-02 , “ leases ” ( “ asu 2016-02 ” ) . asu 2016-02 establishes a right-of-use ( “ rou ” ) model that requires a lessee to record a rou asset and a lease liability on the balance sheet for all leases with terms longer than 12 months . leases will be classified as either finance or operating , with classification affecting the pattern of expense recognition in the income statement . asu 2016-02 is effective for fiscal years beginning after december 15 , 2018 , including interim periods within those fiscal years . a modified retrospective transition approach is required for lessees for capital and operating leases existing at , or entered into after , the beginning of the earliest comparative period presented in the financial statements , with certain practical expedients available . we are currently evaluating the impact of the pending adoption of this new standard on our consolidated financial statements . in march 2016 , the fasb issued asu no . 2016-09 , “ improvements to employee share-based payment accounting , ” ( “ asu 2016-09 ” ) which simplifies several aspects of the accounting for share-based payments , including income tax consequences and classification on the statement of cash flows . under the new standard , all excess tax benefits and tax deficiencies will be recognized as income tax expense or benefit in the income statement as discrete items in the reporting period in which they occur . additionally , excess tax benefits will be classified as an operating activity on the statement of cash flows . in regard to forfeitures , the entity can make an accounting policy election to either recognize forfeitures as they occur or estimate the number of awards expected to be forfeited . the guidance in asu 2016-09 is effective for the fiscal year , and interim periods within that fiscal year , beginning after december 15 , 2016. we are currently evaluating the impact of the adoption of this standard on our consolidated financial statements . in august 2016 , the fasb issued asu 2016-15 , “ statement of cash flows ( topic 230 ) : classification of certain cash receipts and cash payments. ” the new guidance is intended to reduce diversity in practice in how transactions are classified in the statement of cash flows . this asu is effective for fiscal years , and for interim periods within those fiscal years , beginning after december 15 , 2017. the adoption of this standard is not expected to have a material impact on our consolidated financial statements . in october 2016 , the fasb issued asu 2016-16 , “ income taxes ( topic 740 ) : intra-entity transfers of assets other than inventory.
| results of operations the following table sets forth , for the periods indicated , certain statement of operations data as a percentage of net sales . replace_table_token_7_th the following table summarizes , for the periods indicated , certain income statement data by segment ( in thousands ) . replace_table_token_8_th as of march 31 , 2016 the company realigned its segments to align more closely with how management evaluates the business performance of the company . the products included in the realigned segments are detailed in part i , item 1 of the company 's 10-k report . prior period results have been conformed to the new segment reporting structure . 27 comparison of the years ended december 31 , 2016 and 2015 net sales u.s. and canada . net sales of our u.s. and canada segment were $ 478.6 million in 2016 , compared to $ 478.7 million in 2015 , representing a decrease of $ 0.1 million . net sales were flat year-over year primarily due to a decrease in unit sales of various products due to the suspension of shipments to a major u.s. customer and lower than expected unit sales of some movie licensed products , offset by higher unit sales of our disney tsum tsum line of collectibles , disney princess and alice through the looking glass dolls , kids furniture and accessories , and our big figs line . international . net sales of our international segment were $ 131.2 million in 2016 , compared to $ 169.8 million in 2015 , representing a decrease of $ 38.6 million , or 22.7 % . the decrease in net sales was primarily driven by declines in unit sales of various products in the united kingdom and western europe due to the reduced buying power of our customers stemming from the devaluation of the british pound , and lower than expected unit sales of movie licensed product . halloween .
| 6,846 |
these investments consist of treasury bills and u.s. agencies that will mature within six months of june 30 , 2017. the company entered into an unsecured credit agreement on june 30 , 2017 , that provides short-term working capital financing up to $ 10.0 million with interest of libor plus 1 % , including up to $ 4.0 million of letters of credit . letters of credit outstanding at june 30 , 2017 totaled $ 1.3 million . other than the outstanding letters of credit , the company did not utilize borrowing availability under the credit facility , leaving borrowing availability of $ 8.7 million as of june 30 , 2017. the credit agreement expires june 30 , 2018. at june 30 , 2017 , the company was in compliance with all of the financial covenants contained in the credit agreement . the company maintains an additional unsecured $ 10.0 million line of credit , with interest at prime minus 2 % . no amount was outstanding on the line of credit at june 30 , 2017. this line of credit matures december 31 , 2017. net cash provided by operating activities was $ 26.4 million and $ 54.4 million in fiscal years 2017 and 2016 , respectively . the company had net income of $ 23.8 million that included $ 9.0 million in non-cash charges which were offset by cash utilized for operating assets and liabilities of $ 6.4 million in fiscal year 2017. non-cash charges included depreciation of $ 7.9 million . in fiscal year 2016 , the company had net income of $ 24.2 million that included $ 9.6 million in non-cash charges including depreciation of $ 7.6 million and cash provided by changes in operating assets and liabilities of $ 20.6 million . 11 net cash used in investing activities was $ 29.7 million and $ 4.7 million in fiscal years 2017 and 2016 , respectively . in fiscal year 2017 , the company had net purchases of investments of $ 18.1 million and capital expenditures of $ 13.5 million . in fiscal year 2016 , the company made capital expenditures of $ 7.4 million partially offset by $ 2.8 million of proceeds from life insurance policies . net cash used in financing activities was $ 4.6 million in fiscal year 2017 which included dividend payments of $ 6.1 million , which was partially offset by excess stock benefits of $ 1.5 million and proceeds from issuance of common stock of $ 1.1 million . net cash used in financing activities was $ 14.2 million in fiscal year 2016 which included repayments of current notes payable of $ 11.9 million and dividend payments of $ 5.5 million . these amounts were offset by excess tax benefit from stock-based payment arrangements of $ 1.8 million and proceeds from issuance of common stock of $ 1.6 million . management believes that the company has adequate cash and cash equivalents , investments , cash flows from operations and credit arrangements to meet its operating and capital requirements for fiscal year 2018. in the opinion of management , the company 's liquidity and credit resources provide it with the ability to react to opportunities as they arise , to pay quarterly dividends to its shareholders , and to purchase productive capital assets that enhance safety and improve operations . at june 30 , 2017 , the company had no debt obligations and therefore , had no interest payments related to debt . the following table summarizes the company 's contractual obligations at june 30 , 2017 and the effect these obligations are expected to have on the company 's liquidity and cash flow in the future ( in thousands ) : total 1 year 2 - 3 years 4 - 5 years more than 5 years operating lease obligations $ 14,290 $ 3,853 $ 7,002 $ 3,435 $ — at june 30 , 2017 , the company had no capital lease obligations , and no purchase obligations for raw materials or finished goods . the purchase price on all open purchase orders was fixed and denominated in u.s. dollars . the company has excluded the uncertain tax positions from the above table as the timing of payments , if any , can not be reasonably estimated . financing arrangements see note 6 to the consolidated financial statements of this annual report on form 10-k. outlook during fiscal year 2018 , the company expects to have moderate revenue growth , tempered by an intentional sales decrease to certain contract customers . the company is focused on improving product delivery and driving efficiencies in operations . through june 30 , 2017 , “ property , plant & equipment , net ” in the consolidated balance sheets includes $ 12.9 million for business information software and development . the company has completed the design phase of the project and has progressed to the third of four testing cycles . following successful testing , the company will enter the training and readiness phase of the project for associates , customers and suppliers . once this phase indicates readiness , the business information system will be implemented . the company anticipates this work will be completed during the fiscal year ending june 30 , 2018. during fiscal year 2018 , the company anticipates spending $ 5 million for capital expenditures and incurring $ 2 million of sg & a expenses related to the business information system project . once completed , the business information system will be amortized over an average of 4 years . during fiscal year 2018 , the company expects to spend $ 7 million in operating capital expenditures . during the next two fiscal years , the company plans to invest $ 25 million in a new manufacturing facility in dubuque , iowa . the company believes it has adequate working capital and borrowing capabilities to meet these requirements . the company remains committed to its core strategies , which include story_separator_special_tag these investments consist of treasury bills and u.s. agencies that will mature within six months of june 30 , 2017. the company entered into an unsecured credit agreement on june 30 , 2017 , that provides short-term working capital financing up to $ 10.0 million with interest of libor plus 1 % , including up to $ 4.0 million of letters of credit . letters of credit outstanding at june 30 , 2017 totaled $ 1.3 million . other than the outstanding letters of credit , the company did not utilize borrowing availability under the credit facility , leaving borrowing availability of $ 8.7 million as of june 30 , 2017. the credit agreement expires june 30 , 2018. at june 30 , 2017 , the company was in compliance with all of the financial covenants contained in the credit agreement . the company maintains an additional unsecured $ 10.0 million line of credit , with interest at prime minus 2 % . no amount was outstanding on the line of credit at june 30 , 2017. this line of credit matures december 31 , 2017. net cash provided by operating activities was $ 26.4 million and $ 54.4 million in fiscal years 2017 and 2016 , respectively . the company had net income of $ 23.8 million that included $ 9.0 million in non-cash charges which were offset by cash utilized for operating assets and liabilities of $ 6.4 million in fiscal year 2017. non-cash charges included depreciation of $ 7.9 million . in fiscal year 2016 , the company had net income of $ 24.2 million that included $ 9.6 million in non-cash charges including depreciation of $ 7.6 million and cash provided by changes in operating assets and liabilities of $ 20.6 million . 11 net cash used in investing activities was $ 29.7 million and $ 4.7 million in fiscal years 2017 and 2016 , respectively . in fiscal year 2017 , the company had net purchases of investments of $ 18.1 million and capital expenditures of $ 13.5 million . in fiscal year 2016 , the company made capital expenditures of $ 7.4 million partially offset by $ 2.8 million of proceeds from life insurance policies . net cash used in financing activities was $ 4.6 million in fiscal year 2017 which included dividend payments of $ 6.1 million , which was partially offset by excess stock benefits of $ 1.5 million and proceeds from issuance of common stock of $ 1.1 million . net cash used in financing activities was $ 14.2 million in fiscal year 2016 which included repayments of current notes payable of $ 11.9 million and dividend payments of $ 5.5 million . these amounts were offset by excess tax benefit from stock-based payment arrangements of $ 1.8 million and proceeds from issuance of common stock of $ 1.6 million . management believes that the company has adequate cash and cash equivalents , investments , cash flows from operations and credit arrangements to meet its operating and capital requirements for fiscal year 2018. in the opinion of management , the company 's liquidity and credit resources provide it with the ability to react to opportunities as they arise , to pay quarterly dividends to its shareholders , and to purchase productive capital assets that enhance safety and improve operations . at june 30 , 2017 , the company had no debt obligations and therefore , had no interest payments related to debt . the following table summarizes the company 's contractual obligations at june 30 , 2017 and the effect these obligations are expected to have on the company 's liquidity and cash flow in the future ( in thousands ) : total 1 year 2 - 3 years 4 - 5 years more than 5 years operating lease obligations $ 14,290 $ 3,853 $ 7,002 $ 3,435 $ — at june 30 , 2017 , the company had no capital lease obligations , and no purchase obligations for raw materials or finished goods . the purchase price on all open purchase orders was fixed and denominated in u.s. dollars . the company has excluded the uncertain tax positions from the above table as the timing of payments , if any , can not be reasonably estimated . financing arrangements see note 6 to the consolidated financial statements of this annual report on form 10-k. outlook during fiscal year 2018 , the company expects to have moderate revenue growth , tempered by an intentional sales decrease to certain contract customers . the company is focused on improving product delivery and driving efficiencies in operations . through june 30 , 2017 , “ property , plant & equipment , net ” in the consolidated balance sheets includes $ 12.9 million for business information software and development . the company has completed the design phase of the project and has progressed to the third of four testing cycles . following successful testing , the company will enter the training and readiness phase of the project for associates , customers and suppliers . once this phase indicates readiness , the business information system will be implemented . the company anticipates this work will be completed during the fiscal year ending june 30 , 2018. during fiscal year 2018 , the company anticipates spending $ 5 million for capital expenditures and incurring $ 2 million of sg & a expenses related to the business information system project . once completed , the business information system will be amortized over an average of 4 years . during fiscal year 2018 , the company expects to spend $ 7 million in operating capital expenditures . during the next two fiscal years , the company plans to invest $ 25 million in a new manufacturing facility in dubuque , iowa . the company believes it has adequate working capital and borrowing capabilities to meet these requirements . the company remains committed to its core strategies , which include
| results of operations the following table has been prepared as an aid in understanding the company 's results of operations on a comparative basis for the fiscal years ended june 30 , 2017 , 2016 and 2015. amounts presented are percentages of the company 's net sales . replace_table_token_7_th fiscal 2017 compared to fiscal 2016 net sales for fiscal year 2017 were $ 468.8 million compared to $ 500.1 million in the prior fiscal year , a decrease of 6.3 % . for the fiscal year ended june 30 , 2017 , residential net sales were $ 396.1 million compared to $ 420.9 million for the year ended june 30 , 2016 , a decrease of 5.9 % . the residential net sales decrease of $ 24.8 million for the year ended june 30 , 2017 was substantially due to decreased sales volume in upholstered and ready-to-assemble products . contract net sales were $ 72.7 million for the year ended june 30 , 2017 , a decrease of 8.2 % from net sales of $ 79.2 million for the year ended june 30 , 2016. the decrease in contract net sales was substantially due to volume . gross margin for the fiscal year ended june 30 , 2017 was 23.2 % compared to 22.7 % for the prior fiscal year . selling , general and administrative ( sg & a ) expenses for the fiscal year ended june 30 , 2017 were 15.5 % of net sales compared to 15.6 % of net sales in the prior fiscal year . the current fiscal year includes reductions in direct selling costs , professional fees and incentive compensation of $ 3.6 million , or 0.8 % of net sales , offset by $ 2.9 million , or 0.6 % of net sales , related to the business information system project . sg & a expenses for the current and prior fiscal years include reimbursements , net of recovery expenses , related to indiana litigation of $ 0.9 million and $ 0.2
| 6,847 |
management believes that the most critical accounting policies relate to the reporting of reserves for loss and loss adjustment expenses , including losses that have occurred but have not been reported prior to the reporting date , amounts recoverable from reinsurers , assessments , deferred policy acquisition costs , deferred income taxes , the impairment of investment securities and share-based compensation . the following is a description of our critical accounting policies . reserves for loss and loss adjustment expenses . we record reserves for estimated losses under insurance policies that we write and for loss adjustment expenses , which include defense and cost containment , or dcc , and adjusting and other , or ao , expenses , related to the investigation and settlement of policy claims . our reserves for loss and loss adjustment expenses represent the estimated cost of all reported and unreported loss and loss adjustment expenses incurred and unpaid at any given point in time based on known facts and circumstances . our reserves for loss and dcc expenses are estimated using case-by-case valuations based on our estimate of the most likely outcome of the claim at that time . in addition to these case reserves , we establish reserves on an aggregate basis that have been incurred but not reported , or ibnr . our ibnr reserves are also intended to provide for aggregate changes in case incurred amounts as well as for recently reported claims which an initial case reserve has not been established . the third component of our reserves for loss and loss adjustment expenses is our ao reserve . our ao reserve is established for those future claims administration costs that can not be allocated directly to individual claims . the final component of our reserves for loss and loss adjustment expenses is the reserve for mandatory pooling arrangements . in establishing our reserves , we review the results of analyses using actuarial methods that utilize historical loss data from our more than 26 years of underwriting workers ' compensation insurance . the actuarial analysis of our historical data provides the factors we use in estimating our loss reserves . these factors are primarily measures over time of the number of claims paid and reported , average paid and incurred claim amounts , claim closure rates and claim payment patterns . in evaluating the results of our analyses , management also uses substantial judgment in considering other factors that are not considered in these actuarial analyses , including changes in business mix , claims management , regulatory issues , medical trends , employment and wage patterns , insurance policy coverage interpretations , judicial determinations and other subjective factors . due to the 47 inherent uncertainty associated with these estimates , and the cost of incurred but unreported claims , our actual liabilities may vary significantly from our original estimates . on a quarterly basis , we review our reserves for loss and loss adjustment expenses to determine whether adjustments are required . any resulting adjustments are included in the results for the current period . in establishing our reserves , we do not use loss discounting , which would involve recognizing the time value of money and offsetting estimates of future payments by future expected investment income . additional information regarding our reserves for loss and loss adjustment expenses and the actuarial method and other factors used in establishing these reserves can be found under the caption businessloss reserves in item 1 of this report . amounts recoverable from reinsurers . amounts recoverable from reinsurers represent the portion of our paid and unpaid loss and loss adjustment expenses that are assumed by reinsurers and related commissions due from reinsurers . these amounts are separately reported on our balance sheet as assets and do not reduce our reserves for loss and loss adjustment expenses because reinsurance does not relieve us of liability to our policyholders . we are required to pay claims even if a reinsurer fails to pay us under the terms of a reinsurance contract . we calculate amounts recoverable from reinsurers based on our estimates of the underlying loss and loss adjustment expenses , as well as the terms and conditions of our reinsurance contracts , which could be subject to interpretation . in addition , we bear credit risk with respect to our reinsurers , which can be significant because some of the unpaid loss and loss adjustment expenses for which we have reinsurance coverage remain outstanding for extended periods of time . premiums receivable . premiums receivable represents premium-related balances due from our policyholders based on annual premiums for policies written , including surcharges and deposits and it is adjusted for premium audits , endorsements , cancellations , cash transactions and charge offs . the balance is shown net of the allowance for doubtful accounts and it includes an estimate for ebub . the ebub estimate is subject to significant variability and can either increase or decrease premiums receivable and earned premiums based upon several factors , including changes in premium growth , industry mix and economic conditions . assessments . we are subject to various assessments and premium surcharges related to our insurance activities , including assessments and premium surcharges for state guaranty funds and second injury funds . assessments based on premiums are recorded as an expense as premiums are earned and generally paid one year after the calendar year in which the policies are written . assessments based on losses are recorded as an expense as losses are incurred and are generally paid within one year of when claims are paid by us . state guaranty fund assessments are used by state insurance oversight agencies to pay claims of policyholders of impaired , insolvent or failed insurance companies and the operating expenses of those agencies . second injury funds are used by states to reimburse insurers and employers for claims paid to injured employees for aggravation of prior conditions or injuries . in story_separator_special_tag management believes that the most critical accounting policies relate to the reporting of reserves for loss and loss adjustment expenses , including losses that have occurred but have not been reported prior to the reporting date , amounts recoverable from reinsurers , assessments , deferred policy acquisition costs , deferred income taxes , the impairment of investment securities and share-based compensation . the following is a description of our critical accounting policies . reserves for loss and loss adjustment expenses . we record reserves for estimated losses under insurance policies that we write and for loss adjustment expenses , which include defense and cost containment , or dcc , and adjusting and other , or ao , expenses , related to the investigation and settlement of policy claims . our reserves for loss and loss adjustment expenses represent the estimated cost of all reported and unreported loss and loss adjustment expenses incurred and unpaid at any given point in time based on known facts and circumstances . our reserves for loss and dcc expenses are estimated using case-by-case valuations based on our estimate of the most likely outcome of the claim at that time . in addition to these case reserves , we establish reserves on an aggregate basis that have been incurred but not reported , or ibnr . our ibnr reserves are also intended to provide for aggregate changes in case incurred amounts as well as for recently reported claims which an initial case reserve has not been established . the third component of our reserves for loss and loss adjustment expenses is our ao reserve . our ao reserve is established for those future claims administration costs that can not be allocated directly to individual claims . the final component of our reserves for loss and loss adjustment expenses is the reserve for mandatory pooling arrangements . in establishing our reserves , we review the results of analyses using actuarial methods that utilize historical loss data from our more than 26 years of underwriting workers ' compensation insurance . the actuarial analysis of our historical data provides the factors we use in estimating our loss reserves . these factors are primarily measures over time of the number of claims paid and reported , average paid and incurred claim amounts , claim closure rates and claim payment patterns . in evaluating the results of our analyses , management also uses substantial judgment in considering other factors that are not considered in these actuarial analyses , including changes in business mix , claims management , regulatory issues , medical trends , employment and wage patterns , insurance policy coverage interpretations , judicial determinations and other subjective factors . due to the 47 inherent uncertainty associated with these estimates , and the cost of incurred but unreported claims , our actual liabilities may vary significantly from our original estimates . on a quarterly basis , we review our reserves for loss and loss adjustment expenses to determine whether adjustments are required . any resulting adjustments are included in the results for the current period . in establishing our reserves , we do not use loss discounting , which would involve recognizing the time value of money and offsetting estimates of future payments by future expected investment income . additional information regarding our reserves for loss and loss adjustment expenses and the actuarial method and other factors used in establishing these reserves can be found under the caption businessloss reserves in item 1 of this report . amounts recoverable from reinsurers . amounts recoverable from reinsurers represent the portion of our paid and unpaid loss and loss adjustment expenses that are assumed by reinsurers and related commissions due from reinsurers . these amounts are separately reported on our balance sheet as assets and do not reduce our reserves for loss and loss adjustment expenses because reinsurance does not relieve us of liability to our policyholders . we are required to pay claims even if a reinsurer fails to pay us under the terms of a reinsurance contract . we calculate amounts recoverable from reinsurers based on our estimates of the underlying loss and loss adjustment expenses , as well as the terms and conditions of our reinsurance contracts , which could be subject to interpretation . in addition , we bear credit risk with respect to our reinsurers , which can be significant because some of the unpaid loss and loss adjustment expenses for which we have reinsurance coverage remain outstanding for extended periods of time . premiums receivable . premiums receivable represents premium-related balances due from our policyholders based on annual premiums for policies written , including surcharges and deposits and it is adjusted for premium audits , endorsements , cancellations , cash transactions and charge offs . the balance is shown net of the allowance for doubtful accounts and it includes an estimate for ebub . the ebub estimate is subject to significant variability and can either increase or decrease premiums receivable and earned premiums based upon several factors , including changes in premium growth , industry mix and economic conditions . assessments . we are subject to various assessments and premium surcharges related to our insurance activities , including assessments and premium surcharges for state guaranty funds and second injury funds . assessments based on premiums are recorded as an expense as premiums are earned and generally paid one year after the calendar year in which the policies are written . assessments based on losses are recorded as an expense as losses are incurred and are generally paid within one year of when claims are paid by us . state guaranty fund assessments are used by state insurance oversight agencies to pay claims of policyholders of impaired , insolvent or failed insurance companies and the operating expenses of those agencies . second injury funds are used by states to reimburse insurers and employers for claims paid to injured employees for aggravation of prior conditions or injuries . in
| overview of operating results year ended december 31 , 2011 compared to year ended december 31 , 2010 gross premiums written . gross premiums written for 2011 were $ 272.1 million , compared to $ 228.4 million for 2010 , an increase of 19.1 % . the increase was attributable to a $ 33.1 million increase in premiums resulting from payroll audits and related premium adjustments , a $ 10.6 million increase in annual premiums on voluntary policies written during the period and a $ 0.1 million increase in premiums from mandatory pooling arrangements . these increases were partially offset by a $ 0.2 million decrease in direct assigned risk premiums . related premium adjustments in 2011 include a $ 0.3 million increase in earned but unbilled , or ebub , premium . premium adjustments for the same period in 2010 included a $ 2.5 million decrease in ebub premium . net premiums written . net premiums written for 2011 were $ 258.2 million , compared to $ 207.9 million for 2010 , an increase of 24.2 % . the increase was primarily attributable to the increase in gross premiums written . as a percentage of gross premiums earned , ceded premiums were 5.2 % for 2011 , compared to 8.6 % for 2010. the decrease in ceded premiums as a percentage of gross premiums earned is a result of a change in our reinsurance treaties . net premiums earned . net premiums earned for 2011 were $ 251.0 million , compared to $ 218.9 million for 2010 , an increase of 14.7 % . the increase was attributable to the increase in net premiums written , offset by an increase in unearned premiums . net investment income . net investment income in 2011 was $ 26.3 million , compared to $ 26.2 million in 2010 , an increase of 0.4 % .
| 6,848 |
we primarily design , develop , manufacture and supply single-use medical devices used by hospitals and healthcare providers for common diagnostic and therapeutic procedures in critical care and surgical applications . we market and sell our products worldwide through a combination of our direct sales force and distributors . because our products are used in numerous markets and for a variety of procedures , we are not dependent upon any one end-market or procedure . we are focused on achieving consistent , sustainable and profitable growth by increasing our market share and improving our operating efficiencies . we evaluate our portfolio of products and businesses on an ongoing basis to ensure alignment with our overall objectives . based on our evaluation , we may identify opportunities to expand our margins through strategic divestitures of existing businesses and product lines that do not meet our objectives . in addition , we may seek to optimize utilization of our facilities through restructuring initiatives designed to further reduce our cost base and enhance our competitive position . on february 23 , 2016 , our board of directors approved a restructuring plan that involves the consolidation of operations and a related reduction in workforce . we estimate that we will incur aggregate pre-tax charges in connection with these restructuring activities of approximately $ 34 million to $ 44 million , of which , we expect approximately $ 21 million to $ 23 million to be incurred in 2016 and most of the balance will be incurred prior to the end of 2018. we estimate that $ 27 million to $ 31 million of the aggregate pre-tax charges will result in future cash outlays , of which , we expect approximately $ 6 million to $ 8 million will be made in 2016 and most of the balance will be made prior to the end of 2018. additionally , we expect to incur aggregate capital expenditures of approximately $ 13 million to $ 17 million , of which , $ 3 million to $ 5 million will be made in 2016. we currently expect to achieve annualized savings of $ 12 million to $ 16 million once the plan is fully implemented , and currently expect to realize plan-related savings beginning in 2017. see note 19 to the consolidated financial statements included in this annual report on form 10-k for additional information . for a discussion of our ongoing restructuring programs , see `` restructuring and other impairment charges '' under “ results of operations ” below . during 2015 , we completed several acquisitions of businesses that complement our anesthesia , surgical and vascular product portfolios , as well as our asia segment . in 2014 , we completed acquisitions of businesses to complement our asia segment and our surgical product portfolio . the total fair value of consideration for the 2015 and 2014 acquisitions was $ 96.5 million and $ 66.3 million , respectively . see note 3 to the consolidated financial statements included in this annual report on form 10-k for additional information regarding the acquisitions . change in reporting segments effective april 1 , 2015 , we reorganized certain of our businesses to better leverage our resources . as a result , we realigned our operating segments . specifically , the anesthesia/respiratory north america operating segment was divided into two operating segments , anesthesia north america and respiratory north america . additionally , the businesses comprising the former specialty operating segment ( which was not a reportable segment and , therefore , was included in the `` all other '' category in the presentation of segment information ) were transferred to the anesthesia north america , vascular north america and respiratory north america operating segments . as a result of the operating segment changes described above , we have the following six reportable operating segments : vascular north america , anesthesia north america , surgical north america , emea , asia and oem . in connection with the presentation of segment information , we will continue to present certain operating segments , which , effective april 1 , 2015 , include , among others , the respiratory north america operating segment , in the “ all other ” category . all prior comparative periods have been restated to reflect these changes . additionally , because this change affected our reporting units , we performed goodwill impairment analyses as of the april 1 , 2015 effective date for the new reporting units by comparing the fair value of the reporting units , including goodwill , to their carrying values . the impairment analyses performed included the reallocation of the goodwill balances among the reporting units to reflect the changes described above . we did not record any goodwill impairment charges as a result of these analyses . 33 health care reform in 2010 , the patient protection and affordable care act ( as amended , the `` affordable care act '' ) was signed into law . the legislation is far-reaching and is intended to expand access to health insurance coverage and improve the quality and reduce the costs of healthcare . for medical device companies such as teleflex , the expansion of medical insurance coverage should lead to greater utilization of the products we manufacture , but the provisions of the legislation designed to contain the cost of healthcare could negatively affect pricing of our products and encourages patient outcome driven results . the overall impact of the affordable care act on our business is yet to be determined , mainly due to uncertainties around future customer behaviors , which we believe will be affected by reimbursement factors such as insurance coverage , statistics , patient outcomes and patient satisfaction . story_separator_special_tag % , or $ 30.1 million , compared to the prior year . the decrease is primarily attributable to unfavorable fluctuations in foreign currency exchange rates of $ 129.1 million , primarily in the emea and asia segments . the decrease in net revenues was partially offset by a net increase in sales volumes of existing products in most of our segments of $ 51.9 million , and a net increase in new product sales in most of our segments of $ 19.4 million . in addition , the decrease was further offset by sales by acquired businesses , primarily human medics co. , ltd. ( “ human medics ” ) , a distributor of medical devices and supplies primarily in the korean market , mini-lap , a developer of micro-laparoscopic instrumentation , mayo healthcare pty limited , ( `` mayo healthcare '' ) , a distributor of medical devices and supplies , primarily in the australian market , n. stenning & co. pty . ltd. ( `` stenning '' ) , a distributor of medical devices and supplies primarily in the australian market , and truphatek holdings ( 1993 ) limited ( `` truphatek '' ) , a manufacturer of a broad range of disposable and reusable laryngoscope devices , which generated $ 14.8 million , and net price increases , primarily in the asia and surgical north america segments , which generated $ 12.8 million . comparison of 2014 and 2013 net revenues for the year ended december 31 , 2014 increased 8.5 % , or $ 143.5 million , compared to the prior year . the increase in net revenues is primarily attributable to the businesses acquired during 2013 and 2014 ( including vidacare ; mayo healthcare ; and ultimate medical pty . ltd. and its affiliates ( collectively , `` ultimate '' ) , a supplier of airway management devices ) , which generated net revenues of $ 98.6 million , including $ 79.9 million , $ 16.6 million and $ 2.2 million generated by vidacare , mayo healthcare and ultimate , respectively . net revenues further benefited from price increases of $ 23.9 million , primarily in the asia , emea and surgical north america segments , new product sales of $ 14.8 million across most of our segments , and a net increase in sales volumes of existing products of $ 12.3 million , primarily in the oem , emea and vascular north america segments . these increases were partially offset by the unfavorable impact of foreign currency exchange rates of $ 6.2 million , lower sales volumes in the asia segment as well as in certain of the operating segments included in the `` all other '' category , and price reductions in the oem segment . 35 gross profit replace_table_token_7_th comparison of 2015 and 2014 for the year ended december 31 , 2015 , gross profit as a percentage of revenues increased 100 basis points , or 2.0 % , compared to the prior year . the increase in gross margin is primarily attributable to the 70 basis point impact of a net increase in sales of higher margin products , primarily in the surgical north america and oem segments , the 60 basis point impact of a net increase in sales volumes of existing products , primarily in the vascular north america , emea and asia segments and the 30 basis point impact of net price increases , primarily in the asia and surgical north america segments . gross margin was negatively impacted by the 80 basis point impact of net unfavorable fluctuations in foreign currency exchange rates and costs associated with product recalls and quality issues first identified during the second quarter 2015 partially offset by lower manufacturing costs resulting from cost improvement initiatives . comparison of 2014 and 2013 for the year ended december 31 , 2014 , gross profit as a percentage of revenues increased 170 basis points , or 3.4 % , compared to the prior year . the increase in gross margin is primarily due to increased sales from higher margin vidacare products , margin increases in asia resulting from sales of mayo healthcare products , price increases in asia , emea and surgical north america , and increased sales of higher margin products , primarily in the emea and certain of the operating segments included in the `` all other '' category . these improvements in gross profit were partially offset by costs associated with the 2014 manufacturing footprint realignment plan , an increase in logistics and distribution costs and the net unfavorable impact of foreign currency exchange rates . selling , general and administrative replace_table_token_8_th comparison of 2015 and 2014 selling , general and administrative expenses decreased $ 9.7 million during the year ended december 31 , 2015 compared to the prior year . the decrease is due to the favorable impact of foreign currency exchange rate fluctuations of $ 28.5 million and a reduction in medical device excise tax of $ 2.5 million . these declines were partially offset by expenses associated with the 2015 acquisitions and distributors-to-direct sales conversions of $ 11.4 million , an increase in selling expenses of $ 5.4 million , primarily related to higher sales commissions , a reduction in the benefit resulting from contingent consideration liability reversals of $ 2.9 million and higher amortization expense of $ 2.6 million . comparison of 2014 and 2013 selling , general and administrative expenses increased $ 76.5 million during the year ended december 31 , 2014 compared to the prior year .
| segment results segment net revenues replace_table_token_14_th segment operating profit replace_table_token_15_th ( 1 ) see note 16 to the consolidated financial statements included in this annual report on form 10-k for a reconciliation of segment operating profit to our consolidated income from continuing operations before interest , loss on extinguishment of debt and taxes . comparison of 2015 and 2014 vascular north america vascular north america net revenues for the year ended december 31 , 2015 increased $ 23.8 million , or 7.6 % , compared to the prior year . the increase is primarily attributable to an increase in sales volumes of existing products of $ 26.9 million , which was partially offset by unfavorable fluctuations in foreign currency exchange rates of $ 1.9 million and a reduction in new product sales of $ 1.5 million . vascular north america operating profit for the year ended december 31 , 2015 increased $ 19.5 million , or 36.2 % , compared to the prior year . the increase is primarily attributable to the $ 17.2 million impact of increased sales volumes 40 of existing products , a $ 2.3 million reduction with respect to the medical excise tax , a $ 2.6 million reduction in manufacturing costs , a $ 2.1 million reduction in research and development costs , including employee related costs , and the impact of increased sales of higher margin products . the increases to operating profit were partially offset by a $ 4.2 million net increase in non-research and development employee related costs , including higher sales commissions and healthcare benefits , net of restructuring savings and unfavorable fluctuations in foreign currency exchange rates . anesthesia north america anesthesia north america net revenues for the year ended december 31 , 2015 increased $ 5.3 million , or 2.9 % , compared to the prior year .
| 6,849 |
for fiscal year 2011 , mr. brown was eligible for a potential bonus of $ 37,500 ( which was equal to 50 % of his fourth quarter salary ) based on attainment of specified performance objectives for fiscal year 2012 , mr. brown will be eligible for a performance based cash bonus of up to 50 % of his base salary that is paid in fiscal 2012. any earned bonus will be paid in the three months following the end of fiscal 2012 and mr. brown must remain employed with the company through the date of any bonus payment in order to receive such payment . mr. brown is also eligible to participate in company benefits programs . severance . if mr. brown 's employment is terminated without cause or if mr. brown resigns for good reason , mr. brown will be eligible to receive severance equal to mr. brown 's then annual base salary . the severance would be paid in monthly installments over the two years following the termination date . mr. brown must provide a release of all claims against the company and its affiliates and remain in compliance with all restrictive covenants specified in the employment and separation agreements as a condition to receiving the severance . for purposes of mr. brown 's employment agreement , cause and good reason have the same definitions as described above under mr. robinson 's employment agreement . the employment agreement also provides for a reduction in payments to the extent necessary to avoid the imposition of golden parachute excise taxes . prior to the april 2011 employment agreement , in january 2008 we had entered into an employment agreement with mr. brown pursuant to which he was hired as our president and chief executive officer . on december 15 , 2009 , we entered into an amendment agreement to that employment agreement . set forth below is a brief summary of this prior employment agreement . base salary . from december 1 , 2009 through march 31 , 2011 , mr. brown 's monthly salary was 1.5 % of our total net sales for the prior month , subject to any minimum salary amount required by applicable state law . under the original terms of his employment agreement , mr. brown 's monthly salary was to be $ 20,000 during those months . by no later than december 15 , 2010 , we and mr. brown were to agree on his compensation program for calendar year 2011 ; provided , however , mr. brown 's monthly base salary for calendar year 2011 will not be less than $ 20,000 per month , which was his monthly base salary prior to the amendment . -50- stock options . upon hiring , we granted mr. brown options to purchase up to an aggregate of 1,800,000 shares of our common stock . of such 1,800,000 shares : ( i ) 150,000 shares fully vested upon grant and have an exercise price of $ 0.23 per share ; ( ii ) 450,000 shares vested from january 31 , 2008 through december 31 , 2008 and with an exercise price of $ 0.23 per share ; and ( iii ) 300,000 shares with an exercise price of $ 0.30 per share were to vest if warrants to purchase our common stock were exercised on or before april 18 , 2008. of this latter 300,000 shares , 62,751 shares vested on april 18 , 2008 and 237,249 shares terminated on april 18 , 2008. in addition , 450,000 shares of the original option grant were to vest in monthly installments of 37,500 shares from january 31 , 2009 through december 31 , 2009 and have an exercise price of $ 0.50 per share . the remaining 450,000 shares were to vest in monthly installments of 37,500 shares from january 31 , 2010 through december 31 , 2010 and have an exercise price of $ 0.75 per share . in connection with the december 2009 amendment agreement to this employment agreement , we agreed that all of the stock options would cease vesting until such time as we have generated positive cash flow from operations for a period of three consecutive months . upon achievement of such milestone in april 2011 , all of mr. brown 's option awards resumed vesting in accordance with their original vesting schedules and any portion of such awards which did not vest as a result of the tolled vesting became vested and exercisable . bonus . mr. brown was eligible to receive a discretionary an annual bonus of up to 75 % of his annual base salary . see compensation elementsbonuses , above for a discussion of factors taken into account in determining whether to award a bonus . severance . if mr. brown 's employment had been terminated for good reason or had been terminated without substantial cause ( as such terms were defined in the employment agreement ) , mr. brown would have been eligible for severance in the amount of his annual base salary ( at an assumed rate of $ 20,000 per month through december 31 , 2010 ) plus the actual bonus ( if any ) paid to mr. brown for the previous year plus cobra continuation payments for up to 18 months and acceleration of vesting for unvested stock based awards . the cash severance amounts would have been payable in equal installments over a period of 24 months after termination . mr. brown would have also been eligible to receive post employment payments and benefits if his employment had terminated due to his permanent disability . story_separator_special_tag off-balance sheet arrangements we did not have any off-balance sheet arrangements as of the period ended june 30 , 2011. critical accounting policies we prepare our financial statements in conformity with accounting principles generally accepted in the united states of america . as such , we are required to make certain estimates , judgments , and assumptions that we believe are reasonable based upon the information available . these estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented . actual results could differ from these estimates . our significant accounting policies are described in note 2 to our financial statements . certain of these significant accounting policies require us to make difficult , subjective , or complex judgments or estimates . we consider an accounting estimate to be critical if ( 1 ) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made , and ( 2 ) changes in the estimate that are reasonably likely to occur from period to period , or use of different estimates that we reasonably could have used in the current period , would have a material impact on our financial condition or results of operations . -37- there are other items within our financial statements that require estimation , but are not deemed critical as defined above . changes in estimates used in these and other items could have a material impact on our financial statements . management has discussed the development and selection of these critical accounting estimates with our board of directors , and the audit committee has reviewed the following disclosures . allowances for product returns we record allowances for product returns at the time we ship the product based on estimated return rates . we offer a 30-day , money back unconditional guarantee to all customers . in addition , we allow terminating distributors to return 30 % of unopened unexpired product that they purchased within the prior twelve months , subject to certain consumption limitations . as of june 30 , 2011 , our shipments of products sold totaling approximately $ 4,968,963 were subject to the money back guarantee . we monitor our return estimate on an ongoing basis and revise the allowances to reflect our experience . our allowance for product returns was $ 435,135 on june 30 , 2011 , compared with $ 343,937 on june 30 , 2010. for the year ended june 30 , 2011 we reduced the amount of our reserve by approximately $ 300,000 to reflect historical return rates lower than our estimate at the beginning of the year . to date , product expiration dates have not played any role in product returns , and we do not expect they will in the future because it is unlikely that we will ship product with an expiration date earlier than the latest allowable product return date . inventory valuation we state inventories at the lower of cost or market on a first-in first-out basis . from time to time , we maintain a reserve for inventory obsolescence and we base this reserve on assumptions about current and future product demand , inventory whose shelf life has expired , and market conditions . from time to time , we may be required to make additional reserves in the event any of these variables change . we have recorded $ 74,943 in reserves for obsolete inventory as of june 30 , 2011 primarily related to inventory of marketing materials . as of june 30 , 2010 there was no reserve for obsolete inventory . revenue recognition we ship the majority of our product directly to the consumer through the network marketing sales channel via ups and we receive substantially all payment for these sales in the form of credit card charges . we recognize revenue from product sales to customers upon passage of title and risk of loss to customers when product ships from the fulfillment facility . sales revenue and estimated returns are recorded when product is shipped . derivative instruments in connection with the sale of debt or equity instruments , we may sell options or warrants to purchase our common stock . in certain circumstances , these options or warrants may be classified as derivative liabilities , rather than as equity . additionally , the debt or equity instruments may contain embedded derivative instruments , such as conversion options , which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative instrument liability . we estimate fair values of derivative financial instruments using various techniques that are considered to be consistent with the objective measurement of fair values . in selecting the appropriate technique , we consider , among other factors , the nature of the instrument , the market risks that it embodies and the expected means of settlement . for less complex derivative instruments , such as freestanding warrants , we generally use the black scholes merton option valuation technique , adjusted for the effect of dilution , because it embodies all of the requisite assumptions ( including trading volatility , estimated terms , and risk free rates ) necessary to fair value -38- these instruments . for embedded conversion features we generally use a lattice technique because it contains all the requisite assumptions to value these features . estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may , and are likely to , change over the duration of the instrument with related changes in internal and external market factors . in addition , option-based techniques are highly volatile and sensitive to changes in the trading market price of our common stock . since derivative financial instruments are initially and subsequently carried at fair values , our
| results of operations we commenced sales of protandim ® in february 2005 and lifevantage truescience ® in june 2009. for the fiscal years ended june 30 , 2011 and 2010 , we generated net revenues of , $ 38,919,223 and $ 11,478,460 , respectively , recognized operating profit ( loss ) of $ 3,702,204 and $ ( 7,321,952 ) , respectively , and incurred net losses of $ 50,791,750 and $ 11,048,328 , respectively . our expenditures consist primarily of distributor commissions , operating expenses , payroll and professional fees , customer service , research and development and product manufacturing for the marketing and sale of protandim ® . the following table presents certain consolidated earnings data as a percentage of net sales : replace_table_token_2_th -35- comparison of fiscal years ended june 30 , 2011 and 2010 sales . we generated net sales of $ 38,919,223 during the year ended june 30 , 2011 and $ 11,478,460 during the year ended june 30 , 2010 primarily from the sale of protandim ® and lifevantage truescience ® . the increase in sales of $ 27,440,763 was primarily due to significant growth in our network marketing sales channel and included an increase in sales in the u.s. of $ 24,961,662 and sales in japan of $ 2,394,160. as a result of an historical analysis of our return rate during the year ended june 30 , 2011 we adjusted our sales return reserve estimate based on historical trends which resulted in an increase to net revenue of approximately $ 300,000. we expect the growth in sales to continue in our fiscal 2012 year as we continue to add new customers and expand into additional international markets . gross margin .
| 6,850 |
for a reconciliation to accounting principles generally accepted in the united states ( us gaap ) , see note 25 to the consolidated financial statements . this management 's discussion and analysis of financial condition and results of operations includes information available to february 24 , 2009. overview of golden star we are a canadian federally incorporated international gold mining and exploration company producing gold in ghana , west africa . we also conduct gold exploration in west africa and in south america . golden star resources ltd. was established under the canada business corporations act on may 15 , 1992 as a result of the amalgamation of south american goldfields inc. , a corporation incorporated under the federal laws of canada , and golden star resources ltd. , a corporation originally incorporated under the provisions of the alberta business corporations act on march 7 , 1984 as southern star resources ltd. our principal office is located at 10901 west toller drive , suite 300 , littleton , colorado 80127 , and our registered and records offices are located at 66 wellington st. w , 42nd floor , box 20 , toronto dominion bank tower - toronto dominion centre , toronto , on m5k 1n6 . our fiscal year ends on december 31. we own controlling interests in several gold properties in southern ghana : through a 90 % owned subsidiary , golden star bogoso/prestea limited ( gsbpl ) , we own and operate the bogoso/prestea gold mining and processing operations ( bogoso/prestea ) located near the town of bogoso , ghana . in july 2007 , we commissioned a nominal 3.5 million tonnes per year processing facility at bogoso that uses bio-oxidation technology to treat refractory sulfide ore. in addition bogoso/prestea has a carbon-in-leach processing facility which we expect to use to treat oxide ores as they are available . bogoso/prestea produced and sold 120,216 ounces of gold in 2007 and 170,499 ounces of gold in 2008 . 46 through another 90 % owned subsidiary , golden star ( wassa ) limited ( gswl ) , we own and operate the wassa open-pit gold mine and carbon-in-leach processing plant ( wassa ) , located approximately 35 kilometers east of bogoso/prestea . the design capacity of the carbon-in-leach processing plant at wassa is nominally 3.0 million tonnes per annum but varies depending on the ratio of hard and soft ore. wassa produced and sold 126,062 ounces of gold in 2007 and 125,477 ounces of gold in 2008. gswl also owns the hwini-butre and benso concessions ( the hbb properties ) in southwest ghana . we spent approximately $ 40 million on the benso property during 2008 developing the benso mine which began shipping ore to wassa in the third quarter of 2008. an extension of the haul road from benso to hwini-butre commenced in the fourth quarter of 2008 and is expected to be commissioned in the second quarter of 2009. the hwini-butre and benso concessions are located approximately 80 and 50 kilometers , respectively , by road south of wassa . we also hold interests in several gold exploration projects in ghana and elsewhere in west africa including sierra leone , burkina faso , niger and côte d'ivoire , and hold and manage exploration properties in suriname , brazil and french guiana in south america . all of our operations , with the exception of certain exploration projects , transact business in us dollars and keep financial records in us dollars . our accounting records are kept in accordance with canadian gaap . we are a reporting issuer or the equivalent in all provinces of canada and in the united states and file disclosure documents with the canadian securities regulatory authorities and the united states securities and exchange commission . non-gaap financial measures in this form 10-k , we use the terms total operating cost per ounce , total cash cost per ounce and cash operating cost per ounce. total operating cost per ounce is equal to cost of sales for the period , as found in our statements of operations , after adjusting for inventory write-offs and operations-related foreign currency ( gains ) /losses , divided by the ounces of gold sold in the period . cost of sales include all mine-site operating costs , including the costs of mining , processing , maintenance , work-in-process inventory changes including inventory write-offs and adjustments , mine-site overhead as well as production taxes , royalties , mine site depreciation , depletion , amortization , asset retirement obligation accretion and by-product credits but does not include exploration costs , corporate office general and administrative expenses , impairment charges , corporate business development costs , gains and losses on asset sales , gains and losses on foreign currency conversions , interest expense , mark-to-market gains and losses on derivatives , gains and losses on investments and income tax . total cash cost per ounce for a period is equal to total operating costs for the period , as found in the table below , less mining related depreciation and amortization and accretion of asset retirement obligations costs for the period , divided by the number of ounces of gold sold during the period . cash operating cost per ounce for a period is equal to total cash costs for the period less production royalties and production taxes , divided by the number of ounces of gold sold during the period . 47 the following table shows the derivation of these measures : replace_table_token_19_th 48 total cash cost per ounce and cash operating cost per ounce should be considered as non-gaap financial measures as defined in sec regulation s-k item 10 and applicable canadian securities laws and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with gaap . there are material limitations associated with the use of such non-gaap measures . story_separator_special_tag we , along with the other major gold producers in ghana , are working with the volta river authority ( vra ) , our power provider , to agree on a formula for future power prices that more closely reflects the actual cost of power generation for the vra . during the fourth quarter of 2008 diesel fuel prices began to decline reflecting decreasing world crude oil prices . fuel is one of our largest cost factors and the price drop , if continued , should have a beneficial impact on our unit costs . gold prices gold prices have generally trended upward during the last seven years , from a low of $ 260 per ounce in 2001 to a high of $ 1,011 per ounce in march 2008. since march 2008 , and especially after mid-2008 , gold price volatility increased with prices fluctuating in a wide band between $ 700 and $ 950 per ounce . the realized gold price for our shipments averaged $ 870 per ounce during 2008 , as compared to $ 713 per ounce in 2007. prestea south we continue to seek the environmental permits which would allow surface mining at the prestea south gold deposits southeast of the town of prestea . assuming timely receipt of the permits , we expect to begin developing the prestea south deposits in 2009 and plan to commence mining later in the year . the prestea south oxide ore will be transported to bogoso where it will be processed through the bogoso oxide plant , and sulfide ores will be moved to bogoso and processed at the bogoso sulfide plant . management changes in march 2008 , mr. tom mair was appointed president and ceo and as a member of the board of directors . mr. mair previously served as interim president and ceo since january 1 , 2008 and as senior vice president and chief financial officer from february 2007 to december 2007. in april 2008 , mr. scott barr was appointed as executive vice president and chief operating officer . mr. john labate was appointed senior vice president and chief financial officer effective august 20 , 2008. ghana stock exchange listing and share offering in february 2008 , our common shares were listed on the ghana stock exchange in accra to support the further growth of the ghana stock exchange and to allow our employees and stakeholders in ghana an opportunity to invest in golden star . in conjunction with the listing , we completed an offering of 1,881,630 golden star common shares to investors in ghana and europe at a price of $ 3.10 ( 3.0 cedis ) per share . all shares issued are tradable on the toronto stock exchange and the nyse alternext us stock exchange as well as on the ghana stock exchange . illegal mining as with most gold mining operations in ghana , illegal mining is occurring on some of our properties , including prestea south and hwini-butre . we have brought this situation to the attention of the local and national governmental authorities . while illegal mining has had minimal impact at our active mining operations so far , there is increasing amounts of illegal mining activity on our properties and it is occurring closer to our operating mines than in the past . international financial reporting standards the canadian accounting standards board recently confirmed january 1 , 2011 as the date international financial reporting standards ( ifrs ) will replace current canadian gaap for publicly traded companies in canada . in response we are currently developing an ifrs change-over plan . towards this end we have retained a qualified consulting team to oversee and effect the conversion process . it is expected that the plan will take into consideration , among other things : identification of differences in canadian gaap and ifrs accounting policies and their impact on our consolidated financial statements ; 50 selection of our continuing ifrs policies ; changes in note disclosures ; information technology and data system requirements ; disclosure controls and procedures , including investor relations and external communications plans related to the ifrs conversion ; identification of impacts of ifrs on internal controls over financial reporting ; financial reporting expertise requirements , including training of personnel ; and impacts on other business activities that may be influenced by gaap measures , such as debt covenants ; it is not possible at this time to quantify the impact of these factors . progress to date at december 31 , 2008 , the company has completed the planning phase of the project of the initial diagnostic between canadian gaap and ifrs . while the effects of ifrs have not yet been fully determined , the company has identified a number of key areas where it is likely to be impacted by changes in accounting policy . these include : stock based compensation property , plant and equipment mine property and deferred exploration impairment of assets presentation of financial statements , including presentation of minority interests a detailed diagnostic is underway , and no decisions have yet been made with regard to accounting policy choices . results of operations 2008 compared to 2007 story_separator_special_tag impairment determination . portions of the prestea south project near the town of prestea were also deemed impaired because the estimated cost of relocating homes and town site infrastructure negated the economic benefit of the reserves . wassa operations 2008 compared to 2007 wassa generated $ 4.9 million of operating margin in 2008 versus a $ 9.6 million operating margin in 2007. while ore grades and gold prices were higher in 2008 than a year earlier , increases in operating costs during 2008 more than offset the price and grade benefit .
| consolidated results our consolidated net loss totaled $ 120.1 million or $ 0.509 per share for 2008 as compared to a net loss of $ 36.4 million or $ 0.159 per share in 2007. impairment losses , negative operating margins and an inventory adjustment were the major factors contributing to the increase in net loss as compared to prior years . impairment write-offs totaled $ 68.4 million and included write-offs of the prestea underground , the goulagou exploration project in burkina faso , a portion of the prestea south project at bogoso and the niger exploration projects . our mine operating margin was a negative $ 42.3 million , which included a $ 16.4 million net realizable value adjustment which added $ 16.4 million to mine operating costs . increases in cash operating costs , most notably electric power costs and lower gold prices in the fourth quarter , were the major factors contributing to the impairments and inventory adjustment . the results of a pre-feasibility study of the prestea underground , completed in mid-2008 , further contributed to the prestea underground impairment . while gold sales were 49,649 ounces above the 2007 level , and our average realized gold price was up $ 157 per ounce , increases in operating costs more than offset the improved revenues yielding a mine operating margin loss approximately $ 28.0 million larger than the 2007 operating margin loss . the increase in revenues versus 2007 was related mostly to higher gold prices and to a full year of output at the bogoso sulfide plant in 2008 as compared to a half year in 2007 following its july 2007 plant in-service date .
| 6,851 |
( 10 ) this restricted stock award vests over four years , with 25 % of the shares underlying the option vesting on november 27 , 2019 and 2.0833 % of the shares vesting monthly thereafter , subject to continued service . 99 employment and change in control arrangements we have entered into written offer letters with each of our named executive officers . these agreements set forth the terms of the named executive officer 's compensation , including his or her initial base salary , severance and annual cash bonus opportunity . in addition , the agreements provide that the named executive officers are eligible to participate in company-sponsored benefit programs that are available generally to all of our employees . we have also entered into written bonus retention agreements and or letter agreements with certain of our named executive officers which replace such named executive officers ' existing severance benefits as set forth in their written offer letters , as described below . 2018 amended and restated employment agreement story_separator_special_tag financial condition and results of operations you should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and the other financial information included elsewhere in this annual report on form 10-k. some of the information contained in this discussion and analysis or set forth elsewhere in this annual report on form 10-k , including information with respect to our plans and strategy for our business and related financing , includes forward-looking statements that involve risks and uncertainties . as a result of many factors , including those factors set forth in the “ risk factors ” section of this annual report on form 10-k , our actual results could differ materially from the results described in or implied by these forward-looking statements . overview we are a clinical-stage biopharmaceutical company that has historically focused on applying mab immunotherapies to address serious infectious diseases . we possess a deep understanding of the pathogenesis of infection paired with access to what we believe to be some of the most advanced mab discovery techniques and platforms available today . our pipeline is comprised of mabs targeting multiple serious bacterial and viral pathogens , including staphylococcus aureus ( s. aureus ) and rsv . on june 28 , 2018 , we announced the discontinuation of our phase 2 clinical trial of asn100 for the prevention of s. aureus pneumonia in high-risk , mechanically ventilated patients following the completion of a planned interim analysis of unblinded trial data for 118 patients by an independent data review committee , or drc . based on the results of this analysis , the drc determined that the trial was futile , meaning that it was not likely to meet its primary end-point upon completion , and recommended that trial enrollment be discontinued . during the third quarter of 2018 , we completed follow-up visits on patients dosed in the trial per the study protocol , and during the fourth quarter of 2018 , we completed our analysis of the complete dataset from the 154 patients that were enrolled in the trial . we are currently exploring potential collaborations or out-licensing opportunities for the potential continued development of asn100 . following our discontinuation of asn100 clinical development , in august 2018 we announced that we were considering strategic options that may potentially result in changes to our business strategy and future operations and our board of directors approved a reduction in workforce to reduce operating costs and better align our workforce with the needs of our business following our discontinuation of the clinical development of asn100 . as part of this planned reduction in workforce , we eliminated 28 positions across the company , representing approximately 65 % of our workforce , through march 1 , 2019. following an extensive process of evaluating strategic alternatives for the company and identifying and reviewing potential candidates for a strategic acquisition or other transaction , on november 26 , 2018 , we entered into the merger agreement with x4 , pursuant to which a wholly owned subsidiary of the company will merge with and into x4 , with x4 continuing as a wholly owned subsidiary of the company and the surviving corporation of the merger . we and x4 believe that the merger will result in a clinical-stage biopharmaceutical company focused on the discovery , development and commercialization of novel therapeutics for the treatment of rare diseases . we expect to devote significant time and resources to completion of the merger . however , there can be no assurance that such activities will result in the completion of the merger . further , the completion of the merger ultimately may not deliver the anticipated benefits or enhance shareholder value . x4 has expressed interest in retaining certain members of our staff including our scientific team in vienna , austria , a team which has deep expertise in the research of virally-mediated infections . since our inception in 2010 , we have devoted substantially all of our resources to building our business to support discovery , research and development activities for our programs . we do not have any products approved for sale and have not generated any revenue from product sales . since our inception , we have received significant proceeds from outside sources to fund our operations . story_separator_special_tag the letters demanded the immediate repayment of all subsidies , totaling approximately eur 18.1 million ( $ 20.4 million , based on an exchange rate of us $ 1.12 per eur 1.00 on march 7 , 2019 ) , on or before february 19 , 2019 , which consisted of approximately eur 7.2 million ( $ 8.1 million ) for the reimbursement of grants previously received by us , approximately eur 8.5 million ( $ 9.6 million ) for the repayment of outstanding loan principal and approximately eur 2.4 million ( $ 2.7 million ) for assessed interest , which we refer to , collectively , as the ffg demands . ffg reserved all rights and remedies in connection with the subsidies . 74 on march 8 , 2019 , we entered into a settlement agreement , or the settlement agreement , with ffg , x4 , arsanis gmbh and artemis ac corp. , our wholly owned subsidiary , in respect of the ffg demands . pursuant to the terms of the settlement agreement , in exchange for ffg 's waiver of all claims against us and arsanis gmbh except for its claims for repayment of the loans and regular interest , including its waiver of claims for repayment of grants and interest exceeding regular interest , subject to compliance by us and arsanis gmbh with the terms of the settlement agreement , arsanis gmbh has agreed to repay the outstanding loan principal equal to eur 8,505,204 ( $ 9.5 million , based on an exchange rate of us $ 1.12 per eur 1.00 on march 7 , 2019 ) ( plus regular interest accrued thereon ) on an accelerated payment schedule of three years instead of five years , with the final accelerated installment due and payable on june 30 , 2021. the parties have also agreed that ( i ) the portion of such loans to be repaid in 2019 , or the 2019 payment , is eur 2,596,320 ( $ 2.9 million , based on an exchange rate of us $ 1.12 per eur 1.00 on march 7 , 2019 ) and such payment will be made on march 31 , 2019 ; ( ii ) until all of the loans have been repaid and subject to other terms specified in the settlement agreement , a minimum cash balance equal to 70 % of the then-outstanding principal amount of the loans will be maintained at arsanis gmbh in an account held with an austrian bank , which we refer to as the minimum cash requirement ; ( iii ) at least until december 31 , 2021 and subject to other terms specified in the settlement agreement , arsanis gmbh will maintain a physical premises in austria with a minimum of eight full-time equivalent employees , retain ownership rights to intellectual property , or ip , which generated or may be generated ( if any ) from or in relation to the projects that are subject to the subsidy agreements with ffg in austria , and to the extent that it licenses such ip to any third party it will receive arm 's length compensation as consideration and ( iv ) arsanis gmbh will comply with specified quarterly financial reporting obligations . we agreed ( i ) to procure the timely transfer of sufficient funds to arsanis gmbh to ensure the minimum cash requirement is met , ( ii ) to use our best efforts to enable arsanis gmbh to comply with specified obligations and ( iii ) to refrain from any instructions and measures that might endanger compliance with the specified obligations . x4 and artemis ac corp. agreed ( i ) to use commercially reasonable efforts to enable arsanis gmbh and us to comply with their above-mentioned obligations and ( ii ) to refrain from any instructions and measures that might endanger compliance with such specified obligations . if we or arsanis gmbh breach specified obligations under the settlement agreement ( and fail to cure such breach during any applicable grace period ) , ffg is entitled to accelerate the repayment of any outstanding loans . in addition , subject to the fulfillment of arsanis gmbh 's obligations and commitments under the settlement agreement , ffg has agreed that effective as of december 31 , 2021 , it will release the parties , as applicable , from all obligations and claims arising in relation to the subsidies and their commitments provided under the settlement agreement and under other documents in favor of arsanis gmbh , as in effect as of the date of the settlement agreement . merger agreement amendment in connection with the settlement agreement , on march 8 , 2019 , we entered into a second amendment to agreement and plan of merger , or the merger agreement amendment , to the merger agreement with artemis ac corp. and x4 . pursuant to the merger agreement amendment , we and x4 have agreed to amend the terms of our previously announced merger agreement to reflect our agreement that 1/3rd of the 2019 payment , which equals eur 865,440 ( approximately $ 968,600 , based on an exchange rate of us $ 1.12 per eur 1.00 on march 7 , 2019 ) and is referred to as the arsanis accelerated payment amount , would be deducted from our “ net cash ” at closing ( as defined in the merger agreement ) and as a result would increase the exchange ratios for the x4 common stock and x4 preferred stock in the merger . specifically , the merger agreement currently excludes the approximately eur 8.5 million principal amount of ffg loans to arsanis gmbh from the deduction for unpaid indebtedness that otherwise reduces our “ net cash ” at closing . the merger agreement amendment provides that this excluded amount ( and thus “ net cash ” ) be reduced by the arsanis accelerated payment amount , to approximately eur 7.6 million .
| results of operations comparison of the years ended december 31 , 2018 and 2017 the following table summarizes our results of operations for the years ended december 31 , 2018 and 2017 : replace_table_token_3_th revenue . revenue was $ 3.5 million for the year ended december 31 , 2018 , compared to $ 0 for the year ended december 31 , 2017. the increase of $ 3.5 million was due to license revenue recognized under the patent license and option agreement with janssen during the year ended december 31 , 2018 . 79 research and development expenses . replace_table_token_4_th research and development expenses were $ 31.0 million for the year ended december 31 , 2018 , compared to $ 28.1 million for the year ended december 31 , 2017. the increase of $ 2.9 million was primarily due to an increase of $ 0.7 million in direct costs for our asn100 program , an increase of $ 0.7 million in direct costs for our asn500 program , and an increase of $ 1.6 million in unallocated research and development expenses . the increase in direct costs for our asn100 program was primarily due to cmo and cro fees for process development and establishment of manufacturing capabilities for the supply of our clinical materials , the oversight and conduct of our phase 2 clinical trial and investigator fees for that same clinical trial .
| 6,852 |
the value of the stock was based on the trading price on the date of issuance . acquisition-related costs during the year ended march 31 , 2015 , which are included in the selling , general , and administrative expense in the accompanying consolidated statements of income , were not material . the results of operations related to this acquisition have been included in our canadian segment since the acquisition date . during the year ended march 31 , 2015 , our net sales of products utilizing the asset acquired in the vim asset acquisition were $ -0- . the company has not presented pro forma consolidated results of operations related to the vim asset acquisition as it does not deem the pro forma effect of the transaction to be material to the consolidated financial statements . the total purchase price was allocated as follows : replace_table_token_13_th with respect to the intangible assets of vim , the company intends to amortize each as follows , as this is the length of time the company currently estimates that it will generate cash flow from the assets : tundra distribution agreement 9 months patent 20 years other intellectual property 20 years the total weighted-average amortization period for these acquired intangible assets is 20 years . f - 14 profire energy , inc. and subsidiary notes to consolidated financial statements march 31 , 2015 and 2014 note 5 – intangible assets citing an update to asc 2011-08 , entities are provided with the option of first performing a qualitative assessment on none , some , or all of its reporting units to determine whether it is more story_separator_special_tag operations for a complete understanding , this management 's discussion and analysis of financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements contained in this annual report on form 10-k. some of the statements set forth in this section are forward-looking statements relating to our future results of operations . our actual results may vary from the results anticipated by these statements . please see “ information concerning forward-looking statements ” on page 4. story_separator_special_tag payroll expense during the fiscal year ended march 31 , 2015 increased 53 % to $ 6,008,663 compared to $ 3,921,174 during the fiscal year ended march 31 , 2014. payroll expense increased as a result of hiring additional personnel , including additional sales , service , marketing , and administrative personnel during the fiscal year . we believe that the significant investment the company made in acquiring talented personnel will generate increasingly meaningful returns in future periods , especially as industry conditions improve . during the fiscal year , our payroll included as many as 140 employees , which contributed to a significant increase in payroll expense for the year . payroll expense was 32 % of operating expenses in fiscal 2015 compared to 34 % in fiscal 2014. we expect payroll expense will decrease in the upcoming fiscal year as we have made reductions in personnel to more closely align with the current industry conditions . 36 research and development research and development expense increased from $ 703,266 to $ 1,832,671 , which represented 6 % and 10 % of operating expenses for the years ended march 31 , 2014 and march 31 , 2015 , respectively . this was due to the expedition of developing a number of research and development projects , including the next generation of our burner management system , and the hiring of a number of additional engineers . we anticipate that this expense will decrease in the next fiscal year due to completion of certain projects in the first half of fiscal 2016 , as well as a strategic decision to focus on completing and maintaining selected core products until the industry economic environment improves . depreciation expense depreciation expense , not related to cost of sales , during fiscal year ending march 31 , 2015 was $ 558,231 or 102 % higher than the fiscal year ended march 31 , 2014 , when depreciation expense was $ 276,661. these increases in depreciation expense are primarily due to the purchase of multiple fixed assets including additional facility space and additional sales and service vehicles in the last fiscal year , which result in a higher ongoing depreciation expense . as a percentage of operating expenses , depreciation increased from approximately 2 % of operating expenses in the year ended march 31 , 2014 to 3 % of operating expenses in the year ended march 31 , 2015. we expect that depreciation will , as a percentage of revenues , increase in the coming year , given the expected decline in revenues during fiscal 2016 , even if depreciation remains , approximately , similar to fiscal 2015 levels . total other income ( expense ) during the fiscal year ended march 31 , 2015 , total other income ( expense ) increased by 457 % to an income of $ 55,889 from income of $ 10,028 , largely due to higher interest generation from higher cash balances during the fiscal year . we anticipate that interest expense will not fluctuate significantly during fiscal year 2016 , although we may realize a yet-higher amount of interest income in fiscal year 2016 as we improve our interest-generation by allocating cash to higher interest-generating accounts . net income before income tax net income before income taxes during the fiscal year ended march 31 , 2015 decreased 1 % to $ 8,591,588 from $ 8,681,921 during the fiscal year ended march 31 , 2014. this decrease in net income before income taxes is in line with expectations during our growth phase and was attributable to a slightly lower gross margin and increased operating expenses . story_separator_special_tag while we anticipated that net margin would be somewhat lower than historical levels in the near term , we did not expect the severe industry conditions that we are presently facing . the decline in oil prices–and oilfield equipment purchasing–has negatively impacted our revenue and thus decreased our operating leverage and income before taxes . the current industry conditions have elongated the time frame in which we anticipate to see returns from prior investments ; however , as we invest strategically , we still expect to realize returns in future periods . 37 income tax expense income tax expense decreased 8 % from $ 3,074,612 during the year ended march 31 , 2014 to $ 2,843,905 during the year ended march 31 , 2015. this decrease in income tax expense was attributable to a lower effective tax rate than the previous fiscal year , even as more proportional revenue was generated from u.s. operations , which has a higher tax rate . additionally , we had an equity-derived adjustment to income tax expense that increased our income tax expense in calendar 2014. notwithstanding these factors , our effective tax rate declined as a result of improved tax research , resulting in additional tax credits . we anticipate that as a percentage of revenues , our effective tax rate could continue to decline in future quarters as we take advantage of additional tax-deduction opportunities , realize tax benefits from non-equity-derived employee incentive plans , and experience lower tax expense attributable to depreciation ( due to the use of a macrs depreciation schedule for fixed assets , which requires a proportionally higher expense earlier in the life of the asset ) . foreign currency translation gain ( loss ) our consolidated financial statements are presented in u.s. dollars . our functional currencies are the u.s. dollar ( usd ) and the canadian dollar , and our reporting currency is the usd . our financial statements were translated to u.s. dollars using year-end exchange rates for the balance sheet and weighted average exchange rates for the statements of operations . equity transactions were translated using historical rates . foreign currency translation gains or losses as a result of fluctuations in the exchange rates are reflected in the statement of operations and comprehensive income . therefore , the translation adjustment in our consolidated financial statements represents the translation differences from translation of our financial statements . as a result , the translation adjustment is commonly , but not always , positive if the average exchange rates are lower than exchange rates on the date of the financial statements and negative if the average exchange rates are higher than exchange rates on the date of the financial statements . during the year ended march 31 , 2015 , we recognized a foreign currency translation loss of $ 1,657,930 compared to foreign currency translation loss of $ 602,517 during the year ended march 31 , 2014. this loss was the result of a significant weakening of the canadian dollar relative to the us dollar in the reporting period . total comprehensive income for the foregoing reasons , we realized a total comprehensive income of $ 4,089,753 during the fiscal year ended march 31 , 2015 , compared to total comprehensive income of $ 5,004,792 during the fiscal year ended march 31 , 2014 , a decrease of 18 % . 38 earnings per share for the fiscal year ended march 31 , 2015 we realized $ 0.11 per share on a basic and on a fully diluted basis , compared to $ 0.12 per share on a basic and on a fully diluted basis for the fiscal year ended march 31 , 2015 , a decrease of 8 % . liquidity and capital resources on june 2 , 2014 , we filed a registration statement on form s-1 to register shares of our common stock with the securities and exchange commission to be offered to the public by us and by certain selling stockholders named in the registration statement . we also filed amendments to such registration statement on june 19 , 2014 , june 24 , 2014 , june 25 , 2014 , and june 26 , 2014. our net proceeds from the sale of shares of our common stock by us pursuant to the registration statement was approximately $ 16,430,000 , after deducting underwriting discounts and commissions and estimated offering expenses payable by us . we did not receive any proceeds from the sale of shares of our common stock by the selling stockholders . we have used and plan to continue using the proceeds from the offering to help fund company growth initiatives . in november 2013 , we raised approximately $ 4.7 million from a private placement of 2,172,405 shares of our common stock . we received net proceeds of approximately $ 4.2 million from the private placement after paying placement agent fees and offering expenses , which net proceeds we have been using to fund our growth objectives and for working capital purposes . as of march 31 , 2015 , we had total current assets of $ 35,486,450 and total assets of $ 46,856,056 including cash and cash equivalents of $ 14,144,796. at march 31 , 2015 , we had total current liabilities of $ 1,720,245 and total liabilities of $ 2,351,598. during the fiscal years ended march 31 , 2015 and 2014 , cash was primarily used to fund expansion of our facilities and additional trucks and tooling required as we expanded our sales and service teams . see below for additional discussion and analysis of cash flow . replace_table_token_4_th net cash provided by operating activities during fiscal 2015 was $ 685,080. at march 31 , 2015 , we had working capital of $ 33,766,205. we have no current capital commitments outside of general operations and do not anticipate any in the near future . we have no long-term debt . net cash used in investing activities during fiscal
| results of operations comparison of the years ended march 31 , 2015 and 2014. total revenues our total revenues during the year ended march 31 , 2015 increased 45 % to $ 51,179,392 from $ 35,392,108 in the year ended march 31 , 2014. increased production activity in oil and gas for the first half of the fiscal year , combined with our opening of multiple offices , increased hiring of sales and service personnel , and an expansion of our product line helped contribute to our increased sales—especially in the united states . during fiscal 2015 , sales of goods increased 42 % and service revenue increased 95 % . for the fiscal year ended march 31 , 2015 , product sales accounted for 93 % of total revenues and service sales accounted for 7 % of total revenue , while for the fiscal year ended march 31 , 2014 , product sales accounted for 95 % of total revenues and service sales accounted for 5 % of total revenue . we recognize that with current industry conditions , the historical growth rates we have achieved will be difficult to realize in the coming fiscal year , and we anticipate that total revenues may decrease during fiscal 2016 due to the lack of purchasing by exploration and production companies in the oil and gas industry . we will continue to focus on developing of new products , diversifying into new markets and potentially new industries , and enhancing our marketing and sales efforts with key customers and prospects . we anticipate that as we do so , sales can stabilize in the short-term and we will be able to increase revenues and revenue stability over the long-term . we expect that product sales will continue to account for the significant majority of our revenue . during the fiscal year ended march 31 , 2015 , 29 % of total revenues were generated from products and services sold in canada .
| 6,853 |
assets and liabilities of discontinued operations presented in the consolidated balance sheets as of december 31 , 2019 include the following : replace_table_token_34_th note 3. dispositions 2019 dispositions on october 25 , 2019 , we completed the sale of substantially all of the global document solutions ( “ gds ” ) business for approximately $ 53.7 million . gds primarily provided statements and print management services in europe . the disposition resulted in a loss of $ 3.8 million during 2019 , which was recorded in other operating expense ( income ) in the consolidated statements of operations . on may 8 , 2019 , we sold the r & d business within the business services segment for net proceeds of $ 11.6 million . the disposition resulted in a gain of $ 6.1 million during 2019 , which was recorded in other operating expense ( income ) in the consolidated statements of operations . on march 31 , 2019 , our subsidiary , rr donnelley editora e grafica ltda . ( “ rrd brazil ” ) , filed for bankruptcy liquidation in bankruptcy court in brazil . the bankruptcy petition was approved by the court shortly thereafter and a bankruptcy trustee was appointed . as story_separator_special_tag , executive overview , response to covid-19 section for further discussion . each of our abl credit agreement and term loan credit agreement limit availability to make dividend payments , subject to specified exceptions . our board of directors must review and approve future dividend payments and will determine whether to declare additional dividends based on our operating performance , expected future cash flows , debt levels , liquidity needs and investment opportunities . contractual cash obligations and other commitments as of december 31 , 2020 , we had $ 1.5 billion of outstanding debt and the related obligations to make scheduled principal and interest payments , including $ 61.1 million and $ 84.8 million of scheduled principal payments due in 2021 and 2022 , respectively . in addition , we have certain contractual obligations for the purchase of property , plant and equipment of $ 19.6 million payable in 2021. during the year ended december 31 , 2020 , we deferred the employer portion of payroll tax of $ 35.1 million as part of the cares act , and we have obligations to repay one-half of these deferrals in the fourth quarter of 2021 and the remaining one-half in the fourth quarter of 2022. we also have certain other contractual obligations , including certain mepp withdrawal obligations ( see note 5 , restructuring , impairment and other charges and note 10 , retirement plans , to the consolidated financial statements , for further discussion ) and obligations to pay transition tax ( see note 11 , income taxes , to the consolidated financial statements , for further discussion ) . we expect to be able to meet these obligations based on our cash flow from operations , cash balances , and availability under our abl credit facility . liquidity cash and cash equivalents were $ 288.8 million as of december 31 , 2020 , an increase of $ 96.9 million compared to december 31 , 2019. included in cash and cash equivalents at december 31 , 2020 were $ 0.9 million of short-term investments , which primarily consisted of short-term deposits and money market funds . these investments are held at institutions with sound credit ratings and are highly liquid . our cash balances are held in numerous locations throughout the world , including substantial amounts held outside of the united states . cash and cash equivalents as of december 31 , 2020 included $ 51.5 million in the u.s. and $ 237.3 million at international locations . we maintain cash pooling structures that enable participating international locations to draw on our international cash resources to meet local liquidity needs . foreign cash balances may be loaned from certain cash pools to u.s. operating entities on a temporary basis in order to reduce our short-term borrowing costs or for other purposes . during the year ended december 31 , 2020 , we transferred approximately $ 45 million of cash held in international jurisdictions to the u.s. which was used to reduce debt outstanding . in future years , as a result of the tax act , we have further opportunities to repatriate foreign cash , primarily generated from current year earnings , in a tax efficient manner . during the year ended december 31 , 2020 , we executed various transactions that reduced our near-term maturities and extended our debt maturity profile . during this period , we repurchased on the open market $ 98.5 million aggregate principal of debt maturing in 2020 , 2021 , and 2022 , including $ 1.3 million of the 7.625 % notes due 2020 ( the “ 2020 notes ” ) , $ 67.6 million aggregate principal of 7.875 % notes due 2021 ( the “ 2021 notes ” ) , $ 1.3 million aggregate principal of the 8.875 % debentures due 2021 ( the “ 2021 debentures ” ) , and $ 28.3 million aggregate principal of the 7.000 % notes due in 2022 ( the “ 2022 notes ” ) using available cash . on december 4 , 2020 , we redeemed the remaining $ 83.3 million aggregate principal outstanding of the 2021 notes using a combination of available cash and a borrowing under our abl credit facility . the redemption price included a premium of $ 1.7 million . 33 on june 18 , 2020 , we completed a public exchange transaction in which we exchanged $ 246.2 million aggregate principal amount of the company 's debt held by various investors maturing between 2021 and 2024 ( the “ old debt ” ) for $ 244.9 million aggregate principal amount of newly issued unsecured 8.25 % notes due 2027 ( the “ new 2027 notes ” ) . story_separator_special_tag the credit agreement for the $ 550 million senior secured term loan b established in 2018 ( the “ term loan credit agreement ” ) requires that the net cash proceeds of significant asset sales be used to prepay the term loan to the extent that the net cash proceeds are not used for reinvestment in assets useful to our business , certain acquisitions and investments , repayment of certain borrowings under our abl credit facility or the funding of debt repayments , redemptions or tenders of certain existing notes maturing prior to the january 15 , 2024 maturity of the term loan , in each case , subject to certain restrictions and limitations set forth in the term loan credit agreement . as of december 31 , 2020 , we were in compliance with the covenants under our debt agreements and expect to remain in compliance based on our estimates of operating and financial results for 2021 and the foreseeable future . as of december 31 , 2020 , we met all the conditions required to borrow under the abl credit agreement and we expect to continue to meet the borrowing conditions . 34 as of december 31 , 2020 , we had no outstanding borrowings and $ 56.1 million of letters of credit issued under the abl credit facility . based on the borrow ing base as of december 31 , 2020 and outstanding letters of credit , we had $ 575.9 million of borrowing capacity available under the abl credit facility . we also had $ 166.5 million in other uncommitted credit facilities , primarily outside the u.s. , of which we had $ 91.5 million in outstanding letters of credit , bank guarantees and bank acceptance drafts . the current availability under the abl credit facility as of december 31 , 2020 is shown in the table below : replace_table_token_21_th ( a ) total available liquidity does not include credit facilities of non-u.s. subsidiaries , which are uncommitted facilities . the failure of a financial institution supporting the abl credit facility would reduce the amount of underlying commitments unless a replacement institution was added . currently , the abl credit facility is supported by eight u.s. financial institutions . our credit ratings from moody 's investors service , inc. ( “ moody 's ” ) and s & p global ratings ( “ s & p ” ) as of december 31 , 2020 are shown in the table below : s & p moody 's long-term corporate credit rating b , neg b2 , neg senior unsecured debt b- b3 term loan b+ b1 off-balance sheet arrangements other than certain contingent obligations discussed in note 9 , commitments and contingencies , we do not have off-balance sheet arrangements , financings or special purpose entities . critical accounting policies and estimates the preparation of financial statements in conformity with gaap requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities , the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period . our most critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations , and which require us to make our most difficult and subjective judgments , often as a result of the need to make estimates of matters that are inherently uncertain . we have identified the following as our most critical accounting policies and judgments . although we believe that our estimates and assumptions are reasonable , they are based upon information available when they are made , and therefore , actual results may differ from these estimates under different assumptions or conditions . story_separator_special_tag exceeding the carrying values by 20 % or greater . 36 generally , changes in estimates of expected future cash flows would have a similar effect on the estimated fair value of the reporting unit . for example , a 1.0 % decrease in estimated annual future cash flows would decrease the estimated fair value of the reporting unit by approximately 1.0 % . the estimated long-term net sales growth rate can have a significant impact on the estimated future cash flows , and therefore , the fair value of each reporting unit . a 1.0 % decrease in the long-term net sales growth rate woul d have resulted in no reporting units failing the goodwill impairment test . of the other key assumptions that impact the estimated fair values , most reporting units have the greatest sensitivity to changes in the estimated discount rate . the estimated discount rates for the reporting units with operations primarily located in the u.s. ranged between 11.5 % and 12.0 % as of october 31 , 2020 . the estimated discount rate for the one reporting unit with operations primarily in foreign locations was 13.5 % as of october 31 , 2020 . a 1.0 % increase in estimated discount rates woul d have resulted in no reporting units failing the goodwill impairment test . we believe that our estimates of future cash flows and discount rates are reasonable , but future changes in the underlying assumptions could differ due to the inherent uncertainty in making such estimates . additionally , further price deterioration or lower volume could have a material effect on the fair values of the reporting units . other long-lived assets we evaluate the recoverability of other long-lived assets , including property , plant and equipment and certain identifiable intangible assets , whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable .
| revenue recognition on january 1 , 2018 , we adopted asc topic 606 , “ revenue from contracts with customers ” using the modified retrospective method applied to those contracts which were not completed as of january 1 , 2018. results for reporting periods beginning after january 1 , 2018 are presented under topic 606. all revenue recognized in the consolidated statements of operations is considered to be revenue from contracts with clients . our products revenue is primarily recognized at a point in time . we generally recognize revenue for products upon the transfer of control of the products to the client which typically occurs upon transfer of title and risk of ownership , which is generally upon shipment to the client . for certain products , w e are able to recognize revenue for completed inventory billed but not yet shipped at the client 's direction . 35 our services revenue is recognized both at a point in time as well as over time . our business process outsourcing and digital and creative solutions revenue is recognized over time or at a point in time , depending on the nature of the service which could be either recurring or project-based . goodwill and other long-lived assets our methodology for allocating the purchase price of acquisitions is based on established valuation techniques , and when appropriate , includes valuations performed by management or third-party appraisers . based on our current organization structure , we have identified 14 reporting units for which cash flows are determinable and to which goodwill may be allocated . goodwill is either assigned to a specific reporting unit or allocated between reporting units based on the relative excess fair value of each reporting unit .
| 6,854 |
in connection with the acquisition of the foster clubs 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 rci hospitality holdings , inc. , our operations and our present business environment . md & a is provided as a supplement to — and should be read in conjunction with — our consolidated financial statements and the accompanying notes thereto contained in `` item 8. financial statements and supplementary data '' of this report . this overview summarizes the md & a , which includes the following sections : · our business — a general description of our business and the adult nightclub industry , our objective , our strategic priorities , our core capabilities , and challenges and risks of our business . · critical accounting policies and estimates — a discussion of accounting policies that require critical judgments and estimates . 17 · operations review — an analysis of our company 's consolidated results of operations for the three years presented in our consolidated financial statements . · liquidity and capital resources — an analysis of cash flows ; aggregate contractual obligations and an overview of financial position . general information operations : 1. our wholly owned subsidiaries own and or operate upscale adult nightclubs serving primarily businessmen and professionals . these nightclubs are in houston , austin , san antonio , dallas , fort worth , beaumont , longview , harlingen , edinburg , abilene , lubbock , el paso and odessa , texas ; charlotte , north carolina ; minneapolis , minnesota ; new york , new york ; miami gardens , florida ; philadelphia , pennsylvania , phoenix , arizona and indianapolis , indiana . no sexual contact is permitted at any of these locations . 2. our wholly owned subsidiaries own a media division , including the leading trade magazine serving the multi-billion dollar adult nightclubs industry . we also own an industry trade show , one other industry trade publications and more than 15 industry websites . 3. our wholly owned subsidiaries own and operate non-adult nightclubs , sports bars , and restaurants in houston , dallas , austin , webster , spring , and fort worth , texas under the brand names bombshells , vee lounge , and union square ( opening in december 2014 ) . our revenues are derived from the sale of liquor , beer , wine , food , merchandise , cover charges , membership fees , independent contractors ' fees , commissions from vending and atm machines , valet parking and other products and services . media revenues include the sale of advertising content and revenues from an annual expo convention . our fiscal year end is september 30. our goal is to use our company 's assets — our brands , financial strength and the talent and strong commitment of our management and associates — to become more competitive and to accelerate growth in a manner that creates value for our shareholders . critical accounting policies management 's discussion and analysis of financial condition and results of operations are based upon our financial statements , which have been prepared in accordance with united states generally accepted accounting principles ( “ gaap ” ) . gaap consists of a set of standards issued by the fasb and other authoritative bodies in the form of fasb statements , interpretations , fasb staff positions , emerging issues task force consensuses and american institute of certified public accountants statements of position , among others . the fasb recognized the complexity of its standard-setting process and embarked on a revised process in 2004 that culminated in the release on july 1 , 2009 of the accounting standards codification ( “ asc ” ) . the asc does not change how company accounts for its transactions or the nature of related disclosures made . rather , the asc results in changes to how the company references accounting standards within its reports . this change was made effective by the fasb for periods ending on or after september 15 , 2009. the company has updated references to gaap in this annual report on form 10-k to reflect the guidance in the asc . the preparation of these consolidated financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets , liabilities , revenues and expenses , and related disclosure of contingent assets and liabilities . on a regular basis , we evaluate these estimates , including investment impairment . these estimates are based on management 's historical industry experience and on various other assumptions that are believed to be reasonable under the circumstances . actual results may differ from these estimates . property and equipment property and equipment are stated at cost . provisions for depreciation and amortization are made using straight-line rates over the estimated useful lives of the related assets and the shorter of useful lives or terms of the applicable leases for leasehold improvements . buildings have estimated useful lives ranging from 29 to 40 years . furniture , equipment and leasehold improvements have estimated useful lives between five and 40 years . expenditures for major renewals and betterments that extend the useful lives are capitalized . expenditures for normal maintenance and repairs are expensed as incurred . the cost of assets sold or abandoned and the related accumulated depreciation are eliminated from the accounts and any gains or losses are charged or credited in the accompanying consolidated statement of income of the respective period . goodwill and intangible assets fasb asc 350 , intangibles - goodwill and other addresses the accounting for goodwill and other intangible assets . under fasb asc 350 , goodwill and intangible assets with indefinite lives are no longer amortized , but reviewed on an annual basis for impairment . definite lived intangible assets are amortized on a straight-line basis over their estimated lives . fully amortized assets are written-off against accumulated amortization . story_separator_special_tag diluted earnings per share reflect the potential dilution of securities that could share in the earnings of the company . potential common stock shares consist of shares that may arise from outstanding dilutive common stock options and warrants ( the number of which is computed using the “ treasury stock method ” ) and from outstanding convertible debentures ( the number of which is computed using the “ if converted method ” ) . diluted eps considers the potential dilution that could occur if the company 's outstanding common stock options , warrants and convertible debentures were converted into common stock that then shared in the company 's earnings ( loss ) ( as adjusted for interest expense , that would no longer occur if the debentures were converted ) . stock options the company recognizes all employee stock-based compensation as a cost in the consolidated financial statements . equity-classified awards are measured at the grant date fair value of the award . the company estimates grant date fair value using the black-scholes option-pricing model . the critical estimates are volatility , expected life and risk-free rate . the compensation cost recognized for the years ended september 30 , 2014 , 2013 and 2012 was $ 282,305 , $ 847,183 and $ 314,761 , respectively . there were 369,665 , zero and zero stock options exercises for the years ended september 30 , 2014 and 2013 and 2012. story_separator_special_tag justify '' > other expenses increased due to the new units acquired . see note p , gain on contractual debt reduction , of notes to consolidated financial statements , for an explanation of the $ 5.6 million contractual debt reduction item . we added more debt from acquisitions while we paid off debt as we amortize the loans . as of september 30 , 2014 , the balance of long-term debt was $ 70.4 million compared to $ 78.6 million a year earlier . non-gaap financial measures in addition to our financial information presented in accordance with gaap , management uses certain “ non-gaap financial measures ” within the meaning of the sec regulation g , to clarify and enhance understanding of past performance and prospects for the future . generally , a non-gaap financial measure is a numerical measure of a company 's operating performance , financial position or cash flows that excludes or includes amounts that are included in or excluded from the most directly comparable measure calculated and presented in accordance with gaap . we monitor non-gaap financial measures because it describes the operating performance of the company and helps management and investors gauge our ability to generate cash flow , excluding some recurring charges that are included in the most directly comparable measures calculated and presented in accordance with gaap . relative to each of the non-gaap financial measures , we further set forth our rationale as follows : non-gaap operating income and non-gaap operating margin . we exclude from non-gaap operating income and non-gaap operating margin amortization of intangibles , patron taxes , pre-opening costs , gains and losses from asset sales , stock-based compensation charges , litigation and other one-time legal settlements , gain on contractual debt reduction and acquisition costs . we believe that excluding these items assists investors in evaluating period-over-period changes in our operating income and operating margin without the impact of items that are not a result of our day-to-day business and operations . non-gaap net income and non-gaap net income per basic share and per diluted share . we exclude from non-gaap net income and non-gaap net income per diluted share and per basic share amortization of intangibles , patron taxes , pre-opening costs , income tax expense , impairment charges , gains and losses from asset sales , stock-based compensation , litigation and other one-time legal settlements , gain on contractual debt reduction and acquisition costs , and include the non-gaap provision for income taxes , calculated as the tax-effect at 35 % effective tax rate of the pre-tax non-gaap income before taxes less stock-based compensation , because we believe that excluding such measures helps management and investors better understand our operating activities . 22 adjusted ebitda . we exclude from earnings before interest , taxes , depreciation and amortization ( ebitda ) depreciation expense , amortization of intangibles , income tax , interest expense , interest income , gains and losses from asset sales , acquisition costs , litigation and other one-time legal settlements , gain on contractual debt reduction and impairment charges because we believe that adjusting for such items helps management and investors better understand operating activities . adjusted ebitda provides a core operational performance measurement that compares results without the need to adjust for federal , state and local taxes which have considerable variation between domestic jurisdictions . also , we exclude interest cost in our calculation of adjusted ebitda . the results are , therefore , without consideration of financing alternatives of capital employed . we use adjusted ebitda as one guideline to assess our unleveraged performance return on our investments . adjusted ebitda is also the target benchmark for our acquisitions of nightclubs . the following tables present our non-gaap measures for the periods indicated ( in thousands , except per share amounts ) : replace_table_token_5_th 23 results of operations for the fiscal year ended september 30 , 2013 as compared to the fiscal year ended september 30 , 2012 for the fiscal year ended september 30 , 2013 , we had consolidated total revenues of $ 112.2 million , compared to consolidated total revenues of $ 95.2 million for the year ended september 30 , 2012. this was an increase of $ 17.0 million or 17.8 % .
| operations review results of operations for the fiscal year ended september 30 , 2014 as compared to the fiscal year ended september 30 , 2012 for the fiscal year ended september 30 , 2014 , we had consolidated total revenues of $ 129.2 million , compared to consolidated total revenues of $ 112.2 million for the year ended september 30 , 2013. this was an increase of $ 17.0 million or 15.1 % . the increase in total revenues was primarily due to revenues generated in our new units acquired in 2014 , a full year of revenues from units purchased in 2013 and increases in revenues from certain of our existing units , especially from our jaguars odessa , xtc austin and dallas and rick 's new york , san antonio and minnesota locations . revenues from nightclub operations for same-location same-period increased by 2.8 % . 20 our operating margin ( income ( loss ) from operations divided by total revenues ) was 14.6 % for the year ended september 30 , 2014 compared to 19.5 % for the prior year . the decrease is principally due to the settlements of lawsuits and other one-time costs in 2014. our income from operations for our nightclub operations for the same-location-same-period decreased by 2.6 % . our net income was $ 11.2 million for the fiscal year ended september 30 , 2014 compared to $ 9.2 million for the previous year . the increase in our net income is explained in the following paragraphs . following is a comparison of the company 's income statement for the years ended september 30 , 2014 and 2013 with percentages compared to total revenue : replace_table_token_4_th following is an explanation of significant variances in the above amounts . other revenues include atm commissions earned , video games and other vending and certain promotion fees charged to our entertainers .
| 6,855 |
some of the information contained in this discussion and analysis , including information with respect to our plans and strategy for our business , includes forward-looking statements that involve risks and uncertainties . you should review the “ cautionary note regarding forward-looking statements ” and item 1a . risk factors sections of this report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis . overview we are a leading online small business lender . we make it efficient and convenient for small businesses to access financing . enabled by our proprietary technology and analytics , we aggregate and analyze thousands of data points from dynamic , disparate data sources to assess the creditworthiness of small businesses rapidly and accurately . small businesses can apply for a term loan or line of credit on our website in minutes and , using our loan decision process , including our proprietary ondeck score ® , we can make a funding decision immediately and , if approved , fund as fast as 24 hours . qualified customers may have both a term loan and line of credit concurrently , which we believe provides opportunities for repeat business , as well as increased value to our customers . we originated approximately $ 2.5 billion of loans in 2018 and more than $ 10 billion of loans since we made our first loan in 2007. we generate the majority of our revenue through interest income and fees earned on the loans we make to our customers . our term loans , which we offer in principal amounts ranging from $ 5,000 to $ 500,000 and with maturities of 3 to 36 months , feature fixed dollar repayments . our lines of credit range from $ 6,000 to $ 100,000 , and are generally repayable within six or twelve months of the date of the most recent draw . we earn interest on the balance outstanding and lines of credit are subject to a monthly fee unless the customer makes a qualifying minimum draw , in which case the fee is waived for the first six months . the balance of our other revenue primarily comes from our servicing and other fee income , most of which consists of marketing fees from our issuing bank partner , fees generated by odx , and monthly fees earned from lines of credit . prior to 2018 , we also generated gains on loans sold through ondeck marketplace . we rely on a diversified set of funding sources for the loans we make to our customers . our primary source of this financing has historically been debt facilities with various financial institutions and securitizations . we have also used proceeds from operating cash flow to fund loans in the past and continue to finance a portion of our outstanding loans with these funds . as of december 31 , 2018 , we had $ 822.0 million of debt principal outstanding and $ 1.1 billion total borrowing capacity . no loans were sold through ondeck marketplace during 2018 because we determined that the expected economics of retaining our loans and funding them on balance sheet were more attractive than those available through loan sales . during the years ended 2017 and 2016 , we sold loans with an unpaid principal balance of approximately $ 72.5 million and $ 368.3 million to ondeck marketplace purchasers . we originate loans throughout the united states , canada and australia , although , to date , a majority of our revenue has been generated in the united states . these loans are originated through our direct marketing channel , including direct mail , our outbound sales team , our social media and other online marketing channels , referrals from our strategic partner channel , including small business-focused service providers , payment processors , and other financial institutions , and through our funding advisors who advise small businesses on available funding options . 41 key financial and operating metrics we regularly monitor a number of metrics in order to measure our current performance and project our future performance . these metrics aid us in developing and refining our growth strategies and making strategic decisions . replace_table_token_2_th * non-gaap measure . refer to `` non-gaap financial measures '' below for an explanation and reconciliation to gaap . for 2018 , the calculation of certain metrics have changed and new metrics have been added compared to prior periods . prior year metrics have been restated to conform to the 2018 presentation . see detailed definitions and a summary table of changes below . originations originations represent the total principal amount of the term loans we made during the period , plus the total amount drawn on lines of credit during the period . many of our repeat term loan customers renew their term loans before their existing term loan is fully repaid . in accordance with industry practice , originations of such repeat term loans are presented as the full renewal loan principal , rather than the net funded amount , which would be the renewal term loan 's principal net of the unpaid principal balance on the existing term loan . loans referred to , and funded by , our issuing bank partners and later purchased by us are included as part of our originations . loan yield loan yield is the rate of return we achieve on loans outstanding during a period . it is calculated as annualized interest income on loans including amortization of net deferred origination costs divided by average loans . annualization is based on 365 days per year and is calendar day-adjusted . loans represents the sum of loans held for investment and loans held for sale at the end of the period . loan yield replaces our previous metric , effective interest yield . loan yield is calculated using interest income on loans , while effective interest yield was calculated using interest income . story_separator_special_tag adjusted efficiency ratio adjusted efficiency ratio is non-gaap measure calculated as total operating expense divided by gross revenue for the period , adjusted to exclude ( a ) stock-based compensation expense and ( b ) items management deems to be non-representative of 43 operating results or trends , all as shown in the non-gaap reconciliation presentation of this metric . we believe adjusted efficiency ratio is useful because it provides investors and others with a supplemental operating efficiency metric to present our operating efficiency across multiple periods without the effects of stock-based compensation , which is a non-cash expense based on equity grants made to participants in our equity plans at specified prices and times but which does not necessarily reflect how our business is performing , and items which may only affect our operating results periodically . our use of adjusted efficiency ratio has limitations as an analytical tool and you should not consider it in isolation , as a substitute for or superior to our efficiency ratio , which is the most comparable gaap metric . see item 7. management 's discussion and analysis of financial condition and results of operations—non-gaap financial measures for a discussion and reconciliation . return on assets return on assets is calculated as annualized net income ( loss ) attributable to on deck capital , inc. common stockholders for the period divided by average total assets for the period . for periods of less than one year , the metric is annualized based on four quarters per year and is not business day or calendar day-adjusted . adjusted return on assets adjusted return on assets is a non-gaap measure calculated as adjusted net income ( loss ) for the period divided by average total assets for the period . for periods of less than one year , the metric is annualized based on four quarters per year and is not business day or calendar day-adjusted . we believe adjusted return on assets is useful because it provides investors and others with a supplemental metric to assess our performance across multiple periods without the effects of stock-based compensation , which is a non-cash expense based on equity grants made to participants in our equity plans at specified prices and times but which does not necessarily reflect how our business is performing , and items which may only affect our operating results periodically , all as shown in the non-gaap reconciliation presentation of this metric . our use of adjusted return on assets has limitations as an analytical tool and you should not consider it in isolation , as a substitute for or superior to return on assets , which is the most comparable gaap metric . see item 7. management 's discussion and analysis of financial condition and results of operations—non-gaap financial measures for a discussion and reconciliation . return on equity return on equity is calculated as annualized net income ( loss ) attributable to on deck capital , inc. common stockholders for the period divided by average total on deck capital , inc. stockholders ' equity for the period . for periods of less than one year , the metric is annualized based on four quarters per year and is not business day or calendar day-adjusted . adjusted return on equity adjusted return on equity is a non-gaap measure calculated as adjusted net income ( loss ) attributable to on deck capital , inc. common stockholders for the period divided by average total on deck capital , inc. stockholders ' equity for the period . for periods of less than one year , the metric is annualized based on four quarters per year and is not business day or calendar day-adjusted . we believe adjusted return on equity is useful because it provides investors with a supplemental metric to assess our performance across multiple periods without the effects of stock-based compensation , which is a non-cash expense based on equity grants made to participants in our equity plans at specified prices and times but which does not necessarily reflect how our business is performing , and items which may only affect our operating results periodically , all as shown in the non-gaap reconciliation presentation of this metric . our use of adjusted return on equity has limitations as an analytical tool and you should not consider it in isolation , as a substitute or superior to return on equity , which is the most comparable gaap metric . see item 7. management 's discussion and analysis of financial condition and results of operations—non-gaap financial measures for a discussion and reconciliation of adjusted net income to net income ( loss ) . as noted above a number of metrics have changed as of december 31 , 2018 to better align with industry standards . the table below summarizes the metric changes and compares the metrics under the new and old definitions . replace_table_token_3_th 44 on deck capital , inc. and subsidiaries consolidated average balance sheets ( in thousands ) replace_table_token_4_th average balance sheet items for the period represent the average as of the beginning of the first month of the period and as of the end of each month of the period . non-gaap financial measures we believe that the non-gaap metrics can provide useful supplemental measures for period-to-period comparisons of our core business and useful supplemental information to investors and others in understanding and evaluating our operating results . however , non-gaap metrics are not calculated in accordance with gaap , and should not be considered an alternative to any measures of financial performance calculated and presented in accordance with gaap . other companies may calculate these non-gaap metrics differently than we do . the reconciliations below reconcile each of our non-gaap metrics to their most comparable respective gaap metric . 45 adjusted net income ( loss ) and adjusted net income ( loss ) per share adjusted net income ( loss ) represents net income ( loss ) attributable to ondeck adjusted to exclude the items shown in the table below .
| results of operations the following table sets forth our consolidated statements of operations data for each of the periods indicated . replace_table_token_20_th 65 the consolidated statements of operations data as a percentage of gross revenue for each of the periods indicated . replace_table_token_21_th 66 comparison of years ended december 31 , 2018 and 2017 replace_table_token_22_th net income ( loss ) for the year ended december 31 , 2018 , net income increased to $ 25.3 million from a loss of $ ( 14.3 ) million for the year ended december 31 , 2017 while adjusted net income increased to $ 45.4 million from $ 4.2 million over the same period . these increases were primarily attributable to a 13.5 % increase in revenue and a decrease of 1.8 % in cost of revenue , partially offset by a 6.8 % increase in operating expenses . correlating to our growth of net income , our return on assets increased to 2.6 % from ( 1.1 ) % while our return on equity increased to 10.0 % from ( 4.5 ) % . 67 revenue replace_table_token_23_th gross revenue increase d by $ 47.4 million , or 13.5 % , from $ 351.0 million in 2017 to $ 398.4 million in 2018 . this growth was in part attributable to a $ 49.0 million , or 14.6 % , increase in interest income , which was primarily driven by the higher balance of loans being held on our balance sheet as evidenced by the 7 % increase in average loans from $ 1.0 billion to $ 1.1 billion . the increase in interest income was also driven by the increase in loan yield on loans outstanding from 33.8 % to 36.2 % .
| 6,856 |
risk factors beginning on page 13 of this annual report on form 10-k. you should carefully review all of these factors , as well as the comprehensive discussion of forward-looking statements on page 1 of this annual report on form 10-k. overview our company consists of a lsrt business and a rmd business . our strategy for the lsrt segment focuses on creating value through combining tuckunder acquisitions with organic growth and operational improvements . in december 2010 , we acquired the cytopulse electroporation product line . in july 2011 , we acquired the preclinical business unit of cma microdialysis ab . we expect these acquisitions will help drive growth during 2012 and beyond . our lsrt strategy is to have a broad range of highly specialized but relatively inexpensive products that have strong positions in niche markets in life science research . we believe that : having a broad product offering reduces the risk of being dependent on a single technology ; having relatively inexpensive products reduces the volatility associated with expensive capital equipment ; and focusing on niche markets reduces head-to-head competition with the major instrument companies . we seek to grow this range of products through a combination of organic growth driven by internal development of new products , direct marketing , distribution channel expansion and the acquisition of closely related products . we use acquisitions to expand our product offerings because we believe we can use our well-established brands and distribution channels to accelerate the growth of these acquired products . we also believe that our expertise in operational management frequently allows us to improve profitability at acquired companies . in addition to driving growth in our core research markets , we have been investing to create new products to address what we believe is a long term growth opportunity in the emerging field of regenerative medicine . regenerative medicine is using stem cells to repair damaged organs and to grow organs outside the body for transplant . the u.s. department of health and human services has projected that the u.s. market for regenerative medicine may be $ 100 billion in the coming years . the government 's estimate appears to include the value of all regenerative medicine protocols and therapies , including potential cost savings versus current methodologies . our strategy is not to become a therapeutics company but instead to provide tools to researchers and clinicians in the field of regenerative medicine . these new tools currently fall into two main categories : bioreactors for growing tissue and organs outside the body ; and injectors for stem cell therapy . these new tools we are creating are being built on our existing technologiessuch as our market leading harvard apparatus precision syringe pumps and market leading hugo-sachs isolated organ systems . our strategy in regenerative medicine is to create devices in collaboration with leading surgeons , not to discover pharmaceuticals , as creating devices like the inbreath bioreactor reduces risk compared to trying to discover new drugs ; build these devices using our existing technologies and brands as this reduces the investment 29 needed to get to market , and develop devices with significant disposable components as this is clinically safer and will also allow us to participate on a per-procedure basis following the sale of an instrument . our first regenerative medicine tool , the inbreath hollow organ bioreactor , was used to perform the world 's first human transplant of a regenerated bronchus . dr. paolo macchiarini et al reported this success in the lancet , a leading general medicine journal , in november 2008. we have licensed this product from dr. macchiarini 's team , and worked to make it a commercial device . we believe that it is the world 's first commercially available bioreactor that has been used to perform a human transplant of a regenerated organ . we believe it marks an important milestone in the development of the regenerative medicine field as the tools evolve from concepts to commercial quality products . during the first half of 2010 , one of our collaborators , dr. harald ott at massachusetts general hospital ( mgh ) succeeded in regenerating a lung and subsequently transplanting it into a rat . in collaboration with dr. ott and mgh , we designed and developed a novel bioreactor , lb-2 solid organ bioreactor , that was used to grow the lung . the work was published online in nature medicine in july 2010. the bioreactor used by dr. ott was a modified version of one of our market leading hugo sachs isolated organ systems . in june 2011 , the inbreath bioreactor was used for the world 's first successful transplantation of a synthetic tissue engineered windpipe . for the first time in history , a patient was given a new trachea made from a synthetic scaffold seeded with his own stem cells in a bioreactor . the cells were grown on the scaffold inside the bioreactor for two days before transplantation into the patient . because the cells used to regenerate the trachea were the patient 's own , there has been no rejection of the transplant , and the patient is not taking immunosuppressive drugs . the patient had been suffering from late stage tracheal cancer , which before this surgery would have been inoperable , and is now alive and well eight months after the surgery . the operation was performed at the karolinska university hospital in huddinge , stockholm , by dr. paolo macchiarini of the karolinska university hospital and karolinska institutet , and colleagues . dr. macchiarini led an international team which included people who designed and built the nanocomposite tracheal scaffold , and we produced a specifically designed bioreactor used to seed the scaffold with the patient 's own stem cells . the success of this transplant surgery was noted in the lancet on november 24 , 2011. in november 2011 , a second patient was given a new trachea made from a synthetic scaffold seeded with his own stem cells in a bioreactor . story_separator_special_tag 31 for the year ended december 31 , 2011 , approximately 62 % of our revenues were derived from products we manufacture ; approximately 13 % were derived from complementary products we distribute in order to provide the researcher with a single source for all equipment needed to conduct a particular experiment and approximately 25 % were derived from distributed products sold under our brand names . for the year ended december 31 , 2010 , approximately 66 % of our revenues were derived from products we manufacture and approximately 11 % were derived from complementary products we distribute in order to provide the researcher with a single source for all equipment needed to conduct a particular experiment and approximately 23 % were derived from distributed products sold under our brand names . for the years ended december 31 , 2011 and 2010 , approximately 41 % of our revenues were derived from sales made by our non-u.s. operations . a large portion of our international sales during these periods consisted of sales to ge healthcare , the distributor for our spectrophotometers and plate readers . ge healthcare distributes these products to customers around the world , including to many customers in the united states , from its distribution center in upsalla , sweden . as a result , we believe our international sales would have been a lower percentage of our revenues if we had shipped our products directly to our end-users . changes in the relative proportion of our revenue sources between catalog sales , direct sales and distribution sales are primarily the result of a different sales proportion of acquired companies . cost of product revenues . cost of product revenues includes material , labor and manufacturing overhead costs , obsolescence charges , packaging costs , warranty costs , shipping costs and royalties . our cost of product revenues may vary over time based on the mix of products sold . we sell products that we manufacture and products that we purchase from third parties . the products that we purchase from third parties have a higher cost of product revenues as a percent of revenue because the profit is effectively shared with the original manufacturer . we anticipate that our manufactured products will continue to have a lower cost of product revenues as a percentage of revenues as compared with the cost of non-manufactured products for the foreseeable future . additionally , our cost of product revenues as a percent of product revenues will vary based on mix of direct to end user sales and distributor sales , mix by product line and mix by geography . sales and marketing expenses . sales and marketing expense consists primarily of salaries and related expenses for personnel in sales , marketing and customer support functions . we also incur costs for travel , trade shows , demonstration equipment , public relations and marketing materials , consisting primarily of the printing and distribution of our catalogs , supplements and the maintenance of our websites . we may from time to time expand our marketing efforts by employing additional technical marketing specialists in an effort to increase sales of selected categories of products in our catalog . we may also from time to time expand our direct sales organizations in an effort to concentrate on key accounts or promote certain product lines . general and administrative expenses . general and administrative expense consists primarily of salaries and other related costs for personnel in executive , finance , accounting , information technology and human relations functions . other costs include professional fees for legal and accounting services , facility costs , investor relations , insurance and provision for doubtful accounts . research and development expenses . research and development expense consists primarily of salaries and related expenses for personnel and spending to develop and enhance our products and to support collaboration agreements . other research and development expense includes fees for consultants and outside service providers , and material costs for prototype and test units . we expense research and development costs as incurred . we believe that investment in product development is a competitive necessity and plan to continue to make these investments in order to realize the potential of new technologies that we develop , license or acquire for existing markets . additionally , we are working to develop new products aimed at long term opportunities in the emerging field of regenerative medicine . stock-based compensation expenses . stock-based compensation expense for the years ended december 31 , 2011 , 2010 and 2009 was $ 2.9 million , $ 2.8 million , and $ 2.5 million , respectively . the stock-based compensation expense was related to employee stock options , restricted stock units , and the employee stock purchase plan and was recorded as a component of cost of product revenues , sales and marketing expenses , general and administrative expenses , and research and development expenses . 32 story_separator_special_tag style= '' margin-top:12px ; margin-bottom:0px '' > income taxes . income tax expense ( benefit ) from continuing operations was approximately $ 0.7 million expense and $ 9.5 million benefit for the years ended december 31 , 2011 and 2010 , respectively . the effective income tax rate for continuing operations was 16.1 % expense for the year ended december 31 , 2011 , compared with 98.8 % benefit for the same period in 2010. the difference between our effective tax rate and the us statutory tax rate for 2011 is principally attributable to the reversal of the uncertain tax liability and the related accrued interest due to the expiration of statute of limitations , foreign tax differential , and increased research and development tax credits . the difference between our effective tax rate and the us statutory tax rate for 2010 is principally attributable to the changes in our valuation allowance , foreign tax differential , and increased research and development tax credits .
| results of operations year ended december 31 , 2011 compared to year ended december 31 , 2010 revenues . revenues increased $ 0.7 million , or 0.6 % , to $ 108.9 million for the year ended december 31 , 2011 compared to $ 108.2 million for the same period in 2010. our coulbourn instruments and cma microdialysis acquisitions contributed approximately $ 3.2 million , or 2.9 % , to the revenues for the year ended december 31 , 2011. the effect of a weakened u.s. dollar increased our revenues by $ 1.6 million , or 1.5 % , compared with the same period in 2010. adjusting for the effects of foreign currency and acquisitions , revenues were down $ 4.1 million , or 3.8 % . in our biochrom business , sales to ge healthcare decreased by $ 4.1 million , which affected our global year-to-year organic revenue comparison by negative 3.8 % . most of the decrease was due to ge healthcare 's acceleration of orders of our nanovue microvolume spectrophotometer product during 2010 to secure an exclusive right to that product 's technology . as a result , ge heathcare ordered the nanovue product at very low rates for most of 2011. in our hoefer business , sales to ge healthcare were down by $ 0.8 million , which accounted for an additional 0.7 % organic decline . this was partially offset by an organic revenue increase in our denville group . cost of product revenues . cost of product revenues increased $ 2.2 million , or 4.0 % , to $ 58.6 million for the year ended december 31 , 2011 compared with $ 56.4 million for the year ended december 31 , 2010. the increase in cost of product revenues included $ 1.7 million , or 3.0 % , attributable to our coulbourn instruments and cma microdialysis acquisitions .
| 6,857 |
we perform an impairment assessment at the reporting unit level on an annual basis as of the end of our october month end or more frequently if circumstances warrant for goodwill and intangible assets with indefinite lives . in assessing the 2012 fair value of goodwill , we used our best estimates of future cash flows of operating activities and capital expenditures of the reporting unit , the estimated terminal value for each reporting unit , and a discount rate based on weighted average cost of capital for our step one analysis . in 2012 when we performed our step one analysis , the fair value of each of our reporting units exceeded the respective carrying amount , and no goodwill impairments were recorded . the fair values story_separator_special_tag this annual report on form 10-k ( hereinafter , the “ annual report ” ) contains certain statements that are “ forward-looking statements ” as that term is defined under the private securities litigation reform act of 1995 ( the “ act ” ) and releases issued by the sec . the words “ may , ” “ hope , ” “ should , ” “ expect , ” “ plan , ” “ anticipate , ” “ intend , ” “ believe , ” “ estimate , ” “ predict , ” “ potential , ” “ continue , ” and other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters , identify forward-looking statements . we believe that it is important to communicate our future expectations to our stockholders , and we , therefore , make forward-looking statements in reliance upon the safe harbor provisions of the act . however , there may be events in the future that we are not able to accurately predict or control and our actual results may differ materially from the expectations we describe in our forward-looking statements . forward-looking statements involve known and unknown risks , uncertainties and other factors , which may cause our actual results , performance or achievements to differ materially from anticipated future results , performance or achievements expressed or implied by such forward-looking statements . factors that could cause or contribute to such differences include , but are not limited to , the cyclicality and highly competitive nature of some of our end- markets which can affect the overall demand for and pricing of our products , changes in the price of and demand for oil and gas in both domestic and international markets , any adverse changes in governmental policies , variability of raw material and component pricing , changes in our suppliers ' 16 performance , fluctuations in foreign currency exchange rates , our ability to hire and maintain key personnel , our ability to continue operating our manufacturing facilities at efficient levels including our ability to prevent cost overruns and continue to reduce costs , our ability to generate increased cash by reducing our inventories , our prevention of the accumulation of excess inventory , our ability to successfully implement our acquisition strategy , fluctuations in interest rates , our ability to continue to successfully defend product liability actions including asbestos-related claims , as well as the uncertainty associated with the current worldwide economic conditions and the continuing impact on economic and financial conditions in the united states and around the world as a result of terrorist attacks , current middle eastern conflicts and related matters . for a discussion of certain of these risks , uncertainties and other factors , see item 1a `` risk factors . '' we undertake no obligation to publicly update or revise any forward-looking statement , whether as a result of new information , future events or otherwise . story_separator_special_tag $ 203.8 million as of december 31 , 2011 . our inventory allowance as of december 31 , 2012 was $ 22.3 million , compared to $ 17.7 million as of december 31 , 2011 . our provision for inventory obsolescence was $ 8.3 million , $ 4.2 million , and $ 5.1 million , for 2012 , 2011 , and 2010 , respectively . included in the inventory obsolescence charge for the twelve months ended december 31 , 2012 is $ 0.9 million and $ 3.2 million of repositioning related inventory obsolescence charges for the energy and aerospace segments , respectively . we believe our inventory allowances remain adequate with the net realizable value of our inventory being higher than our current inventory cost . if there were to be a sudden and significant decrease in demand for our products , significant price reductions , or if there were a higher incidence of inventory obsolescence for any reason , including a change in technology or customer requirements , we could be required to increase our inventory allowances and our gross profit could be adversely affected . inventory management remains an area of focus as we balance the need to maintain adequate inventory levels to ensure competitive lead times against the risk of inventory obsolescence . penalty accruals some of our customer agreements , primarily in our project related businesses , contain late shipment penalty clauses whereby we are contractually obligated to pay consideration to our customers if we do not meet specified shipment dates . the accrual for estimated penalties is shown as a reduction of revenue and is based on several factors including historical customer settlement experience and management 's assessment of specific shipment delay information . accruals related to these potential late shipment penalties as of december 31 , 2012 and 2011 were $ 8.6 million and $ 9.4 million , respectively . as we conclude performance under these agreements , the actual amount of consideration paid to our customers may vary from the amounts we currently have accrued . concentrations of credit risk financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash , cash equivalents , short-term investments and trade receivables . story_separator_special_tag on january 2 , 2013 , the president of the united states signed legislation that retroactively extended the research and development ( r & d ) tax credit for two years , from january 1 , 2012 through december 31 , 2013. the company expects its income tax expense for the first quarter of 2013 will reflect the entire benefit of the r & d tax credit attributable to 2012 and the first quarter of 2013. the company will continue to record the benefit of the r & d tax credit in subsequent quarters in 2013. our future effective tax rates could be adversely affected by earnings being lower than anticipated in countries where we have lower statutory rates and vice versa . changes in the valuation 19 of our deferred tax assets or liabilities , or changes in tax laws or interpretations thereof may also adversely affect our future effective tax rate . in addition , we are subject to the continuous examination of our income tax returns by the internal revenue service and other tax authorities . we regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes . in 2012 , net deferred income tax assets remained consistent with 2011. we maintained a total valuation allowance of $ 13.5 million and $ 10.6 million at december 31 , 2012 and december 31 , 2011 , respectively , for deferred income tax assets due to uncertainties related to our ability to utilize these assets . such deferred income tax assets had consisted of certain foreign tax credits , foreign and state net operating losses and state tax credits carried forward . for 2012 , the primary reason for the change in the valuation allowance composition related to losses in one of our international subsidiaries that is not likely to produce future tax benefits.the valuation allowance is based on estimates of taxable income in each of the jurisdictions in which we operate and the period over which our deferred tax assets will be recoverable . if market conditions improve and future results of operations exceed our current expectations , our existing tax valuation allowances may be adjusted , resulting in future tax benefits . alternatively , if market conditions deteriorate or future results of operations are less than expected , future assessments may result in a determination that some or all of the deferred tax assets are not realizable . consequently , we may need to establish additional tax valuation allowances for all or a portion of the gross deferred tax assets , which may have a material adverse effect on our business , results of operations and financial condition . the company has had a history of domestic and foreign taxable income , is able to avail itself of federal tax carryback provisions , has future taxable temporary differences and projects future domestic and foreign taxable income . we believe that after considering all of the available objective evidence , it is more likely than not that the results of future operations will generate sufficient taxable income to realize the remaining deferred tax assets . deferred tax assets and liabilities are determined based upon the differences between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse . valuation allowances are provided if , based upon the weight of available evidence , it is more likely than not that some or all of the deferred tax assets will not be realized . except for the company 's dutch subsidiary , undistributed earnings of foreign subsidiaries are generally considered to be indefinitely reinvested and , accordingly , no provision for u.s. federal and state income taxes has been recorded thereon . no additional provision is required for the undistributed earnings of the dutch subsidiary . it is the company 's policy to record estimated interest and penalties as income tax expense and tax credits as a reduction in income tax expense . the company recognizes both interest and penalties as part of the income tax provision . as of december 31 , 2012 and december 31 , 2011 , accrued interest and penalties were $ 0.9 million and $ 1.0 million , respectively . as of december 31 , 2012 , the liability for uncertain income tax positions was $ 2.0 million excluding interest of $ 0.9 million . due to the high degree of uncertainty regarding the timing of potential future cash flows associated with these liabilities , we are unable to make a reasonably reliable estimate of the amount and period in which these liabilities might be paid . pension benefits we maintain two pension benefit plans , a qualified noncontributory defined benefit plan and a nonqualified , noncontributory defined benefit supplemental plan that provides benefits to certain highly compensated officers and employees . to date , the supplemental plan remains an unfunded plan . these plans include significant pension benefit obligations which are calculated based on actuarial valuations . key assumptions are made in determining these obligations and related expenses , including expected rates of return on plan assets and discount rates . benefits are based primarily on years of service and employees ' compensation . as of july 1 , 2006 , in connection with a revision to our retirement plan , we froze the pension benefits of our qualified noncontributory plan participants . under the revised plan , such participants generally do not accrue any additional benefits under the defined benefit plan after july 1 , 2006 and instead receive enhanced benefits associated with our defined contribution 401 ( k ) plan in which substantially all of our u.s. employees are eligible to participate .
| company overview circor international , inc. designs , manufactures and markets valves and other highly engineered products and sub-systems used in the energy , aerospace and industrial markets . within our major product groups , we develop , manufacture , sell and service a portfolio of fluid-control products , subsystems and technologies that enable us to fulfill our customers ' unique fluid-control application needs . we have organized our reporting structure into three segments : energy , aerospace , and flow technologies . our energy segment primarily serves large international energy projects , short-cycle north american energy , and the pipeline transmission equipment and services end-markets . our aerospace segment primarily serves the commercial and military aerospace end-markets . our flow technologies segment serves our broadest variety of end-markets , including power generation , industrial and process markets , chemical and refining , and industrial and commercial hvac/steam . the flow technologies segment also provides products specifically designed for u.s. and international navy applications . regarding our 2012 results , we had consolidated revenues of $ 845.6 million , a 5 % organic increase with organic growth in energy up 12 % and aerospace up 6 % . even flow technologies , which declined organically 4 % , had growth in almost all areas except led equipment where the market was down significantly . operating income decreased 17 % to $ 46.5 million inclusive of 2012 special & repositioning charges of $ 19.8 million , which are associated with productivity benefits we expect to realize in 2013. excluding these special and repositioning charges , 2012 operating income would have increased 18 % over 2011. cash flow provided by operating activities for 2012 was $ 60.5 million . as we look to 2013 , the global markets continue to be uncertain , we expect the economies in north america and europe to grow slowly , if at all , and the emerging markets to grow slower than recent years .
| 6,858 |
as a federal savings bank , which was formerly chartered as a state mutual savings bank , we enjoy broader fiduciary powers than most other financial institutions . a fixture in the community , wsfs has been in operation for more than 181 years . in addition to its focus on stellar customer service , the bank has continued to fuel growth and remain a leader in our community . we are a relationship-focused , locally-managed , community banking institution that has grown to become the largest thrift holding company in the state of delaware , one of the top commercial lenders in the state and the third largest bank in terms of delaware deposits . we state our mission simply : we stand for service. our strategy of engaged associates delivering stellar service growing customer advocates and value for our owners focuses on exceeding customer expectations , delivering stellar service and building customer advocacy through highly-trained , relationship-oriented , friendly , knowledgeable and empowered associates . our core banking business is commercial lending funded by customer-generated deposits . we have built a $ 2.2 billion commercial loan portfolio by recruiting the best seasoned commercial lenders in our markets and offering a high level of service and flexibility typically associated with a community bank . we fund this business primarily with deposits generated through commercial relationships and retail deposits . we service our customers primarily from our 51 offices located in delaware ( 42 ) , pennsylvania ( 7 ) , virginia ( 1 ) and nevada ( 1 ) . we also offer a broad variety of consumer loan products , retail securities and insurance brokerage through our retail branches . our cash connect division is a premier provider of atm vault cash and related services in the united states . cash connect manages nearly $ 444 million in vault cash in nearly 13,000 atms nationwide and also provides online reporting and atm cash management , predictive cash ordering , armored carrier management , atm processing and equipment sales . cash connect also operates over 440 atms for the bank , which has , by far , the largest branded atm network in delaware . as a leading provider of atm vault cash to the u.s. atm industry , cash connect is exposed to substantial operational risk , including theft of cash from atms , armored vehicles , or armored carrier terminals , as well as general risk of accounting errors or fraud . this risk is managed through a series of financial controls , automated tracking and settlement systems , contracts , and other risk mitigation strategies , including both loss prevention and loss recovery strategies . throughout its 12-year history , cash connect periodically has been exposed to theft through theft from armored courier companies and consistently has been able to recover any losses through its risk management strategies . we offer trust and wealth management services through christiana trust , cypress , wsfs investment group brokerage and our private banking group . the trust and wealth division provides investment , fiduciary , agency and commercial domicile services from locations in delaware and nevada and has $ 17.0 billion in fiduciary assets . these services are provided to individuals and families as well as corporations and institutions . the trust and wealth division of wsfs bank provides these services to customers locally , nationally and internationally taking advantage of its branch facilities in delaware and nevada . cypress is an investment advisory firm that manages over $ 597 million of portfolios for individuals , trusts , retirement plans and endowments . we have two consolidated subsidiaries , wsfs bank and montchanin . we also have one unconsolidated affiliate , the trust . wsfs bank has two fully-owned subsidiaries , wsfs investment group , inc. and 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 . 41 montchanin has one consolidated subsidiary , cypress . cypress is a wilmington-based investment advisory firm serving high net-worth individuals and institutions . story_separator_special_tag width= '' 3 % '' > ( 5 ) includes loans held-for-sale in conjunction with our asset strategies undertaken in 2012 . ( 6 ) includes securities available-for-sale at fair value . ( 7 ) includes reverse mortgages . 45 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 nonperforming assets . our evaluation is based upon a review of the portfolio and requires significant judgment . for the year ended december 31 , 2012 , we recorded a provision for loan losses of $ 32.1 million compared to $ 28.0 million in 2011 and $ 41.9 million in 2010. this increase was primarily due to the successful completion of our asset strategies in the second quarter of 2012 , which resulted in an additional $ 14.2 million in the provision for loan losses during the year . also impacting the provision for loan losses for 2012 was additional asset disposition efforts undertaken in 2012 aimed at improving asset quality . noninterest income . noninterest income increased $ 23.1 million to $ 86.7 million in 2012 from $ 63.6 million in 2011. excluding the impact of net securities gains in both periods , and $ 1.2 million unanticipated bank-owned life insurance ( boli ) income in 2011 and $ 1.0 million in 2012 , noninterest income increased $ 6.8 million , or 12 % in 2012 compared to 2011. credit/debit card and atm fees increased by $ 1.9 million , or 9 % in 2012 compared to 2011 , most of which came from growth in cash connect ( our atm division ) . story_separator_special_tag net loans ( including those held for sale ) increased $ 23.9 million , or 1 % , during 2012. loan growth included construction loans increases of $ 27 million , or 26 % as well as $ 14.5 million , or 1 % , in commercial and industrial loan growth . partially offsetting these increases were residential mortgage loans which decreased by $ 28.1 million , or 10 % , mainly due to our strategy to originate then sell these loans in the secondary market to generate fee income . the completion in the second quarter of 2012 of our asset strategies resulted in bulk loan sales of $ 42.7 million in recorded balances . goodwill and intangibles . goodwill and intangibles remained essentially flat during 2012. customer deposits . customer deposits increased $ 256.8 million , or 9 % , during 2012 to $ 3.1 billion . core deposit relationships ( demand deposits , money market and savings accounts ) increased $ 404.2 million , or 19 % , during 2012. partially offsetting these decreases were jumbo certificates of deposits which decreased $ 52.3 million , or 15 % , and customer time deposits ( cds under $ 100,000 ) , which decreased $ 95.0 million , or 23 % , in 2012 ( vs. a $ 23.4 million decrease in 2011 and a $ 39.5 million increase in 2010 ) . the table below depicts the changes in customer deposits during the last three years : replace_table_token_18_th borrowings and brokered deposits . borrowing and brokered deposits decreased by $ 203.6 million during 2012. included in the decrease was $ 162.4 million of federal home loan bank advances , $ 117.2 million , in brokered deposits and $ 40.0 million , in other borrowed funds . partially offsetting these decreases was an increase of $ 60.0 million , in federal funds purchased and securities sold under agreements to repurchase , and the issuance of $ 55 million of 6.25 % senior notes during 2012 . 47 stockholders ' equity . stockholders ' equity increased $ 28.9 million , or 7 % , to $ 421.1 million at december 31 , 2012 compared to $ 392.1 million at december 31 , 2011. retained earnings increased $ 24.4 million , or 6 % , to $ 433.2 million during 2012 , primarily as a result of earnings from the year less dividends paid . in addition , other comprehensive income increased $ 1.7 million , or 16 % , during 2012 , mainly 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 using a number of methods including 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 . the repricing and maturities of our interest-rate sensitive assets and interest-rate sensitive liabilities at december 31 , 2012 are shown in the following table : replace_table_token_19_th 48 replace_table_token_20_th ( 1 ) includes commercial mortgage , construction , and residential mortgage loans ( 2 ) loan balances exclude nonaccruing loans , deferred fees and costs the table shows a deficiency of interest-rate sensitive assets over interest-rate liabilities for less than one year which reflects the early-stages of a program to deleverage our balance sheet by $ 125.0 million in mbs , which began during the fourth quarter of 2012. as of december 31 , 2012 , we had completed only approximately $ 55.0 million of the mbs reduction , with the remainder completed during the first quarter of 2013. we currently have a preference towards a neutral to slightly asset sensitive one year gap position at this time . 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 , 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 .
| results of operations we recorded net income of $ 31.3 million for the year ended december 31 , 2012 , a 38 % increase compared to $ 22.7 million for the year ended december 31 , 2011 , and an increase from $ 14.1 million for the year ended december 31 , 2010. income allocable to common stockholders ' ( after preferred stock dividends ) was $ 28.5 million , or $ 3.25 per diluted common share ( a 43 % increase in diluted eps ) , for the year ended december 31 , 2012 , compared to income allocable to common shareholders ' of $ 19.9 million , or $ 2.28 per diluted common share , and income of $ 11.3 million , or $ 1.46 per common share , for the years ended december 31 , 2011 and 2010 , respectively . earnings for 2012 included the impact of our asset strategies completed during the year , which resulted in net securities gains of $ 13.3 million , $ 14.2 million in additional provision for loan losses and $ 600,000 in other credit costs related to the asset dispositions . excluding the impact of asset strategies , we still had significant increases in noninterest income , reflecting growth in all segments , including increases in wealth management income , mortgage banking activities and credit/debit card and atm income . in addition , net interest income increased during the year despite margin pressure , assets disposition efforts and the impact of the early-stages of our deleveraging strategy ( completed in early 2013 ) .
| 6,859 |
the credit agreement also allows for the issuance of letters of credit in story_separator_special_tag you should read the following summary together with the more detailed business information and consolidated financial statements and related notes that appear elsewhere in this annual report on form 10-k and in the documents that we incorporate by reference into this annual report on form 10-k. this annual report on form 10-k may contain certain “ forward-looking ” information within the meaning of the private securities litigation reform act of 1995. this information involves risks and uncertainties . our actual results may differ materially from the results discussed in the forward-looking statements . factors that might cause such a difference include , but are not limited to , those discussed in “ risk factors. ” overview we are an information technology and management consulting firm serving forbes global 2000® and other large enterprise companies with a primary focus on the united states . we help clients gain competitive advantage by using technology to : make their businesses more responsive to market opportunities ; strengthen relationships with customers , suppliers , and partners ; improve productivity ; and reduce information technology costs . our digital experience , business optimization and industry solutions enable these benefits by developing , integrating , automating , and extending business processes , technology infrastructure and software applications end-to-end within an organization and with key partners , suppliers , and customers . our solutions include business intelligence and analytics , commerce , content management , custom applications , platform implementations , portals and collaboration , business integration and apis , management consulting , business process management , and customer relationship management , among others . our solutions enable our clients to operate a real-time enterprise that dynamically adapts business processes and the systems that support them to meet the changing demands of an increasingly global , internet-driven , and competitive marketplace . 14 services revenues services revenues are derived from professional services that include developing , implementing , integrating , automating and extending business processes , technology infrastructure , and software applications . most of our projects are performed on a time and materials basis , while a portion of our revenues is derived from projects performed on a fixed fee basis . fixed fee engagements represented approximately 22 % of our services revenues for the year ended december 31 , 2016 compared to 18 % and 10 % for each of the years ended december 31 , 2015 and 2014 , respectively . the increase in fixed fee revenues is primarily attributable to the company 's acquisition of zeon solutions incorporated and certain related entities ( collectively , “ zeon ” ) and the pup group , inc. d/b/a enlighten ( “ enlighten ” ) as well as an organic increase in fixed fee engagements overall . for time and material projects , revenues are recognized and billed by multiplying the number of hours our professionals expend in the performance of the project by the established billing rates . for fixed fee projects , revenues are generally recognized using an input method based on the ratio of hours expended to total estimated hours . amounts invoiced and collected in excess of revenues recognized are classified as deferred revenues . in conjunction with services provided , we occasionally receive referral fees under partner programs . these referral fees are recorded when earned within services revenues . on most projects , we are also reimbursed for out-of-pocket expenses including travel and other project-related expenses . these reimbursements are included as a component of revenues . the aggregate amount of reimbursed expenses will fluctuate depending on the location of our clients , the total number of our projects that require travel , and whether our arrangements with our clients provide for the reimbursement of such expenses . software and hardware revenues software and hardware revenues are derived from sales of third-party and internally developed software and hardware . revenues from sales of third-party software and hardware are generally recorded on a gross basis provided that we act as a principal in the transaction . revenues from sales of third-party software-as-a-service arrangements where we are not the primary obligor are recorded on a net basis . software and hardware revenues are expected to fluctuate depending on our clients ' demand for these products . if we enter into contracts for the sale of services and software or hardware , management evaluates whether each element should be accounted for separately by considering the following criteria : ( 1 ) whether the deliverables have value to the client on a stand-alone basis ; and ( 2 ) whether delivery or performance of the undelivered item or items is considered probable and substantially in our control ( only if the arrangement includes a general right of return related to the delivered item ) . further , for sales of software and services , management also evaluates whether the services are essential to the functionality of the software and whether there is fair value evidence for each deliverable . if management concludes that the separation criteria are met , then it accounts for each deliverable in the transaction separately , based on the relevant revenue recognition policies . generally , all deliverables of our multiple element arrangements meet these criteria and are accounted for separately , with the arrangement consideration allocated among the deliverables using vendor specific objective evidence of the selling price . as a result , we generally recognize software and hardware sales upon delivery to the customer and services consistent with the policies described herein . further , delivery of software and hardware sales , when sold contemporaneously with services , can generally occur at varying times depending on the specific client project arrangement . delivery of services generally occurs over a period of time consistent with the timeline as outlined in the client contract . there are no significant cancellation or termination-type provisions for our software and hardware sales . story_separator_special_tag reimbursable expenses increased 19 % to $ 18.4 million for the year ended december 31 , 2016 from $ 15.5 million for the year ended december 31 , 2015. the increase in reimbursable expenses is primarily due to the acquisition of enlighten in which media buy expenses are passed through to customers . we do not realize any profit on reimbursable expenses . cost of revenues . cost of revenues increased 5 % to $ 335.7 million for the year ended december 31 , 2016 from $ 318.4 million for the year ended december 31 , 2015. the increase in cost of revenues is primarily related to costs associated with services revenues which increased 5 % to $ 273.7 million for the year ended december 31 , 2016 from $ 261.7 million for the year ended december 31 , 2015 due to an increase in revenue as noted above . software and hardware costs increased 6 % to $ 43.6 million for the year ended december 31 , 2016 from $ 41.2 million for the year ended december 31 , 2015 , as a result of the increase in software license sales . gross margin . gross margin decreased 3 % to $ 151.3 million for the year ended december 31 , 2016 from $ 155.2 million for the year ended december 31 , 2015. gross margin as a percentage of revenues decreased to 31.1 % for the year ended december 31 , 2016 from 32.8 % for the year ended december 31 , 2015 primarily due to lower average bill rates and an increased mix of lower margin software and hardware sales and reimbursable expenses . services gross margin , excluding reimbursable expenses , decreased to 34.6 % or $ 144.9 million for the year ended december 31 , 2016 from 36.4 % or $ 149.8 million for the year ended december 31 , 2015 primarily driven by a lower average bill rate in addition to higher salaries and subcontractor costs . the average bill rate for our professionals decreased to $ 127 per hour for the year ended december 31 , 2016 from $ 134 per hour for the year ended december 31 , 2015 , primarily due to the impact of a higher mix of lower bill rate offshore resources combined with a 1 % reduction in the north american employee bill rate . selling , general and administrative . sg & a expenses increased 1 % to $ 101.3 million for the year ended december 31 , 2016 from $ 100.0 million for the year ended december 31 , 2015 primarily due to acquisitions completed during the second half of 2015 and october 2016 and the fluctuations in expenses as detailed in the following table . sg & a expenses , as a percentage of revenues , decreased to 20.8 % for the year ended december 31 , 2016 from 21.1 % for the year ended december 31 , 2015. replace_table_token_5_th depreciation . depreciation expense increased 8 % to $ 4.9 million for the year ended december 31 , 2016 from $ 4.5 million for the year ended december 31 , 2015. the increase in depreciation expense is primarily attributable to an increase in capital expenditures to support our growth . depreciation expense as a percentage of revenues was 1.0 % and 0.9 % for the years ended december 31 , 2016 and 2015 , respectively . amortization . amortization expense decreased 3 % to $ 13.4 million for the year ended december 31 , 2016 from $ 13.8 million for the year ended december 31 , 2015. the decrease in amortization expense was due to intangible assets related to previous acquisitions becoming fully amortized partially offset by the addition of intangible assets from the 2015 and 2016 acquisitions . amortization expense as a percentage of revenues was 2.7 % for the year ended december 31 , 2016 and 2.9 % for the year ended december 31 , 2015 . acquisition costs . acquisition-related costs of $ 1.3 million were incurred during 2016 compared to $ 1.2 million during 2015. costs were incurred for legal , accounting , tax , investment bank and advisor fees , and valuation services performed by third parties in connection with merger and acquisition-related activities . adjustment to fair value of contingent consideration . a favorable adjustment of $ 1.7 million was recorded during the year ended december 31 , 2016 which represents the net impact of the fair market value adjustments to the enlighten revenue and earnings-based contingent consideration liability partially offset by the accretion of the fair value estimate for the revenue and earnings-based contingent consideration related to the acquisition of zeon , market street , enlighten and bluetube . an adjustment of $ 0.4 million was recorded during the year ended december 31 , 2015 for the accretion of the fair value estimate for the revenue and earnings-based contingent consideration related to the acquisitions of the zeon , market street , enlighten . provision for income taxes . we provide for federal , state , and foreign income taxes at the applicable statutory rates adjusted for non-deductible expenses . the effective income tax rate increased to 32.9 % for the year ended december 31 , 2016 from 29.9 % for the year ended december 31 , 2015. the increase in the effective rate is primarily due to an additional research and development tax credit recorded during the year ended december 31 , 2015 related to the finalization of the company 's 2014 research and development tax assessment . the increase in the effective rate year ended december 31 , 2016 was partially offset by an additional research and development tax credit related to the current year and a favorable impact related to the early adoption of accounting standards update ( “ asu ” ) no . 2016-09 . see note 2 , summary of significant accounting policies-recent accounting pronouncements , in the notes to consolidated financial statements for additional information regarding the adoption of asu no . 2016-09 .
| financial results explanation for increases ( decreases ) over prior year period ( in thousands ) ( in thousands ) for the year ended december 31 , 2015 for the year ended december 31 , 2014 total increase ( decrease ) over prior year period increase attributable to acquired companies decrease attributable to base business services revenues $ 411,469 $ 386,668 $ 24,801 $ 33,429 $ ( 8,628 ) software and hardware revenues 46,622 52,776 ( 6,154 ) 4,099 ( 10,253 ) reimbursable expenses 15,530 17,248 ( 1,718 ) 1,522 ( 3,240 ) total revenues $ 473,621 $ 456,692 $ 16,929 $ 39,050 $ ( 22,121 ) services revenues increased 6 % to $ 411.5 million for the year ended december 31 , 2015 from $ 386.7 million for the year ended december 31 , 2014. the increase in services revenues was primarily due to acquisitions during 2015 and 2014. services revenues attributable to our base business decreased $ 8.6 million while services revenues attributable to acquired companies was $ 33.4 million , resulting in a total increase of $ 24.8 million . software and hardware revenues decreased 12 % to $ 46.6 million for the year ended december 31 , 2015 from $ 52.8 million for the year ended december 31 , 2014 primarily due to a decrease in volume and magnitude of initial and renewal software license sales compared to 2014. reimbursable expenses decreased 10 % to $ 15.5 million for the year ended december 31 , 2015 from $ 17.2 million for the year ended december 31 , 2014 primarily as a result of a higher mix of projects with no reimbursable expenses . we did not realize any profit on reimbursable expenses . cost of revenues .
| 6,860 |
68 scm microsystems , inc. and subsidiaries notes to consolidated financial statements ( continued ) 5. inventories inventories consist of : replace_table_token_22_th 6. equity investments equity investments consist of : december 31 , 2008 2007 ( in thousands ) tranzfinity , inc. $ 2,244 $ on october 1 , 2008 , the company entered into a stock purchase story_separator_special_tag the following information should be read in conjunction with the audited consolidated financial statements and notes thereto included in item 8 of this annual report on form 10-k. we also urge readers to review and consider our disclosures describing various factors that could affect our business , including the disclosures under the headings risk factors in this annual report on form 10-k. overview scm microsystems designs , develops and sells hardware and system solutions that enable people to conveniently and securely access digital content and services . we sell our secure digital access products into two market segments : secure authentication and digital media and connectivity . our products are sold primarily to original equipment providers , or oems , who typically either bundle our products with their own solutions , or repackage our products for resale to their customers . our oem customers include : government contractors , systems integrators , large enterprises , computer manufacturers , as well as banks and other financial institutions for our smart card readers ; and major brand computer and photo processing equipment manufacturers for our digital media readers . we sell our chipdrive solutions through resellers and the internet . we sell and license our products through a direct sales and marketing organization , as well as through distributors , value added resellers and systems integrators worldwide . growth strategies we have put in place a number of strategies to grow revenues over the long-term , as discussed below . throughout most of 2007 , our revenue growth strategy was primarily based on investing in new secure authentication products to address emerging smart card-based security programs in europe , including e-passport , national id and e-health . additionally , we implemented programs to expand sales of our chipdrive business productivity solutions for small and medium-sized businesses to markets outside germany . we also continued our traditional focus on the u.s. government market , providing smart card readers for authentication programs within various federal agencies ; as well as providing digital media readers for the photo kiosk market in the u.s. in late 2007 , we embarked on a multi-pronged strategy to expand and diversify our customer base , fully capture emerging market opportunities and accelerate long-term growth . as part of this strategy , we added sales resources in europe , asia and the americas to increase our ability to address current and future business opportunities , including the expansion of existing product lines into new geographic markets . for example , we added sales resources to target authentication programs in the government and enterprise sectors in asia and we began targeting the photo kiosk markets in europe and asia . as sales cycles for government projects and design cycles for photo kiosks may take several quarters , we believe we will begin to realize revenue from these investments in the first half of 2009. in early 2008 , we implemented an additional growth strategy aimed at further diversifying and expanding our customer base by targeting the emerging contactless reader market . we have begun investing to develop new secure authentication products based on contactless technologies such as near field communication and felica ® and have initiated business development activities aimed at penetrating the worldwide financial services and enterprise markets with our contactless reader products . for example , in october 2008 , we introduced the first in a family of new products called @ maxx that are aimed at the market for contactless applications . to better leverage our own capabilities , we have also adopted a more active approach to partnering with other companies that can provide complementary resources and strengths . for example , in recent months we have worked together with xiring , a french security solutions company , to develop a mobile ehealth terminal for the german electronic health card system . we have also taken an equity position in tranzfinity , a company with which we developed our @ maxx family of contactless readers and which has agreed to provide application services for those readers . additionally , in december 2008 we announced our proposed merger with hirsch . on december 10 , 2008 , we entered into an agreement and plan of merger with hirsch , a privately held california corporation that manufactures and sells physical access control and other security management systems . 38 our special meeting of stockholders to vote upon the merger was adjourned on march 23 , 2009 , and a new meeting is scheduled for april 16 , 2009. we expect the closing of the proposed merger to occur once certain closing conditions have been met , including the approval of the stockholders of both companies and the resolution of the lawsuit filed by secure keyboards and its partners in connection with the proposed merger . ( see part i , item 3 , legal proceedings , for additional information about this pending litigation . ) upon the closing of the proposed merger , hirsch is expected to become a delaware limited liability company and wholly-owned subsidiary of scm . in exchange for all of the outstanding capital stock of hirsch , the hirsch securityholders will receive an aggregate of approximately $ 14.1 million in cash , 9,411,470 shares of scm common stock and 4,705,735 warrants to purchase scm common stock . in addition , each warrant to purchase shares of hirsch common stock outstanding immediately prior to the merger will convert into a warrant to purchase shares of scm common stock as multiplied by a conversion ratio . story_separator_special_tag based on the german government 's plans to begin deploying cards and readers in april 2009 , we expect the opportunity for scm to sell significant volumes of ehealth terminals will begin in the second half of 2009. sales of our digital media and connectivity products are less subject to variability based on market or project demands than sales of our secure authentication products ; however , we are dependent on a small number of customers in both of our primary product segments , which can result in fluctuations in sales levels from one period to another . for example , during the second half of 2008 , digital media reader sales were well below recent quarterly levels due to reduced orders from a major customer . both our secure authentication and digital media and connectivity businesses are subject to ongoing pricing pressure . to counter this trend , we have implemented ongoing cost reduction programs that have resulted in ongoing improvements to our product margins . we believe we should be able to offset pricing pressure and material cost increases with ongoing improvements in our supply chain systems . during 2008 , we increased operational spending in order to develop card reader terminals for the electronic health card program in germany and to invest in new products and business development programs in the contactless market . given our progress towards our development goals , we expect our research and development expenses to decrease in 2009. we expect 2009 sales and marketing expenses to remain at current levels , reflecting our continued investment in our contactless and expansion strategies , and we expect general and administrative expenses to remain at higher than ordinary levels in 2009 , due to the inclusion of transaction and integration-related expenses in connection with our proposed merger with hirsch . we incurred approximately $ 1.4 million in merger-related expenses in the fourth quarter of 2008 . 40 story_separator_special_tag in asia and sales of our chipdrive software and readers . 42 revenue from our digital media and connectivity product line was $ 6.0 million in 2007 , a decrease of 39 % from $ 9.9 million in 2006. the revenue decrease in 2007 was primarily due to the loss of a major customer at the beginning of that year . sales to another major customer increased significantly in the second half of the year ; however , this was not sufficient to offset the decrease in sales in the first half of the year . gross profit the following table sets forth our gross profit and year-to-year change in gross profit by product segment for the fiscal years ended december 31 , 2008 , 2007 and 2006 : replace_table_token_6_th gross profit for 2008 was $ 12.5 million , or 44 % of revenue . during 2008 , gross profit was impacted by a more favorable mix of higher margin products overall and product cost reductions in our secure authentication business , offset by lower digital media and connectivity product volumes . by product segment , gross profit for our secure authentication products was 46 % and gross profit for our digital media and connectivity products was 35 % in 2008. gross profit for 2007 was $ 12.7 million , or 42 % of revenue . during 2007 , gross profit was impacted by a favorable mix of products sold , including our chipdrive products , better inventory management and product cost reductions , particularly in our secure authentication business . offsetting these positive factors were low sales levels of digital media and connectivity products in the first half of the year and low sales levels of secure authentication products in the second quarter of 2007 , as well as pricing pressure over the last several quarters . by product segment , gross profit for our secure authentication products was 43 % and gross profit for our digital media and connectivity products was 36 % in 2007. gross profit for 2006 was $ 11.9 million , or 35 % of revenue . during 2006 , gross profit for our secure authentication products was impacted by increased pricing pressure , offset by the effect of a more favorable product mix as we increased the number of contactless readers sold , particularly for e-passport applications . during the fourth quarter of 2006 , we experienced an increase in gross profit in our secure authentication business primarily due to better inventory management and cost reduction programs established earlier in the year . in our digital media and connectivity business , gross profit was impacted by pricing pressure , as well as by an increasing proportion of lower margin products sold . we expect there will be some variation in our gross profit from period to period , as our gross profit has been and will continue to be affected by a variety of factors , including , without limitation , competition , the volume of sales in any given quarter , product configuration and mix , the availability of new products , product enhancements , software and services , inventory write-downs and the cost and availability of components . 43 operating expenses research and development replace_table_token_7_th research and development expenses consist primarily of employee compensation and various external expenses for the development of hardware and firmware products . we focus the bulk of our research and development activities on the development of products for new and emerging market opportunities . research and development expenses were $ 3.9 million in 2008 , up 25 % from $ 3.1 million in 2007. the increase in research and development expenses in 2008 was primarily due to the development of new contactless secure authentication products and increased development activity related to card terminals for the german e-healthcard program . in 2007 and 2006 , we focused primarily on the development of smart card reader technology for the german e-healthcard program , electronic id applications and the global e-passport market .
| results of operations the following table sets forth our statements of operations as a percentage of net revenue for the periods indicated : replace_table_token_4_th revenue the following table sets forth our annual revenues and year-to-year change in revenues by product segment for the fiscal years ended december 31 , 2008 , 2007 and 2006 : replace_table_token_5_th fiscal 2008 revenue compared with fiscal 2007 revenue revenue for the year ended december 31 , 2008 was $ 28.4 million , a decrease of 7 % from $ 30.4 million in 2007. this decrease was due primarily to a 23 % decline in sales of our digital media and connectivity products , as 41 well as , to a lesser extent , a 3 % decrease in sales of our secure authentication products . sales of our secure authentication products accounted for 84 % of total revenue and sales of digital media and connectivity products accounted for 16 % of revenue in 2008. secure authentication product revenue was $ 23.7 million in 2008 , a decrease of 3 % from $ 24.4 million in 2007. our secure authentication product line principally consists of smart card readers and related chip technology that are primarily used in large security programs where smart cards are employed to authenticate the identity of people in order to control access to computers or computer networks ; borders ; buildings and other facilities ; and services , such as health care . also included in this business segment are our chipdrive software and reader solutions , which provide electronic timecard and other productivity applications for small and medium enterprises , and are primarily sold in europe . the majority of revenue in our secure authentication business segment is government , financial or enterprise programs and is subject to significant variability based on the size and timing of customer orders .
| 6,861 |
80 index to financial statements details on outstanding foreign currency derivative contracts related primarily to intercompany receivables and payables are presented below ( in thousands ) : replace_table_token_52_th the fair value of the company 's outstanding derivative instruments are summarized below ( in thousands ) : fair value of derivative instruments as of january 31 , balance sheet location 2014 2013 derivative assets derivatives not designated story_separator_special_tag the following discussion contains forward-looking statements , including , without limitation , our expectations and statements regarding our outlook and future revenues , expenses , results of operations , liquidity , plans , strategies and objectives of management and any assumptions underlying any of the foregoing . our actual results may differ significantly from those projected in the forward-looking statements . our forward-looking statements and factors that might cause future actual results to differ materially from our recent results or those projected in the forward-looking statements include , but are not limited to , those discussed in the section titled forward-looking information and risk factors of this annual report on form 10-k. except as required by law , we assume no obligation to update the forward-looking statements or our risk factors for any reason . overview we are a leading provider of enterprise cloud computing solutions . we were founded on the concept of delivering customer relationship management , or crm , applications via the internet , or cloud. we introduced our first crm solution in february 2000 and we have expanded our offerings with new editions , solutions and enhanced features , through internal development and acquisitions . we sell to businesses of all sizes and in almost every industry worldwide on a subscription basis . our mission is to help our customers transform themselves into customer companies by empowering them to connect with their customers , partners , employees and products in entirely new ways . our objective is to deliver solutions to help companies transform the way they sell , service , market and innovate . with our four core servicessales cloud , service cloud , marketing cloud and the salesforce1 platformcustomers have the tools they need to build a next generation social front office with our social and mobile cloud technologies . key elements of our strategy include : strengthening our market-leading solutions ; extending distribution into high-growth markets ; expanding relationships with our existing customer base ; pursuing new customers ; reducing our attrition rates ; building our business in top markets globally , which includes building partnerships that help us add customers ; and encouraging the development of third-party applications on our cloud computing platforms . we believe the factors that will influence our ability to achieve our objectives include : our prospective customers ' willingness to migrate to enterprise cloud computing services ; the availability , performance and security of our service ; our ability to continue to release , and gain customer acceptance of , new and improved features ; our ability to successfully integrate acquired businesses and technologies ; successful customer adoption and utilization of our service ; acceptance of our service in markets where we have few customers ; the emergence of additional competitors in our market and improved product offerings by existing and new competitors ; the location of new data centers ; third-party developers ' willingness to develop applications on our platforms ; our ability to attract new personnel and retain and motivate current personnel ; and general economic conditions which could affect our customers ' ability and willingness to purchase our services , delay the customers ' purchasing decision or affect attrition rates . to address these factors , we will need to , among other things , continue to add substantial numbers of paying subscriptions , upgrade our customers to fully featured versions such as our unlimited edition or arrangements such as a social enterprise license agreement , provide high quality technical support to our customers , encourage the development of third-party applications on our platforms and continue to focus on retaining 33 index to financial statements customers at the time of renewal . our plans to invest for future growth include the continuation of the expansion of our data center capacity , the hiring of additional personnel , particularly in direct sales , other customer-related areas and research and development , the expansion of domestic and international selling and marketing activities , continuing to develop our brands , the addition of distribution channels , the upgrade of our service offerings , the development of new services , the integration of acquired technologies , the expansion of our salesforce1 exacttarget marketing cloud and salesforce1 platform service offerings and the additions to our global infrastructure to support our growth . we also regularly evaluate acquisitions or investment opportunities in complementary businesses , joint ventures , services and technologies and intellectual property rights in an effort to expand our service offerings . we expect to continue to make such investments and acquisitions in the future and we plan to reinvest a significant portion of our incremental revenue in future periods to grow our business and continue our leadership role in the cloud computing industry . as a result of our aggressive growth plans , specifically our hiring plan and acquisition activities , we have incurred significant expenses from equity awards and amortization of purchased intangibles which have resulted in net losses on a gaap basis . as we continue with our growth plan , we may continue to have net losses on a gaap basis . our typical subscription contract term is 12 to 36 months , although terms range from one to 60 months , so during any fiscal reporting period only a subset of active subscription contracts are available for renewal . we calculate our attrition rates as of the end of each reporting period . we do not calculate the attrition rate for exacttarget , inc. ( exacttarget ) . story_separator_special_tag in determining whether professional services can be accounted for separately from subscription and support revenues , we consider a number of factors , which are described in critical accounting estimatesrevenue recognition below . seasonal nature of deferred revenue and accounts receivable deferred revenue primarily consists of billings to customers for our subscription service . over 90 percent of the value of our billings to customers is for our subscription and support service . we generally invoice our customers in either annual or quarterly cycles . occasionally , we bill customers for their multi-year contract on a single invoice which results in an increase in noncurrent deferred revenue . we typically issue renewal invoices in 35 index to financial statements advance of the renewal service period , and depending on timing , the initial invoice for the subscription and services contract and the subsequent renewal invoice may occur in different quarters . this may result in an increase in deferred revenue and accounts receivable . there is a disproportionate weighting towards annual billings in the fourth quarter , primarily as a result of large enterprise account buying patterns . our fourth quarter has historically been our strongest quarter for new business and renewals . year on year compounding effect of this seasonality in both billing patterns and overall new and renewal business causes the value of invoices that we generate in the fourth quarter for both new business and renewals to increase as a proportion of our total annual billings . approximately 74 percent of all subscription and support invoices were issued with annual terms during fiscal 2014. accordingly , the sequential quarterly changes in accounts receivable and the related deferred revenue during the first three quarters of our fiscal year are not necessarily indicative of the billing activity that occurs in the fourth quarter as displayed below : replace_table_token_6_th unbilled deferred revenue the deferred revenue balance on our consolidated balance sheet does not represent the total contract value of annual or multi-year , non-cancelable subscription agreements . unbilled deferred revenue represents future billings under our subscription agreements that have not been invoiced and , accordingly , are not recorded in deferred revenue . unbilled deferred revenue was approximately $ 4.5 billion as of january 31 , 2014 and approximately $ 3.5 billion as of january 31 , 2013. also as a result , our typical contract length has grown and is now between 12 and 36 months . we expect that the amount of unbilled deferred revenue will change from quarter to quarter for several reasons , including the specific timing and duration of large customer subscription agreements , varying billing cycles of subscription agreements , the specific timing of customer renewals , foreign currency fluctuations , the timing of when unbilled deferred revenue is to be recognized as revenue , and changes in customer financial circumstances . for multi-year subscription agreements billed annually , the associated unbilled deferred revenue is typically high at the beginning of the contract period , zero just prior to renewal , and increases if the agreement is renewed . low unbilled deferred revenue attributable to a particular subscription agreement is often associated with an impending renewal and may not be an indicator of the likelihood of renewal or future revenue from such customer . accordingly , we expect that the amount of aggregate unbilled deferred revenue will change from year-to-year depending in part upon the number and dollar amount of subscription agreements at particular stages in their renewal cycle . such fluctuations are not a reliable indicator of future revenues . unbilled deferred revenue does not include minimum revenue commitments from indirect sales channels , as we recognize revenue , deferred revenue , and any unbilled deferred revenue upon sell-through to an end user customer . 36 index to financial statements cost of revenues and operating expenses cost of revenues . cost of subscription and support revenues primarily consists of expenses related to hosting our service and providing support , the costs of data center capacity , depreciation or operating lease expense associated with computer equipment and software , allocated overhead and amortization expense associated with capitalized software related to our services and acquired developed technologies . we allocate overhead such as information technology infrastructure , rent and occupancy charges based on headcount . employee benefit costs and taxes are allocated based upon a percentage of total compensation expense . as such , general overhead expenses are reflected in each cost of revenue and operating expense category . cost of professional services and other revenues consists primarily of employee-related costs associated with these services , including stock-based expenses , the cost of subcontractors and allocated overhead . the cost of providing professional services is significantly higher as a percentage of the related revenue than for our enterprise cloud computing subscription service due to the direct labor costs and costs of subcontractors . we intend to continue to invest additional resources in our enterprise cloud computing services . for example , we have invested in additional database software and we plan to open additional data centers and expand our current data centers in the future . additionally , as we acquire new businesses and technologies , the amortization expense associated with this activity will be included in cost of revenues . the timing of these additional expenses will affect our cost of revenues , both in terms of absolute dollars and as a percentage of revenues , in the affected periods . research and development . research and development expenses consist primarily of salaries and related expenses , including stock-based expenses , the costs of our development and test data center and allocated overhead . we continue to focus our research and development efforts on adding new features and services , integrating acquired technologies , increasing the functionality and security and enhancing the ease of use of our enterprise cloud computing services . our proprietary , scalable and secure multi-tenant architecture enables us to provide all of our customers with a service based on a single version of our application .
| results of operations the following tables set forth selected data for each of the periods indicated ( in thousands ) : replace_table_token_7_th 42 index to financial statements cost of revenues and marketing and sales expenses include the following amounts related to amortization of purchased intangibles from business combinations ( in thousands ) : replace_table_token_8_th cost of revenues and operating expenses include the following amounts related to stock-based awards ( in thousands ) : replace_table_token_9_th revenues by geography were as follows ( in thousands ) : replace_table_token_10_th americas revenue attributed to the united states was approximately 96 percent , 94 percent and 93 percent for fiscal 2014 , fiscal 2013 and 2012 , respectively . 43 index to financial statements the following tables set forth selected consolidated statements of operations data for each of the periods indicated as a percentage of total revenues : replace_table_token_11_th replace_table_token_12_th 44 index to financial statements replace_table_token_13_th we present constant currency information to provide a framework for assessing how our underlying business performed excluding the effect of foreign currency rate fluctuations . to present this information , current and comparative prior period results for entities reporting in currencies other than united states dollars are converted into united states dollars at the weighted average exchange rate for the quarter being compared to for growth rate calculations presented , rather than the actual exchange rates in effect during that period . replace_table_token_14_th unbilled deferred revenue was approximately $ 4.5 billion as of january 31 , 2014 and $ 3.5 billion as of january 31 , 2013. unbilled deferred revenue represents future billings under our non-cancelable subscription agreements that have not been invoiced and , accordingly , are not recorded in deferred revenue . fiscal years ended january 31 , 2014 and 2013 revenues . replace_table_token_15_th total revenues were $ 4.1 billion for fiscal 2014 , compared to $ 3.1 billion during the same period a year ago , an increase of $ 1.0 billion , or 33 percent .
| 6,862 |
we begin management 's discussion and analysis of financial condition and results of operations with an overview of the business , including our strategy to give the reader a summary of the goals of our business and the direction in which our business is moving . this is followed by a discussion of the critical accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results . in the next section , we discuss our results of operations for the year ended february 28 , 2019 compared to the years ended february 28 , 2018 and february 28 , 2017 . next , we present adjusted ebitda and diluted adjusted ebitda per common share for the year ended february 28 , 2019 compared to the years ended february 28 , 2018 and february 28 , 2017 in order to provide a useful and appropriate supplemental measure of our performance . we then provide an analysis of changes in our balance sheet and cash flows and discuss our financial commitments in the sections entitled `` liquidity and capital resources . '' we conclude this md & a with a discussion of `` related party transactions '' and `` recent accounting pronouncements . '' business overview and strategy voxx international corporation ( `` voxx , '' `` we , '' `` our , '' `` us , '' or the `` company '' ) is a leading international distributor , manufacturer and value-added service provider in the automotive , premium audio and consumer accessory industries . we conduct our business through sixteen wholly-owned subsidiaries and one majority owned subsidiary . voxx has a broad portfolio of brand names used to market our products as well as private labels through a large domestic and international distribution network . we also function as an oem ( `` original equipment manufacturer '' ) supplier to several customers , as well as market a number of products under exclusive distribution agreements . in recent years , we have focused on our intention to acquire synergistic businesses with the addition of several new subsidiaries . these subsidiaries have helped us to expand our core business and broaden our presence in the accessory and oem markets . our acquisitions of klipsch and invision provided the opportunity to enter the manufacturing arena , and our acquisition of a controlling interest in eyelock inc. and eyelock corporation has allowed us to enter the growing and innovative biometrics market . our intention is to continue to pursue business opportunities which will allow us to further expand our business model while leveraging overhead and exploring specialized niche markets in the electronics industry . notwithstanding the above acquisitions , if the appropriate opportunity arises , the company has been willing to explore the potential divestiture of a product line or business , such as with the sale of the company 's hirschmann subsidiary on august 31 , 2017. the company aligns its subsidiaries in three operating and reporting segments , based upon our products and internal organizational structure . the operating and reporting segments consist of the automotive , premium audio and consumer accessories segments . the characteristics of our operations that are relied on in making and reviewing business decisions within these segments include the similarities in our products , the commonality of our customers , suppliers and product developers across multiple brands , our unified marketing and distribution strategy , our centralized inventory management and logistics , and the nature of the financial information used by our chief operating decision maker ( `` codm '' ) . the codm reviews the financial results of the company based on the performance of the automotive , premium audio and consumer accessories segments . the company 's domestic and international business is subject to retail industry trends and conditions and the sales of new and used vehicles . in recent years , worldwide economic conditions have had an adverse impact on consumer spending . if the global macroeconomic environment does not continue to improve or if it deteriorates further , this could have a negative effect on the company 's revenues and earnings . in an attempt to offset negative market conditions , the company continues to explore strategies and alternatives to reduce its operating expenses , such as the consolidation of facilities and it systems , and has been introducing new products to obtain a greater market share . the company continues to focus on cash flow and anticipates having sufficient resources to operate during fiscal 2020 . 24 although we believe our product groups have expanding market opportunities , there are certain levels of volatility related to domestic and international markets , new car sales , increased competition by manufacturers , private labels , technological advancements , discretionary consumer spending and general economic conditions . also , all of our products are subject to price fluctuations which could affect the carrying value of inventories and gross margins in the future . acquisitions and dispositions we have acquired and integrated several businesses , as well as divested certain businesses , the most recent of which are outlined in the acquisitions and dispositions section of part i and presented in detail in note 2 to the notes to the consolidated financial statements . net sales decline net sales from continuing operations over a five-year period have decreased ( 23.7 ) % from $ 585,360 for the year ended february 28 , 2015 to $ 446,816 for the year ended february 28 , 2019 . story_separator_special_tag we utilize the most likely amount consistently to estimate the effect of uncertainty on the amount of variable consideration to which we would be entitled . the most likely amount method considers the single most likely amount from a range of possible consideration amounts . the most likely amounts are based upon the contractual terms of the incentives and historical experience with each customer . although we make our best estimate of sales incentive liabilities , many factors , including significant unanticipated changes in the purchasing volume and the lack of claims from customers could have a significant impact on the liability for sales incentives and reported operating results . we record estimates for cash discounts , promotional rebates , and other promotional allowances in the period the related revenue is recognized ( “ customer credits ” ) . the provision for customer credits is recorded as a reduction from gross sales and reserves for customer credits are presented within accrued sales incentives on the consolidated balance sheet . unearned sales incentives are volume incentive rebates where the customer did not purchase the required minimum quantities of product during the specified time . volume incentive rebates are reversed into income in the period when the customer did not reach the required minimum purchases of product during the specified time . unclaimed sales incentives are sales incentives earned by the customer , but the customer has not claimed payment within the claim period ( period after program has ended ) . unclaimed sales incentives are investigated in a timely manner after the end of the program and reversed if deemed appropriate . accounts receivable we perform ongoing credit evaluations of our customers and adjust credit limits based upon payment history and current credit worthiness , as determined by a review of current credit information . we continuously monitor collections from our customers and maintain a provision for estimated credit losses based upon historical experience and any specific customer collection issues that have been identified . while such credit losses have historically been within management 's expectations and the provisions established , we can not guarantee that we will continue to experience the same credit loss rates that have been experienced in the past . our five largest customer balances comprise 24 % of our accounts receivable balance as of february 28 , 2019. a significant change in the liquidity or financial position of any one of these customers could have a material adverse impact on the collectability of accounts receivable and our results of operations . inventory we value our inventory at the lower of the actual cost to purchase or the net realizable value of the inventory . net realizable value is defined as estimated selling prices , less cost of completion , disposal , and transportation . we regularly review inventory quantities on-hand and record a provision in cost of sales for excess and obsolete inventory based primarily on selling prices , indications from customers based upon current price negotiations , and purchase orders . the cost of the inventory is determined primarily on 26 a weighted moving average basis , with a portion valued at standard cost , which approximates actual costs on the first in , first out basis . our industry is characterized by rapid technological change and frequent new product introductions that could result in an increase in the amount of obsolete inventory quantities on-hand . in addition , and as necessary , specific reserves for future known or anticipated events may be established . estimates of excess and obsolete inventory may prove to be inaccurate , in which case we may have understated or overstated the provision required for excess and obsolete inventory . although we make every effort to ensure the accuracy of our forecasts of future product demand , any significant unanticipated changes in demand or technological developments could have a significant impact on the carrying value of inventory and our results of operations . long-lived and intangible asset impairments as of february 28 , 2019 , intangible assets totaled $ 119,449 and property , plant and equipment totaled $ 60,493 . management makes estimates and assumptions in preparing the consolidated financial statements for which actual results will emerge over long periods of time . this includes the recoverability of long-lived assets employed in the business , including assets of acquired businesses . these estimates and assumptions are closely monitored by management and periodically adjusted as circumstances warrant . for instance , expected asset lives may be shortened or an impairment recorded based upon a change in the expected use of the asset or performance of the related asset group . at the present time , management intends to continue the development , marketing and selling of products associated with its intangible assets , and there are no known restrictions on the continuation of their use . during the second quarter of fiscal 2019 , the company re-evaluated its projections for several brands in its consumer accessories and automotive segments based on lower than anticipated results . specifically , during the second quarter of fiscal 2019 , the lower than anticipated results were due to reduced product load-ins , increased competition for certain product lines , a streamlining of sku 's , and a change in market strategy for one of its brands . accordingly , these were considered indicators of impairment requiring the company to test the related indefinite-lived tradenames for impairment as of august 31 , 2018. the company also tested its indefinite-lived intangible assets as of february 28 , 2019 as part of its annual impairment testing . during the fourth quarter , the company further streamlined its sku 's in conjunction with its corporate realignment and transformation initiatives , and adjusted expectations for select customer demand , and the anticipated results from alternative sales channels for one of its brands .
| results of operations included in item 8 of this annual report on form 10-k are the consolidated balance sheets as of february 28 , 2019 and february 28 , 2018 and the consolidated statements of operations and comprehensive ( loss ) income , consolidated statements of stockholders ' equity and consolidated statements of cash flows for the years ended february 28 , 2019 , february 28 , 2018 and february 28 , 2017 . in order to provide the reader meaningful comparison , the following analysis provides comparisons of the audited year ended february 28 , 2019 with the audited year ended february 28 , 2018 , and the audited year ended february 28 , 2018 with the audited year ended february 28 , 2017 . we analyze and explain the differences between periods in the specific line items of the consolidated statements of operations and comprehensive ( loss ) income . year ended february 28 , 2019 compared to the years ended february 28 , 2018 and february 28 , 2017 continuing operations the tables presented in this section set forth , for the periods indicated , certain statement of operations data for the years ended february 28 , 2019 ( `` fiscal 2019 `` ) , february 28 , 2018 ( `` fiscal 2018 `` ) and february 28 , 2017 ( `` fiscal 2017 `` ) . net sales replace_table_token_3_th fiscal 2019 compared to fiscal 2018 29 automotive sales , which include both oem and aftermarket automotive electronics , represented 36.2 % of the net sales for the year ended february 28 , 2019 , compared to 30.7 % in the prior year . sales in this segment increased during the year ended february 28 , 2019 as compared to the prior year primarily due to a full year of sales of its evo headrest product within the oem manufacturing line .
| 6,863 |
to fund the construction of the story_separator_special_tag introduction the following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition . this discussion contains forward-looking statements that involve risks and uncertainties . our actual results may differ materially from those anticipated in these forward-looking statements as a result of numerous factors including , but not limited to , those described above under item 1a . risk factors , and forward-looking statements - safe harbor below . the discussion should be read in conjunction with the consolidated financial statements and notes thereto . we are a real estate investment trust specializing in the ownership , leasing and management of correctional , detention and reentry facilities and the provision of community-based services and youth services in the united states , australia , south africa , and the united kingdom . we own , lease and operate a broad range of correctional and detention facilities including maximum , medium and minimum security prisons , immigration detention centers , minimum security detention centers , and community based reentry facilities . we offer counseling , education and or treatment to inmates with alcohol and drug abuse problems at most of the domestic facilities we manage . we are also a provider of innovative compliance technologies , industry-leading monitoring services , and evidence-based supervision and treatment programs for community-based parolees , probationers and pretrial defendants . additionally , we have an exclusive contract with ice to provide supervision and reporting services designed to improve the participation of non-detained aliens in the immigration court system . we develop new facilities based on contract awards , using our project development expertise and experience to design , construct and finance what we believe are state-of-the-art facilities that maximize security and efficiency . we also provide secure transportation services for offender and detainee populations as contracted domestically and in the united kingdom through our joint venture geoamey . as of december 31 , 2018 , our worldwide operations included the management and or ownership of approximately 96,000 beds at 135 correctional , detention and reentry facilities , including idle facilities and projects under development and also included the provision of servicing more than 210,000 offenders in a community-based environment on behalf of approximately 900 federal , state and local correctional agencies located in all 50 states . for the years ended december 31 , 2018 , 2017 and 2016 , we had consolidated revenues of $ 2.3 billion , $ 2.3 billion and $ 2.2 billion , respectively , and we maintained an average company wide facility occupancy rate of 92.7 % including 88,567 active beds and excluding 7,068 idle beds for the year ended december 31 , 2018 , and 91.2 % including 88,272 active beds and excluding 7,846 idle beds and beds under development for the year ended december 31 , 2017. reit conversion we have been a leading owner , lessor and operator of correctional , detention and reentry facilities and provider of community-based services and youth services in the industry since 1984 and began operating as a reit for federal income tax purposes effective january 1 , 2013. as a result of the reit conversion , we reorganized our operations and moved non-real estate components into trss . through the trs structure , the portion of our businesses which are non-real estate related , such as our managed-only contracts , international operations , electronic monitoring services , and other non-residential and community based facilities , are part of wholly-owned taxable subsidiaries of the reit . most of our business segments , which are real estate related and involve company-owned and company-leased facilities , are part of the reit . the trs structure allows us to maintain the strategic alignment of almost all of our diversified business segments under one entity . the trs assets and operations will continue to be subject to federal and state corporate income taxes and to foreign taxes as applicable in the jurisdictions in which those assets and operations are located . 54 as a reit , we are required to distribute annually at least 90 % of our reit taxable income ( determined without regard to the dividends paid deduction and by excluding net capital gain ) and we began paying regular distributions in 2013. we declared and paid the following regular reit distributions to our shareholders for the years ended december 31 , 2018 , 2017 and 2016 which were treated for federal income taxes as follows ( retroactively adjusted to reflect the effects of our 3-for-2 stock split ) : replace_table_token_17_th ( 1 ) the amount constitutes a qualified dividend , as defined by the internal revenue service . ( 2 ) the amount constitutes a return of capital , as defined by the internal revenue service . critical accounting policies we believe that the accounting policies described below are critical to understanding our business , results of operations and financial condition because they involve the more significant judgments and estimates used in the preparation of our consolidated financial statements . we have discussed the development , selection and application of our critical accounting policies with the audit committee of our board of directors , and our audit committee has reviewed our disclosure relating to our critical accounting policies in this management 's discussion and analysis of financial condition and results of operations. our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the united states . as such , we are required to make certain estimates , judgments and assumptions that we believe are reasonable based upon the information available . these estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period . we routinely evaluate our estimates based on historical experience and on various other assumptions that our management believes are reasonable under the circumstances . story_separator_special_tag each of these activities is highly interrelated and we perform a significant level of integration of these activities . we have identified these activities as a bundle of services and determined that each day of the promised service is distinct . the services provided are part of a series of distinct services that are substantially the same and are measured using the same measure of progress ( time-based output method ) . we have determined that revenue for these services are recognized over time as our customers simultaneously receive and consume the benefits as the services are performed , which is on a continual daily basis , and we have a right to payment for performance completed to date . time-based output methods of revenue recognition are considered to be a faithful depiction of our efforts to fulfill our obligations under our contracts and therefore reflect the transfer of services to our customers . our customers generally pay for these services based on a net rate per day per individual or on a fixed monthly rate . owned and leased community-based we recognize revenue for community-based reentry services where we own or lease the facility in a manner similar to our corrections and detention services discussed above . we provide individuals nearing the end of their sentence with the resources necessary to productively transition back into society . through our residential reentry centers , we provide federal and state parolees and probationers with temporary housing , rehabilitation , substance abuse counseling and vocational and educational programs . these activities are considered to be a bundle of services which are a part of a series of distinct services recognized over time based on the same criteria as discussed above for corrections and detention revenues . our customers also generally pay for these services based on a net rate per day per individual or on a fixed monthly rate . owned and leased youth services we recognize revenues for youth services where we own or lease the facility in the same manner as discussed above for the housing , supervision , care and rehabilitation of troubled youth residents . the activities to house and care for troubled youth residents are also considered to be a bundle of services which are part of a series of distinct services recognized over time based on the same criteria discussed for the previous two revenue streams . our customers generally pay for these services based on a net rate per day per individual . managed only we recognize revenue for our managed only contracts in the same manner as our owned and leased corrections & detention and owned and leased community-based contracts as discussed above . the primary exception is that we do not own or lease the facility . the facility is owned by the customer . in certain circumstances , our customers may request that we make certain capital improvements to the facility or make other payments related to the facility . these payments are amortized as a reduction of revenues over the life of the contract . our customers generally pay for these services based on a net rate per day per individual or a fixed monthly rate . facility construction and design facility construction and design revenues during the year ended december 31 , 2017 consisted of one contract with the department of justice in the state of victoria ( the state ) for the development and operation of 57 a new 1,300-bed correctional facility ( the facility ) in ravenhall , a locality near melbourne , australia . the facility was completed during the fourth quarter of 2017 and we are currently managing the facility under a 25-year management contract . there were no facility construction and design revenues related to the facility during the year ended december 31 , 2018. our promise to design and construct the facility was considered to be a separate and distinct performance obligation from the management obligation which includes the safe and secure housing , care and programming activities for incarcerated individuals similar to the correction & detention services discussed above . for the obligation to manage the facility , we have determined that revenue should be recorded over time using a time-based output method based on the same criteria as discussed above for correction and detention services . fees included and priced in the contract for managing the facility are considered to be stated at their individual estimated stand-alone selling prices using the adjusted market assessment approach . these services are regularly provided by us on a stand-alone basis to similar customers within a similar range of amounts . we used the expected cost plus margin approach to allocate the transaction price to the construction obligation . we were entitled under the contract to receive consideration in the amount of our costs plus a margin . during the design and construction phase , we determined that revenue should be recorded over time and applied cost based input methods using the actual costs incurred relative to the total estimated costs ( percentage of completion basis ) to determine progress towards contract completion and to calculate the corresponding amount of revenue and gross profit to recognize . cost based input methods of revenue recognition are considered to be a faithful depiction of our efforts to satisfy long-term construction contracts and therefore reflect the transfer of goods to the customer as the customer controls the work in progress as the facility is constructed . cost based input methods of revenue recognition also require us to make estimates of net contract revenues and costs to complete the project . significant judgment was required to evaluate the costs to complete the project , including materials , labor , contingencies and other costs . if estimated total costs on the contract are greater than the net contract revenues , the entire estimated loss on the contract is recognized in the period the loss becomes known .
| results of operations the following discussion should be read in conjunction with our consolidated financial statements and the notes to the consolidated financial statements accompanying this report . this discussion contains forward-looking statements that involve risks and uncertainties . our actual results may differ materially from those anticipated in the forward-looking statements as a result of certain factors , including , but not limited to , those described under item 1a . risk factors and those included in other portions of this report . 2018 versus 2017 revenues replace_table_token_18_th u.s. corrections & detention revenues increased in 2018 compared to 2017 by $ 54.9 million primarily due to aggregate net increases of $ 56.1 million due to our acquisition of cec on april 5 , 2017 and net increases in population with our federal clients , transportation services and or rates . we also had increases of $ 13.7 million resulting from the activation of our contracts at our company-owned eagle pass detention facility in eagle pass , texas and our company-owned montgomery processing center in conroe , texas . these increases were partially offset by net decreases of $ 14.9 million at certain of our facilities primarily due to contract terminations . the number of compensated mandays in u.s. corrections & detention facilities was approximately 22.9 million in 2018 and 22.3 million in 2017. we experienced an aggregate net increase of approximately 600,000 mandays primarily as a result of our acquisition of cec , activation of new contracts and net increases in population with our federal clients discussed above . we look at the average occupancy in our facilities to determine how we are managing our available beds . the average occupancy is calculated by taking compensated mandays as a percentage of capacity .
| 6,864 |
brokerage and logistics services consist of services such as transportation scheduling , routing , mode selection , transloading and other value added services related to the transportation of freight which may or may not involve the usage of company owned or independent contractor owned equipment . both our truckload operations and our brokerage/logistics operations have similar economic characteristics and are impacted by virtually the same economic factors as discussed elsewhere in this report . all of the company 's operations are in the motor carrier segment . for both operations , substantially all of our revenue is generated by transporting freight for customers and is predominantly affected by the rates per mile received from our customers , equipment utilization , and our percentage of non-compensated miles . these aspects of our business are carefully managed and efforts are continuously underway to achieve favorable results . truckload services revenues , excluding fuel surcharges , represented 87.6 % , 92.5 % and 92.6 % of total revenues , excluding fuel surcharges for the twelve months ended december 31 , 2015 , 2014 and 2013 , respectively . - 21 - the main factors that impact our profitability on the expense side are costs incurred in transporting freight for our customers . currently , our most challenging costs include fuel , driver recruitment , training , wage and benefit costs , independent broker costs ( which we record as purchased transportation ) , insurance , and maintenance and capital equipment costs . in discussing our results of operations we use revenue , before fuel surcharge ( and operating supplies and expense , net of fuel surcharge ) , because management believes that eliminating the impact of this sometimes volatile source of revenue allows a more consistent basis for comparing our results of operations from period to period . during 2015 , 2014 and 2013 , approximately $ 61.6 million , $ 94.4 million and $ 89.7 million , respectively , of the company 's total revenue was generated from fuel surcharges . we also discuss certain changes in our expenses as a percentage of revenue , before fuel surcharge , rather than absolute dollar changes . we do this because we believe the high variable cost nature of certain expenses makes a comparison of changes in expenses as a percentage of revenue more meaningful than absolute dollar changes . results of operations - truckload services the following table sets forth , for truckload services , the percentage relationship of expense items to operating revenues , before fuel surcharges , for the periods indicated . operating supplies and expenses are shown net of fuel surcharges . replace_table_token_6_th 2015 compared to 2014 for the year ended december 31 , 2015 , truckload services revenue , before fuel surcharges , increased 6.3 % to $ 311.2 million as compared to $ 292.7 million for the year ended december 31 , 2014. the increase relates primarily to an increase in the number of miles traveled , an increase in equipment utilization , and an increase in the average rate charged to customers . the number of miles traveled increased from 210.0 million miles during 2014 to 218.4 million miles during 2015 primarily as a result of an increase in the average number of trucks in service , which increased from 1,781 during 2014 to 1,829 during 2015. also contributing to the increase in miles traveled was an increase in equipment utilization as the average number of miles traveled each work day increased from 464 miles per truck during 2014 to 470 miles per truck during 2015. the average rate charged per total mile during 2015 increased $ 0.03 as compared to the average rate charged during 2014 . - 22 - salaries , wages and benefits decreased from 36.8 % of revenues , before fuel surcharges , during 2014 to 33.6 % of revenues , before fuel surcharges , during 2015. the decrease relates primarily to a decrease in company driver wages paid during 2015 as compared to company driver wages paid during 2014. our driver pool consists of both company drivers and third-party independent contractor drivers . company drivers are employees of the company and perform services in company-owned equipment while independent contractors provide services , under contract , using their own equipment . while each group is generally compensated on a per-mile basis , independent contractor payments are classified in the company 's financial statements under rent and purchased transportation . the decrease in salaries , wages and benefits primarily resulted from a decrease in the proportion of total miles driven by company drivers during 2015 in comparison to the proportion of total miles driven by company drivers during 2014. this proportional decrease was the result of an increase in the average number of independent contractors under contract from 339 during 2014 to 414 during 2015. also contributing to the decrease was the interaction of expenses with fixed-cost characteristics , such as general and administrative wages , with the increase in revenues for the periods compared . operating supplies and expenses decreased from 11.1 % of revenues , before fuel surcharges , during 2014 to 9.1 % of revenues , before fuel surcharges , during 2015. the decrease relates primarily to a decrease in the average surcharge-adjusted fuel price paid per gallon of diesel fuel and to an increase in the average miles-per-gallon ( “ mpg ” ) experienced during 2015 as compared to 2014. the average surcharge-adjusted fuel price paid per gallon of diesel fuel decreased as a result of more favorable fuel surcharge arrangements made with customers and to an increase in the number of independent contractors in our fleet . fuel surcharge collections can fluctuate significantly from period to period as they are generally based on changes in fuel prices from period to period so that during periods of rising fuel prices fuel surcharge collections increase while fuel surcharge collections decrease during periods of falling fuel prices . story_separator_special_tag partially offsetting the increase was a decrease in costs associated with workers ' compensation benefits during 2014 as compared to 2013. operating supplies and expenses decreased from 16.4 % of revenues , before fuel surcharges , during 2013 to 11.1 % of revenues , before fuel surcharges , during 2014. the decrease related primarily to a decrease in the average surcharge-adjusted fuel price paid per gallon of diesel fuel and to an increase in the average miles-per-gallon ( “ mpg ” ) experienced during 2014 as compared to 2013. the average surcharge-adjusted fuel price paid per gallon of diesel fuel decreased as a result of more favorable fuel surcharge arrangements made with customers and to an increase in the number of independent contractors in our fleet . fuel surcharge collections can fluctuate significantly from period to period as they are generally based on changes in fuel prices from period to period so that during periods of rising fuel prices fuel surcharge collections increase while fuel surcharge collections decrease during periods of falling fuel prices . fuel surcharge revenue generated from transportation services performed by independent contractors is reflected as a reduction in net operating supplies and expenses , while fuel surcharges paid to independent contractors for their services is reported along with their base rate of pay in the rent and purchased transportation category . these categorizations have the effect of reducing our net operating supplies and expenses while increasing the rent and purchased transportation category , as discussed below . the average mpg experienced increased during 2014 as compared to the mpg experienced during 2013 as a result of replacing older trucks with newer trucks , which are more fuel efficient . the decrease also relates to a decrease in amounts paid for equipment maintenance costs during 2014 as compared to amounts paid during 2013 as a result of replacing older equipment with new equipment . partially offsetting this decrease is an increase in amounts paid for driver recruiting and driver training schools during 2014 as compared to amounts paid during 2013. the increase in driver recruiting and training costs were a result of heightened competition for qualified drivers as industry demand increased and increased regulations had forced some drivers to exit the profession . - 24 - rent and purchased transportation increased from 21.9 % of revenues , before fuel surcharges , during 2013 to 23.5 % of revenues , before fuel surcharges , during 2014. this increase related primarily to lease payments associated with the lease of 421 trucks , as discussed below . this increase was partially offset by a decrease in driver lease expense as a result of fewer miles being driven by independent contractors during 2014 as compared to 2013. depreciation decreased from 13.5 % of revenues , before fuel surcharges , during 2013 to 12.4 % of revenues , before fuel surcharges , during 2014. the decrease related primarily to a decrease in the average number of company-owned trucks as a result of a leasing arrangement entered into during the first quarter of 2014 for the lease of 147 trucks , including 97 company-owned trucks which were sold to a third party and then leased back to the company . during the remainder of 2014 , the company entered into lease agreements for the lease of an additional 274 trucks , and as of december 31 , 2014 , the company 's truck fleet included of 421 leased trucks . the lease payments associated with these leases were reported in the rents and purchased transportation category . insurance and claims increased from 5.0 % of revenues , before fuel surcharges , during 2013 to 6.9 % of revenues , before fuel surcharges , during 2014. this increase related primarily to an estimated amount reserved during 2014 for the anticipated settlement of a lawsuit , which claims that the company was in violation of minimum wage laws with regard to certain activities performed by employee driver as described in the section “ legal proceedings ” in item 3 of this report , as well as an increase in amounts expensed for litigation costs associated with other claims . the increase also related to increases in the amount paid for physical damage insurance premiums during 2014 as compared to 2013 due to an increase in the value of the equipment covered as a result of replacing older equipment with new equipment and to obtaining physical damage coverage on our trailers effective during the fourth quarter of 2013. other expenses increased from 3.1 % of revenues , before fuel surcharges , during 2013 to 3.3 % of revenues , before fuel surcharges , during 2014. the increase related primarily to an increase in amounts expensed for legal fees . the truckload services division operating ratio , which measures the ratio of operating expenses , net of fuel surcharges , to operating revenues , before fuel surcharges , improved to 92.4 % for 2014 from 96.3 % for 2013. non-operating income increased from 0.5 % of revenues , before fuel surcharges , during 2013 to 0.7 % of revenues , before fuel surcharges , during 2014. the components of this category consist primarily of dividends earned and gains or losses on the company 's investments in marketable equity securities . the increase related primarily to an increase in the amount of gains recognized during 2014 as compared to 2013 on the company 's investments in marketable equity securities . - 25 - results of operations - logistics and brokerage services the following table sets forth , for logistics and brokerage services , the percentage relationship of expense items to operating revenues , before fuel surcharges , for the periods indicated . brokerage service operations occur specifically in certain divisions ; however , brokerage operations occur throughout the company in similar operations having substantially similar economic characteristics . rent and purchased transportation , which includes costs paid to third party carriers , are shown net of fuel surcharges .
| quarterly results of operations the following table presents selected consolidated financial information for each of our last eight fiscal quarters through december 31 , 2015. the information has been derived from unaudited consolidated financial statements that , in the opinion of management , reflect all adjustments , consisting of normal recurring adjustments , necessary for a fair presentation of the quarterly information . replace_table_token_8_th - 28 - liquidity and capital resources our business has required , and will continue to require , a significant investment in new revenue equipment . our primary sources of liquidity have been funds provided by operations , proceeds from the sales of revenue equipment , borrowings under our lines of credit , installment notes and investment margin account , and issuances of equity securities . during 2015 , we generated $ 61.5 million in cash from operating activities compared to $ 55.3 million and $ 43.2 million in 2014 and 2013 , respectively . investing activities used $ 85.5 million in cash during 2015 compared to $ 0.1 million and $ 44.3 million in 2014 and 2013 , respectively . the cash used for investing activities in all three years related primarily to the purchase of revenue equipment such as trucks and trailers or related equipment such as auxiliary power units . financing activities used $ 3.5 million in cash during 2015 compared to $ 28.7 million in cash used during 2014 and $ 1.8 million in cash provided during 2013. see the consolidated statements of cash flows in item 8 of this report . our primary use of funds is for the purchase of revenue equipment . we typically use installment notes , our existing lines of credit on an interim basis , proceeds from the sale or trade of equipment , and cash flows from operations , to finance capital expenditures and repay long-term debt .
| 6,865 |
the discussion and analysis presented below refers to , and should be read in conjunction with , the consolidated financial statements and accompanying notes included in item 8 of part ii of this annual report on form 10-k. overview owens & minor , inc. , along with its subsidiaries , ( we , us , or our ) is a leading global healthcare solutions company . in 2018 , we have made changes to the leadership team , organizational structure , budgeting and financial reporting processes which required changes to segment reporting . these changes align our operations into two distinct business units : global solutions and global products . global solutions ( previously domestic and international ) is our u.s. and european distribution , logistics and value-added services business . global products ( previously proprietary products ) manufactures and sources medical surgical products through our production and kitting operations . beginning with the quarter ended march 31 , 2018 , we now report financial results using this two segment structure and have recast prior year segment results on the same basis . segment financial information is provided in note 20 of notes to consolidated financial statements included in this annual report . on april 30 , 2018 ( the closing date ) , we completed the acquisition of substantially all of avanos medical , inc. 's ( avanos , previously halyard health , inc. ) surgical and infection prevention business , the name “ halyard health ” ( and all variations of that name and related intellectual property rights ) and its information technology ( it ) systems in exchange for $ 758 million , net of cash acquired . the halyard business is a leading global provider of medical supplies and solutions for the prevention of healthcare associated infections across acute care and non-acute care markets . this business is reported as part of the global products segment . we entered into transition services agreements with avanos pursuant to which they and we will provide to each other various transitional services , including , but not limited to , facilities , product supply , financial and business services , procurement , human resources , research and development , regulatory affairs and quality assurance , sales and marketing , information technology and other support services . on the closing date , certain of our affiliates also entered into transitional distribution agreements with affiliates of avanos under which the avanos affiliates will serve as limited risk distributors for our international customer orders on a transitional basis . the services under the transition services agreements and distribution agreements generally commenced on the closing date and terminate within 18 months thereafter . 20 story_separator_special_tag style= '' line-height:120 % ; padding-top:12px ; font-size:10pt ; '' > replace_table_token_5_th consolidated net revenue increased primarily as a result of the acquisition of byram in august 2017 , which contributed revenue growth of $ 340.1 million to global solutions offset by reduced revenues from lost distribution customers , and the acquisition of halyard on april 30 , 2018 , which contributed revenue of $ 663.6 million to global products . the changes from prior year also included a favorable impact from foreign currency translation of $ 19.7 million . cost of goods sold . for the years ended december 31 , change ( dollars in thousands ) 2018 2017 $ % cost of goods sold $ 8,471,745 $ 8,146,409 $ 325,336 4.0 % cost of goods sold includes the cost of the product ( net of supplier incentives and cash discounts ) and all costs incurred for shipments of products from manufacturers to our distribution centers for all customer arrangements where we are the primary obligor and bear risk of general and physical inventory loss . these are sometimes referred to as distribution or buy/sell contracts . cost of goods sold also includes direct and certain indirect labor , material and overhead costs associated with our global products business . there is no cost of goods sold associated with our fee-for-service arrangements . cost of goods sold compared to prior year reflects changes in sales activity , including sales mix within our products and solutions businesses . replace_table_token_6_th gross margin included positive contributions from byram and halyard , increased revenues for fee-for-service business , and favorable impact from foreign currency translation of $ 12.2 million ; which were partially offset by lower distribution revenues and a decline in distribution margins . with ongoing customer cost pressures and competitive dynamics in healthcare , we expect margin pressure in our distribution business to continue . we value distribution inventory held in the united states under the lifo method . had inventory been valued under the first-in , first-out ( fifo ) method , gross margin as a percentage of net revenue would have been 28 basis points higher in 2018 and 4 basis points higher in 2017. replace_table_token_7_th distribution , selling and administrative ( ds & a ) expenses include labor and warehousing costs associated with our distribution and logistics services and all costs associated with our fee-for-service arrangements . shipping and handling costs 23 are primarily included in ds & a expenses and include costs to store , move , and prepare products for shipment , as well as costs to deliver products to customers . overall ds & a expenses compared to prior year reflected increased expenses related to byram and halyard , higher distribution warehouse and delivery expenses , and increased expenses incurred for the development of new customer solutions , as well as unfavorable foreign currency translation impacts of $ 12.1 million . the change in other operating ( income ) expense , net was attributed primarily to lower software as a service implementation expenses and higher foreign currency transaction gains compared to prior year . a discussion of the goodwill and intangible asset impairment charges and acquisition-related and exit and realignment charges is included above in the overview section . story_separator_special_tag replace_table_token_15_th ( 1 ) based on year end accounts receivable and net revenue for the fourth quarter ( 2 ) based on average annual inventory and costs of goods sold for the years ended december 31 , 2018 and 2017 liquidity and capital expenditures . the following table summarizes our consolidated statements of cash flows : replace_table_token_16_th cash provided by ( used for ) operating activities in 2018 , 2017 and 2016 reflected fluctuations in net income along with changes in working capital . 26 cash used for investing activities in 2018 , 2017 and 2016 included capital expenditures of $ 65.7 million , $ 50.7 million and $ 30.1 million for our strategic and operational efficiency initiatives , particularly initiatives relating to information technology enhancements and optimizing our distribution network . cash used for investing activities in 2018 included cash paid for the acquisition of halyard of $ 758 million and in 2017 included cash paid for the acquisition of byram healthcare of $ 367 million . cash used for investing activities in 2016 was partially offset by $ 5.4 million in proceeds from the sale of property . cash used in financing activities included dividend payments of $ 48.2 million , $ 63.2 million and $ 63.4 million and repurchases of common stock under our share repurchase programs for $ 5.0 million and $ 71.0 million in the years ended december 31 , 2017 and 2016. in 2018 and 2017 , cash provided by financing activities included proceeds from borrowings of $ 801.3 million and $ 354.6 million under our credit agreement . financing activities in 2018 and 2017 also included the repayment of $ 16.3 million and $ 3.1 million in borrowings on our credit agreement . capital resources . our sources of liquidity include cash and cash equivalents and a revolving credit facility under our credit agreement with wells fargo bank , n.a. , jpmorgan chase bank , n.a. , bank of america , n.a . and a syndicate of financial institutions ( the credit agreement ) . in connection with the halyard acquisition , we amended our credit agreement to include , among others things , an additional $ 195.8 million term a-2 loan and $ 500 million term b loan . the revolving credit facility and term a loans mature in july 2022 and the term b loan matures in october 2025. our credit agreement now includes collateral for the benefit of the secured parties ( as defined ) , first priority liens and security interests in ( a ) all present and future shares of capital stock owned by the credit parties ( as defined ) in the credit parties ' present and future subsidiaries ( limited , in the case of controlled foreign corporations , to a pledge of 65 % of the voting capital stock of each first-tier foreign subsidiary of each credit party ) and ( b ) all present and future personal property and assets of the credit parties , subject to certain exceptions . our credit agreement has a “ springing maturity date ” with respect to the revolving loans and the term a loans and the term b loans , if as of the date that is 91 days prior to the maturity date of the company 's 2021 notes or the 2024 notes , respectively , all outstanding amounts owing under the 2021 notes or the 2024 notes , respectively , have not been paid in full then the termination date ( as defined in the credit agreement ) of the revolving loans , term a loans and term b loans shall be the date that is 91 days prior to the maturity date of the 2021 notes . we make principal payments under the term loans on a quarterly basis with the remaining outstanding principal due upon maturity . the interest rate on our revolving credit facility and term a loans , which is subject to adjustment quarterly , is based on the eurocurrency rate , the federal funds rate or the prime rate , plus an adjustment based on the better of our credit ratings or debt to ebitda ratio as defined by the credit agreement . our term b loan pays interest based on the eurocurrency rate , the federal funds rate or the prime rate , plus an interest rate margin of 3.50 % per annum with respect to base rate loans ( as defined in the credit agreement ) , and 4.50 % per annum with respect to eurocurrency rate loans ( as defined in the credit agreement ) . we are charged a commitment fee of between 12.5 and 25.0 basis points on the unused portion of the facility . the terms of the credit agreement limit the amount of indebtedness that we may incur and require us to maintain ratios for leverage and interest coverage , including on a pro forma basis in the event of an acquisition . based on our credit spread , the interest rate under the credit facility at december 31 , 2018 is eurocurrency rate plus 2.00 % . on february 12 , 2019 , we entered into a fourth amendment to the credit agreement , dated as of july 27 , 2017. the fourth amendment implements certain principal changes to the credit agreement , including reduction of the revolving loan facility to $ 400 million ( from $ 600 million ) ; amendment to the leverage and interest coverage financial covenants ( through the maturity date of the credit agreement ) and the definition of ebitda ; addition of an anti-cash hoarding covenant ; amendments to certain negative covenants , including a reduction of certain baskets for restricted payments , prepayments of junior debt , asset sales , investments and capital expenditures ; and removal of the incremental facility . in connection with the fourth amendment , we amended our our security agreement to include additional joining subsidiaries ( as defined ) providing collateral for the benefit of the secured parties ( as defined ) and holders of our 2021 and 2024 notes .
| financial highlights . the following table provides a reconciliation of reported operating income ( loss ) , net income ( loss ) and diluted net income ( loss ) per common share to non-gaap measures used by management : replace_table_token_4_th net income ( loss ) per diluted share was $ ( 7.28 ) for the year ended december 31 , 2018 , a decline of $ 8.48 compared to 2017. adjusted eps ( non-gaap ) was $ 1.15 for the year ended december 31 , 2018 , a decline of $ 0.46 over the prior year . global solutions segment operating income was $ 104.1 million for 2018 , compared to $ 141.1 million for 2017. the declines were a result of a decline in distribution revenues , continued pressure on distribution margins , warehouse inefficiencies in certain of our facilities , increased expenses incurred for the development of new customer solutions , and higher severance and restricted stock expense which were partially offset by positive contributions from byram healthcare ( acquired in august 2017 ) . global products segment operating income was $ 75.7 million for 2018 , compared to $ 38.5 million for 2017. the increase was a result of the contributions from halyard ( acquired in april 2018 ) . use of non-gaap measures adjusted operating income , adjusted net income and adjusted eps are alternative views of performance used by management , and we believe that investors ' understanding of our performance is enhanced by disclosing these performance 21 measures . in general , the measures exclude items and charges that ( i ) management does not believe reflect our core business and relate more to strategic , multi-year corporate activities ; or ( ii ) relate to activities or actions that may have occurred over multiple or in prior periods without predictable trends . management uses these non-gaap financial measures internally to evaluate our performance , evaluate the balance sheet , engage in financial and operational planning and determine incentive compensation .
| 6,866 |
our actual results and timing of selected events in future periods may differ materially from those anticipated or implied in these forward-looking statements as a result of many factors , including those discussed under item 1a , `` risk factors , '' and elsewhere in this 10-k. see also `` cautionary note regarding forward-looking statements `` at the beginning of this 10-k. overview we are a global information and analytics company that measures advertising , content , and the consumer audiences of each , across media platforms . we create our products using a global data platform that combines information on digital platforms ( smartphones , tablets and computers ) , tv and movie screens with demographics and other descriptive information . we have developed proprietary data science that enables measurement of person-level and household-level audiences , removing duplicated viewing across devices and over time . this combination of data and methods enables a common standard for buyers and sellers to transact on advertising . this helps companies across the media ecosystem better understand and monetize their audiences and develop marketing plans and products to more efficiently and effectively reach those audiences . our ability to unify behavioral and other descriptive data enables us to provide audience ratings , advertising verification , and granular consumer segments that describe hundreds of millions of consumers . our customers include digital publishers , television networks , movie studios , content owners , advertisers , agencies and technology providers . the platforms we measure include televisions , smartphones , computers , tablets , ott devices and movie theaters . the information we analyze crosses geographies , types of content and activities , including websites , mobile apps , video games , television and movie programming , e-commerce , and advertising . 33 results of operations the following table sets forth selected consolidated statements of operations and comprehensive loss data as a percentage of revenues for each of the periods indicated . replace_table_token_3_th revenues our products and services are organized around solution groups that address customer needs . we evaluate revenues around three solution groups : ratings and planning provides measurement of the behavior and characteristics of audiences of content and advertising , across television and digital platforms including computers , tablets , smartphones , and other connected devices . these products and services are designed to help customers find the most relevant viewing audience , whether that viewing is linear , non-linear , online or on-demand . analytics and optimization includes custom solutions , activation , lift and survey-based products that provide end-to-end solutions for planning , optimization and evaluation of advertising campaigns and brand protection . movies reporting and analytics measures movie viewership and box office results by capturing movie ticket sales in real time or near real time and includes box office analytics , trend analysis and insights for movie studios and movie theater operators worldwide . we categorize our revenue along these solution groups ; however , our cost structure is tracked at the corporate level and not by our solution groups . these costs include , but are not limited to employee costs , purchased data , operational overhead , data storage and technology that supports multiple solution groups . 34 revenues for the years ended december 31 , 2019 and 2018 are as follows : replace_table_token_4_th total revenues decreased by $ 30.8 million , or 7.4 % , for the year ended december 31 , 2019 as compared to the year ended december 31 , 2018. the decrease was driven by the ratings and planning and analytics and optimization solution groups . ratings and planning revenue decreased by $ 13.7 million for the year ended december 31 , 2019 as compared to the year ended december 31 , 2018. the decrease was primarily driven by syndicated digital products , which declined 12 % from 2019 to 2018. while retention of syndicated digital enterprise customers remained high in 2019 , revenue from our smaller and international syndicated digital customers declined and continued to be impacted by ongoing industry changes in ad buying and consolidation . syndicated digital revenue represented 51 % and 55 % of our ratings and planning revenue for 2019 and 2018 , respectively . revenue from vce declined due to lower volumes of measured impressions as we transitioned to premium video content through our ccr product offering . offsetting those decreases were increased revenue from our cross-platform and tv offerings . cross-platform revenue increased from higher deliveries of data in 2019 versus 2018. tv revenue increased to 36 % of ratings and planning revenue in 2019 as compared to 34 % in 2018. tv revenue grew as a result of higher local tv revenue due to new customers and expansion of existing relationships , offset in part by lower national tv revenue , due in part to political revenue recognized in 2018 that did not recur in 2019. analytics and optimization revenue decreased by $ 17.7 million for the year ended december 31 , 2019 as compared to the year ended december 31 , 2018. the decrease was primarily driven by lower sales and deliveries of digital custom solutions , survey and lift products in 2019. the decrease was offset by increased revenue from activation products , which continued to experience year-over-year growth . movies reporting and analytics revenue increased by $ 0.6 million for the year ended december 31 , 2019 as compared to the year ended december 31 , 2018 due to growth in new product revenue . revenues for the years ended december 31 , 2018 and 2017 are as follows : replace_table_token_5_th ( 1 ) as discussed in footnote 2 , summary of significant accounting policies , the revenue for the year ended december 31 , 2018 is not comparable to the year ended december 31 , 2017 due to our adoption of asc 606. refer to our reconciliation of as reported revenue to compare the periods presented . story_separator_special_tag other costs decreased $ 2.0 million due to reduction in travel costs from lower headcount and certain license expenses that are now included in data costs . offsetting these decreases was an increase in data costs of $ 6.9 million due to increased costs associated with our long-term data contracts with mvpds . we continued to invest in product solution offerings through the acquisition of additional tv data . lease expense and depreciation increased $ 2.3 million primarily due to increased depreciation related to internally developed software . professional fees increased $ 1.5 million due to an increase in data governance and technology consulting services to improve operational processes . cost of revenues for the years ended december 31 , 2018 and 2017 are as follows : replace_table_token_7_th cost of revenues increased by $ 6.6 million , or 3.4 % , for the year ended december 31 , 2018 as compared to the year ended december 31 , 2017 . the increase was largely attributable to increases in data and systems and bandwidth costs , offset by decreases in employee costs , lease expense and depreciation , panel costs , and other costs . data costs increased $ 12.9 million primarily due to costs associated with the acquisition of data for distinct services provided under certain arrangements that include the purchase and sale of services and increases in our long-term contracts with mvpds . we continued to invest in product solution offerings through the acquisition of additional tv data , as well as in our digital platform through the acquisition of additional mobile data during 2018. systems and bandwidth costs increased $ 6.2 million primarily as a result of our ongoing technology transformation to reduce complexity , increase capacity and transition to a cloud-based environment from data centers . these increases in expenses were offset by decreases in employee costs , rent and depreciation , and other costs . employee costs declined $ 5.7 million , primarily due to the capitalization of payroll costs for internal-use software development in 2018 totaling $ 3.7 million compared with no amounts capitalized in 2017. in addition , employee costs decreased due to reduced headcount and restructuring efforts as discussed in footnote 16 , organizational restructuring , offset by an increase in stock-based compensation expense . lease expense and depreciation decreased $ 4.7 million due to assets fully depreciating in 2018. other cost of revenues decreased $ 2.0 million primarily due to reduced activity under our digital analytix ( `` dax '' ) transition services agreement as related contracts wound down . selling and marketing selling and marketing expenses consist primarily of employee costs , including salaries , benefits , commissions , stock-based compensation and other related costs for personnel associated with sales and marketing activities , as well as costs related to online and offline advertising , industry conferences , promotional materials , public relations , other sales and marketing programs and allocated overhead , which is comprised of lease expense and other facilities-related costs , and depreciation expense generated by general purpose equipment and software . 37 selling and marketing expenses for the years ended december 31 , 2019 and 2018 are as follows : replace_table_token_8_th ( 1 ) as discussed in footnote 2 , summary of significant accounting policies , lease expense and depreciation for the year ended december 31 , 2019 is not comparable to the year ended december 31 , 2018 due to our adoption of asc 842. selling and marketing expenses decreased by $ 19.3 million , or 17.8 % , for the year ended december 31 , 2019 as compared to the year ended december 31 , 2018 . the decrease was attributable to a decrease in employee costs as well as lease expense and depreciation , travel and professional fees , offset by an increase in technology costs . employee costs decreased $ 15.6 million due to reduced headcount and restructuring efforts as discussed in footnote 16 , organizational restructuring . lease expense and depreciation decreased $ 2.0 million as a result of various lease terminations and decreased depreciation expense as various assets reached the end of their depreciable lives . travel costs decreased $ 1.5 million from lower headcount while professional fees decreased $ 0.8 million from reduced use of consultants . offsetting these decreases in costs was an increase of $ 1.7 million in technology costs due certain license expenses that were previously included in research and development expense . selling and marketing expenses for the years ended december 31 , 2018 and 2017 are as follows : replace_table_token_9_th selling and marketing expenses decreased by $ 22.1 million , or 16.9 % , for the year ended december 31 , 2018 as compared to the year ended december 31 , 2017 . the decrease was the result of a decrease in employee costs , professional fees and lease expense and depreciation . employee costs decreased $ 12.6 million , due to reduced headcount and restructuring efforts as discussed in footnote 16 , organizational restructuring and lower sales commissions , offset by an increase in stock-based compensation . lease expense and depreciation decreased $ 2.6 million due to assets fully depreciating in 2018. the decrease in professional fees of $ 3.2 million was mainly due to the decreased use of consultants . research and development research and development expenses include product development costs , consisting primarily of employee costs including salaries , benefits , stock-based compensation and other related costs for personnel associated with research and development activities , third-party expenses to develop new products and third-party data costs and allocated overhead , which is comprised of lease expense and other facilities-related costs , and depreciation expense related to general purpose equipment and software .
| summary of significant accounting policies for additional information . in december 2019 , we issued a secured term note ( `` secured term note '' ) for gross proceeds of $ 13.0 million . see `` secured term note '' below . our liquidity could be negatively affected by a decrease in demand for our products and services or additional losses from operations , as well as payment of expenses incurred in prior periods . our liquidity could also be negatively affected if we elect to pay our interest liability on the notes ( currently set at 12.0 % per year ) in cash in lieu of common stock . for additional information on our interest liability , see footnote 4 , long-term debt . finally , our liquidity could be significantly affected if we are unable to maintain compliance with the affirmative and negative covenants in our notes , including the minimum cash balance requirement described below . if we fail to comply with our covenants , we could be required to redeem the notes at a premium . the source of funds for any such redemption would be our available cash or , possibly , other financing . based on our current plans , including actions within management 's control , we do not anticipate a breach of these covenants that would result in an event of default under the notes ; however , any such breach could have a material impact on our liquidity . we continue to be focused on maintaining flexibility in terms of sources , amounts and the timing of any potential financing , refinancing or strategic transaction in order to best position the company for future success . we believe that our sources of funding will be sufficient to satisfy our currently anticipated requirements for at least the next 12 months . however , we can not predict with certainty the outcome of our actions to generate liquidity , including the availability of additional financing .
| 6,867 |
we have significant long-lived tangible and intangible assets , which are susceptible to valuation adjustments as a result of changes in various factors or conditions . the most significant long-lived tangible and intangible assets are property , plant story_separator_special_tag you should read the following management 's discussion and analysis in conjunction with our consolidated financial statements and the related notes thereto contained elsewhere in this report . this discussion 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 a variety of factors , including those set forth under item 1a , risk factors and elsewhere in this report . the results of swss , our former security solutions division , which were previously reported as a separate business segment , are being presented as discontinued operations in the consolidated statements of income and comprehensive income for all periods presented . see note 4 discontinued operations in the notes to consolidated financial statements and discontinued operations below for additional information regarding these discontinued operations . unless otherwise indicated , any reference to income statement items in this management 's discussion and analysis of financial condition and results of operations refers to results from continuing operations . 2014 highlights our fiscal 2014 net sales of $ 626.6 million represented an increase of 6.7 % over our fiscal 2013 net sales . it should be noted that walther net sales were $ 36.0 million less than for the prior fiscal year , primarily because we ended our exclusive u.s. importer and distributor agreement with walther at the end of fiscal 2013. excluding walther , sales increased $ 75.1 million , or 13.8 % , over the prior fiscal year . income from continuing operations for fiscal 2014 was $ 88.6 million , or $ 1.47 per fully diluted share , compared with income from continuing operations of $ 81.4 million , or $ 1.22 per fully diluted share , for fiscal 2013. our operating results for fiscal 2014 were affected by numerous factors , including the following : the 13.8 % increase in net sales , excluding walther , was primarily driven by our ability to respond to consistently increased consumer demand over the past year with a 16.2 % increase in firearm units produced , particularly in our m & p branded polymer products and smaller size pistols . sales were also impacted favorably by price increases on certain of our products and a strategic change in our production mix . the introduction of new products in the last several years combined with increased production volumes for our m & p branded polymer pistols had a positive impact on our net sales and gross margins for fiscal 2014. in addition , increased consumer demand for certain of our products and increased customer acceptance of firearms has attributed to our sales and gross margin . our gross margin increased 4.2 percentage points from the prior fiscal year primarily as a result of additional manufacturing capacity resulting in increased sales volume of our higher margin products , the termination of our walther distribution agreement , which had lower gross margins , the improvement in manufacturing fixed-cost absorption that exceeded volume-related spending , reduced recall expenses , and lower promotional spending . we also implemented a new pricing and discount structure on selected products that improved both net sales and gross profit . we invested $ 30.4 million to upgrade our erp system to sap , including $ 12.3 million of support and maintenance expenses recorded in general and administration expense . we intend to continue investing in improving our systems in order to enhance our efficiency , improve information reporting , and strengthen internal controls . we sold an aggregate of $ 47.1 million of 5.875 % senior notes due in 2017 to various qualified institutional buyers in exchange for approximately $ 42.8 million of our outstanding 9.5 % senior notes held by existing holders of such notes . we also issued an additional $ 52.9 million of new 5.875 % senior notes for cash . the remaining $ 712,000 of 9.5 % senior notes outstanding after the exchange noted above were extinguished via legal defeasance . we recorded $ 4.3 million of interest expense and $ 795,000 of debt issuance write-off costs to retire the outstanding 9.5 % senior notes during fiscal 2014 . 34 our business we are one of the world 's leading manufacturers of firearms . we sell our products under the smith & wesson brand , the m & p brand , and the thompson/center arms brand . we manufacture a wide array of handguns ( including revolvers and pistols ) , long guns ( including modern sporting rifles , bolt action rifles , and black powder firearms ) , handcuffs , and firearm-related products and accessories for sale to a wide variety of customers , including gun enthusiasts , collectors , hunters , sportsmen , competitive shooters , individuals desiring home and personal protection , law enforcement and security agencies and officers , and military agencies in the united states and throughout the world . we are one of the largest manufacturers of handguns and handcuffs in the united states . we manufacture our firearm products at our facilities in springfield , massachusetts and houlton , maine . in addition , with the purchase of the net assets of ttpp in may 2014 , we will begin offering injection molded parts both to firearm and non-firearm customers . we plan to continue to offer products that leverage the over 160 year old smith & wesson brand and capitalize on the goodwill developed through our historic american tradition by expanding consumer awareness of products we produce . key performance indicators we evaluate the performance of our business based upon operating profit , which includes net sales , cost of sales , selling and administrative expenses , and certain components of other income and expense . story_separator_special_tag selling and marketing expenses decreased $ 1.3 million in fiscal 2013 , which was largely due to a $ 1.0 million reduction in consulting and outside services relating to market research and an $ 873,000 reduction in sample costs from fiscal 2012. general and administrative costs for fiscal 2013 increased over fiscal 2012 because of $ 1.5 million of additional profit sharing expense ; $ 2.5 million of increased incentive accruals ; and $ 1.9 million of additional stock-based compensation expense primarily related to options , rsus , and psus granted to our employees late in fiscal 2012 ; $ 1.2 million of additional bad debt expense offset by $ 2.5 million of reduced legal and consulting fees , of which $ 2.3 million related to our investigation of the doj and sec matters and $ 988,000 of employee-related costs resulting from severance benefits paid to our former president and chief executive officer in the prior year . 38 operating expenses as a percentage of net sales for fiscal 2013 decreased by 5.6 % , predominately because the increased volume did not require a corresponding increase in operating expenses . in addition , reduced market research and sample costs and reduced costs related to the doj and sec matters were partially offset by increased employee costs . operating income from continuing operations the following table sets forth certain information regarding operating income from continuing operations for the fiscal years ended april 30 , 2014 , 2013 , and 2012 ( dollars in thousands ) : replace_table_token_7_th fiscal 2014 operating income from continuing operations compared with fiscal 2013 in fiscal 2014 , operating income from continuing operations increased by $ 18.2 million over the prior fiscal year primarily from increased sales volume because of increased production capacity and the related gross profit , the corresponding impact of improved favorable fixed-cost absorption , increased manufacturing efficiencies , and price increases on selected products , offset by a 26.8 % increase in operating expenses primarily because of expenses associated with our new retail sales associate rewards program and trade show expenses , administrative costs relating to the support and employee training for our new erp system , additional stock-based compensation expense primarily from rsus and psus granted to our employees late in fiscal 2013 and early fiscal 2014 , salary and benefit costs , and additional depreciation expense from increased capital expenditures . fiscal 2013 operating income from continuing operations compared with fiscal 2012 in fiscal 2013 , we increased sales by over 42 % while only increasing operating expenses by 3 % . thus , the increase in operating income from continuing operations resulted from increased sales volumes which improved manufacturing fixed-cost absorption , favorable production mix , increased manufacturing efficiencies , and price increases on selected products . we also experienced reduced plant consolidation costs as a result of moving the production of our hunting products to our springfield , massachusetts facility in fiscal 2012 , reduced legal and consulting fees on the doj and sec matters as well as related improvements made to our customer acceptance process in foreign markets , partially offset by increased employee costs associated with increased profitability , and costs associated with the recall of our thompson/center arms bolt action rifles noted above other ( expense ) /income the following table sets forth certain information regarding other ( expense ) /income for the fiscal years ended april 30 , 2014 , 2013 , and 2012 ( dollars in thousands ) : replace_table_token_8_th other expense was $ 2.2 million for fiscal 2014 primarily as a result of a $ 2.0 million expense we recorded based on a pending resolution to an sec investigation . any future agreement is subject to final review and approval by the sec commissioners . other income in fiscal 2013 and 2012 relates primarily to rental income we recorded as a result of an agreement with the buyer of our foundry business in fiscal 2012 . 39 interest expense the following table sets forth certain information regarding interest expense for the fiscal years ended april 30 , 2014 , 2013 , and 2012 ( dollars in thousands ) : replace_table_token_9_th interest expense increased for fiscal 2014 over the prior fiscal year , primarily as a result of servicing our $ 100.0 million 5.875 % senior notes compared with our exchanged $ 43.6 million 9.5 % senior notes in the prior fiscal year . as a result of this exchange , we incurred $ 4.3 million of bond premium and $ 795,000 of debt issuance write-off costs to retire the outstanding 9.5 % senior notes . interest expense decreased for fiscal 2013 compared with fiscal 2012 because of the repurchase of $ 30.0 million of our 4.0 % senior convertible notes ( the convertible notes ) in fiscal 2012 and reduced amortization in connection with the write off of debt issuance costs as a result of the reduction of our line of credit during the prior fiscal year . the reduction of interest expense was offset by $ 552,000 of additional bond premium and $ 173,000 of debt issuance write-off costs to retire $ 6.4 million of our 9.5 % senior notes during fiscal 2013. income tax expense the following table sets forth certain information regarding income tax expense for the fiscal years ended april 30 , 2014 , 2013 , and 2012 ( dollars in thousands ) : replace_table_token_10_th our income tax expense for fiscal 2014 included the effect of changes in temporary differences between book value and tax bases of assets and liabilities and net operating loss carryforwards . these amounts are reflected in the balance of our net deferred tax assets , which totaled $ 5.7 million , after valuation allowance , as of april 30 , 2014. we had federal net operating loss carryforwards amounting to $ 649,000 , $ 757,000 , and $ 865,000 as of april 30 , 2014 , 2013 , and 2012 , respectively .
| results of operations net sales the following table sets forth certain information regarding net product and services sales for the fiscal years ended april 30 , 2014 , 2013 , and 2012 ( dollars in thousands ) : replace_table_token_4_th fiscal 2014 net sales compared with fiscal 2013 net sales for fiscal 2014 increased 6.7 % over the prior fiscal year as we were able to address increased consumer demand , particularly for our handgun products , which saw a net sales increase of 30.3 % over the prior fiscal year . handgun net sales were driven primarily by increased production volumes of our m & p branded polymer pistol products and smaller sized pistols and revolvers . net sales for our long guns decreased $ 23.9 million , or 13.3 % , from the prior fiscal year , primarily because of reduced bolt action rifle sales as we serviced the thompson/center arms bolt action rifle recall and reduced sales of our rimfire m & p rifles caused primarily by ammunition constraints . those lower rifle sales were offset by increased sales of our centerfire m & p rifles , including an m & p rifle newly introduced in 2013. in addition , during fiscal 2013 , we implemented a new pricing and discount structure that improved net sales . walther net sales were $ 36.0 million , or 86.4 % , less than for the prior fiscal year primarily because we ended our exclusive u.s. importer and distributor agreement with walther at the end of fiscal 2013. walther net sales for fiscal 2014 related to those products we manufacture on behalf of walther at our houlton , maine facility through an agreement that expired on april 30 , 2014. net sales were positively impacted by a price increase in january 2014 on a selected number of our products .
| 6,868 |
henglong usa corporation , “ hlusa , ” which was incorporated on january 8 , 2007 in troy , michigan , is a wholly-owned subsidiary of the company , and mainly engages in marketing of automotive parts in north america , and provides after sales service and research and development support accordingly . furthermore , the company owns the following aggregate net interests in the subsidiaries incorporated in the prc and brazil as of december 31 , 2018 and 2017. replace_table_token_3_th 27 story_separator_special_tag top ; text-align : justify '' > — henglong kyb mainly engages in providing passenger eps products . net sales for henglong kyb were $ 23.4 million for the year ended december 31 , 2018. the company restructured its business and transferred its eps business from henglong to henglong kyb in the fourth quarter of 2018. the company 's eps business will be primarily operated by henglong kyb in the future . henglong kyb contributed $ 23.4 million of net sales in 2018 . — net sales for other entities were $ 72.4 million for the year ended december 31 , 2018 , compared with $ 59.1 million for the year ended december 31 , 2017 , representing an increase of $ 13.3 million , or 22.5 % , mainly contributed by jielong , which manufactures automobile steering columns for both hydraulic power steering ( “ hps ” ) and eps . 29 cost of products sold for the year ended december 31 , 2018 , the cost of sales was $ 430.7 million , compared with $ 414.4 million for the year ended december 31 , 2017 , representing an increase of $ 16.3 million , or 3.9 % . the increase in cost of sales was mainly due to the effect of the following major factors : i ) the change in product mix , i.e . unit costs of new products are generally higher than those of the previous products ; ii ) the decrease in sales volumes with a cost of sales decrease of $ 6.5 million ; iii ) the increase in unit cost with a cost of sales increase of $ 10.9 million due to the increase in the cost of raw materials in china ; and iv ) the appreciation of the rmb against the u.s. dollar with a cost of sales increase of $ 11.9 million . further analysis is as follows : — cost of sales for henglong was $ 235.9 million for the year ended december 31 , 2018 , compared with $ 250.5 million for the year ended december 31 , 2017 , representing a decrease of $ 14.6 million , or 5.8 % . a decrease in sales volumes resulted in a cost of sales decrease of $ 25.2 million , an increase in unit material and subcomponents costs led to a cost of sales increase of $ 5.7 million and the effect of foreign currency translation of the rmb against the u.s. dollar led to a cost of sales increase of $ 4.9 million . — cost of sales for jiulong was $ 93.5 million for the year ended december 31 , 2018 , compared with $ 87.7 million for the year ended december 31 , 2017 , representing an increase of $ 5.8 million , or 6.6 % . the increase in cost of sales was mainly due to a decrease in sales volumes resulting in a cost of sales decrease of $ 5.1 million , an increase in unit cost resulting in a cost of sales increase of $ 8.2 million , and the effect of foreign currency translation of the rmb against the u.s. dollar resulting in a cost of sales increase of $ 2.7 million . — cost of sales for shenyang was $ 23.4 million for the year ended december 31 , 2018 , compared with $ 34.8 million for the year ended december 31 , 2017 , representing a decrease of $ 11.4 million , or 32.8 % . the decrease in cost of sales was mainly due to a decrease in sales volumes resulting in a cost of sales decrease of $ 17.6 million , an increase in unit cost resulting in a cost of sales increase of $ 5.7 million and the effect of foreign currency translation of the rmb against the u.s. dollar resulting in a cost of sales increase of $ 0.5 million . — cost of sales for wuhu was $ 29.6 million for the year ended december 31 , 2018 , compared with $ 23.6 million for the year ended december 31 , 2017 , representing an increase of $ 6.0 million , or 25.4 % . the increase in cost of sales was mainly due to an increase in sales volumes resulting in a cost of sales increase of $ 5.7 million , a decrease in unit cost resulting in a cost of sales decrease of $ 0.6 million and the effect of foreign currency translation of the rmb against the u.s. dollar resulting in a cost of sales increase of $ 0.9 million . — cost of sales for hubei henglong was $ 97.8 million for the year ended december 31 , 2018 , compared with $ 66.4 million for the year ended december 31 , 2017 , representing an increase of $ 31.4 million , or 47.3 % . the increase in cost of sales was mainly due to an increase in sales volumes resulting in a cost of sales increase of $ 17.1 million , an increase in unit cost resulting in a cost of sales increase of $ 11.6 million and the appreciation of the rmb against the u.s. dollar resulting in a cost of sales increase of $ 2.7 million . — cost of sales for henglong kyb was $ 22.8 million for the year ended december 31 , 2018. the company transferred its eps business from henglong to henglong kyb in the fourth quarter of 2018 . story_separator_special_tag in addition , withholding tax of $ 3.9 million was accrued in the fourth quarter of 2017 since the company plans to distribute dividends from its prc subsidiaries to the company in order to fund the payment of such one-time transition tax . excluding the one-time transition tax and the withholding tax discussed above , income tax benefit was mainly due to the additional r & d expenses super-deduction in calculating china entities ' taxable income allowed in 2018 according to china 's new tax regulation . 32 net income/ ( loss ) net income was $ 0.1 million for the year ended december 31 , 2018 , compared with net loss of $ 18.6 million for the year ended december 31 , 2017 , representing an increase in net income of $ 18.7 million , mainly due to a decrease in income before income tax expenses of $ 22.9 million , a decrease in income tax expenses of $ 43.0 million and a decrease in equity in earnings of affiliated companies of $ 1.5 million . net ( loss ) /income attributable to non-controlling interests the company recorded a net loss attributable to non-controlling interests of $ 2.3 million for the year ended december 31 , 2018 , compared to net income of $ 0.7 million for the year ended december 31 , 2017. net income/ ( loss ) attributable to parent company 's common shareholders net income attributable to parent company was $ 2.4 million for the year ended december 31 , 2018. as compared to net loss attributable to parent company of $ 19.3 million for the year ended december 31 , 2017 , there was an increase in net income attributable to parent company of $ 21.7 million , mainly resulting from the increase in net income of $ 18.7 million and an increase in net loss attributable to non-controlling interests of $ 3.0 million . privatization proposal on august 2 , 2017 , the company issued a press release announcing the appointment by the special committee ( the “ special committee ” ) of the company 's board of directors of houlihanlokey capital , inc. as its financial advisor and kirkland & ellis as its u.s. legal counsel in connection with its review and evaluation of the previously announced preliminary non-binding proposal letter ( the “ proposal ” ) that the company 's board of directors received on may 14 , 2017 from mr. hanlin chen , the chairman of the board of directors of the company , relating to a possible “ going private ” transaction , as well as in connection with its review and evaluation of any other sale , merger , business combination or other corporate transaction , with mr. chen or any other party , and any other strategic alternatives . in connection with the proposal , the company incurred expenses primarily due to professional service fees related to the proposal . in addition , the company paid a supplemental director fee to each of mr. arthur wong , mr. guangxun xu and mr. robert tung of approximately $ 9,333 per month over a period of ten months from may 2017 to february 2018 to compensate them in connection with their evaluation of the proposal . the aggregate amount of such supplemental director fees paid was $ 279,990. in connection with the appointment of the special committee of independent directors to evaluate the privatization proposal , the company 's management studied the fees payable to members of the special committee in over 25 privatization bids . based on that information , the company 's management determined that the aggregate fees paid by companies to members of a special committee in connection with a going-private transaction ranged from $ 75,000 to $ 440,000 , with an average of $ 244,176 and a median of $ 220,000. for the more recent transactions , the aggregate fees ranged from $ 200,000 to $ 650,000 , with an average of $ 487,000. considering the size and complexity of the company , the company 's management determined to cap the fees payable to the special committee at $ 280,000 , even if the privatization transaction were to take more than ten months to complete . 33 on august 16 , 2018 , as previously announced , the special committee received a notice of withdrawal of the proposal . liquidity and capital resources capital resources and use of cash the company has historically financed its liquidity requirements from a variety of sources , including short-term borrowings under bank credit agreements , bankers ' acceptances , issuances of capital stock and notes and internally generated cash . as of december 31 , 2018 , the company had cash and cash equivalents and short-term investments of $ 103.9 million , compared with $ 94.1 million as of december 31 , 2017 , an increase of $ 9.8 million , or 10.4 % . short-term investments included pledged short-term investments of nil and $ 2.0 million , respectively , as of december 31 , 2018 and 2017. the company had working capital ( current assets less current liabilities ) of $ 154.1 million as of december 31 , 2018 , compared with $ 159.1 million as of december 31 , 2017 , representing a decrease of $ 5.0 million , or 3.1 % . except for the expected distribution of dividends from the company 's prc subsidiaries to the company in order to fund the payment of the one-time transition tax due to the u.s. tax reform , the company intends to indefinitely reinvest the funds in subsidiaries established in the prc . the company believes that , in view of its current cash position , the cash expected to be generated from the operations and funds available from bank borrowings will be sufficient to meet its working capital and capital expenditure requirements ( including the repayment of bank loans ) for at least twelve months commencing from the date of issuance of this annual report .
| results of operations selected highlights from our operations ( in thousands of u.s. dollars ) : replace_table_token_4_th net product sales and cost of products sold for the years ended december 31 , 2018 and 2017 , net sales and cost of sales are summarized as follows ( figures are in thousands of usd ) : replace_table_token_5_th net product sales net product sales were $ 496.2 million for the year ended december 31 , 2018 , as compared to $ 499.1 million for the year ended december 31 , 2017 , representing a decrease of $ 2.9 million , or 0.6 % . net sales of traditional steering products were $ 388.3 million for the year ended december 31 , 2018 , compared to $ 378.4 million for 2017 , representing an increase of $ 9.9million , or 2.6 % . net sales of eps were $ 107.9 million for the year ended december 31 , 2018 , compared to $ 120.7 million for 2017 , representing a decrease of $ 12.8 million , or 10.6 % . as a percentage of net sales , the sales of eps was 21.7 % for the year ended december 31 , 2018 , compared to 24.2 % for 2017 . 28 the decrease in net product sales was due to the effects of three major factors : i ) the decrease in sales volume led to a sales decrease of $ 4.2 million due to the soft demand in the china domestic brand automobile market ; ii ) the decrease in average selling price of steering gears led to a sales decrease of $ 10.1 million ; and iii ) the appreciation of the rmb against the u.s. dollar in 2018 led to a sales increase of $ 11.4 million . further analysis is as follows : — henglong mainly engages in providing passenger vehicle steering systems .
| 6,869 |
in february 2016 , the fasb issued asu 2016-02 , “ leases ( topic 842 ) ” ( “ asu 2016-02 ” ) , which requires lessees to present right-of-use assets and lease liabilities on the balance sheet . lessees are required to apply a modified retrospective transition approach for leases existing at , or entered into after , the beginning of the earliest comparative period presented in the financial 53 statements or the additional transition method . under the additional transition method , the cumulative effect of applying the new guidance is recognized as an adjustment to certain captions on the balance sheet , including the opening balance of retained earnings in the first quarter of 2019 , and the prior years ' financial information will be presented under the prior accounting standard , asc 840 , “ story_separator_special_tag overview ducommun incorporated ( “ ducommun , ” “ the company , ” “ we , ” “ us ” or “ our ” ) is a leading global provider of engineering and manufacturing services for high-performance products and high-cost-of failure applications used primarily in the aerospace , defense , industrial , medical , and other industries . we differentiate ourselves as a full-service solution-based provider , offering a wide range of value-added products and services in our primary businesses of electronics , structures and integrated solutions . we operate through two primary business segments : electronic systems and structural systems , each of which is a reportable segment . highlights for the year ended december 31 , 2019 : net revenues of $ 721.1 million net income of $ 32.5 million , or $ 2.75 per diluted share adjusted ebitda of $ 92.3 million completed the acquisition of nobles worldwide , inc. non-gaap financial measures adjusted earnings before interest , taxes , depreciation , amortization , stock-based compensation expense , restructuring charges , inventory purchase accounting adjustments , and loss on extinguishment of debt ( “ adjusted ebitda ” ) was $ 92.3 million and $ 70.7 million for years ended december 31 , 2019 and december 31 , 2018 , respectively . when viewed with our financial results prepared in accordance with accounting principles generally accepted in the united states of america ( “ gaap ” ) and accompanying reconciliations , we believe adjusted ebitda provides additional useful information to clarify and enhance the understanding of the factors and trends affecting our past performance and future prospects . we define these measures , explain how they are calculated , and provide reconciliations of these measures to the most comparable gaap measure in the table below . adjusted ebitda and the related financial ratios , as presented in this annual report on form 10-k ( “ form 10-k ” ) , are supplemental measures of our performance that are not required by , or presented in accordance with , gaap . they are not a measurement of our financial performance under gaap and should not be considered as alternatives to net income or any other performance measures derived in accordance with gaap , or as an alternative to net cash provided by operating activities as measures of our liquidity . the presentation of these measures should not be interpreted to mean that our future results will be unaffected by unusual or nonrecurring items . we use adjusted ebitda non-gaap operating performance measures internally as complementary financial measures to evaluate the performance and trends of our businesses . we present adjusted ebitda and the related financial ratios , as applicable , because we believe that measures such as these provide useful information with respect to our ability to meet our operating commitments . adjusted ebitda has limitations as an analytical tool , and you should not consider it in isolation or as substitutes for analysis of our results as reported under gaap . some of these limitations are : they do not reflect our cash expenditures , future requirements for capital expenditures or contractual commitments ; they do not reflect changes in , or cash requirements for , our working capital needs ; they do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt ; although depreciation and amortization are non-cash charges , the assets being depreciated and amortized will often have to be replaced in the future , and adjusted ebitda does not reflect any cash requirements for such replacements ; they are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows ; they do not reflect the impact on earnings of charges resulting from matters unrelated to our ongoing operations ; and other companies in our industry may calculate adjusted ebitda differently from us , limiting their usefulness as comparative measures . 22 because of these limitations , adjusted ebitda and the related financial ratios should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as a measure of cash that will be available to us to meet our obligations . you should compensate for these limitations by relying primarily on our gaap results and using adjusted ebitda only as supplemental information . see our consolidated financial statements contained in this form 10-k. however , in spite of the above limitations , we believe that adjusted ebitda is useful to an investor in evaluating our results of operations because these measures : are widely used by investors to measure a company 's operating performance without regard to items excluded from the calculation of such terms , which can vary substantially from company to company depending upon accounting methods and book value of assets , capital structure and the method by which assets were acquired , among other factors ; help investors to evaluate and compare the results of our operations from period to period by removing the effect of our capital structure from our operating performance ; and are used by our management team for various other purposes in presentations to our board of directors as a basis for strategic story_separator_special_tag the new revolving credit facility is a $ 100.0 million senior secured revolving credit facility that matures on december 20 , 2024 replacing the $ 100.0 million 2018 revolving credit facility that would have matured on november 21 , 2023. the new term loan is a $ 140.0 million senior secured term loan that matures on december 20 , 2024. we also have an existing $ 240.0 million senior secured term loan that was entered into in november 2018 that matures on november 21 , 2025 ( “ 2018 term loan ” ) . the original amounts available under the new revolving credit facility , new term loan , and 2018 term loan ( collectively , the “ credit facilities ” ) in aggregate , totaled $ 480.0 million . we are required to make installment payments of 1.25 % of the original outstanding principal balance of the new term loan amount on a quarterly basis . in addition , if we meet the annual excess 30 cash flow threshold , we will be required to make excess flow payments on an annual basis . further , the undrawn portion of the commitment of the new revolving credit facility is subject to a commitment fee ranging from 0.175 % to 0.275 % , based upon the consolidated total net adjusted leverage ratio . as of december 31 , 2019 , we were in compliance with all covenants required under the credit facilities . see note 9 to our consolidated financial statements included in part iv , item 15 ( a ) of this annual report on form 10-k for further information . in november 2018 , we completed credit facilities to replace the then existing credit facilities . the november 2018 credit facilities consisted of the 2018 term loan and the 2018 revolving credit facility ( collectively , the “ 2018 credit facilities ” ) . we are required to make installment payments of 0.25 % of the outstanding principal balance of the 2018 term loan amount on a quarterly basis . in addition , if we meet the annual excess cash flow threshold , we will be required to make excess flow payments on an annual basis . further , the undrawn portion of the commitment of the 2018 revolving credit facility is subject to a commitment fee ranging from 0.200 % to 0.300 % , based upon the consolidated total net adjusted leverage ratio . see note 9 to our consolidated financial statements included in part iv , item 15 ( a ) of this annual report on form 10-k for further information . in october 2015 , we entered into interest rate cap hedges designated as cash flow hedges with a portion of these interest rate cap hedges maturing on a quarterly basis , and a final quarterly maturity date of june 2020 , in aggregate , totaling $ 135.0 million of our debt . we paid a total of $ 1.0 million in connection with entering into the interest rate cap hedges . on october 8 , 2019 , we acquired nobles parent inc. , the parent company of nobles worldwide , inc. ( “ nobles ” ) for a purchase price of $ 77.0 million , net of cash acquired , all payable in cash . we paid an aggregate of $ 77.3 million in cash by drawing down on the 2018 revolving credit facility . see note 3 to our consolidated financial statements included in part iv , item 15 ( a ) of this annual report on form 10-k for further information . in april 2018 , we acquired certified thermoplastics co. , llc ( “ ctp ” ) for a purchase price of $ 30.7 million , net of cash acquired , all payable in cash . we paid an aggregate of $ 30.8 million in cash by drawing down on the 2018 revolving credit facility . see note 3 to our consolidated financial statements included in part iv , item 15 ( a ) of this annual report on form 10-k for further information . in september 2017 , we acquired lightning diversion systems , llc ( “ lds ” ) for a purchase price of $ 60.0 million , net of cash acquired , all payable in cash . upon the closing of the transaction , we paid $ 61.4 million in cash by drawing down on the then existing revolving credit facility . the remaining $ 0.6 million was paid in october 2017 in cash , also by drawing down on the then existing revolving credit facility . we expect to spend a total of $ 16.0 million to $ 18.0 million for capital expenditures in 2020 financed by cash generated from operations , principally to support new contract awards at structural systems and electronic systems . as part of our strategic plan to become a supplier of higher-level assemblies and win new contract awards , additional up-front investment in tooling will be required for newer programs which have higher engineering content and higher levels of complexity in assemblies . we believe the ongoing aerospace and defense subcontractor consolidation makes acquisitions an increasingly important component of our future growth . we will continue to make prudent acquisitions and capital expenditures for manufacturing equipment and facilities to support long-term contracts for commercial and military aircraft and defense programs . we continue to depend on operating cash flow and the availability of our credit facilities to provide short-term liquidity . cash generated from operations and bank borrowing capacity is expected to provide sufficient liquidity to meet our obligations during the next twelve months . cash flow summary 2019 compared to 2018 net cash provided by operating activities during 2019 increased to $ 51.0 million compared to $ 46.2 million during 2018 due to higher net income partially offset by no restructuring charges in the current year . net cash used in investing activities in 2019 was $ 94.9 million compared to $ 47.9 million in 2018 due to higher payments for acquisition . net cash provided by financing activities during 2019 was $ 73.2
| results of operations 2019 compared to 2018 the following table sets forth net revenues , selected financial data , the effective tax rate and diluted earnings per share : replace_table_token_5_th nm = not meaningful net revenues by end-use market and operating segment net revenues by end-use market and operating segment during 2019 and 2018 , respectively , were as follows : replace_table_token_6_th 25 net revenues for 2019 were $ 721.1 million compared to $ 629.3 million for 2018 . the year-over-year increase was due to the following : $ 46.2 million higher revenues in our military and space end-use markets due to higher build rates on other military and space platforms , higher build rates on various missile platforms , and higher build rates on various military fixed-wing aircraft platforms ; and $ 45.0 million higher revenues in our commercial aerospace end-use markets due to additional content and higher build rates on large aircraft platforms . net revenues by major customers a significant portion of our net revenues are from our top ten customers as follows : replace_table_token_7_th ( 1 ) includes the boeing company ( “ boeing ” ) , raytheon company ( “ raytheon ” ) , and spirit aerosystems holdings , inc. ( “ spirit ” ) . the revenues from boeing , raytheon , and spirit are diversified over a number of commercial , military and space programs and were generated by both operating segments . gross profit gross profit consists of net revenues less cost of sales . cost of sales includes the cost of production of finished products and other expenses related to inventory management , manufacturing quality , and order fulfillment . gross profit margin increased to 21.1 % in 2019 compared to 19.5 % in 2018 due to favorable product mix and favorable manufacturing volume , partially offset by higher other manufacturing costs .
| 6,870 |
dealers either remit payment upon receipt of the product or finance their inventory through third-party floor plan lenders , who pay marine products generally within ten days of delivery of the products to the dealers . we manage our company by focusing on the execution of the following business and financial strategies : ● manufacturing high-quality , stylish , and innovative powerboats for our dealers and retail consumers , ● providing our independent dealer network appropriate incentives , training , and other support to enhance their success and their customers ' satisfaction , thereby facilitating their continued relationship with us , ● managing our production and dealer order backlog to optimize operating results and reduce risk in the event of a downturn in sales of our products , ● maintaining a flexible , variable cost structure which can be reduced quickly when deemed appropriate , ● focusing on the competitive nature of the boating business and designing our products and strategies in order to grow and maintain profitable market share , ● monitoring the recreational boat market for strong complementary product lines which we may enter through new product development or acquisition , ● extending our brand name recognition to enhance the success of new boat models that complement our existing offerings , ● improving our sales and profits by increasing the utilization of our manufacturing capacity , ● monitoring the activities and financial condition of our dealers and of the third-party floor plan lenders who finance our dealers ' inventories , ● maximizing stockholder return by optimizing the balance of cash invested in the company 's productive assets , the payment of dividends to stockholders , and the repurchase of the company 's common stock on the open market , and ● aligning the interests of our management and stockholders . in implementing these strategies and attempting to optimize our financial returns , management closely monitors dealer orders and inventories , the production mix of various models , and indications of near term demand such as consumer confidence , interest rates , dealer orders placed at our annual dealer conferences , and retail attendance and orders at annual winter boat show exhibitions . we also consider trends related to certain key financial and other data , including our historical and forecasted financial results , market share , unit sales of our products , average selling price per boat , and gross profit margins , among others , as indicators of the success of our strategies . marine products ' financial results are affected by consumer confidence — because pleasure boating is a discretionary expenditure , interest rates — because many retail customers finance the purchase of their boats , and other socioeconomic and environmental factors such as availability of leisure time , consumer preferences , demographics and the weather . during 2014 , several segments of the recreational boating industry improved due to stable consumer confidence and improving residential real estate markets , as well as a strong financing environment for dealers and consumers . overall retail sales of outboard recreational boats improved during 2014 , although sterndrive unit sales declined . our net sales improved in 2014 compared to 2013 due to higher unit sales of our robalo sport fishing boats and a model mix among our chaparral boats that yielded an increase in average selling prices . we achieved higher net sales , as well as increased gross and operating profit in 2014 compared to 2013. also during 2014 , chaparral produced and sold its first vortex jet boats and re-entered the outboard market , selling its first suncoast outboard model in the fourth quarter of 2014. management will continue to monitor retail demand among the various segments in the recreational boat market , dealer inventory levels and the availability of dealer and consumer financing for the purchase of our products and adjust our production levels as deemed appropriate . we continuously monitor our market share in the 18 to 33 foot sterndrive category as one indicator of the success of our strategies and the market 's acceptance of our products . for the nine months ended september 30 , 2014 ( latest data available to us ) , chaparral 's market share in the 18 to 33 foot sterndrive category was 14.3 percent compared to 13.9 percent during the same period in 2013 , the highest market share in this category . our market share increased across this broad size range , but was lower among the smallest boats in our market due to the decreased sales of our smaller entry level chaparral models . chaparral 's market share in the 18 to 20 foot category decreased to 9.4 percent during 2014 , compared to 10.7 percent in 2013. chaparral 's market share in the 21 to 33 foot category increased from 16.2 percent during the nine months ended september 30 , 2013 to 17.6 percent during the same period in 2014 due to the relative strength of our larger chaparral models along with an increase in sales of the 21 foot entry level models . based on available market share data , chaparral 's share of the jet boat market during the 12 months ended december 31 , 2014 was approximately seven percent . we will continue to monitor our market share and believe it to be important , but we also believe that maximizing profitability takes precedence over growing our market share . 20 outlook we believe that recreational boating retail demand in many segments of the industry is improving . attendance and sales during the 2015 winter boat shows have been moderately higher than the 2014 winter boat show season , residential real estate markets and consumer confidence have stabilized , and fuel prices have declined significantly . we also believe that there is improved demand from consumers who have delayed purchasing a boat over the past few years due to economic uncertainty . story_separator_special_tag cash used for investing activities was $ 269 thousand in 2013 compared to $ 16.8 million provided by investing activities in 2012. this change was due to significant sales of marketable securities in 2012 primarily used to fund a portion of the $ 0.55 per share special dividend paid in the fourth quarter of 2012. cash used for financing activities decreased $ 18.2 million in 2013 primarily due to the special dividend of $ 0.55 per share paid in the fourth quarter of 2012 , partially offset by a 50.0 percent increase in the quarterly cash dividend in 2013 compared to the prior year coupled with a special dividend of $ 0.03 per share paid in the fourth quarter of 2013. cash requirements management expects that capital expenditures during 2015 will be approximately $ 1.6 million . 23 the company participates in a multiple employer retirement income plan , sponsored by rpc , inc. ( “ rpc ” ) . during 2014 , the company made cash contributions of $ 135 thousand to this plan in order to achieve the company 's funding objective . we expect that additional contributions by the company to the retirement income plan of approximately $ 150 thousand will be made in 2015. on january 27 , 2015 , the board of directors approved a quarterly dividend of $ 0.04 per common share payable march 10 , 2015 to stockholders of record at the close of business on february 10 , 2015. the company has agreements with two employees , which provide for a monthly payment to the employees equal to 10 percent of profits ( defined as pretax income before goodwill amortization and certain allocated corporate expenses ) . in january 2008 , the board of directors authorized an additional 3,000,000 shares that the company may repurchase for a total aggregate authorization of 8,250,000 shares . there were 124,664 shares repurchased in the open market during 2014. as of december 31 , 2014 , the company has repurchased a total of 5,158,449 shares in the open market under this program and there are 3,091,551 shares that remain available for repurchase . the company has entered into agreements with third-party floor plan lenders where it has agreed , in the event of default by the dealer , to repurchase mpc boats repossessed from the dealer . these arrangements are subject to maximum repurchase amounts and the associated risk is mitigated by the value of the boats repurchased . there were no material repurchases of dealer inventory during 2013. the company incurred obligations for inventory repurchases totaling approximately $ 1.1 million during 2014 resulting from dealer defaults on floor plan financing . the company recorded costs in connection with these repurchases of approximately $ 75 thousand during 2014 as a reduction of net sales . as of december 31 , 2014 there were no amounts payable to lenders related to repurchased inventory . there are no repurchased boats remaining in inventory as of december 31 , 2014 as all of these boats have been redistributed among existing and replacement dealers . if dealers experience financial difficulty as a result of the current market conditions , the company may incur repurchase obligations under current programs or programs initiated in the future . see further information regarding repurchase obligations in “ note 9 : commitments and contingencies ” of the consolidated financial statements . the company believes that the liquidity provided by its existing cash and cash equivalents , marketable securities , and cash expected to be generated from operations will provide sufficient capital to meet its requirements for at least the next twelve months . the company 's decisions about the amount of cash to be used for investing and financing purposes are influenced by its capital position and the expected amount of cash to be provided by operations . contractual obligations the following table summarizes the company 's contractual obligations as of december 31 , 2014 : replace_table_token_7_th ( 1 ) operating leases represent agreements for warehouse space and various office equipment . ( 2 ) as part of the normal course of business the company enters into purchase commitments to manage its various operating needs . however , the company does not have any obligations that are non-cancelable or subject to a penalty if canceled . ( 3 ) the company has agreements with various third-party lenders where it guarantees varying amounts of debt for qualifying dealers on boats in inventory . as of december 31 , 2014 , there are no payables outstanding to floor plan lenders . fair value measurements the company 's assets and liabilities measured at fair value are classified in the fair value hierarchy ( level 1 , 2 or 3 ) based on the inputs used for valuation . assets and liabilities that are traded on an exchange with a quoted price are classified as level 1. assets and liabilities that are valued using significant observable inputs in addition to quoted market prices are classified as level 2. the company currently has no assets or liabilities measured on a recurring basis that are valued using unobservable inputs and therefore no assets or liabilities measured on a recurring basis are classified as level 3. for defined benefit plan assets classified as level 3 , the values are computed using inputs such as cost , discounted future cash flows , independent appraisals and market based comparable data or on net asset values calculated by the fund and not publicly available . 24 off balance sheet arrangements to assist dealers in obtaining financing for the purchase of its boats for inventory , the company has entered into agreements with various third-party floor plan lenders whereby the company guarantees varying amounts of debt for qualifying dealers on boats in inventory . the company 's obligation under these guarantees becomes effective in the case of a default under the financing arrangement between the dealer and the third-party lender .
| results of operations replace_table_token_5_th year ended december 31 , 2014 compared to year ended december 31 , 2013 net sales . marine products ' net sales increased by $ 2.8 million or 1.6 percent in 2014 compared to 2013. the increase was primarily due to a 2.7 percent increase in the average gross selling price per boat , partially offset by a 2.2 percent decrease in the number of boats sold . unit sales decreased due to lower sales of our chaparral sterndrive models , partially offset by increased unit sales of our robalo outboard sport fishing boats and sales of our vortex jet boats . average selling prices increased due to higher sales of our larger models in both the chaparral and robalo boat lines . during 2014 , sales outside of the united states accounted for 15.3 percent of net sales , a decrease compared to 17.2 percent of net sales in the prior year . domestic sales increased 4.0 percent and international sales decreased 9.5 percent during the period compared to the prior year . cost of goods sold . cost of goods sold decreased 0.1 percent in 2014 compared to 2013. as a percentage of net sales , cost of goods sold decreased to 80.9 percent in 2014 , compared to 82.3 percent in 2013 , primarily due to a favorable model mix , coupled with improved manufacturing efficiencies . selling , general and administrative expenses . selling , general and administrative expenses increased 1.8 percent in 2014 compared to 2013 primarily as a result of costs that vary with sales , such as sales commissions , coupled with an increase in advertising expense .
| 6,871 |
this discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included herein in part ii , item 8 , financial statements and supplementary data and the description of our business included herein in part 1 , item 1 business . executive overview net income for 2015 totaled $ 12.5 million , an increase of 27.1 % from the $ 9.9 million earned in 2014. diluted earnings per share for 2015 were $ 1.79 , an increase of 26.1 % from the $ 1.42 in diluted earnings per share earned in 2014. key components of the company 's performance in 2015 are summarized below . the company 's financial condition and income as of and for the period ended december 31 , 2015 were impacted by the acquisition of louisiana bancorp , inc. ( louisiana bancorp ) , the holding company for bank of new orleans ( bno ) of metairie , louisiana , on september 15 , 2015. as a result of the acquisition , the company acquired assets of $ 351.1 million , which included loans of $ 281.6 million , and $ 291.3 million in deposits and other liabilities . shareholders of louisiana bancorp received $ 24.25 per share in cash , resulting in an aggregate purchase price of $ 70.0 million . the company incurred $ 1.4 million in pre-tax merger-related expenses during the year ended december 31 , 2015. see note 3 to the consolidated financial statements for additional information regarding the acquisition of louisiana bancorp . assets totaled $ 1.6 billion as of december 31 , 2015 , up $ 330.5 million , or 27.1 % , from december 31 , 2014. the increase was primarily the result of the louisiana bancorp acquisition . investment securities totaled $ 190.7 million as of december 31 , 2015 , an increase of $ 4.2 million , or 2.2 % , from december 31 , 2014. the increase was driven by $ 36.4 million in securities acquired from louisiana bancorp as of the date of acquisition . loans as of december 31 , 2015 were $ 1.2 billion , an increase of $ 315.4 million , or 34.7 % , from december 31 , 2014. the increase in loans was primarily driven by the $ 281.6 million in loans acquired from louisiana bancorp at the acquisition date . growth in our originated loan portfolio during the year was primarily related to construction and land loans , commercial and industrial loans and one- to four-family first mortgage loans . net office properties and equipment as of december 31 , 2015 were $ 40.8 million , an increase of $ 2.9 million , or 7.5 % , from december 31 , 2014. the company began 2015 with 27 banking offices . the acquisition of three bno locations increased our total number of banking offices to 30. total customer deposits as of december 31 , 2015 were $ 1.2 billion , an increase of $ 250.6 million , or 25.2 % , from december 31 , 2014. the louisiana bancorp acquisition added $ 208.7 million in deposits at the acquisition date . excluding the deposits assumed from louisiana bancorp , core deposits increased $ 76.5 million , or 9.9 % , while certificate of deposits decreased $ 34.5 million , or 15.6 % . interest income increased $ 4.1 million , or 7.5 % , in 2015 compared to 2014. the increase was primarily due to higher average volume of interest-earning assets as the result the louisiana bancorp acquisition and organic loan growth . interest expense increased $ 582,000 , or 17.7 % , in 2015 compared to 2014. the increase was primarily due to a higher average volume of interest-bearing liabilities as the result of the louisiana bancorp acquisition and organic core deposit growth . 19 the provision for loan losses totaled $ 2.1 million in 2015 , 12.4 % lower than the $ 2.4 million recorded in 2014. at december 31 , 2015 , the company 's ratio of allowance for loan losses to total loans was 0.78 % , compared to 0.85 % at december 31 , 2014. the ratio of the allowance for loan losses to total originated loans was 1.15 % at december 31 , 2015 , compared to 1.04 % at december 31 , 2014. based upon our analysis of the risk elements in our loan portfolio , including continued low energy prices , the company increased its allowance for loan losses on originated loans by 11 basis points , or $ 873,000 , during 2015. net charge-offs for 2015 were $ 283,000 , or 0.02 % of total loans , compared to $ 1.5 million , or 0.17 % , in 2014. noninterest income increased $ 595,000 , or 7.3 % , in 2015 compared to 2014. the increase was primarily the result of higher gains on the sale of mortgage loans ( up $ 316,000 ) , bank card fees ( up $ 235,000 ) and service fees and charges ( up $ 191,000 ) due to increased sales and transaction volume . noninterest expense increased $ 251,000 , or 0.6 % , in 2015 compared to 2014. the company incurred $ 1.4 million and $ 2.3 million in merger-related expenses during 2015 and 2014 , respectively . excluding merger-related expenses , noninterest expense increased $ 1.1 million , or 2.9 % . the increase was primarily the result of higher compensation and benefits , data processing and communications , and occupancy expenses due to the company 's growth . acquisition activity on september 15 , 2015 , the company acquired louisiana bancorp , inc. , the former holding company of bank of new orleans of metairie , louisiana . shareholders of louisiana bancorp received $ 24.25 per share in cash , resulting in aggregate purchase price of $ 70.0 million . story_separator_special_tag this evaluation is inherently subjective as it requires material estimates including , among others , exposure to default , the amount and timing of expected future cash flows on loans , value of collateral , estimated losses on our commercial and residential loan portfolios as well as consideration of general loss experience . all of these estimates may be susceptible to significant change . while management uses the best information available to make loan loss allowance evaluations , adjustments to the allowance may be necessary based on changes in economic and other conditions or changes in accounting guidance . the occ , as an integral part of its examination processes , periodically reviews our allowance for loan losses . the occ may require the recognition of adjustments to the allowance for loan losses based on their judgment of information available to them at the time of their examinations . to the extent that actual outcomes differ from management 's estimates , additional provisions to the allowance for loan losses may be required that would adversely impact earnings in future periods . as part of the risk management program , an independent review is performed on the loan portfolio , which supplements management 's assessment of the loan portfolio and the allowance for loan losses . the result of the independent review is reported directly to the audit committee of the board of directors . acquired loans were recorded at fair value at the date of acquisition with no carryover of the allowance for loan losses . as of december 31 , 2015 , our allowance for loan losses included $ 373,000 allocated to acquired loans with credit quality which had deteriorated since the date of acquisition . our accounting policy for acquired loans is described below . accounting for loans . the following briefly describes the distinction between originated and acquired loans and certain significant accounting policies relevant to each category . originated loans loans originated for investment are reported at the principal balance outstanding net of unearned income . interest on loans and accretion of unearned income are computed in a manner that approximates a level yield on recorded principal . interest on loans is recorded as income as earned . the accrual of interest on an originated loan is discontinued when it is probable the borrower will not be able to meet payment obligations as they become due . the company maintains an allowance for loan losses on originated loans that represents management 's estimate of probable losses incurred in this portfolio category . 21 acquired loans acquired loans are those collectively associated with our acquisitions of statewide , gsfc , britton & koontz and bno . these loans were recorded at estimated fair value at the acquisition date with no carryover of the related allowance for loan losses . the acquired loans were segregated between those considered to be performing ( acquired performing ) and those with evidence of credit deterioration ( acquired impaired ) , and then further segregated into loan pools designed to facilitate the estimation of expected cash flows . the fair value estimate for each pool of acquired performing and acquired impaired loans was based on the estimate of expected cash flows , both principal and interest , from that pool , discounted at prevailing market interest rates . the difference between the fair value of an acquired performing loan pool and the contractual amounts due at the acquisition date ( the fair value discount ) is accreted into income over the estimated life of the pool . management estimates an allowance for loan losses for acquired performing loans using a methodology similar to that used for originated loans . the allowance determined for each loan pool is compared to the remaining fair value discount for that pool . if the allowance amount calculated under the company 's methodology is greater than the company 's remaining discount , the additional amount called for is added to the reported allowance through a provision for loan losses . if the allowance amount calculated under the company 's methodology is less than the company 's recorded discount , no additional allowance or provision is recognized . actual losses first reduce any remaining fair value discount for the loan pool . once the discount is fully depleted , losses are applied against the allowance established for that pool . acquired performing loans are placed on nonaccrual status and considered and reported as nonperforming or past due using the same criteria applied to the originated portfolio . the excess of cash flows expected to be collected from an acquired impaired loan pool over the pool 's estimated fair value at acquisition is referred to as the accretable yield and is recognized in interest income using an effective yield method over the remaining life of the pool . each pool of acquired impaired loans is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows . management recasts the estimate of cash flows expected to be collected on each acquired impaired loan pool periodically . if the present value of expected cash flows for a pool is less than its carrying value , an impairment is recognized by an increase in the allowance for loan losses and a charge to the provision for loan losses . if the present value of expected cash flows for a pool is greater than its carrying value , any previously established allowance for loan losses is reversed and any remaining difference increases the accretable yield which will be taken into interest income over the remaining life of the loan pool . acquired impaired loans are generally not subject to individual evaluation for impairment and are not reported with impaired loans , even if they would otherwise qualify for such treatment . certain loans purchased in the statewide acquisition are covered by loss sharing agreements between the fdic and the company .
| results of operations the company earned net income of $ 12.5 million in 2015 , an increase of $ 2.7 million , or 27.1 % , compared to 2014. the company earned net income of $ 9.9 million in 2014 , an increase of $ 2.6 million , or 35.3 % , compared to 2013. diluted earnings per share for 2015 were $ 1.79 , an increase of 26.1 % from 2014. diluted earnings per share for 2014 were $ 1.42 , an increase of 34.0 % from 2013 . 31 net interest income net interest income is the difference between the interest income earned on interest-earning assets , such as loans and investment securities , and the interest expense paid on interest-bearing liabilities , such as deposits and borrowings . our net interest income is largely determined by our net interest spread , which is the difference between the average yield earned on interest-earning assets and the average rate paid on interest bearing liabilities , and the relative amounts of interest-earning assets and interest-bearing liabilities . net interest income totaled $ 54.5 million in 2015 , an increase of $ 3.5 million , or 6.9 % , compared to the $ 51.0 million earned in 2014. the increase was due to a $ 4.1 million , or 7.5 % , increase in interest income , which was partially offset by a $ 582,000 , or 17.7 % , increase in interest expense . the increases in 2015 compared to 2014 were primarily due to increases in our average loan and deposit portfolios driven by organic growth and acquired balances from louisiana bancorp in the third quarter of 2015. in 2014 , net interest income totaled $ 51.0 million , an increase of $ 10.8 million , or 26.9 % , compared to the $ 40.2 million earned in 2013. the increase was due to a $ 10.6 million , or 24.2 % , increase in interest income and a $ 219,000 , or 6.3 % , decrease in interest expense .
| 6,872 |
“ equipment ” means each item of and all of the technology equipment and other similar capital equipment ( medical technology equipment , telecommunications technology equipment , inventory management equipment ) purchased , owned , operated , and or leased by the partnership or in which the partnership has acquired a direct or indirect interest , as more fully described in the partnership agreement , together with all appliances , parts , instruments , accessories , furnishings , or other equipment included therein and all substitutions , renewals , or replacements of , and all additions , improvements , and accessions to , any and all thereof . “ finance lease ” generally means a full-payout , non-cancellable agreement in which the customer is responsible for maintenance , taxes and insurance . the term also refers in article 2a of the uniform commercial code to a special type of lease in which the lessor , lessee and the manufacturer have contractual relationships and the lessor at all times , with the lessee 's acknowledgement , remains a passive investor where the lessee makes most equipment decisions directly with the manufacturer . “ full payout net lease ” means an initial net lease of the equipment under which the non-cancelable rental payments due ( and which can story_separator_special_tag the following is a discussion of our current financial position and results of operations . this discussion should be read together with the partnership 's financial statements contained under item 8 of this annual report on form 10-k. this discussion should also be read in conjunction with the disclosures above regarding “ forward-looking statements. ” 15 introduction we were formed on may 19 , 2003 for the purpose of acquiring various types of business-essential technology equipment , including computer information technology , telecommunications , medical technology , inventory management and other similar capital equipment . we offered for sale up to 1,250,000 units of the limited partnership at the purchase price of $ 20 per unit ( the “ offering ” ) . we reached the minimum offering amount , broke escrow and commenced operations on march 14 , 2005. the offering terminated on february 24 , 2006 with 1,249,951 units ( $ 24,957,862 net of transaction costs of $ 41,158 ) sold . our management team consists of the officers of our corporate general partner , commonwealth income & growth fund , inc. we have utilized the net proceeds of our public offering to purchase equipment that is subject to leases with businesses throughout the united states . we have also utilized debt financing ( not in excess of 30 % of the aggregate cost of the equipment owned or subject to conditional sales contracts at the time the debt is incurred ) to purchase additional equipment . we acquire and lease equipment principally to u.s. corporations and other institutions pursuant to operating leases . we retain the flexibility to enter into full payout net leases and conditional sales contracts , but have not done so . competitive outlook as discussed in “ competition ” in item 1 above , the commercial leasing and financing industry is highly competitive and is characterized by competitive factors that vary based upon product and geographic region . we compete primarily on the basis of pricing , terms and structure , particularly on structuring flexible , responsive , and customized financing solutions for our customers . our investments are often made directly rather than through competition in the open market . this approach limits the competition for our typical investment , which is intended to enhance returns . we believe our investment model will represent the best way for individual investors to participate in investing in business-essential equipment . nevertheless , to the extent that our competitors compete aggressively on any combination of the foregoing factors , our results could be adversely impacted . principal investment objectives our principal investment objectives are to : a ) acquire , lease and sell equipment to generate revenues from operations sufficient to provide annual cash distributions to our limited partners ; b ) preserve and protect limited partners ' capital ; c ) use a portion of cash flow and net disposition proceeds derived from the sale , refinancing or other disposition of equipment to purchase additional equipment ; and d ) refinance , sell or otherwise dispose of equipment in a manner that will maximize proceeds . industry overview we invest in various types of domestic information technology equipment leases located solely within the united states . our investment objective is to acquire primarily high technology equipment . we believe that dealing in high technology equipment is particularly advantageous due to a robust aftermarket . information technology has developed rapidly in recent years and is expected to continue to do so . technological advances have permitted reductions in the cost of computer processing capacity , speed , and utility . in the future , the rate and nature of equipment development may cause equipment to become obsolete more rapidly . in an effort to mitigate this risk our portfolio manager attempts to diversify our fund through the acquisition of different types of equipment , staggered lease maturities , various lessees , and businesses located throughout the u.s. , and industries served . 16 we also acquire high technology medical , telecommunications and inventory management equipment . our general partner seeks to maintain an appropriate balance and diversity in the types of equipment acquired . the market for high technology medical equipment is growing each year . generally , this type of equipment has a longer useful life . this allows for increased re-marketability , if it is returned before its economic or announcement cycle is depleted . story_separator_special_tag ancillary to the partnership 's principal equipment leasing business , the partnership also sells certain equipment and may offer certain services to support its customers . the partnership 's lease transactions are principally accounted for under topic 842 on january 1 , 2019. prior to topic 842 , the partnership accounted for these transactions under topic 840 , leases ( “ topic 840 ” ) . lease revenue includes revenue generated from leasing equipment to customers , including re-rent revenue , and is recognized as either on a straight line basis or using the effective interest method over the length of the lease contract , if such lease is either an operating lease or finance lease , respectively . the partnership 's sale of equipment along with certain services provided to customers is recognized under asc topic 606 , revenue from contracts with customers , ( “ topic 606 ” ) , which was adopted on january 1 , 2018. prior to adoption of topic 606 , the partnership recognized these transactions under asc topic 605 , revenue recognized , and ( “ topic 605 ” ) . the partnership recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer . the amount of revenue recognized reflects the consideration the partnership expects to be entitled to in exchange for such products or services . for the year ended december 31 , 2020 , the partnership 's lease portfolio consisted of operating leases and finance leases . for operating leases , lease revenue is recognized on a straight-line basis in accordance with the terms of the lease agreement . finance lease interest income is recorded over the term of the lease using the effective interest method . upon the end of the lease term , if the lessee has not met the return conditions as set out in the lease , the partnership is entitled in certain cases to additional compensation from the lessee . the partnership 's accounting policy for recording such payments is to treat them as revenue . gains or losses from sales of leased and off-lease equipment are recorded on a net basis in the partnership 's statement of operations . gains from the termination of leases are recognized when the lease is modified and terminated concurrently . our leases do not contain any step-rent provisions or escalation clauses nor are lease revenues adjusted based on any index . partnership 's accounting policy for sales and property taxes collected from the lessees are presented in the current period as gross revenues and expenses . long lived assets depreciation on equipment for financial statement purposes is based on the straight-line method estimated generally over useful lives of two to four years . once an asset comes off lease or is re-leased , the partnership reassesses the useful life of an asset . the partnership evaluates its long-lived assets when events or circumstances indicate that the value of the asset may not be recoverable . the partnership determines whether impairment exists by estimating the undiscounted cash flows to be generated by each asset . if the estimated undiscounted cash flows are less than the carrying value of the asset then impairment exists . the amount of the impairment is determined based on the difference between the carrying value and the fair value . fair value is determined based on estimated discounted cash flows to be generated by the asset , third party appraisals or comparable sales of similar assets , as applicable , based on asset type . residual values are determined by management and are calculated using information from both internal and external sources , as well as other economic indicators . 18 reimbursable expenses reimbursable expenses are comprised of both ongoing operational expenses and fees associated with the allocation of salaries and benefits , referred to as other lp ( “ other lp ” ) expenses . for the year ended december 31 , 2020 , the general partner waived certain reimbursable expenses charged to the partnership by ccc in connection with the administration and operation of the partnership . ccc is not reimbursed for salary and benefit costs of control persons . reimbursable expenses , which are charged to us by ccc in connection with our administration and operation , are allocated to us based upon several factors including , but not limited to , the number of investors , leasing volume and stage of the program . for example , if one partnership has more investors than another program sponsored by ccc , then higher amounts of expenses related to investor services , mailing and printing costs will be allocated to that partnership . also , while a partnership is in its offering stage , higher compliance costs are allocated to it than to a program not in its offering stage , as compliance resources are utilized to review incoming investor suitability and proper documentation . finally , lease related expenses , such as due diligence , correspondence , collection efforts and analysis staff costs , increase as programs purchase more leases , and decrease as leases terminate and equipment is sold . all of these factors contribute to ccc 's determination as to the amount of expenses to allocate to us or to other sponsored programs . ccc is not reimbursed for salary and benefit costs of control persons . for the partnership , all reimbursable items are expensed as they are incurred . forgiveness of related party payables in accordance with asc topic 470-50 debt modifications and extinguishments , the partnership accounts for forgiveness of related party payables as partners ' capital transactions . lease income receivable lease income receivable includes current lease income receivable net of allowances for uncollectible accounts , if any . the partnership monitors lease income receivable to ensure timely and accurate payment by lessees . its lease relations department is responsible for monitoring lease income receivable and , as necessary , resolving outstanding invoices .
| results from operations for the year ended december 31 , 2020 , the partnership recognized revenue of approximately $ 349,000 , expenses of approximately $ 488,000 , which resulted in a net loss of approximately $ 139,000. for the year ended december 31 , 2019 , the partnership recognized revenue of approximately $ 551,000 , expenses of approximately $ 493,000 , which resulted in a net income of approximately $ 57,000. the decrease was primarily due to a reduction of revenue of approximately $ 188,000 and an increase in operating expenses of approximately $ 194,000 , offset by a decrease in bad debt expense of approximately $ 79,000 and a decrease in depreciation expense of approximately $ 103,000. the partnership had 59 active operating leases that generated lease revenue of approximately $ 299,000 during 2020 as compared 63 active operating leases that generated lease revenue of approximately $ 488,000 during 2019. the decrease in revenue was primarily due to more leases expiring versus new leases being acquired . the decrease in number of active leases is consistent with the overall decrease in lease revenue . management expects to add new leases to our portfolio during 2021 , funded primarily through debt financing . the partnership 's equipment portfolio consists of approximately 45 % servers/other , digital storage 21 % , multifunction centers 10 % , high end servers 9 % , desktops – tier 1/laptops 8 % , inventory control centers 3 % , workstations 2 % , high volume spec printers 1 % and fitness equipment 1 % . the general partner continuously monitors and seeks to decrease the concentration of equipment by type to diversify the equipment portfolio and potentially reduce the overall risk to the investor . for the year ended december 31 , 2020 , the partnership had a total of five lessees that accounted for lease revenue of 10 % or greater which are ranked as follows : 32 % ; 21 % ; 18 % ; 12 % and 12 % .
| 6,873 |
the company 's operating results can be impacted significantly by cost and volatility of commodities , especially steel , plastic , and wood . because a majority of the company 's sales are generated under annual contracts in which the company has limited ability to raise the price of its products during the term of the contract , if the costs of the company 's raw materials increase suddenly or unexpectedly , the company can not be certain that it will be able to implement corresponding increases in its sales prices in order to offset such increased costs . the company moderates this exposure by building significant quantities of finished goods and component parts during the first and second quarters . commodity prices for raw material were relatively stable in 2015 and declined modestly in 2016. in 2017 commodity costs , particularly steel , increased significantly but the company had already sourced and produced the majority of the product delivered during the summer . in 2015 the company experienced challenges with both capacity and cost for third party freight carriers . the majority of virco 's sales include freight to the customer facility , and volatility in cost or availability of transportation equipment can adversely impact both profitability and customer service . significant cost increases in manufacturing or distributing products during a given contract period can adversely impact operating results and have done so during prior years . the company typically benefits from any decreases in raw material or distribution costs under the contracts described above . during 2018 the company anticipates continued uncertainty and volatility in commodity costs , particularly with respect to certain raw materials , transportation , and energy . the company does not anticipate that this volatility overall will be as dramatic as experienced in some prior years but may have an adverse effect on operating results . while the company anticipates challenging economic conditions to continue to impact its core customer base in the near term , there are certain underlying demographics , customer responses , and changes in the competitive landscape that provide opportunities . first , the underlying demographics of the student population are stable compared to the volatility of school budgets , and the related level of furniture and equipment purchases . this volatility is attributable to the financial health of the school systems . virco management believes that there is a pent-up demand for quality school furniture ( though it is unclear when and to what extent that pent-up demand will be converted into a meaningful increase in purchases ) . second , management believes that parents and voters will make quality education an ongoing priority for future government spending . third , many schools have responded to the budget strains by reducing their support infrastructure . this change provides opportunities to provide services to schools , such as project management for new or renovated schools , delivery to individual school sites rather than truckload deliveries to central warehouses , and delivery of furniture into classrooms . moreover , this change offers opportunities for virco to promote its complete product assortment which allows one-stop shopping as opposed to sourcing furniture needs from a variety of suppliers . fourth , many suppliers previously shut down or dramatically curtailed their domestic manufacturing capabilities , making it difficult for competitors to adapt to dynamic fluctuations in demand or provide custom colors or finishes during a narrow seasonal summer delivery window when they are reliant upon a supply chain extending to asia or elsewhere . meanwhile , virco has continued to and invest in automation at its domestic manufacturing facilities , adding flat metal forming processes to its manufacturing capabilities and bringing production into its factories of items formerly sourced from other suppliers . virco views its domestic factories as a strategic resource for providing its customers with timely delivery of a broad selection of colors , finishes , laminates , and product styles . critical accounting policies and estimates this discussion and analysis of virco 's financial condition and results of operations is based upon the company 's financial statements which have been prepared in accordance with u.s. generally accepted accounting principles . the preparation of these financial statements requires virco management to make estimates and judgments that affect the company 's reported assets , liabilities , revenues and expenses , and related disclosure of contingent assets and liabilities . on an on-going basis , management evaluates such estimates , including those related to revenue recognition , allowance for doubtful accounts , valuation of inventory and related obsolescence reserves , self-insured retention for products and general liability insurance , self-insured retention for workers ' compensation insurance , provision for warranty , liabilities under defined benefit and other compensation programs , and estimates related to deferred tax assets and liabilities . management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances . this forms the basis of judgments about the carrying value of assets and liabilities that are not readily apparent from other sources . actual results may differ from these estimates under different assumptions or conditions . factors that could cause or contribute to these differences include the factors discussed above under item 1 , business , and elsewhere in this annual report on form 10-k. virco 's critical accounting policies are as follows : revenue recognition : the company recognizes revenue in accordance with financial accounting standards board ( “ fasb ” ) accounting standards codification ( “ asc ” ) topic 605 , “ revenue recognition. ” revenue is recognized when title passes under its various shipping terms , when classroom delivery services are complete , and when collectability is reasonably assured . 25 the company reports sales net of sales returns and allowances , sales taxes imposed by various government authorities , cash discounts and rebates to customers . in most instances , the company sells furniture on bids and contracts , which may include multiple elements . story_separator_special_tag 26 defined benefit obligations : the company has three defined benefit plans , the virco employees retirement plan ( the “ employee plan ” ) and the virco important performers plan ( the “ vip plan ” ) and the outside directors plan , which provide retirement benefits to employees and outside directors . virco discounted the pension obligations for the various plans using the following rates : replace_table_token_5_th because the company froze new benefit accruals for all three plans effective december 31 , 2003 , the assumed rate of increase in compensation has no effect on the accounting for the plans . the company estimated a 6.5 % return on plan assets for the employee plan for all three years . the vip plan and directors plan are unfunded and have no plan assets . these rate assumptions can vary due to changes in interest rates and expected returns in the stock market . in prior years , the discount rate has decreased by several percentage points , causing pension expense and pension obligations to increase . in 2015 , the company experienced material reductions in the discount rates that are used to measure plan obligations , and utilized new mortality tables that reflect increased life expectancies . these changes increased pension expense and may require future cash contributions to adequately fund the employee plan . because the plans have been frozen for many years , there is no service cost related to the plans . in 2016 , due to a large number of lump sum benefits paid to retired and terminated employees , the company has incurred settlement costs for the employee plan . in effort to “ de-risk ” the employee plan , the company intends to continue to reach out to and offer lump sum benefits to terminated and retired employees , which may result in settlement costs in the future . the company did not incur settlement costs in 2017 or 2015. due to the size of the company 's pension obligations , a one percent change in rates can cause a material change in the pension obligations . a one percent reduction in discount rates would cause obligations under the employee plan to increase by approximately $ 2.9 million . a one percent reduction in discount rates would cause obligations under the non-qualified plans to increase by approximately $ 1.4 million . the retirement obligations would decrease by similar amounts if discount rate were to increase by a comparable percentage . the company obtains annual actuarial valuations for both plans . deferred tax assets and liabilities : the company recognizes deferred income taxes under the asset and liability method of accounting for income taxes in accordance with the provisions of fasb asc topic 740 “ income taxes. ” deferred income taxes are recognized for differences between the financial statement and tax basis of assets and liabilities at enacted statutory tax rates in effect for the years in which the differences are expected to reverse . the effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date . in assessing the realizability of deferred tax assets , the company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized . the ultimate realization of deferred tax assets is dependent upon the generation of future taxable income or reversal of deferred tax liabilities during the periods in which those temporary differences become deductible . the company considers the scheduled reversal of deferred tax liabilities , projected future taxable income , and tax planning strategies in making this assessment . the company recorded a substantial operating loss for the years ended january 31 , 2013 , 2012 , and 2011. during the fourth quarter of the year ended january 31 , 2011 , based on this consideration , the company determined the realization of a majority of the net deferred tax assets no longer met the more likely than not criteria and a valuation allowance was recorded against the majority of the net deferred tax assets . a valuation allowance was recorded against the majority of the net deferred tax assets totaling $ 21,906,000 at january 31 , 2016. the company recorded operating profits for the fiscal years ended january 31 , 2015 , january 31 , 2016 , and january 31 , 2017. at october 31 , 2016 , the company determined that it was more-likely-than-not to realize the majority of its deferred tax assets , and therefore released its valuation against those assets resulting in a benefit to income taxes . the company has left a partial valuation allowance of $ 515,000 against certain state deferred tax assets that the company does not believe it is more-likely-than-not to realize . at january 31 , 2017 , the company has net operating loss carryforwards of approximately $ 16,879,000 for federal and $ 34,145,000 for state income tax purposes , expiring at various dates through january 31 , 2035. results of operations ( 2017 vs. 2016 ) financial results and cash flow 27 the company earned a pre-tax profit of $ 4,727,000 on net sales of $ 173,417,000 for the fiscal year ended january 31 , 2017 , compared to pre-tax profit of $ 4,667,000 on net sales of $ 168,595,000 in the fiscal year ended january 31 , 2016. net after-tax income increased to $ 22,760,000 for the fiscal year ended january 31 , 2017 from $ 4,549,000 in the prior fiscal year , due to a benefit to income taxes of $ 17,962,000 recognized in october 2016 upon the release of the company 's valuation against deferred tax assets . net income per basic share increased to $ 1.51 for the fiscal year ended january 31 , 2017 , compared to $ 0.31 in the prior year , due primarily to the income tax benefit .
| executive overview management 's strategy is to position virco as the overall value supplier of educational furniture and equipment . the markets that virco serves include the education market ( the company 's primary market ) , which is made up of public and private schools ( preschool through 12th grade ) , junior and community colleges , four-year colleges and universities ; and trade , technical and vocational schools . virco also serves convention centers and arenas ; the hospitality industry , with respect to their banquet and meeting facilities ; government facilities at the federal , state , county and municipal levels ; and places of worship . in addition , the company sells to wholesalers , distributors , retailers , catalog retailers , and internet retailers that serve these same markets . these institutions are frequently characterized by extreme seasonality and or a bid-based purchasing function . the company 's business model , which is designed to support this strategy , includes the development of several competencies to enable superior service to the markets in which virco competes . an important element of virco 's business model is the company 's emphasis on developing and maintaining key manufacturing , warehousing , distribution , delivery , project management , and service capabilities . the company has developed a comprehensive product offering for the furniture , fixtures and equipment needs of the k-12 education market , enabling a school to procure all of its furniture , fixtures and equipment ( “ ff & e ” ) requirements from one source . virco 's product offering consists primarily of items manufactured by virco , complemented with products sourced from other furniture manufacturers . our product offerings are continually enhanced with an ongoing new product development program that incorporates internally developed products as well as product lines developed with accomplished designers . finally , management continues to hone virco 's ability to forecast , finance , manufacture , warehouse , deliver , and install furniture within the relatively narrow delivery window associated with the highly seasonal demand for education sales .
| 6,874 |
34 the actual and target allocation for plan assets are as follows : replace_table_token_24_th the fair value of our pension plan assets as of october 30 , 2020 and the level under which fair values were determined , using the hierarchy described in note 1 , is as follows : 2020 level 1 level 2 level 3 total total plan assets $ 54,116 - - $ 54,116 expected payments for the pension benefits are as follows : replace_table_token_25_th executive retirement plans non-qualified deferred compensation effective january 1 , 1991 , we adopted a deferred compensation savings plan for certain key employees . under this arrangement , selected employees contribute a portion of their annual compensation to the plan . we contribute an amount to each participant 's account by computing an investment return equal to moody 's average seasoned bond rate plus 2 % . employees receive vested amounts upon death , termination or attainment of retirement age . no benefit expense was recorded under this plan for fiscal years 2020 and 2019. supplemental executive retirement plan retirement benefits otherwise available to certain key executives under the primary benefit plan have been limited by the effects of the tax equity and fiscal responsibility act of 1982 ( “ tefra ” ) and the tax reform act of 1986 ( “ tra ” ) . to offset the loss of retirement benefits associated with tefra and tra , the company has adopted a non-qualified “ makeup ” benefit plan ( the “ supplemental executive retirement plan ” ) . benefits will be provided under the supplemental executive retirement plan in an amount equal to 60 % of each participant 's final average earnings minus any pension benefits and primary insurance amounts available to them under social security . however , in all cases the benefits are capped at $ 120,000 per year for allan l. bridgford . benefits provided under this plan for william l. bridgford and raymond f. lancy are calculated at 50 % of final average earnings , capped at $ 200,000 per year , without offsets for other pension or social security benefits . 35 benefits payable related to these plans and included in the accompanying consolidated financial statements were $ 6,544 and $ 6,428 as of october 30 , 2020 and november 1 , 2019 , respectively . in connection with these arrangements we are the beneficiary of life insurance policies on the lives of certain key employees and retirees . the aggregate cash surrender value of these policies , included in non-current assets , was $ 13,195 and $ 12,289 as of october 30 , 2020 and november 1 , 2019 , respectively . expected payments for executive postretirement benefits are as follows : replace_table_token_26_th incentive compensation plan for certain key executives we provide an incentive compensation plan for certain key executives , which is based upon our pretax income . the payment of these amounts is generally deferred over three or five-year periods . the total amount payable related to this arrangement was $ 6,070 and $ 7,919 as of october 30 , 2020 and november 1 , 2019 , respectively . future payments are approximately $ 3,074 , $ 1,996 , $ 877 , $ 87 and $ 36 for fiscal years 2021 through 2025 , respectively . postretirement healthcare benefits for selected executive employees we provide postretirement health care benefits for selected executive employees . net periodic postretirement healthcare ( benefit ) cost is determined using assumptions as of the beginning of each fiscal year , except for the total actual benefit payments and the discount rate used to develop the net periodic postretirement benefit expense , which is determined at the end of the fiscal year . net periodic postretirement healthcare cost ( benefit ) consisted of the following : replace_table_token_27_th weighted average assumptions for the fiscal years ended october 30 , 2020 and november 1 , 2019 are as follows : replace_table_token_28_th the table below shows the estimated effect of a 1 % increase in healthcare cost trend rate on the following : replace_table_token_29_th the table below shows the estimated effect of a 1 % decrease in healthcare cost trend rate on the following : replace_table_token_30_th 36 the healthcare obligation and funded status of this plan as of the fiscal years ended are as follows : replace_table_token_31_th expected payments for the postretirement benefits are as follows : replace_table_token_32_th 401 ( k ) plan for sales , administrative , supervisory and certain other employees during the fiscal year ended november 3 , 2006 , we implemented a qualified 401 ( k ) retirement plan ( the “ 401k plan ” ) for our sales , administrative , supervisory and certain other employees . during fiscal years 2020 and 2019 , we made total employer contributions to the 401k plan in the amounts of $ 754 and $ 722 , respectively . note 4 - income taxes : the benefit on or provision for income taxes includes the following : replace_table_token_33_th 37 the total tax ( benefit ) provision differs from the expected amount computed by applying the story_separator_special_tag for a complete understanding , this management 's discussion and analysis of financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements contained in this report . certain statements under “ management 's discussion and analysis of financial condition and results of operations ” and elsewhere in this report constitute “ forward-looking statements ” within the meaning of the securities act of 1933 and the securities exchange act of 1934 ( refer to part i. , item 1. business for more information ) . story_separator_special_tag the major components comprising the increase of “ other sg & a ” expenses were computer maintenance and utilities . selling , general and administrative expenses-frozen food products segment sg & a expenses in the frozen food products segment decreased by $ 2,301 ( 15.5 % ) to $ 12,566 during fiscal year 2020 compared to the prior fiscal year . the overall decrease in sg & a expenses was due to lower unit sales volume , profit-sharing accruals and product advertising . 13 selling , general and administrative expenses-refrigerated and snack food products segment sg & a expenses in the snack food products segment increased by $ 3,910 ( 10.3 % ) to $ 41,880 during fiscal year 2020 compared to the prior fiscal year . most of the increase was due to higher unit sales volume partially offset by an allocated gain on cash surrender value of life insurance policies . gain or loss on sale of property , plant and equipment the gain or loss during fiscal years 2020 and 2019 was due to ordinary gain or loss on disposal of assets . story_separator_special_tag $ 225 received as non-refundable earnest money . the table below highlights the additions to property , plant and equipment for the fifty-two weeks ended : replace_table_token_10_th expenditures for additions to property , plant and equipment during the fifty-two weeks ended october 30 , 2020 include projects in process of $ 1,090 related to the new facility in chicago . cash provided by financing activities : replace_table_token_11_th our stock repurchase program was approved by the board of directors in november 1999 and was expanded in june 2005. under the stock repurchase program , we were authorized , at the discretion of management and the board of directors , to purchase up to an aggregate of 2,000,000 shares of our common stock on the open market . as of the end of fiscal year 2020 , 120,113 shares remained authorized for repurchase under the program . the company leases three long-haul trucks received during fiscal year 2019. the six-year leases for these trucks expire in 2025. amortization of equipment under capital lease was $ 71 in 2020. the company leased one long-haul truck for $ 40 during fiscal year 2020 , and that lease term is two years . 15 we maintain a line of credit with wells fargo bank , n.a . that extends through march 1 , 2022. under the terms of this line of credit , we may borrow up to $ 7,500 at an interest rate equal to the bank 's prime rate or libor plus 1.5 % . we borrowed $ 2,000 under this line of credit on november 24 , 2019 and $ 2,500 on january 24 , 2020 for a combined total of $ 4,500. we repaid the balance on this line of credit with wells fargo bank , n.a . on may 13 , 2020 of $ 4,500 with the proceeds from the fifth borrowing of $ 7,200 under the master collateral loan and security agreement with wells fargo bank , n.a . described below . the company was in compliance with all covenants as of october 30 , 2020. subsequent to october 30 , 2020 , we borrowed $ 2,000 under the line of credit on december 2 , 2020. on december 26 , 2018 , we entered into a master collateral loan and security agreement with wells fargo bank , n.a . ( the “ original wells fargo loan agreement ” ) for up to $ 15,000 in equipment financing as amended to expand facility . pursuant to the original wells fargo loan agreement , we borrowed the following amounts . replace_table_token_12_th ( 1 ) term : 7 years for 84 installment payments . the wells fargo loan agreement as amended and line of credit , contain various affirmative and negative covenants that limit the use of funds and define other provisions of the loan . the main financial covenants are listed below : ● total liabilities divided by tangible net worth not greater than 2.5 to 1.0 at each fiscal quarter , ● quick ratio not less than 1.0 to 1.0 at each fiscal quarter end , and ● fixed charge coverage ratio not less than 1.25 to 1.0 as of each fiscal quarter end , determined on a trailing 4-quarter basis . aggregate contractual maturities of debt in future fiscal years are as follows : replace_table_token_13_th the company was in compliance with all covenants under the wells fargo loan agreement and line of credit as of october 30 , 2020. impact of inflation our operating results are heavily dependent upon the prices paid for raw materials . the marketing of our value-added products does not lend itself to instantaneous changes in selling prices . changes in selling prices are relatively infrequent and do not compare with the volatility of commodity markets . while fluctuations in significant cost structure components , such as ingredient commodities and fuel prices , have had a significant impact on profitability over the last two fiscal years , the impact of general price inflation on our financial position and results of operations has not been significant . however , future volatility of general price inflation or deflation and raw material cost and availability could adversely affect our financial results . management is of the opinion that our strong financial position and our capital resources are sufficient to provide for our operating needs and capital expenditures for fiscal year 2021. off-balance sheet arrangements we do not currently have any off-balance sheet arrangements within the meaning of item 303 ( a ) ( 4 ) of regulation s-k. contractual obligations except as described above , we had no other debt or other contractual obligations within the meaning of item 303 ( a ) ( 5 ) of regulation s-k , as of october 30 , 2020. our expected future liability related to construction of the new chicago processing facility is
| income taxes the company 's effective income tax rate was -42.7 % and 24.0 % in fiscal years 2020 and 2019 , respectively . the effective income tax rate differed from the applicable mixed statutory rate of approximately 26.4 % due to the rate differential on our net operating loss carryback available under the cares act , non-deductible meals and entertainment , non-taxable gains and losses on life insurance policies and state income taxes . ( refer to note 4 of notes to the consolidated financial statements for more information ) . liquidity and capital resources ( in thousands except share amounts , percentages and ratios ) the principal source of our operating cash flow is cash receipts from the sale of our products , net of costs to manufacture , store , market and deliver such products . we normally fund our operations from cash balances and cash flow generated from operations . we borrowed $ 15,000 during fiscal year 2019 and $ 18,450 during the first half of fiscal year 2020 to purchase specific equipment for our new chicago processing facility . in addition , we borrowed $ 4,500 under our line of credit with wells fargo bank , n.a . during the first quarter of fiscal year 2020 to fund operations which was repaid in the third quarter of fiscal 2020. we borrowed $ 2,000 under the line of credit subsequent to the end of fiscal year 2020 on december 2 , 2020. on march 16 , 2020 , we entered into a purchase and sale agreement with crg acquisition , llc ( “ crg ” ) as amended , pursuant to which we agreed to sell to crg a parcel of land including an approximate 156,000 square foot four-story industrial food processing building located at 170 n. green street in chicago , illinois ( the “ property ” ) .
| 6,875 |
, begins to expire in 2021. note 10— related party transactions the company previously entered into lease agreements for approximately 70,000 and 10,000 square feet of office space in buildings in which the company 's chairman and chief executive officer ( `` ceo `` ) , and president , own minority interests as limited partners . the company exercised its option to terminate the lease for 70,000 square feet of office space effective in may 2015. in connection with the termination of this lease , the company paid $ 1.3 million for unamortized expenses in january 2016. additionally , as of january 2016 , payments for the remaining 10,000 square feet of space are no longer being made to a related party entity as the lender has taken ownership of the property . under the terms of these agreements , the company made no rent payments to related parties in 2016 and made payments story_separator_special_tag the following discussion and analysis presents factors that had a material effect on our results of operations during the years ended december 31 , 2016 , 2015 and 2014 . also discussed is our financial position as of december 31 , 2016 and 2015 . investors should read this discussion in conjunction with our consolidated financial statements , including the notes thereto , appearing elsewhere in this annual report . this discussion and analysis contains forward-looking statements . please refer to the section entitled “ disclosure regarding forward-looking statements ” at the beginning of this annual report on form 10-k for a discussion of the uncertainties , risks and assumptions associated with these statements . year in review 2016 highlights : solidified timing to begin operating a single fleet type in conjunction with fully retiring our md-80 aircraft by the end of 2019 ; appointed john redmond as president of our company ; reached a collective bargaining agreement for our pilots ( which became effective august 1 , 2016 ) ; launched the allegiant world mastercard® issued by bank of america ; added 9 airbus a320 series aircraft into revenue service and signed contracts ( including for the purchase of 12 newly manufactured aircraft ) which will increase the number of owned airbus aircraft to 78 ; returned $ 66.4 million to shareholders through stock repurchases , paid a special cash dividend of $ 27.7 million in january 2016 , as well as $ 39.8 million as 2016 recurring cash dividends ; added $ 150.0 million to our existing senior unsecured notes ; produced operating margin of 27.2 percent and $ 13.21 earnings per share ( fully diluted ) ; and operated 360 routes at december 31 , 2016 versus 296 at the end of 2015 . 28 aircraft operating fleet the following table sets forth the number and type of aircraft in service and operated by us as of the dates indicated : replace_table_token_9_th ( 1 ) does not include 12 owned aircraft currently on lease to a european carrier or two aircraft being prepared for revenue service as of december 31 , 2016. as of february 1 , 2017 , we have entered into forward purchase agreements for 31 airbus a320 series aircraft for which we have not yet taken delivery . we expect delivery of 18 aircraft in 2017 and the remaining in 2018 and 2019. refer to part i - item 2 - properties for further detail regarding our aircraft fleet . we continuously consider aircraft acquisitions on an opportunistic basis . network we use profitability management tools to manage capacity and route expansion through optimization of our flight schedule to , among other things , better match demand in certain markets . we continually adjust our network through the addition of new markets and routes , adjusting the frequencies into existing markets , and exiting under-performing markets , as we seek to achieve and maintain profitability on each route we serve . our route network as of december 31 , 2016 represents a 22 percent increase in the number of routes flown compared to the end of 2015 , and the number of mid-sized cities served is now up to 19 after initiating service to these larger airports in 2014. as of february 1 , 2017 and including recent service announcements , we were selling 377 routes . the following table shows the number of leisure destinations and cities served as of the dates indicated ( includes cities served seasonally ) : replace_table_token_10_th trends during 2016 , we solidified our plan to transition to the airbus a320 series aircraft as our single fleet type and retired one boeing 757 aircraft and four md-80 aircraft . we expect to retire the remaining four boeing 757 aircraft in 2017 , and the remaining 47 md-80 aircraft by the end of 2019. we continue to focus on the purchase of used airbus a320 series aircraft to add to our operating fleet . although airbus aircraft are significantly more fuel efficient than our other fleet types , fuel costs in the long-term remain uncertain and cost volatility could materially affect our future operating expenses . in september 2016 , we launched the allegiant world mastercard® issued by bank of america . this program provides us with an additional opportunity to increase revenue . the number of cardholder accounts established thus far has exceeded initial forecasts . we continuously develop initiatives for additional revenue streams and opportunities to promote the allegiant brand . 29 we continue to add service from medium-sized cities . as of february 1 , 2017 , we were offering service on 96 medium-sized city routes compared to 71 as of the same date in 2016. we believe many of these cities are no longer considered core hubs for major carriers , and from which many have reduced service , creating a void for us to fill with limited or no direct nonstop competition . we will continue to strategically add routes and service to new cities . story_separator_special_tag ancillary air-related revenue for 2015 increased $ 102.6 million , or 30.9 percent , compared with 2014 , due mostly to the 16.7 percent increase in scheduled service passengers as well as continued revenue optimization efforts . in addition , an increase to our customer convenience fee , and effective yield management of other existing products , drove a 12.2 percent increase in average ancillary air-related fare per passenger . 33 ancillary third party revenue . the following table details the calculation of ancillary revenue from third party products . third party products consist of revenue from the sale of hotel rooms , ground transportation ( rental cars and hotel shuttle products ) , attraction and show tickets , and fees we receive from other merchants selling products through our website : replace_table_token_14_th ( a ) includes payment expenses and travel agency commissions . ancillary third party revenue increased $ 3.6 million in 2015 from 2014. this was due primarily to the 16.7 percent increase in scheduled service passengers which drove a 31.5 percent increase in rental car days sold . also , rental car sales have been bolstered by our network growth in east coast cities , where rental car take rates are higher . hotel room night sales slowed in 2015 mostly due to our network shift away from las vegas ( our largest hotel market ) to east coast cities where hotel room night sales are weaker . additionally , weakness in the canadian dollar led to a decrease in canadian passengers who have historically comprised a significant percentage of our hotel room night sales . fixed fee contract revenue . fixed fee contract revenue for 2015 increased $ 2.3 million , or 13.5 percent , compared with 2014 , due to additional charter activity in 2015. other revenue . other revenue for 2015 increased $ 13.0 million compared with 2014 , primarily from aircraft lease revenue related to the 12 airbus a320 series aircraft acquired in june 2014 , which remain on lease to a european carrier . operating expenses we primarily evaluate our expense management by comparing our costs per passenger and per asm across different periods , which enables us to assess trends in each expense category . the following table presents operating expense per passenger for the indicated periods . replace_table_token_15_th 34 the following table presents unit costs on a per asm basis , or casm , for the indicated periods . replace_table_token_16_th aircraft fuel expense . aircraft fuel expense for 2015 decreased $ 109.8 million , or 28.3 percent , compared with 2014. the decrease was primarily the result of a 38.2 percent decrease in system average cost per gallon . this was offset by a 16.3 percent increase in system fuel gallons consumed . airbus aircraft flew 32.6 percent of scheduled service asms in 2015 , compared to 21.1 percent in 2014. salary and benefits expense . excluding a one-time expense of $ 7.3 million related to the departure of our former president and coo in september 2014 , salary and benefits expense for 2015 increased $ 43.8 million , or 23.5 percent , compared with 2014. the increase is primarily attributable to an 18.0 percent increase in the number of ftes needed to support an 8.0 percent increase in average number of aircraft in service . in addition , a year over year increase in profitability drove a $ 15.1 million increase in our bonus accrual , and our pilots entered a higher pay-band in may 2015. salary and benefits expense on a per asm basis was relatively flat year over year . station operations expense . station operations expense for 2015 increased $ 17.6 million , or 20.8 percent on a 20.7 percent increase in scheduled service departures compared with the same period in 2014. maintenance and repairs expense . maintenance and repairs expense for 2015 increased $ 5.8 million , or 6.7 percent compared with 2014. the increase was due mostly to an 8.0 percent increase in the average number of operating aircraft in service . our total major maintenance events decreased by one when compared to 2014 due to the regular rotation of scheduled events for our md-80 aircraft . sales and marketing expense . sales and marketing expense for 2015 decreased $ 7.1 million , or 25.1 percent , compared to 2014 , primarily due to a reduction in net credit card fees paid by us . we charged for credit card fee reimbursement at zero margin ( a fee charged to customers for using a credit card ) beginning in december 2014. this charge was applied as a reduction to sales and marketing expense , and the net amount paid by us for credit card fees was reduced . aircraft lease rentals expense . aircraft lease rentals expense decreased $ 13.6 million for 2015 compared with 2014 , as our need for sub-service flights decreased substantially in 2015. we do not currently lease any aircraft . depreciation and amortization expense . depreciation and amortization expense for 2015 increased $ 14.7 million , or 17.6 percent , compared with 2014 due mainly to an 8.0 percent increase in average number of operating airbus aircraft , and was flat on a per asm basis . additionally , during the second quarter of 2014 , we began depreciating 12 airbus a320 series aircraft on lease to a european carrier , which are non-asm producing aircraft . other expense . other expense for 2015 increased by $ 10.1 million , or 18.1 percent , compared with 2014 , due primarily to increased flight crew training needed to support our growing operating fleet , as well as expenses incurred to support improvement and development of our information technology initiatives .
| results of operations 2016 compared to 2015 operating revenue scheduled service revenue . scheduled service revenue for 2016 increased by $ 17.9 million compared with 2015 , primarily driven by a 17.6 percent increase in the number of scheduled service passengers on a 16.5 percent increase in asms , offset by a 30 12.9 percent decrease in average base fare . during 2016 , we increased scheduled service asms for off-peak flying ( flights scheduled on off-peak days or during off-peak seasons ) by 24.0 percent over 2015 as flights with lower base fares added to our profitability due to lower fuel prices . ancillary air-related revenue . ancillary air-related revenue for 2016 increased $ 65.2 million , or 15.0 percent , compared with 2015 , due mostly to the 17.6 percent increase in scheduled service passengers resulting from capacity growth . this was offset by a 2.2 percent decrease in average ancillary air-related fare per passenger . ancillary third party revenue . the following table details the calculation of ancillary revenue from third party products . third party products consist of revenue from the sale of hotel rooms , ground transportation ( rental cars and hotel shuttle products ) , attraction and show tickets , and fees we receive from other merchants selling products through our website : replace_table_token_11_th ( 1 ) includes payment expenses and travel agency commissions . ancillary third party revenue increased $ 4.8 million in 2016 from 2015 . this was due primarily to the 17.6 percent increase in scheduled service passengers which contributed to a 24.7 percent increase in rental car days sold . rental car sales have been bolstered by our network growth in east coast cities , where rental car take rates are higher . this increase was offset by an overall 4.9 percent decrease in ancillary third party products revenue per passenger , largely attributable to a decline in hotel room take rate .
| 6,876 |
the company recorded $ 47.2 million of noncash impairment charges related to indefinite-lived intangible assets and $ 7.3 million of noncash impairment charges related to finite-lived intangible assets in 2020 , which were included in goodwill and other intangible asset impairments in the company 's consolidated statement of operations . please see note 7 , “ goodwill and other intangible assets , ” for further discussion . in 2019 , the company recorded a noncash impairment charge of $ 116.4 million related to the speedo perpetual license right , which was included in other noncash loss , net in the company 's consolidated statement of f-9 operations . please see note 3 , “ acquisitions and divestitures , ” and note 7 , “ goodwill and other intangible assets , ” for further discussion . asset impairments — the company reviews for impairment of long-lived assets ( excluding goodwill and other indefinite-lived intangible assets ) when events and circumstances indicate that the assets might be impaired . the company records an impairment loss when the carrying amount of the asset is not recoverable and exceeds its fair value . please see note 11 , “ fair value measurements , ” for further discussion . inventories — inventories are comprised principally of finished goods and are stated at the lower of cost or net realizable value , except story_separator_special_tag overview the following discussion and analysis is intended to help you understand us , our operations and our financial performance . it should be read in conjunction with our consolidated financial statements and the accompanying notes , which are included elsewhere in this report . we are one of the largest global apparel companies in the world and , in march 2020 , we marked our 100-year anniversary as a listed company on the new york stock exchange . we manage a diversified brand portfolio , including tommy hilfiger , calvin klein , van heusen , izod , arrow , warner 's , olga , true & co . and geoffrey beene , which are owned , as well as various other owned , licensed and , to a lesser extent , private label brands . we had a perpetual license for speedo in north america and the caribbean until april 6 , 2020. our business strategy is to position our brands to sell globally at various price points and in multiple channels of distribution . this enables us to offer products to a broad range of consumers , while minimizing competition among our brands and reducing our reliance on any one demographic group , product category , price point , distribution channel or region . we also license the use of our trademarks to third parties and joint ventures for product categories and in regions where we believe our licensees ' expertise can better serve our brands . we generated revenue of $ 7.1 billion and $ 9.9 billion in 2020 and 2019 , respectively . over 60 % of our revenue in 2020 and over 50 % of our revenue in 2019 was generated outside of the united states . our business was significantly negatively impacted by the covid-19 pandemic during 2020 , resulting in an unprecedented material decline in revenue . our global lifestyle brands , tommy hilfiger and calvin klein , accounted for over 85 % of our revenue during 2020 and 2019. story_separator_special_tag businesses are expected to remain challenged throughout 2021 as international tourism , which is the source of a significant portion of regional revenue , is not expected to return to any significant level until the end of the year . operations overview we generate net sales from ( i ) the wholesale distribution to traditional retailers ( both for stores and digital operations ) , pure play digital commerce retailers , franchisees , licensees and distributors of branded sportswear ( casual apparel ) , jeanswear , performance apparel , intimate apparel , underwear , swimwear , dress shirts , neckwear , handbags , accessories , footwear and other related products under owned and licensed trademarks , and ( ii ) the sale of certain of these products through ( a ) approximately 1,730 company-operated free-standing retail store locations worldwide under our tommy hilfiger , calvin klein and certain of our heritage brands trademarks , ( b ) approximately 1,425 company-operated shop-in-shop/concession locations worldwide under our tommy hilfiger and calvin klein trademarks , and ( c ) digital commerce sites worldwide under our tommy hilfiger and calvin klein trademarks and in the united states through our directly operated digital commerce sites for van heusen , izod , and , until april 6 , 2020 , speedo . we announced in july 2020 a plan to exit our heritage brands retail business , which will result in the closing of 162 heritage brands stores by mid-2021 . approximately 40 of these stores had been 33 closed by the end of 2020. additionally , we generate royalty , advertising and other revenue from fees for licensing the use of our trademarks . we manage our operations through our operating divisions , which are presented as six reportable segments : ( i ) tommy hilfiger north america ; ( ii ) tommy hilfiger international ; ( iii ) calvin klein north america ; ( iv ) calvin klein international ; ( v ) heritage brands wholesale ; and ( vi ) heritage brands retail . our heritage brands retail segment will cease operations following the closure of our directly operated heritage brands retail stores . the following actions and transactions have impacted our results of operations and the comparability among the years , including our 2021 expectations as compared to 2020 , as discussed below : we announced in march 2021 plans to reduce our workforce in certain international markets and to reduce our real estate footprint , including reductions in office space and select store closures , which are expected to result in annual cost savings of approximately $ 60 million . story_separator_special_tag in connection with the australia and th csap acquisitions , we recorded an aggregate net pre-tax gain of $ 83 million during 2019 , including ( i ) a noncash gain of $ 113 million to write up our previously held equity investments in gazal and pvh australia to fair value , partially offset by ( ii ) $ 21 million of costs , primarily consisting of noncash valuation adjustments and one-time expenses recorded on our equity investments in gazal and pvh australia prior to the australia acquisition closing , and ( iii ) a $ 9 million expense recorded in interest expense resulting from the remeasurement of the mandatorily redeemable non-controlling interest that was recognized in connection with the australia acquisition . we recorded a pre-tax expense of $ 5 million during 2020 in interest expense resulting from the remeasurement of the mandatorily redeemable non-controlling interest that was recognized in connection with the australia acquisition . we entered into a licensing agreement in may 2019 with g-iii for the design , production and wholesale distribution of calvin klein jeans women 's jeanswear collections in the united states and canada , which resulted in the discontinuation of our directly operated calvin klein north america women 's jeanswear wholesale business in 2019. we closed our tommy hilfiger flagship and anchor stores in the united state s ( the “ th u.s. store closures ” ) in the first quarter of 2019 and recorded pre-tax costs of $ 55 million , primarily consisting of noncash lease asset impairments . please see note 11 , “ fair value measurements , ” in the notes to consolidated financial statements included in item 8 of this report for further discussion of the noncash lease asset impairments . we announced in january 2019 a restructuring in connection with strategic changes for our calvin klein business ( the “ calvin klein restructuring ” ) . the strategic changes included ( i ) the closure of the calvin klein 205 w39 nyc brand ( formerly calvin klein collection ) , ( ii ) the closure of the flagship store on madison avenue in new york , new york , ( iii ) the restructuring of the calvin klein creative and design teams globally , and ( iv ) the consolidation of operations for the men 's calvin klein sportswear and calvin klein jeans businesses . all costs related to this restructuring were incurred by the end of 2019. we recorded pre-tax costs of $ 103 million during 2019 in connection with the calvin klein restructuring , consisting of a $ 30 million noncash lease asset impairment resulting from the closure of the flagship store on madison avenue in new york , new york , $ 26 million of contract termination and other costs , $ 26 million of severance , $ 13 million of inventory markdowns and $ 9 million of other noncash asset impairments . we recorded pre-tax costs of $ 41 million in the fourth quarter of 2018 , consisting of $ 27 million of severance , $ 7 million of noncash asset impairments , $ 4 million of contract termination and other costs and $ 2 million of inventory markdowns . our tommy hilfiger and calvin klein businesses each have substantial international components that expose us to significant foreign exchange risk . our heritage brands business also has international components but those components are not significant to the business . our results of operations in local foreign currencies are translated into united states dollars using an average exchange rate over the representative period . accordingly , our revenue is unfavorably impacted during times of a strengthening united states dollar against the foreign currencies in which we generate significant revenue and favorably impacted during times of a weakening united states dollar against those currencies . our earnings are similarly affected by foreign currency translation in periods that we generate income . however , in periods that we generate losses , as we did in 2020 , the opposite is true and our results are favorably impacted by a strengthening united states dollar against the foreign currencies in which we generate losses and unfavorably impacted by a weakening united states dollar against those currencies . over 60 % 35 of our 2020 revenue was subject to foreign currency translation . the united states dollar strengthened against most major currencies in 2019 and into the first half of 2020 , but then weakened against those currencies in the latter half of 2020 , particularly the euro , which is the foreign currency we transact the most business . as a result , foreign currency translation had a slight positive impact on our revenue and net loss in 2020 as compared to 2019. we currently expect our 2021 revenue and net income to increase by approximately $ 180 million and $ 20 million , respectively , due to the impact of foreign currency translation . there is also a transactional impact on our financial results because inventory typically is purchased in united states dollars by our foreign subsidiaries . our results of operations will be unfavorably impacted during times of a strengthening united states dollar , as the increased local currency value of inventory results in a higher cost of goods in local currency when the goods are sold , and favorably impacted during times of a weakening united states dollar , as the decreased local currency value of inventory results in a lower cost of goods in local currency when the goods are sold . we use foreign currency forward exchange contracts to hedge against a portion of the exposure related to this transactional impact . the contracts cover at least 70 % of the projected inventory purchases in united states dollars by our foreign subsidiaries . these contracts are generally entered into 12 months in advance of the related inventory purchases .
| results of operations covid-19 pandemic update the covid-19 pandemic has had , and is expected to continue to have , a significant impact on our business , results of operations , financial condition and cash flows from operations . our retail stores have been , and continue to be , impacted by temporary closures , reduced hours and limited occupancy as a result of the pandemic : virtually all of our retail stores were temporarily closed for varying periods of time throughout the first quarter and into the second quarter of 2020 , but had reopened by mid-june 2020. during the fourth quarter of 2020 and into the first quarter of 2021 , our retail stores in europe , north america and certain markets in asia have faced significant pressure as a result of resurgences in covid-19 cases there , including additional temporary store closures , particularly in europe and canada . approximately 70 % of our stores in europe were temporarily closed throughout the fourth quarter of 2020. approximately 75 % of our stores in europe were temporarily closed earlier in the first quarter of 2021 and 50 % are currently closed . in addition , our north america retail stores have been , and continue to be , challenged by the lack of international tourists coming to the united states , as stores located in international tourist destinations represent a significant portion of that business . our brick and mortar wholesale customers and licensing partners also have experienced significant business disruptions as a result of the pandemic , with several of our north america wholesale customers filing for bankruptcy . our wholesale customers and franchisees globally generally have experienced temporary store closures at the same time as us . although most of our wholesale customers ' and franchisees ' stores had reopened the majority of their locations across all regions by mid-june , there was a significant level of inventory that remained in their stores .
| 6,877 |
as of february 23 , 2018 , we offered 30 brands of new vehicles and all brands of used vehicles in 171 stores in the united states and online at over 200 websites . we sell new and used cars and replacement parts ; provide vehicle maintenance , warranty , paint and repair services ; arrange related financing ; and sell vehicle service contracts , vehicle protection products and credit insurance . we believe that the fragmented nature of the automotive dealership sector provides us with the opportunity to achieve growth through consolidation . in 2017 , the top ten automotive retailers , as reported by automotive news , represented approximately 7 % of the stores in the united states . our dealerships are located across the united states . we seek domestic , import and luxury franchises in cities ranging from mid-sized regional markets to metropolitan markets . we evaluate all brands for expansion opportunities provided the market is large enough to support adequate new vehicle sales to justify the required capital investment . our acquisition strategy has been to acquire dealerships at prices that meet our internal investment targets and , through the application of our centralized operating structure , leverage costs and improve store profitability . we believe our disciplined approach and the current economic environment provides us with attractive acquisition opportunities . we also believe that we can continue to improve operations at our existing stores . by promoting entrepreneurial leadership within our general and department managers , we strive for continuous improvement to drive sales and capture market share in our local markets . our goal is to retail an average of 85 used vehicles per store per month and we believe we can make additional improvements in our used vehicle sales performance by offering lower-priced value vehicles and selling brands other than the new vehicle franchise at each location . our service , body and parts operations provide important repeat business for our stores . we continue to grow this business through increased marketing efforts , competitive pricing on routine maintenance items and diverse commodity product offerings . in 2017 , we continued to experience organic growth and profitability through increasing market share and maintaining a lean cost structure , while adding significant revenue to our base through acquisitions . as sales volume increases and we gain leverage in our cost structure , we anticipate targeting sg & a as a percentage of gross profit in the upper 60 % range . this metric may be impacted by recently acquired stores , as they may not be fully integrated into our cost structure . we focus on accelerating the integration of acquired stores to increase incremental profitability . critical accounting policies and estimates the preparation of financial statements in conformity with u.s. generally accepted accounting principles requires us to make certain estimates , judgments and assumptions that affect the reported amounts of assets and liabilities , the disclosure of contingent assets and liabilities and reported amounts of revenues and expenses at the date of the financial statements . certain accounting policies require us to make difficult and subjective judgments on matters that are inherently uncertain . the following accounting policies involve critical accounting estimates because they are particularly dependent on assumptions made by management . while we have made our best estimates based on facts and circumstances available to us at the time , different estimates could have been used in the current period . changes in the accounting estimates we used are reasonably likely to occur from period to period , which may have a material impact on the presentation of our financial condition and results of operations . our most critical accounting estimates include those related to goodwill and franchise value , long-lived assets , charge-backs for various contracts , lifetime lube , oil and filter contracts , self-insurance programs , revenue , income taxes , equity investments and acquisitions . we also have other key accounting policies for valuation of accounts receivable and expense accruals . however , these policies either do not meet the definition of critical accounting estimates described above or are not currently material items in our financial statements . we review our estimates , judgments and assumptions periodically and reflect the effects of revisions in the period that they are deemed to be necessary . we believe that these estimates are reasonable . however , actual results could differ materially from these estimates . 29 goodwill and franchise value we are required to test our goodwill and franchise value for impairment at least annually , or more frequently if conditions indicate that an impairment may have occurred . goodwill is tested for impairment at the reporting unit level . our reporting units are individual retail automotive stores as this is the level at which discrete financial information is available and for which operating results are regularly reviewed by our chief operating decision maker to allocate resources and assess performance . we have the option to qualitatively or quantitatively assess goodwill for impairment and , in 2017 , we evaluated our goodwill using a qualitative assessment process . if the qualitative factors determine that it is more likely than not that the fair value of the reporting unit exceeds the carrying amount , goodwill is not impaired . if the qualitative assessment determines it is more likely than not the fair value is less than the carrying amount , the first step of the two-step goodwill impairment test is performed . as of december 31 , 2017 , we had $ 256.3 million of goodwill on our balance sheet associated with 151 reporting units no reporting unit accounted for more than 2.4 % of our total goodwill as of december 31 , 2017 . the annual goodwill impairment analysis , which we perform as of october 1 of each year , did not result in an indication of impairment in 2017 , 2016 or 2015 . story_separator_special_tag payments we receive upon sale of the lifetime oil contracts are deferred and recognized in revenue over the expected life of the service agreement to best match the expected timing of the costs to be incurred to perform the service . we estimate the timing and amount of future costs for claims and cancellations related to our lifetime lube , oil and filter contracts using historical experience rates and estimated future costs . if , in the future , usage and cancellations were different than expected or claims cost increased , we could have additional expenses related these contracts , reducing profitability . as of december 31 , 2017 , the deferred revenue related to these self-insured contracts was $ 127.3 million . see note 7 of notes to consolidated financial statements for additional information . self-insurance programs we self-insure a portion of our property and casualty insurance , vehicle open lot coverage , medical insurance and workers ' compensation insurance . we engage third-parties to assist in estimating the loss exposure related to the self-retained portion of the risk associated with these insurances . additionally , we analyze our historical loss and claims trends associated with these programs . the exposure on any single claim under our property and casualty insurance , medical insurance and workers ' compensation insurance varies based upon type of coverage . our maximum exposure on any single claim is $ 5.5 million , subject to certain aggregate limit thresholds . although we believe we have sufficient insurance , exposure to uninsured or underinsured losses may result in the recognition of additional charges , which could have a material adverse impact on our financial position and results of operations . as of december 31 , 2017 , we had liabilities associated with these programs of $ 31.2 million recorded as a component of accrued liabilities and other long-term liabilities on our consolidated balance sheets . see note 7 of notes to consolidated financial statements for additional information . revenue revenue is earned from the sale of new and used vehicles , parts and service or from commissions earned on the arrangement of financing or sales of third party contracts and insurance products . we recognize revenue from the sale 31 of new and used vehicles and the the commissions earned associated with finance and insurance when a contract is signed by the customer , financing has been arranged or collectibility is reasonably assured and the delivery of the vehicle to the customer is made . parts and service revenues are recognized upon completion and delivery of the parts or service to the customer . in may 2014 , the financial accounting standards board ( `` fasb '' ) issued accounting standards update ( `` asu '' ) 2014-09 , `` revenue from contracts with customers , '' which amends the accounting guidance related to revenues . w e have evaluated the effect of this amendment to revenue recognition and expect the timing of our revenue recognition to generally remain the same . see notes 1 and 19 of notes to consolidated financial statements for additional information . income taxes as of december 31 , 2017 , we had deferred tax assets of $ 76.3 million , net of valuation allowance of $ 0.6 million , and deferred tax liabilities of $ 132.5 million . the principal components of our deferred tax assets are related to allowances and accruals , deferred revenue and cancellation reserves . the principal components of our deferred tax liabilities are related to depreciation on property and equipment , inventories and goodwill . as a result of the tax reform passed in december 2017 , we recorded a reduction in the value of our net deferred tax liability of $ 32.9 million . we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized . the ultimate realization of deferred tax assets is dependent upon future taxable income during the periods in which those temporary differences become deductible . we consider the scheduled reversal of deferred tax liabilities ( including the impact of available carryback and carryforward periods ) , projected future taxable income , and tax-planning strategies in making this assessment . based upon the scheduled reversal of deferred tax liabilities , and our projections of future taxable income over the periods in which the deferred tax assets are deductible , we believe it is more likely than not that we will realize the benefits of the unreserved deductible differences . as of december 31 , 2017 , we had a $ 0.6 million valuation allowance against our deferred tax assets associated with state net operating losses . since these amounts are dependent on generating future taxable income , we evaluated the income expectations in the underlying states and determined that it is unlikely these amounts will be fully utilized . if we are unable to meet the projected taxable income levels utilized in our analysis , and depending on the availability of feasible tax planning strategies , we might record an additional valuation allowance on a portion or all of our deferred tax assets in the future . see note 13 of notes to consolidated financial statements for additional information . equity-method investment associated with new markets tax credits in 2016 and 2015 , we held an equity investment in a limited liability company managed by u.s. bancorp community development corporation . this investment generated new market tax credits under the new markets tax credit program ( “ nmtc program ” ) . the nmtc program was established by congress in 2000 to spur new or increased investments into operating businesses and real estate projects located in low-income communities . while u.s. bancorp community development corporation exercised management control over the limited liability company , due to the economic interest we held in the entity , we determined the appropriate accounting for our ownership portion of the entity was under the equity method of accounting .
| results of operations for the year ended december 31 , 2017 , we reported net income of $ 245.2 million , or $ 9.75 per diluted share . for the years ended december 31 , 2016 and 2015 , we reported net income of $ 197.1 million , or $ 7.72 per diluted share , and $ 183.0 million , or $ 6.91 per diluted share , respectively . key performance metrics certain key performance metrics for revenue and gross profit were as follows ( dollars in thousands ) : replace_table_token_8_th replace_table_token_9_th replace_table_token_10_th ( 1 ) commissions reported net of anticipated cancellations . same store operating data we believe that same store comparisons are an important indicator of our financial performance . same store measures demonstrate our ability to grow revenues in our existing locations . therefore , we have integrated same store measures into the discussion below . same store measures reflect results for stores that were operating in each comparison period , and only include the months when operations occurred in both periods . for example , a store acquired in november 2016 would be included in same store operating data beginning in december 2017 , after its first complete comparable month of operations . the fourth quarter operating results for the same store comparisons would include results for that store in only the period of december for both comparable periods . 33 new vehicle revenue and gross profit replace_table_token_11_th replace_table_token_12_th ( 1 ) a basis point is equal to 1/100 th of one percent . new vehicle sales increased in 2017 compared to 2016 and in 2016 compared to 2015 primarily driven by acquisitions . in 2017 , we acquired 18 stores and opened one store . in 2016 , we acquired 15 stores and one franchise and opened one store .
| 6,878 |
introduction esco technologies inc. and its wholly owned subsidiaries ( the company ) are organized into four operating segments for financial reporting purposes : filtration/fluid flow ( filtration ) , rf shielding and test ( test ) , utility solutions group ( usg ) , and technical packaging . the technical packaging segment was created in the second quarter of 2016 to disclose teq , plastique and fremont separately as they no longer met the criteria for aggregation with the filtration segment . prior period amounts have been reclassified to conform to the current period presentation . the company 's business segments are comprised of the following primary operating entities : · filtration : pti technologies inc. ( pti ) ; vacco industries ( vacco ) ; crissair , inc. ( crissair ) ; and westland technologies , inc. ( westland ) . · test : ets-lindgren inc. ( ets-lindgren ) . · usg : doble engineering company ( doble ) . · technical packaging : thermoform engineered quality llc ( teq ) ; plastique limited and plastique sp . z o.o . ( together , plastique ) . 18 filtration . most of the companies within this segment primarily design and manufacture specialty filtration products including hydraulic filter elements and fluid control devices used in commercial aerospace applications , unique filter mechanisms used in micro-propulsion devices for satellites and custom designed filters for manned aircraft and submarines ; westland designs , develops and manufactures elastomeric-based signature reduction solutions for u.s. naval vessels . test . ets-lindgren is an industry leader in providing its customers with the ability to identify , measure and contain magnetic , electromagnetic and acoustic energy . usg . doble provides high-end , intelligent diagnostic test solutions for the electric power delivery industry and is a leading supplier of power factor and partial discharge testing instruments used to assess the integrity of high-voltage power delivery equipment . technical packaging . the companies within this segment provide innovative solutions to the medical and commercial markets for thermoformed and precision molded pulp fiber packages and specialty products using a wide variety of thin gauge plastics and pulp . the company continues to operate with meaningful growth prospects in its primary served markets and with considerable financial flexibility . the company continues to focus on new products that incorporate proprietary design and process technologies . management is committed to delivering shareholder value through internal growth , ongoing performance improvement initiatives , and acquisitions . story_separator_special_tag ( income ) , net , in 2016 , 2015 or 2014. non-gaap financial measures the information reported herein includes the financial measures eps – as adjusted , which the company defines as eps from continuing operations less defined restructuring charges ; ebit , which the company defines as earnings before interest and taxes from continuing operations , without adjustment for the defined restructuring charges ; and ebit margin , which the company defines as ebit expressed as a percentage of net sales . eps – as adjusted , and ebit and ebit margin on a consolidated basis , are not recognized in accordance with u.s. generally accepted accounting principles ( gaap ) . however , the company believes that ebit and ebit margin provide investors and management with a valuable alternative method for assessing the company 's operating results . management evaluates the performance of its operating segments based on ebit and believes that ebit is useful to investors to demonstrate the operational profitability of the company 's business segments by excluding interest and taxes , which are generally accounted for across the entire company on a consolidated basis . ebit is also one of the measures management uses to determine resource allocations and incentive compensation . the company believes that the presentation of ebit , ebit margin and eps – as adjusted provides important supplemental information to investors by facilitating comparisons with other companies , many of which use similar non-gaap financial measures to supplement their gaap results . the use of non-gaap financial measures is not intended to replace any measures of performance determined in accordance with gaap . 21 ebit replace_table_token_4_th the reconciliation of ebit from continuing operations to a gaap financial measure is as follows : replace_table_token_5_th filtration ebit increased $ 3.5 million in 2016 as compared to 2015 mainly due to the increased sales volumes at crissair and vacco and the ebit contribution from the current year acquisition of westland , partially offset by lower margins at pti due to the impact of early stage production volumes . ebit increased $ 5.3 million in 2015 as compared to 2014 primarily due to the increased sales volumes at pti and a decrease in restructuring costs that were incurred at crissair in 2014 related to the exit and relocation of crissair 's palmdale , california operation into the canyon facility in valencia , california . test the $ 4.4 million increase in ebit in 2016 as compared to 2015 was mainly due to the higher sales volumes from the segment 's asian operations and operational improvement initiatives that were partially offset by $ 5.1 million of incremental restructuring charges related to closing the test business operating facilities in taufkirchen , germany and stevenage , england consisting mainly of employee severance and compensation benefits , professional fees , and asset impairment charges . in addition , 2015 ebit was negatively impacted by incremental charges related to the write-down of certain inventories . the $ 11.6 million decrease in ebit in 2015 as compared to 2014 was mainly due to the lower sales volumes from the segment 's u.s. and european operations , changes in product mix , and incremental charges related to the write-down of certain inventories and charges related to legal costs incurred in defense of patents . usg the $ 1.5 million increase in ebit in 2016 as compared to 2015 was primarily due to an increase in sales volumes and the full year ebit contribution from the 2015 acquisition of enoserv . story_separator_special_tag the increase in 2016 as compared to 2015 was mainly due to higher capitalized software expenditures within the usg and test segments . the decrease in 2015 as compared to 2014 was mainly due to lower capitalized software expenditures at doble . the company made required pension contributions of zero , $ 0.7 million and $ 2.7 million in 2016 , 2015 and 2014 , respectively . net cash provided by financing activities was $ 46.2 million in 2016 compared to net cash used by financing activities of $ 16.6 million and $ 152.5 million in 2015 and 2014 , respectively . the increase in 2016 compared to the prior year periods was mainly due to an increase in borrowings related to the 2016 acquisitions . acquisitions 2016 on september 2 , 2016 , the company acquired the stock of westland technologies , inc. ( westland ) , located in modesto , california , for a purchase price of approximately $ 41 million in cash . westland is a market leader in the design , development and manufacture of elastomeric-based signature reduction solutions which enhance u.s. naval maritime platform survivability . westland has annual sales of approximately $ 25 million . since the date of acquisition , the operating results for westland have been included within the company 's filtration segment . based on the preliminary purchase price allocation , the company recorded tangible assets , net , of $ 5.5 million , deferred tax liabilities of $ 10.4 million , goodwill of $ 17.9 million , and $ 28.3 million of identifiable intangible assets primarily consisting of customer relationships . on january 29 , 2016 , the company acquired plastique , which is headquartered in tunbridge wells , england and has manufacturing locations in nottingham , england and poznan , poland , for a purchase price of approximately $ 31.6 million ( of which $ 2.7 million is due over the next three years ) . plastique is a market leader in the development and manufacture of highly-technical thermoformed plastic and precision molded pulp fiber packaging primarily serving pharmaceutical , personal care , and various specialty end markets . since the date of acquisition , the operating results for plastique have been included within the company 's technical packaging segment . plastique has annual sales of approximately $ 35 million . based on the purchase price allocation , the company recorded tangible assets , net , of $ 9.6 million , goodwill of $ 10.2 million , and $ 11.9 million of identifiable intangible assets primarily consisting of customer relationships . on october 16 , 2015 , the company acquired the stock of fremont for a purchase price of $ 10.5 million in cash . the company also purchased for $ 2 million fremont 's real property located in fremont , indiana . fremont was a developer , manufacturer , promoter and seller of high quality sterile-ready and non-sterile thin gauge thermoformed medical plastic packaging products . immediately following the closing of the transaction , fremont was merged into teq , and therefore since the date of acquisition the operating results for fremont have been included as part of teq . 2015 on january 28 , 2015 , the company acquired the assets of enoserv , llc ( enoserv ) , headquartered in tulsa , oklahoma , for $ 20.5 million in cash . enoserv provides utility customers with high quality , user-friendly multi-platform software and has annual revenues of approximately $ 8 million . since the date of acquisition the operating results for enoserv have been included as part of doble within the company 's usg segment . based on the purchase price allocation , the company recorded approximately $ 10.0 million of goodwill and $ 9.0 million of amortizable identifiable intangible assets consisting primarily of customer relationships and developed technology . all of the company 's acquisitions have been accounted for using the purchase method of accounting , and accordingly , the respective purchase prices were allocated to the assets ( including intangible assets ) acquired and liabilities assumed based on estimated fair values at the date of acquisition . the financial results from these acquisitions have been included in the company 's financial statements from the date of acquisition . 24 subsequent event on november 7 , 2016 , the company acquired aerospace suppliers mayday manufacturing co. ( mayday ) and its affiliate , hi-tech metals , inc. ( hi-tech ) , which share a state-of-the-art , expandable 130,000 square foot facility in denton , texas , for a purchase price of approximately $ 75 million in cash . mayday is a leading manufacturer of mission-critical bushings , pins , sleeves and precision-tolerance machined components for landing gear , rotor heads , engine mounts , flight controls and actuation systems for the aerospace and defense industry . hi-tech is a full-service metal processor offering aerospace oem 's and tier 1 suppliers a large portfolio of processing services including anodizing , cadmium and zinc-nickel plating , organic coatings , non-destructive testing and heat treatment . mayday and hi-tech together have annual sales of approximately $ 40 million . they will be included in the company 's filtration operating segment beginning in 2017. divestiture in march 2014 , the company completed the sale of aclara technologies llc ( aclara ) to an affiliate of sun capital partners , inc. a disagreement between the parties over the calculation of the final working capital adjustment was finally resolved by arbitration on june 15 , 2015 , resulting in a cash payment to the company of $ 2.3 million in 2015. for more information about the aclara divestiture , see note 3 to the consolidated financial statements included in this report . bank credit facility on december 21 , 2015 , the company amended its existing credit facility to extend the maturity date from may 13 , 2017 through december 21 , 2020 , and to reduce the outstanding borrowing rates and commitment fees .
| highlights of 2016 operations · sales , net earnings and diluted earnings per share in 2016 were $ 571.5 million , $ 45.9 million and $ 1.77 per share , respectively , compared to sales , net earnings from continuing operations and diluted earnings per share from continuing operations of $ 537.3 million , $ 41.7 million and $ 1.59 per share , respectively , in 2015 . · diluted eps for 2016 was $ 1.77. diluted eps – as adjusted for 2016 was $ 2.03 which excludes $ 6.9 million , net after tax , or $ 0.26 per share , related to the previously announced exit of test 's operating facilities in germany and england and the impact of the domestic headcount reductions , plus doble 's closure of its brazil operating office . · net cash provided by operating activities from continuing operations was approximately $ 73.9 million in 2016 , compared to $ 65.0 million in 2015 . · at september 30 , 2016 , cash on hand was $ 53.8 million and outstanding debt was $ 110.0 million , for a net debt position ( total debt less net cash ) of approximately $ 56.2 million . · 2016 entered orders were $ 576.3 million resulting in a book-to-bill ratio of 1.00x . backlog at september 30 , 2016 was $ 332.4 million compared to $ 327.5 million at september 30 , 2015 . · in september 2016 , the company acquired the stock of westland for approximately $ 41 million in cash . westland designs , develops and manufactures elastomeric-based signature reduction solutions which enhance u.s. naval maritime platform survivability . the operating results for westland , since the date of acquisition are included within the filtration segment . · in january 2016 , the company acquired plastique , headquartered in tunbridge wells , england , for a purchase price of approximately $ 31.6 million in cash .
| 6,879 |
interest related to income taxes presented as a separate line in the accompanying statement of operations of $ 1.9 million included $ 1.1 million in reversal of accrued interest previously accrued for the contingent tax liability , and $ 0.8 million for the interest related to the income tax refund . provision ( benefit ) for income taxes included $ 2.8 million recognized for the net benefit for income taxes related to $ 3.4 million for the reversal of the non-interest portion of the contingent tax liability , and $ 0.9 million story_separator_special_tag management 's discussion and analysis of the financial condition and results of operations should be read in conjunction with the consolidated financial statements and footnotes for the fiscal years ended august 25 , 2010 , august 26 , 2009 , and august 27 , 2008 included in item 8 of this report . overview in fiscal year 2010 , we generated revenues primarily by providing quality food to customers at our 96 luby 's cafeteria branded restaurants located throughout texas and three other states . on july 26 , 2010 , we became a multi-brand restaurant company with a national footprint through the acquisition of substantially all of the assets of fuddruckers . the fuddruckers acquisition added 59 company-operated restaurants and a franchise network of 130 franchisee operated units . this acquisition further expands our family-friendly , value-oriented portfolio of restaurants located in close proximity to retail centers , business developments and residential areas . in addition to our restaurant business model , we also provide culinary contract services for organizations that offer on-site food service , such as health care facilities , college and universities , as well as businesses and institutions . in fiscal years 2010 and 2009 , we continued to operate and compete , like many restaurant companies , in a challenging economic environment with customers seeking the most value for their dollar when they chose to dine away from home . at the beginning of the fiscal year , we evaluated each of our stores and assessed each location 's near-term and long-term value potential . as a result , we made the difficult decision to close certain underperforming units . we took this step in order to reallocate capital to better uses . in fiscal year 2010 , we responded to the challenging economic environment by redoubling our efforts to attract customers into our restaurants with a focus on local restaurant marketing . this included store specific menu offerings and limited time offers such as steak and shrimp on friday and saturday nights at select units , $ 2.00 entrée portions of our customer favorites ( luby 's fried fish and chicken fried steak ) at lunch , and all-you-can-eat lunch or dinner buffets in certain locations . in addition , in the second half of the year , we introduced an all-you-can-eat breakfast buffet at a price point of $ 4.99 that has become especially popular and has represented a significant portion of our customer count growth . as we have focused more efforts on local restaurant marketing as well as on-line marketing efforts , we turned to a positive and growing trend in year-over-year traffic comparables in the third and fourth quarter of fiscal year 2010. while we have managed to grow our traffic , it has come at the expense of a lower average spend on each customer visit . we expect one challenge in fiscal year 2011 will be to continue to balance this trade-off between customer growth and average customer spend . our current strategy is to build customer frequency by marketing quality offerings and brand loyalty . in response to the economic environment , we reduced our capital spending to a level necessary to maintain the attractiveness of our cafeteria units , but we pared back on any major remodeling efforts . we also benefited from the capital investment in our cafeteria units in recent years , which allowed us to reduce our capital expenditures in fiscal year 2010. as a result , we completed the year with $ 3.6 million in capital spending , including investment in our contract culinary services business . throughout the past several years , we have maintained a strong balance sheet , which contributed to our ability to take advantage of the opportunity to acquire fuddruckers and enhance the combined company 's value . working with our lenders to finance this transaction , we increased the size of our revolving credit facility from $ 20 million to $ 53 million . we plan to service the debt , including principal repayments , through cash from operations , as well as from proceeds from the sale of assets . fiscal 2010 review same-store restaurant sales declined 7.4 % for fiscal year 2010 compared to fiscal year 2009. the negative trend in customer traffic in the first half of the fiscal year reversed in the second half of the year . however , 22 throughout fiscal year 2010 , we experienced declines in average spend per person compared to fiscal year 2009. this decline was due to making available menu offerings and limited time offers at lower price points that were utilized to stimulate customer traffic . we believe these initiatives and our local restaurant marketing efforts have gained traction , and we continue to receive favorable guest comments from the actions we have taken to make these value offerings available . over the past fifteen quarters , we have experienced a same-store sales decline on average of 5.4 % ; this decline follows a period of twelve consecutive quarters when we averaged an increase in same-store sales of 4.6 % per quarter . story_separator_special_tag to qualify for inclusion in this group , a store must have been in operation for 18 consecutive accounting periods . stores that close on a permanent basis are removed from the group in the fiscal quarter when operations cease at the restaurant , but remain in the same-store group for previously reported fiscal quarters . although management believes this approach leads to more effective year-over-year comparisons , neither the time frame nor the exact practice may be similar to those used by other restaurant companies . same-store sales decreased 7.4 % for fiscal year 2010 , decreased 6.6 % for fiscal year 2009 and increased 0.3 % for fiscal year 2008. the following table shows the same-store sales change for comparative historical quarters : replace_table_token_6_th minimum wage increase impact the third of three federal minimum wage increases took effect on july 23 , 2009. we expect to experience a compression due to these minimum wage increases , meaning that wages earned by employees within a certain range of the new minimum wage would be adjusted over time as the new minimum wage increases were phased in through calendar year 2009 . 24 discontinued operations our cash flow improvement and capital redeployment plan called for the closure of more than 20 underperforming units . in accordance with the plan , the entire fiscal activity of the applicable stores closed after the inception of the plan has been classified as discontinued operations . results related to these same locations have also been classified as discontinued operations for all periods presented . impact of hurricane ike hurricane ike struck southeast texas in september 2008 causing massive power outages and inflicting wide-spread damage in the greater houston area . over 40 luby 's locations in the houston area were closed over varying lengths of time due to the storm . restaurant sales were negatively impacted by approximately 273 days in the aggregate when some of our locations were unable to open due to storm damage or loss of power . we incurred approximately $ 1.5 million in lost sales from these store closures . we incurred storm related direct costs of $ 1.5 million for damages , auxiliary power , food loss and other miscellaneous costs . we received insurance proceeds of approximately $ 0.6 million related to hurricane property damage claims which were recognized in income in fiscal year ended august 25 , 2010. story_separator_special_tag > interest income decreased approximately $ 0.2 million due to lower interest rates and cash investment balances . interest expense interest expense increased $ 0.3 million in fiscal year 2010 from fiscal year 2009 due to the reduction in unamortized debt expense recognized as a result of the amendment of our amended 2009 revolving credit agreement . gain on sales and redemptions ( impairments in fair value ) of investments the net gain on sales and redemptions of investments of $ 1.6 million in fiscal year 2010 represents ( 1 ) the reversal of previous impaired investments in auction rate securities that were subsequently redeemed at par value in the fourth quarter of fiscal year 2010 , offset by ( 2 ) the portion of the impairment previously assigned to these investments in fiscal year 2010. the impairment in fair value of investments was $ 1.0 million in fiscal year 2009 due to the illiquidity of the auction rate securities markets . other income , net other income , net , consisted primarily of the following components : net rental property income and expenses relating to property for which we are the landlord ; and prepaid sales tax discounts earned through our participation in state tax prepayment programs . other income , net , decreased by approximately $ 0.2 million in fiscal year 2010 compared to fiscal year 2009 , due primarily to a decrease in rental income , net of rental expenses and a decrease in prepaid state sales tax discounts resulting from lower sales in fiscal year 2010. taxes the income tax benefit related to continuing operations for fiscal year 2010 was $ 3.1 million compared to a provision for income taxes of $ 0.5 million in fiscal year 2009. the benefit for income taxes in fiscal year 2010 reflects the tax effect of the pre-tax loss for the year adjusted for a reduction in a tax valuation allowance . the income tax provision in fiscal year 2009 reflects the tax effect of pre-tax loss for the year adjusted for a valuation allowance reducing the current recognition of the full tax benefit for the year . discontinued operations the net loss from discontinued operations decreased approximately $ 10.1 million in fiscal year 2010 compared to fiscal year 2009. the loss from discontinued operations in fiscal year 2010 and fiscal year 2009 reflected ( 1 ) the activity of restaurant units that were closed as part of the cash flow improvement and capital redeployment plan and not subsequently redeployed into other income generating uses ; ( 2 ) the impairment of assets associated with properties that were closed as part of the cash flow improvement and capital redeployment plan ; ( 3 ) the gain on sale of units above their carrying value and ( 4 ) the tax benefit on losses from discontinued operations . fiscal year 2009 ( 52 weeks ) compared to fiscal year 2008 ( 52 weeks ) sales total sales decreased approximately $ 20.1 million , or 7.2 % , in fiscal year 2009 , compared to fiscal year 2008 , consisting of a $ 24.9 million decrease in restaurant sales and a $ 4.8 million increase in culinary contract services revenue .
| results of operations fiscal year 2010 ( 52 weeks ) compared to fiscal year 2009 ( 52 weeks ) sales total sales decreased approximately $ 15.5 million , or 5.9 % , in fiscal year 2010 compared to fiscal year 2009 , consisting of a $ 16.9 million decrease in restaurant sales , a $ 0.8 million increase in culinary contract services revenue and the addition of $ 0.6 million in franchise revenue in fiscal year 2010. the $ 16.9 million decline in restaurant sales included a $ 24.5 million reduction in sales from cafeteria units offset by the addition of $ 7.6 million in sales from the fuddruckers and koo koo roo restaurants acquired in july of 2010. the $ 24.5 million reduction in sales from cafeteria units included a $ 6.5 million reduction in sales related to closed operations and a $ 0.4 million reduction in sales from stores open less than 18 accounting periods . on a same-store basis , sales decreased approximately $ 17.8 million , or 7.4 % , due primarily to lower average spending per guest as a result of the availability of lower menu prices , limited time offers , reduced kids ' meals prices , and the re-introduction of breakfast in addition to lower guest traffic on a full year basis . cost of food food costs decreased approximately $ 4.9 million , or 7.1 % , in fiscal year 2010 compared to fiscal year 2009 primarily due to the lower sales volume . as a percentage of restaurant sales , food costs were unchanged at 27.6 % in fiscal year 2010 and fiscal year 2009. the stable food cost as a percentage of sales was primarily the result of our operational improvements in food production , lower commodity prices in much of the fiscal year , and enhanced menu management , offset by lower menu prices and limited time offers in fiscal year 2010. payroll and related costs payroll and related costs decreased approximately $ 7.1
| 6,880 |
in 2012 , 82 % of our $ 47.2 billion in net sales were from the u.s. government , either as a prime contractor or as a subcontractor ( including 61 % from the department of defense ( dod ) ) , 17 % were from international customers ( including foreign military sales ( fms ) contracted through the u.s. government ) , and 1 % were from u.s. commercial and other customers . our main areas of focus are in defense , space , intelligence , homeland security , and information technology , including cyber security . we organize our business segments based on the nature of the products and services offered . effective december 31 , 2012 , we operate in five business segments : aeronautics , information systems & global solutions ( is & gs ) , missiles and fire control ( mfc ) , mission systems and training ( mst ) , and space systems . this structure reflects the reorganization of our former electronic systems business segment into the new mfc and mst business segments in order to streamline our operations and enhance customer alignment . in connection with this reorganization , management layers at our former electronic systems business segment and our former global training and logistics ( gtl ) business were eliminated , and the former gtl business was split between the two new business segments . in addition , operating results for sandia corporation , which manages the sandia national laboratories for the u.s. department of energy , and our equity interest in the u.k. atomic weapons establishment ( awe ) joint venture were transferred from our former electronic systems business segment to our space systems business segment . the amounts , discussion , and presentation of our business segments reflect this reorganization for all years presented in this annual report on form 10-k. we are operating in an environment that is characterized by both increasing complexity in global security , as well as continuing economic pressures in the u.s. and globally . a significant component of our strategy in this environment is to focus on program execution , improving the quality and predictability of the delivery of our products and services , and placing more security capability quickly into the hands of both our domestic and international customers at affordable prices . recognizing that our customers are resource constrained , we are endeavoring to develop and extend our portfolio in a disciplined manner with a focus on adjacent markets close to our core capabilities . despite the challenges we face , we expect to continue to invest in technologies to fulfill new mission requirements for our customers , invest in our people so that we have the technical skills necessary to be successful in this environment , and return at least 50 % of free cash flow 1 to investors in the form of dividends and share repurchases . our outlook for 2013 is premised on the assumption that sequestration does not occur , that the u.s. government continues to support and fund our programs , which is consistent with the continuing resolution funding measure through march 27 , 2013 , and that congress approves defense budget legislation for government fiscal year ( gfy ) 2013 at a level consistent with the president 's proposed defense budget for the second half of the u.s. government 's fiscal year 2013. with these assumptions , we expect 2013 net sales will decline at a mid single digit percentage rate from the record 2012 net sales amount , due to an anticipated reduction in net sales at four of five of our business segments as discussed in the business segment results of operations section below . we expect our 2013 segment operating profit will also decrease from 2012 levels at a slightly higher percentage rate than the decline in net sales due to the factors mentioned in the business segment results of operations section below , and 2013 segment operating profit margin will accordingly be slightly lower than 2012 levels . if sequestration or other budgetary cuts in lieu of sequestration occur , we expect these budget reductions would have a material effect on our corporation as discussed in the industry considerations section below and item 1a- risk factors . industry considerations u.s. government business budget priorities the u.s. government continues to focus on discretionary spending , entitlements , tax , and other initiatives to stimulate the economy , create jobs , and reduce the deficit . the administration and congress are attempting to balance decisions 1 we define free cash flow as cash from operations as determined under u.s. generally accepted accounting principles ( gaap ) , less capital expenditures as presented on our statements of cash flows . 23 regarding defense , homeland security , and other federal spending priorities in a constrained fiscal environment imposed by the budget control act of 2011 ( budget act ) , which reduced defense spending by a minimum of $ 487 billion over a ten-year period that began in gfy 2012. in light of the budget act and deficit reduction pressures generally , it is likely that discretionary spending by the federal government will remain constrained for a number of years . notably , should congress and the administration fail to change or further delay the pending sequestration of appropriations in gfy 2013 imposed by the budget act , currently scheduled to take effect on march 1 , 2013 as adjusted by the american taxpayer relief act of 2012 ( taxpayer relief act ) , both our dod and non-dod customers ' budgets would be reduced significantly and there would be a direct and significant reduction in our customers ' contract awards . although the taxpayer relief act delayed sequestration two months from january 2 , 2013 , to march 1 , 2013 , and reduced the amount of the gfy 2013 budget cuts , the impacts to our customers remain significant with limited time to implement spending reductions required under sequestration . in addition , congress passed a continuing resolution funding measure for gfy 2013 to finance all u.s. story_separator_special_tag department of defense business the passage of the budget act imposed specific limits on security and non-security spending beginning in gfy 2013. the gfy 2013 dod base budget is the first to reflect the reduced spending limits imposed by the budget act and is consistent with its limits on discretionary spending . the gfy 2014 request has been delayed as a result of the ongoing federal budgetary negotiations . the gfy 2014 request will likely reflect a continuation of the spending limits with some variation as a result of sequester negotiations . in prior years , the administration has requested and congress has provided funds for u.s. military operations in afghanistan and iraq , and other unforeseeable contingency or peacekeeping operations , through a separate oco funding outside of the base dod budget . the oco funding for gfy 2012 totaled $ 115 billion , and the administration requested $ 88 billion for gfy 2013. we expect that the fiscal 2014 request will continue these reductions , reflecting the completion of u.s. military operations in iraq and reduced operations in afghanistan . our net sales historically have not been significantly dependent on overseas contingency or supplemental funding requests and , therefore , we continue to focus our attention on the dod 's base budget for support and funding of our programs . the gfy 2013 budget proposal reflected the administration 's new national security strategy and is consistent with the lower spending levels imposed by the budget act . we have no specific indications that the gfy 2014 budget will deviate significantly , other than the reduction due to the sequester delay as described above , from the estimated spending levels in the gfy 2013 request . despite these reduced defense spending levels , we believe our broad mix of programs and capabilities continues to position us favorably to support the current and future needs of the dod and our programs were well supported in the gfy 2013 budget request . for example , the budget supported continuation of all three variants of the f-35 and maintains the same ultimate inventory objective of 2,443 aircraft for the u.s. government . additionally , the dod has specifically cited continued support for a broad spectrum of our programs . given the administration 's emphasis on affordability and the need to find further efficiencies in the management and operations of dod , the need for more affordable logistics and sustainment , expansive use of information technology and knowledge-based solutions , and vastly improved levels of network and cyber security , all remain national priorities . to address these priorities , we continue to focus on growing our portfolio in these areas , diversifying our business , and expanding into adjacent businesses and programs that include surface naval vessels , unmanned aerial systems , rotary wing aviation , and land vehicles . non-department of defense business our experience in the defense arena , together with our core information technology and services expertise , has enabled us to provide products and services to a number of government agencies , including the departments of homeland security , justice , commerce , health and human services , transportation , and energy , the u.s. postal service , the social security administration ( ssa ) , the federal aviation administration , the national aeronautics and space administration , the veterans administration , national science foundation , and the environmental protection agency ( epa ) . 25 as with the dod , all other departments and agencies were impacted by the budget act . the result would be that budgets for gfy 2013 and beyond will be reduced further below the gfy 2012 budget . should sequester go into effect on march 1 , 2013 , our non-dod customers will also be significantly affected as the across-the-board reductions will also be applied to their available gfy 2013 discretionary funds . our businesses with smaller , short-term contracts that work with our non-dod customers could be significantly impacted by the across-the-board reductions , such as our is & gs business segment . we have continued to expand our capabilities in critical intelligence , knowledge management , and government information technology solutions for our customers , including the ssa and the centers for medicare and medicaid services . we also provide program management , business strategy and consulting , complex systems development and maintenance , complete life-cycle software support , information assurance , and enterprise solutions . we believe that there will be continued demand by federal and civil government agencies for upgrading and investing in new information technology systems and solutions in order to reduce costs of operations , but at a slower pace in the near term . in addition , we believe there are opportunities in the health care and energy space . consistent with our dod business , a more expansive use of information technology and knowledge-based solutions , and improved levels of network and cyber security all appear to be priorities in our non-dod business as well . homeland security , critical infrastructure protection , and improved service levels for civil government agencies also appear to be high customer priorities . other business considerations international business we remain committed to growth in our sales to international customers . we conduct business with other governments primarily through our aeronautics , mfc , and mst business segments . our international sales are comprised of fms transactions contracted through the u.s. government and direct commercial sales transactions in which we sell directly to the international customer . in aeronautics , the u.s. government and eight other government development partners are working together on the design , testing , production , and sustainment of the f-35 lightning ii , and israel and japan have selected the f-35 as their next generation combat aircraft . the first international deliveries of the f-35 were made in 2012 , with two aircraft delivered to the united kingdom . the number of aircraft for international customers in the more recent and future low-rate initial production ( lrip ) contracts continues to increase .
| consolidated results of operations since our operating cycle is long-term and involves many types of contracts for the design , development , and manufacturing of products and related activities with varying delivery schedules , the results of operations of a particular year , or year-to-year comparisons of recorded sales and profits , may not be indicative of future operating results . the following discussions of comparative results among years should be viewed in this context . all per share amounts cited in these discussions are presented on a per diluted share basis , unless otherwise noted . our consolidated results of operations were as follows ( in millions , except per share data ) : replace_table_token_5_th ( a ) in the fourth quarter of 2012 , gains and losses on investments used to fund our deferred compensation plan liabilities were reclassified from other non-operating income ( expense ) , net to other unallocated costs within cost of sales for all years presented on our statements of earnings in order to align the classification of changes in the market value of investments held for the plan with changes in the value of the corresponding plan liabilities . the amounts in the above table and all prior year amounts included in management 's discussion and analysis of financial condition and results of operations reflect , as appropriate , this reclassification . net gains on these investments in 2012 , 2011 , and 2010 were $ 67 million , $ 40 million , and $ 56 million . the following provides an overview of our consolidated results of operations . product sales are predominantly generated in the aeronautics , mfc , mst , and space systems business segments , and most of our services sales are generated in our is & gs and mfc business segments . our consolidated net sales were as follows ( in millions ) : net sales replace_table_token_6_th substantially all of our contracts are accounted for using the percentage-of-completion ( poc ) method of accounting .
| 6,881 |
all of the goodwill recorded for financial statement purposes will be deductible for story_separator_special_tag the following discussion and analysis provides information we believe is relevant to an assessment and understanding of our consolidated results of operations and financial condition . the discussion should be read in conjunction with the consolidated financial statements and notes thereto for the year ended december 31 , 2013 which are located in item 8 of this report . general overview we are a global performance improvement solutions provider of training , e-learning solutions , management consulting and engineering services that seeks to improve the effectiveness of organizations by providing services and products that are customized to meet the specific needs of clients . clients include fortune 500 companies and governmental and other commercial customers in a variety of industries . we believe we are a global leader in performance improvement , with over four decades of experience in providing solutions to optimize workforce performance . as of december 31 , 2013 , we operated through five reportable business segments : ( i ) learning solutions , ( ii ) professional & technical services , ( iii ) sandy training & marketing , ( iv ) performance readiness solutions ( formerly rwd ) , and ( v ) energy services . our learning solutions segment represents an aggregation of two operating groups in accordance with the aggregation criteria in u.s. gaap , while all of the other reportable segments each represent one operating group . we are organized by operating group primarily based upon the markets served by each group and or the services performed . each operating group consists of business units which are focused on providing specific products and services to certain classes of customers or within targeted markets . marketing and communications , accounting , finance , legal , human resources , information systems and other administrative services are organized at the corporate level . business development and sales resources are aligned with operating groups to support existing customer accounts and new customer development . 24 effective january 1 , 2013 , we made changes to our organizational structure to transfer the management responsibility of certain business units between segments , which resulted in a change in the composition of certain of our operating segments . the changes primarily consisted of : ( i ) the alternative fuels business unit transferred from professional & technical services to energy services ; ( ii ) a business unit which predominantly provides content development services to u.s. government and commercial clients transferred from learning solutions to professional & technical services ; and ( iii ) our foreign operations in india and china and a portion of our canadian operations transferred from professional & technical services to learning solutions . we have reclassified the segment financial information herein for the prior years to reflect these changes and conform to the current year 's presentation . further information regarding our business segments is discussed below . learning solutions . the learning solutions segment delivers training , curriculum design and development , e-learning services , system hosting , training business process outsourcing and consulting services globally through our offices in the u.s. , europe , asia and canada . this segment also offers organizational performance solutions including leadership training and employee engagement tools and services . this segment serves large companies in the electronics and semiconductors , healthcare , software , financial services and other industries as well as to government agencies . the ability to deliver a wide range of training services on a global basis allows this segment to take over the entire learning function for the client , including their training personnel . professional & technical services . this segment has over four decades of experience providing training , consulting , engineering and technical services , including lean consulting , emergency preparedness , safety and regulatory compliance , chemical demilitarization and environmental services primarily to large companies in the manufacturing , steel , pharmaceutical and petrochemical industries , federal and state government agencies and large government contractors . sandy training & marketing . the sandy training & marketing segment provides custom product sales training and has been a leader in serving manufacturing customers in the u.s. automotive industry for over 30 years . sandy provides custom product sales training designed to better educate customer sales forces with respect to new vehicle features and designs , in effect rapidly increasing the sales force knowledge base and enabling them to address detailed customer queries . furthermore , sandy helps our clients assess their customer relationship marketing strategy , measure performance against competitors and connect with their customers on a one-to-one basis . this segment also provides technical training services to automotive manufacturers as well as customers in other industries . performance readiness solutions . this segment provides performance consulting and technology consulting services , including platform adoption , end-user training , change management , knowledge management , customer product training outsourcing and sales enablement solutions in industries such as manufacturing , aerospace , healthcare , life sciences , consumer products , financial , telecommunications , services and higher education as well as the public sector . energy services . the energy services segment provides engineering services , products and training primarily to electric power generators . our proprietary etapro tm performance and condition monitoring system provides a suite of real-time software solutions for power generation facilities and is installed on power generating units across the world . in addition to providing custom training solutions , this segment provides web-based training through our gpilearn tm portal , which offers a variety of courses to power plant personnel in the u.s. and several other countries . this segment also provides services to users of alternative fuels , including designing and constructing liquefied natural gas ( lng ) , liquid to compressed natural gas ( lcng ) and hydrogen fueling stations , as well as supplying fuel and equipment . we discuss our business in more detail in item 1.business and the risk factors affecting our business in item 1a . story_separator_special_tag the acquired prospero business is included in the learning solutions segment and the results of its operations have been included in the consolidated financial statements since june 1 , 2013. lorien on june 12 , 2013 , we completed the acquisition of lorien engineering solutions ( “ lorien ” ) , a united kingdom-based provider of engineering design and project management services with specific expertise in the food and beverage , manufacturing and life sciences industries . the upfront purchase price for lorien was $ 6.7 million which was paid in cash at closing . in addition , the purchase agreement requires up to an additional $ 1.0 million of consideration , contingent upon the achievement of certain earnings targets during the first twelve months following completion of the acquisition , as defined in the purchase agreement . the acquired lorien business is included in the learning solutions segment and the results of its operations have been included in the consolidated financial statements since june 12 , 2013 . 2012 acquisitions information horizons effective may 1 , 2012 , we entered into an asset purchase agreement with information horizons limited ( “ information horizons ” ) , an independent skills training provider located in the united kingdom , to acquire its government funded training services business . the purchase price was $ 0.5 million in cash at closing . information horizons is included in the learning solutions segment and its results of operations have been included in the consolidated financial statements since may 1 , 2012. asentus on june 29 , 2012 , through our wholly-owned subsidiaries in canada and europe , we acquired the business and operations of asentus consulting group ltd. and asentus europe b.v. ( collectively , “ asentus ” ) . asentus is an international provider of it technical training content , and live and virtual training event services , with offices in vancouver , canada , the netherlands , germany and france . the total upfront purchase price for both companies was $ 1.4 million , of which $ 1.1 million was paid in cash at closing and $ 0.3 million was paid during the fourth quarter of 2012 subsequent to the finalization of a working capital calculation pursuant to the purchase agreement . in addition , the purchase agreement requires up to an additional $ 3.7 million of consideration , contingent upon the achievement of certain earnings targets , as defined in the purchase agreement , during two successive twelve-month periods following the closing . no contingent consideration was payable in respect of the first twelve-month period following completion of the acquisition as the earnings target was not achieved . a maximum of $ 1.6 million would be payable subsequent to the second twelve-month period following completion of the acquisition if the earnings targets are achieved . the acquired asentus business is included in the learning solutions segment and the results of its operations have been included in the consolidated financial statements since july 1 , 2012 . 27 rovsing dynamics on september 17 , 2012 , we entered into an asset purchase agreement with rovsing dynamics a/s ( “ rovsing ” ) , located in denmark , a provider of vibration condition monitoring hardware and software , and on that date acquired the business and certain operating assets . the purchase price was approximately $ 0.7 million in cash paid at closing . the acquired rovsing business is included in the energy services segment and its results of operations have been included in the consolidated financial statements since september 17 , 2012. blessingwhite on october 1 , 2012 , we completed the acquisition of blessingwhite , a provider of leadership development and employee engagement solutions . the purchase price was $ 10.8 million in cash at closing and was subsequently reduced by a $ 0.2 million working capital adjustment paid by the sellers . blessingwhite is included in the learning solutions segment and its results of operations have been included in the consolidated financial statements since october 1 , 2012 . 2011 acquisitions communication consulting on february 1 , 2011 , through our wholly-owned subsidiaries in hong kong and shanghai , we acquired the training business and certain related assets of cathay/communication consulting limited ( “ communication consulting ” ) , a hong kong-based training and consulting company with offices in shanghai and beijing , china , and haryana ( new delhi ) in india . communication consulting designs and delivers customized training solutions and specializes in the areas of leadership , communication skills , sales and customer service training . the purchase price for the acquired business and assets was $ 1.5 million in cash and $ 0.2 million of contingent consideration paid in 2012. communication consulting is included in the learning solutions segment and the results of its operations have been included in the consolidated financial statements since february 1 , 2011. ultra training ltd. on april 1 , 2011 , we acquired ultra training ltd. , an independent skills training provider located in the united kingdom . we acquired 100 % ownership of ultra training ltd. for a purchase price of $ 3.4 million in cash . ultra training ltd. is included in the learning solutions segment and its results of operations have been included in the consolidated financial statements since april 1 , 2011. rwd technologies on april 15 , 2011 , we completed the acquisition of certain assets of the consulting business of rwd technologies , llc , a delaware limited liability company , and certain of its subsidiaries ( collectively , “ rwd ” ) . rwd is a provider of human capital management and it consulting services , business transformation and lean process improvement , end-user training , change management , knowledge management and operator effectiveness management solutions in industries such as manufacturing , energy , automotive , aerospace , healthcare , life sciences , consumer products , financial , telecommunications , services and higher education as well as the public sector . we paid $ 28.0 million of cash at closing .
| results of operations operating highlights on july 2 , 2013 , we entered into an agreement ( the “ global master agreement ” ) with hsbc holdings plc ( “ hsbc ” ) to provide global learning services . the global master agreement establishes a contractual framework pursuant to which we and certain of our wholly owned subsidiaries will enter into local services agreements with certain members of hsbc 's group of companies in respect of each country in which the learning services are to be provided by us . during the third quarter of 2013 , we entered into local services agreements relating to the provision of services in the u.s. , canada , the u.k. and hong kong . we anticipate entering into additional local services agreements with hsbc group members in other countries through september 30 , 2014. the initial term of the global master agreement is three years . hsbc has the right to extend the global master agreement for one additional two-year term . we anticipate that hsbc will be our largest customer when the global master agreement and additional local services agreements are fully implemented . as a result , we anticipate that this new contract award could materially impact our future results of operations when compared to corresponding prior year periods . see part i , item 1a for a discussion of certain risks related to our performance of the global master agreement . year ended december 31 , 2013 compared to the year ended december 31 , 2012 for the year ended december 31 , 2013 , we had income before income taxes of $ 38.5 million compared to $ 35.8 million for the year ended december 31 , 2012. the improved results are primarily due to an increase in operating income of $ 2.7 million , the components of which are discussed below .
| 6,882 |
23 the following table sets forth , for the period indicated , certain financial data expressed for the two years ended december 31 , 2018 : replace_table_token_1_th revenues revenue is recognized when control of the promised services is transferred to a customer , in an amount that reflects the consideration that we expect to receive in exchange for those services as per the agreement with the customer . we generate all our revenue from agreements with customers . in case there are agreements with multiple performance obligations , we identify each performance obligation and evaluate whether the performance obligations are distinct within the context of the agreement at the agreement 's inception . performance obligations that are not distinct at agreement inception are combined . we allocate the transaction price to each distinct performance obligation proportionately based on the estimated standalone selling price for each performance obligation , if any , and then evaluates how the services are transferred to the customer to determine the timing of revenue recognition . for the dds segment , revenue is recognized primarily based on the quantity delivered or resources utilized in the period in which services are performed and performance conditions are satisfied as per the agreement . revenues for agreements billed on a time-and-materials basis are recognized as services are performed . revenues under fixed-fee agreements , which are not significant to the overall revenues , are recognized based on the proportional performance method of accounting , as services are performed , or milestones are achieved . for the synodex segment , revenue is recognized primarily based on the quantity delivered in the period in which services are performed and performance conditions are satisfied as per the agreement . a portion of our synodex segment revenue is derived from licensing our functional software and providing access to our hosted software platform . revenue from such services is recognized monthly when access to the service is provided to the end user ; all parties to the agreement have agreed to the agreement ; each party 's rights are identifiable ; the payment terms are identifiable ; the agreement has commercial substance ; and collection is probable . the agility segment derives its revenue primarily from subscription arrangements and provision of enriched media analysis services . it also derives revenue as a reseller of corporate communication solutions . revenue from subscriptions is recognized monthly when access to the service is provided to the end user ; all parties to the agreement have agreed to the agreement ; each party 's rights are identifiable ; the payment terms are identifiable ; the agreement has commercial substance ; and collection is probable . revenue from enriched media analysis services is recognized when the services are performed , and performance conditions are satisfied . revenues from the reseller agreements , which are not significant to the overall revenues , are recognized at gross with our functioning as a principal due to our meeting the following criteria . we act as the primary obligor in the sales transaction ; assume the credit risk , set the price ; can select suppliers ; and are involved in the execution of the services , including after sales service . 24 revenues include reimbursement of out-of-pocket expenses , with the corresponding out-of-pocket expenses included in direct operating costs . we consider u.s. gaap criteria for determining whether to report revenue gross as a principal versus net as an agent . factors considered include whether we are the primary obligor , have risks and rewards of ownership , and bear the risk that a client may not pay for the services performed . if there are circumstances where the above criteria are not met and therefore , we are not the principal in providing services , amounts received from clients are presented net of payments in the condensed consolidated statements of operations and comprehensive loss . contract acquisition cost for our agility segment is amortized over the term of the subscription agreement which normally has a duration of 12 months or less . we review these costs on a periodic basis to determine the need to adjust the carrying values for pre-terminated contracts . direct operating costs direct operating costs consist of direct payroll , occupancy costs , data center hosting fees , content acquisition costs , depreciation and amortization , travel , telecommunications , computer services and supplies , realized gain ( loss ) on forward contracts , foreign currency revaluation gain ( loss ) , and other direct expenses that are incurred in providing services to our clients . selling and administrative expenses selling and administrative expenses consist of management and administrative salaries , sales and marketing costs including commissions , new services research and related software development , third-party software , advertising and trade conferences , professional fees and consultant costs , and other administrative overhead costs . valuation of goodwill and intangible assets we perform a valuation of assets acquired and liabilities assumed on each acquisition accounted for as a business combination and allocate the purchase price of each acquired business to its respective net tangible and intangible assets and liabilities . acquired intangible assets principally consist of technology , customer relationships , backlog and trademarks . liabilities related to intangibles principally consist of unfavorable vendor contracts . we determine the appropriate useful life by performing an analysis of expected cash flows based on projected financial information of the acquired businesses . intangible assets are amortized over their estimated useful lives using the straight-line method , which approximates the pattern in which the majority of the economic benefits are expected to be consumed . intangible liabilities are amortized into direct operating costs ratably over their expected related revenue streams over their useful lives . goodwill represents the excess of the cost of an acquired entity over the fair value of the acquired net assets . story_separator_special_tag selling and administrative expenses for the agility segment as a percentage of agility segment revenues were 59 % and 64 % for the years ended december 31 , 2018 and 2017 , respectively . 29 goodwill impairment during the year ended december 31 , 2018 , we recorded a full goodwill impairment of $ 675,000 for the dds segment . there was no goodwill impairment recorded during the year ended december 31 , 2017. we periodically analyze whether any indicators of impairment have occurred . as part of these periodic analyses , we compare the company 's estimated fair value , as determined based on our stock price , to our net book value . the continued decline in our stock price was viewed as a triggering event under asu 2017-04 which required an assessment for possible goodwill impairment as of june 30 , 2018. under the provisions of asu 2017-04 , which we opted to early adopt , goodwill impairment is recognized based on step 1 of the current guidance , which calculates the carrying value in excess of the reporting unit 's fair value . we performed this assessment as of june 30 , 2018 and determined that the fair value of the agility segment exceeded its carrying value , but that the fair value of the dds segment was below its carrying value . as a result , we recorded a full goodwill impairment of $ 675,000 for the dds segment reporting unit as of june 30 , 2018. we conducted our annual goodwill impairment test for the agility segment as of september 30 , 2018. the estimated fair value of the reporting unit exceeded its carrying value , including goodwill , and we concluded that there is no impairment of the goodwill of the agility segment . taxes we recorded a provision for income taxes of approximately $ 1.8 million and $ 0.3 million for the years ended december 31 , 2018 and 2017 , respectively . taxes primarily consist of a provision for foreign taxes recorded in accordance with the local tax regulations by our foreign subsidiaries . effective income tax rates are disproportionate primarily due to the valuation allowance recorded on the deferred taxes on the u.s. and canadian entities . see notes to consolidated financial statements , footnote 4 . “ taxes ” for additional information . in december 2017 , the president signed the u.s. tax cuts and jobs act ( 2017 tax act ) , which includes a broad range of provisions , many of which significantly differ from those contained in previous u.s. tax law . changes in tax law are accounted for in the period of enactment . as such , the 2017 consolidated financial statements reflect the immediate tax effect of the 2017 tax act , which was enacted on december 22 , 2017 ( enactment date ) . the 2017 tax act contains several key provisions including , among other things : · a one-time tax on the mandatory deemed repatriation of post-1986 untaxed foreign earnings and profits ( e & p ) , referred to as the toll charge ; · a reduction in the maximum corporate tax rate from 35 % to 21 % for tax years beginning after december 31 , 2017 ; · the introduction of a new u.s. tax on certain off-shore earnings referred to as global intangible low-taxed income ( gilti ) at an effective tax rate of 10.5 % for tax years beginning after december 31 , 2017 ( increasing to 13.125 % for tax years beginning after december 31 , 2025 ) with a partial offset by applicable foreign tax credits ; and · the introduction of a quasi-territorial tax system for tax years beginning after december 31 , 2017 by providing a dividend received deduction under the participation exemption system . 30 pursuant to the 2017 tax act , we recorded the following adjustments to income tax expense during the fourth quarter of 2017 : · a one-time deemed repatriation of e & p amounting to $ 25.8 million . no toll charge liability was recorded due to the available net operating loss carryforwards ; and · a reduction of deferred tax assets and a corresponding reduction of the valuation allowance of $ 2.3 million , primarily for the remeasurement of our deferred tax assets at the enacted tax rate of 21 % . beginning january 1 , 2018 , we performed a calculation of the gilti provisions and concluded that it has no impact on account of the net losses of our foreign subsidiaries . despite access to overseas earnings and the resulting toll charge , we intend to indefinitely reinvest foreign earnings in our foreign subsidiaries on account of the foreign jurisdiction withholding taxes that we would have to incur on the actual remittances . unremitted earnings of foreign subsidiaries amounted to approximately $ 21.0 million at december 31 , 2018. if such earnings are repatriated in the future , or are on longer deemed to be indefinitely reinvested , we would have to accrue the applicable amount of foreign jurisdiction withholding taxes associated with such remittances . we have a valuation allowance on all of our u.s. deferred tax assets on account of continuing losses incurred by our u.s. entity . in addition , we also have a valuation allowance on the deferred tax assets of our canadian subsidiaries . our canadian subsidiaries also have research and development expenditures available to reduce taxable income in future years , which may be carried forward indefinitely . the potential benefits from these balances have not been recognized for financial statement purposes . tax assessments in october 2010 , our indian subsidiary received an assessment from the indian income tax department for the fiscal year ended march 31 , 2006. we disagree with the basis of this tax assessment , have filed an appeal against the assessment and are contesting it . we believe that our recorded tax liability of $ 329,000 for this matter , which includes interest , is adequate .
| results of operations year ended december 31 , 2018 compared to the year ended december 31 , 2017 the results below for the year ended december 31 , 2017 are presented on a reclassified basis as if for the full year 2017 docgenix had been included in the dds segment and the synodex segment had solely included the results of synodex . docgenix revenue was $ 531,000 and $ 1,087,000 in the years ended december 31 , 2018 and 2017 , respectively . revenues total revenues were $ 57.4 million for the year ended december 31 , 2018 , a 6 % decrease from $ 60.9 million for the year ended december 31 , 2017. revenues from the dds segment were $ 43.5 million and $ 47.8 million for the years ended december 31 , 2018 and 2017 , respectively , a decline of $ 4.3 million or approximately 9 % . approximately $ 2.3 million of the decrease is attributable to one large project that ended in 2017 and the balance is attributable to volume fluctuations from other clients . revenues from the synodex segment were $ 4.1 million and $ 3.7 million for the years ended december 31 , 2018 and 2017 , respectively , an increase of $ 0.4 million or approximately 11 % . the increase is primarily due to additional volume from two existing clients partially offset by a reduction in volume from another client whose project ended in the first quarter of 2018. revenues from the agility segment were $ 9.8 million and $ 9.4 million for the year ended december 31 , 2018 and 2017 , respectively , an increase of $ 0.4 million or approximately 4 % . 28 two clients in the dds segment generated approximately 30 % of the company 's total revenues in the fiscal years ended december 31 , 2018 and 2017 , respectively . no other client accounted for 10 % or more of total revenues during these periods .
| 6,883 |
the u.s. government , 10 state governments and the united nations combined were responsible for 93.9 % and 91.9 % of our annualized rental income , as defined below , as of december 31 , 2012 and 2011 , respectively . property operations as of december 31 , 2012 , 92.5 % of our rentable square feet were leased , compared to 95.0 % of our rentable square feet as of december 31 , 2011. occupancy data for our properties as of december 31 , 2012 and 2011 is as follows ( square feet in thousands ) : replace_table_token_6_th ( 1 ) based on properties we owned on december 31 , 2012 and which we owned continuously since january 1 , 2011. our comparable properties increased from 33 properties at december 31 , 2011 as a result of acquisitions we completed during the year ended december 31 , 2010 . ( 2 ) percent leased includes ( i ) space being fitted out for tenant occupancy pursuant to our lease agreements , if any , and ( ii ) space which is leased , but is not occupied or is being offered for sublease by tenants , if any , as of the measurement date . the average annual effective rental rate per square foot , as defined below , for our properties for the years ended december 31 , 2012 and 2011 are as follows : replace_table_token_7_th ( 1 ) average annual effective rental rate per square foot represents total rental income during the period specified divided by the average rentable square feet leased during the period specified . ( 2 ) comparable properties for the year ended december 31 , 2012 consist of 55 properties we owned on december 31 , 2012 and which we owned continuously since january 1 , 2011. we currently believe that u.s. property leasing market conditions are slowly improving , but remain weak in many u.s. markets . our historical experience , including that of our predecessor , cwh , with 45 respect to properties of the type we own that are majority leased to government tenants has been that government tenants frequently renew leases to avoid the costs and disruptions that may result from relocating their operations . we believe that current budgetary pressures may cause increased demand for leased space by government tenants , as opposed to new buildings built on behalf of government tenants . however , these same increased budgetary pressures upon the u.s. government and state governments could also result in a decrease in government employment , an increase in space utilization rates by government tenants and consolidation of operations into government owned properties , thereby reducing the need for government leased space . accordingly , we are unable to reasonably project what the financial impact of market conditions will be on our financial results for future periods . as of december 31 , 2012 , leases totaling 430,505 rentable square feet are scheduled to expire through march 31 , 2013. based upon current market conditions and tenant negotiations for leases scheduled to expire through march 31 , 2013 , we expect that rental rates we are likely to achieve on new or renewed leases will , in the aggregate and on a weighted average basis , be higher than the rates currently being paid , thereby generally resulting in higher revenue from the same space absent an increase in vacancies . however , we can not assure that the rental rates we expect will occur or that we will not experience material declines in our rental income due to vacancies upon lease expirations . prevailing market conditions at the time our leases expire will generally determine lease renewals and rental rates for space in our properties ; and market conditions are generally beyond our control . as of december 31 , 2012 , lease expirations at our properties by year are as follows ( square feet and dollars in thousands ) : replace_table_token_8_th ( 1 ) the year of lease expiration is pursuant to current contract terms . some government tenants have the right to vacate their space before the stated expirations of their leases . as of december 31 , 2012 , government tenants occupying approximately 8.6 % of our rentable square feet and responsible for approximately 7.1 % of our annualized rental income as of december 31 , 2012 have currently exercisable rights to terminate their leases before the stated expirations . also in 2013 , 2014 , 2015 , 2016 , 2017 , 2018 , 2019 and 2020 , early termination rights become exercisable by other tenants who currently occupy an additional approximately 3.5 % , 3.9 % , 0.6 % , 6.4 % , 2.4 % , 1.1 % , 3.6 % and 0.6 % of our rentable square feet , respectively , and contribute an additional approximately 3.0 % , 4.4 % , 0.5 % , 9.5 % , 3.4 % , 1.4 % , 4.2 % and 0.7 % of our annualized rental income , respectively , as of december 31 , 2012. in january 2013 , we were notified by one of our 46 tenants , representing approximately 1.0 % of our rentable square feet and responsible for approximately 0.9 % of our annualized rental income as of december 31 , 2012 , that it intends to exercise its right to vacate its space in july 2013 prior to the stated expiration of its lease in january 2015. in addition as of december 31 , 2012 , 12 of our state government tenants have currently exercisable rights to terminate their leases if these states do not appropriate rent in their respective annual budgets . these 12 tenants occupy approximately 7.6 % of our rentable square feet and contribute approximately 7.6 % of our annualized rental income as of december 31 , 2012 . story_separator_special_tag on a per share basis , net income in 2012 is lower as compared to 2011 principally due to our issuance of common shares pursuant to a public offerings in 2012 and 2011 . 50 year ended december 31 , 2011 , compared to year ended december 31 , 2010 ( amounts in thousands , except per share amounts ) replace_table_token_10_th ( 1 ) comparable properties consist of 33 properties we owned on december 31 , 2011 and which we owned continuously since january 1 , 2010 . ( 2 ) acquired properties consist of the 38 and 22 ( which 22 are included in the previously referenced 38 ) properties we owned on december 31 , 2011 and december 31 , 2010 , respectively , and which we acquired during the period from january 1 , 2010 to december 31 , 2011. we refer to the 33 properties we owned on december 31 , 2011 and which we have owned continuously since january 1 , 2010 as comparable properties . we refer to the 38 and 22 ( which 22 are included in the previously referenced 38 ) properties that we owned as of december 31 , 2011 and 2010 , respectively , which we purchased during the period from january 1 , 2010 to december 31 , 2011 , as acquired properties . our consolidated income statement for the year ended december 31 , 2011 includes the operating results of 22 acquired properties for the entire year and 16 acquired properties for less than the entire year , as we purchased those 22 properties prior to january 1 , 2011 and we purchased those 16 properties during that period . our consolidated income statement for the year ended december 31 , 2010 includes the operating results of 22 acquired properties for less than the entire year , as those properties were purchased during 2010 . 51 references to changes in the income and expense categories below relate to the comparison of consolidated results for the year ended december 31 , 2011 , compared to the year ended december 31 , 2010. rental income . the increase in rental income reflects the effects of acquired properties , partially offset by lower revenues for comparable properties . rental income for acquired properties increased $ 22,951 from properties acquired during 2011 and $ 39,976 from properties acquired during 2010. rental income for the comparable properties decreased primarily due to a decrease in occupancy at one of our properties and lower real estate tax expense recoveries at certain of our properties , partially offset by the effect of net rental increases at certain of our other properties . rental income includes non-cash straight line rent adjustments totaling $ 1,729 in 2011 and ( $ 5 ) in 2010 and amortization of acquired leases and assumed lease obligations totaling ( $ 498 ) in 2011 and ( $ 34 ) in 2010. real estate taxes . the increase in real estate taxes primarily reflects the effects of acquired properties . real estate taxes for acquired properties increased $ 2,155 from properties acquired during 2011 and $ 5,292 from properties acquired during 2010. real estate taxes for comparable properties decreased primarily due to the effects of lower assessed values from successful property tax appeals at certain of our properties . utility expenses . the increase in utility expenses reflects the effects of acquired properties . utility expenses for acquired properties increased $ 1,771 from properties acquired during 2011 and $ 4,523 from properties acquired during 2010. utility expenses for comparable properties were essentially unchanged between 2011 and 2010. other operating expenses . the increase in other operating expenses reflects the effects of acquired properties in addition to a slight increase in other operating expenses for comparable properties . other operating expenses for acquired properties increased $ 3,517 for properties acquired during 2011 and $ 8,044 for properties acquired during 2010. other operating expenses for comparable properties increased primarily due to increased repair and maintenance costs at certain of our properties . depreciation and amortization . the increase in depreciation and amortization reflects the effect of property acquisitions and improvements made to certain of our properties since january 1 , 2010. depreciation and amortization for acquired properties increased $ 6,773 for properties acquired during 2011 and $ 8,834 for properties acquired during 2010. acquisition related costs . acquisition related costs represent legal and due diligence costs incurred in connection with our acquisition activity during 2011 and 2010. general and administrative . the increase in general and administrative expenses primarily reflects the effect of our property acquisitions since january 1 , 2010. interest and other income . interest and other income is essentially unchanged between 2011 and 2010. interest expense . the increase in interest expense reflects a larger average outstanding balance under our revolving credit facility in 2011 compared to 2010 and interest expense related to the mortgage notes we assumed in connection with certain of our 2010 and 2011 acquisitions , partially offset by a lower weighted average interest rate for borrowings under our revolving credit facility in 2011. loss on extinguishment of debt . the loss on extinguishment of debt is the result of our write off of unamortized financing costs associated with the early termination of our $ 250,000 secured revolving credit facility in 2010 . 52 equity in earnings ( losses ) of an investee . equity in earnings ( losses ) of an investee represents our proportionate share of earnings ( losses ) from our investment in aic . income tax expense . the increase in income tax expense is a result of our higher operating income in 2011 compared to 2010 which is subject to state income taxes in certain jurisdictions . net income . our net income increased in 2011 as compared to 2010 as a result of the changes noted above .
| results of operations ( amounts in thousands , except per share amounts ) year ended december 31 , 2012 , compared to year ended december 31 , 2011 replace_table_token_9_th ( 1 ) comparable properties consist of 55 properties we owned on december 31 , 2012 and which we owned continuously since january 1 , 2011 . ( 2 ) acquired properties consist of the 29 and 16 ( which 16 are included in the previously referenced 29 ) properties we owned on december 31 , 2012 and december 31 , 2011 , respectively , and which we acquired during the period from january 1 , 2011 to december 31 , 2012 . ( 3 ) we calculate net operating income , or noi , as shown above . we define noi as income from our real estate less our property operating expenses . noi excludes amortization of capitalized tenant improvement costs and leasing commissions . we consider noi to be an appropriate supplemental measure to net income because it may help both investors and management to understand the operations of our properties . we use noi internally to evaluate individual and company wide property level performance , and we believe that noi provides useful information to investors regarding our results of operations because it reflects only those income and expense items that are incurred at the property level and may facilitate comparisons of our operating performance between periods . the calculation of noi excludes certain components of net income in order to provide results that are more closely related to our properties ' results of operations . noi does not represent cash generated by operating activities in accordance with gaap and should not be considered as an alternative to net income , operating income or cash flow from operating activities , determined in accordance with gaap , or as an indicator of our financial performance or liquidity , nor is this measure necessarily indicative of sufficient cash flow to fund all of our needs .
| 6,884 |
the amount reclassified out of other accumulated comprehensive income relating to realized gains ( losses ) on securities available for sale was $ 114,000 , ( $ 8,000 ) and ( $ 158,000 ) for 2019 , 2018 and 2017 , with the related tax effect of $ 34,000 , ( $ 2,000 ) and ( $ 65,000 ) , respectively . in february 2018 , the fasb issued asu 2018-02 , reclassification of certain tax effects from accumulated other comprehensive income ( “ aoci ” ) . asu 2018-02 allows entities to elect to reclassify stranded tax effects on items within aoci , resulting from the new tax bill signed into law on december 22 , 2017 , to retained earnings . the company elected to early adopt this new standard in 2017 and recorded a reclassification from aoci to retained earnings in the amount of $ 94,000 . dividend restrictions banking regulations require maintaining certain capital levels and may limit the dividend paid by the bank to the holding company or by the holding company to shareholders . fair value of financial instruments fair values of financial instruments 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 , automobile and consumer loans and , to a lesser extent , interest on investment securities , fees received in connection with servicing deposit and loan customers and gains from the sale of government guaranteed 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 and northern nevada , are significantly influenced by economic conditions in california and northern nevada , 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 collectability 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 . 21 the following discussion is designed to provide a better understanding of significant trends related to the company 's financial condition , results of operations , liquidity and capital . it pertains to the company 's financial condition , changes in financial condition and results of operations as of december 31 , 2019 and 2018 and for each of the three years in the period ended december 31 , 2019 . the discussion should be read in conjunction with the company 's audited consolidated financial statements and notes thereto and the other financial information appearing elsewhere herein . overview the company recorded net income of $ 15.5 million for the year ended december 31 , 2019 , an increase of $ 1.5 million or 11 % over net income of $ 14.0 million during the year ended december 31 , 2018 . pretax income increased by $ 2.3 million , or 12 % , to $ 21.4 million in 2019 from $ 19.1 million during the year ended december 31 , 2018 . net interest income increased by $ 4.5 million to $ 37.6 million during 2019 from $ 33.1 million for the year ended december 31 , 2018 . this increase in net interest income resulted from an increase in interest income of $ 5.0 million partially offset by an increase in interest expense of $ 511 thousand . interest on loans increased by $ 4.5 million , interest on investment securities increased by $ 444 thousand and interest on other interest earning assets increased by $ 22 thousand . the provision for loan losses was $ 1.5 million during 2019 , up $ 500 thousand from $ 1.0 million during 2018 . story_separator_special_tag million during 2018 from $ 96.9 million during 2017. interest expense on money market accounts increased by $ 50 thousand to $ 134 thousand during the year ended december 31 , 2018. rates paid on money market accounts averaged 0.19 % during 2018 and 0.14 % in 2017. the increase is primarily related to higher cost money market accounts at the carson city branch . average balances increased by $ 10.8 million from $ 58.6 million in 2017 to $ 69.4 million during the year ended december 31 , 2018. much of this increase is associated with the acquisition of the carson city branch . interest expense on savings accounts increased by $ 30 thousand as we continued to experience growth in this category of deposits . average savings deposits increased by $ 17.1 million from $ 159.7 million during 2017 to $ 176.8 million during 2018. the average rate paid on savings accounts was 17 basis points in 2018 and 2017. interest expense on time deposits increased $ 47 thousand from $ 145 thousand during 2017 to $ 192 thousand during 2018 primarily as a result of the acquisition of the carson city branch average time deposits declined by $ 2.7 million from $ 47.4 million during 2017 to $ 44.7 million during the year ended december 31 , 2018. the average rate paid on time deposits was 0.43 % in 2018 and 0.31 % during 2017. interest expense on other interest-bearing liabilities increased by $ 85 thousand from $ 435 thousand during the year ended december 31 , 2017 to $ 520 thousand during the current twelve-month period . interest expense on the company 's note payable decreased by $ 28 thousand during the twelve months ended december 31 , 2018. this decrease was related to a decrease in average borrowings on this note from $ 700 thousand during 2017 to $ 0 in 2018. the note payable was paid off in april of 2017. interest expense on junior subordinated debentures , which increased by $ 109 thousand to $ 510 thousand , fluctuates with changes in the 3-month london interbank offered rate ( libor ) rate . as a result of the changes noted above , the net interest margin for 2018 increased to 4.70 % , from 4.35 % during 2017. provision for loan losses during the year ended december 31 , 2019 we recorded a provision for loan losses of $ 1.5 million up $ 500 thousand from $ 1.0 million during the year ended december 31 , 2018 . see “ analysis of asset quality and allowance for loan losses ” for further discussion of loan quality trends and the provision for loan losses . the allowance for loan losses is maintained at a level that management believes will be appropriate to absorb inherent losses on existing loans based on an evaluation of the collectability of the loans and prior loan loss experience . the evaluations take into consideration such factors as changes in the nature and volume of the portfolio , overall portfolio quality , review of specific problem loans , and current economic conditions that may affect the borrower 's ability to repay their loan . the allowance for loan losses is based on estimates , and ultimate losses may vary from the current estimates . these estimates are reviewed periodically and , as adjustments become necessary , they are reported in earnings in the periods in which they become known . based on information currently available , management believes that the allowance for loan losses is appropriate to absorb potential risks in the portfolio . however , no assurance can be given that the company may not sustain charge-offs which are in excess of the allowance in any given period . 26 non-interest income the following table sets forth the components of non-interest income for the years ended december 31 , 2019 , 2018 and 2017 . replace_table_token_8_th 2019 compared to 2018 . during the year ended december 31 , 2019 , non-interest income totaled $ 8.1 million , a decrease of $ 746 thousand from the twelve months ended december 31 , 2018. the largest component of this decrease was a decline of $ 1.0 million in gains on sale of sba loans from $ 1.9 million during the twelve months ended december 31 , 2018 to $ 867 thousand during 2019. proceeds from sba loan sales totaled $ 19.5 million during 2019 and $ 41.7 million during 2018. loans originated for sale totaled $ 20.4 million during 2019 compared to $ 38.9 million during the twelve months ended december 31 , 2018. we attribute some of the decline in originations to the government shutdown during the first quarter of 2019. during the shutdown we were unable to provide sba guaranteed loans . in addition , higher market rates have resulted in a decrease in demand and competition in the sba lending market remains intense . loan servicing income , which decreased by $ 40 thousand , represents servicing income received on the guaranteed portion of sba loans sold into the secondary market . at december 31 , 2019 we were servicing $ 116 million in guaranteed portions of loans , a decrease of $ 6 million from $ 122 million at december 31 , 2018. non-interest income benefited during the 2018 period from a $ 209 thousand gain recorded upon the prospective adoption of a newly effective accounting pronouncement impacting the measurement of equity securities , which in our case consists of stock in our correspondent banks , without a readily determinable fair market value . no gain or loss was recorded on these investment securities during the current period . partially offsetting these declines in non-interest income were increases of $ 119 thousand in service charge income and $ 200 thousand in interchange income mostly related to an increase in the size of the bank .
| 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_5_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 $ 2.0 million for 2019 , $ 1.0 million for 2018 and $ 3.2 million for 2017 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 costs of $ 741,000 , $ 462,000 and $ 501,000 for 2019 , 2018 and 2017 , 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 .
| 6,885 |
for the year ended december 31 , 2011 , officers of the company were eligible to participate in the 2011 employee deferred bonus compensation program ( the 2011 deferred program ) with respect to any payments received under the 2011 cash incentive plan . electing officers could elect to receive 50 % or 100 % of the cash value story_separator_special_tag the following discussion of our financial condition and results of operations contains forward-looking statements within the meaning of the federal securities laws that involve material risks and uncertainties . this discussion should be read in conjunction with a warning about forward-looking statements on page 2 and risk factors under item 1a of this annual report . in addition , our discussion of the financial condition and results of operations of quidel corporation in this item 7 should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report . overview and executive summary we have a leadership position in the development , manufacturing and marketing of rapid diagnostic testing solutions . these diagnostic testing solutions primarily include applications in infectious diseases , women 's health and gastrointestinal diseases . we sell our products directly to end users and distributors , in each case , for professional use in physician offices , hospitals , clinical laboratories , reference laboratories , leading universities , retail clinics and wellness screening centers . we market our products in the u.s. through a network of national and regional distributors , and a direct sales force . internationally , we sell and market primarily in japan and europe through distributor arrangements . 25 a majority of our total revenues relate to three product families . for the years ended december 31 , 2011 , 2010 and 2009 , we derived approximately 59 % , 51 % and 87 % , respectively , of our total revenues from sales of our influenza , group a strep and pregnancy tests . additionally , a significant portion of our total revenue is from a relatively small number of distributors . approximately 40 % , 31 % and 52 % of our total revenue for the years ended december 31 , 2011 , 2010 and 2009 , respectively , were related to sales through our four largest distributors . for the year ended december 31 , 2011 , total revenue increased 40 % to $ 158.6 million from $ 113.3 million for the year ended december 31 , 2010. the increase in total revenues was primarily due to a more normalized cold and flu season in 2011 and the related increase in sales of our influenza products , as compared to the lack of an influenza season in 2010. additionally , the increase was due to the first quarter of 2011 including a full quarter of revenues from the dhi acquisition compared to the first quarter of 2010 that does not include $ 5.7 million of dhi pre-acquisition revenues and increased revenues from our strep a products . our primary objective is to build a broader-based diagnostic company , with products in market segments in which we have significant expertise and know-how , and realize increased shareholder value . our diagnostic testing solutions are designed to provide specialized results that serve a range of customers , by addressing varying requirements of reduced cost , increased test accuracy and reduced time to result , thus creating a diagnostic continuum in the ivd market . our current approach to address this diagnostic continuum relative to our strategy is comprised of three parts : lateral flow immunoassay tests ; direct fluorescent assays ( dfa ) and culture-based tests ; and molecular diagnostic tests . our strategy to accomplish our primary objective includes the following : leveraging our current infrastructure to develop and launch new lateral flow and dfa products such as the sofia tm analyzer approved by the fda in october 2011 ; developing a molecular diagnostics franchise ; and strengthening our position with distribution partners and our customers to gain more emphasis on our products in the u.s. and abroad . our current initiatives to execute this strategy include the following : continue to focus our research and development efforts on three areas : new proprietary product platform development , the creation of improved products and new products for existing markets and unmet clinical needs , and pursuit of collaborations with other companies for new and existing products and markets that advance our differentiated strategy ; provide clinicians with validated studies that encompass the clinical efficacy and economic efficiency of our diagnostic tests for the professional market ; continue to focus on strengthening our market and brand leadership in infectious diseases and women 's health by acquiring and or developing and introducing clinically superior diagnostic solutions ; strengthening our direct sales force to create direct relationships with integrated delivery networks , laboratories and hospitals , with a goal of driving growth through improved physician and laboratorian satisfaction ; 26 support payer evaluation of diagnostic tests and establishment of favorable reimbursement rates ; continue to create strong global alliances to support our efforts to achieve leadership in key markets and expand our presence in emerging markets ; and further refine of our manufacturing efficiencies and productivity improvements to improve profit , with continued focus on profitable products and markets and our effort to create a core competency in new product development . product development activities are inherently uncertain , and there can be no assurance that we will be able to obtain approval for any of our products , or if we obtain approval , that we will commercialize any of our products . in addition , we may terminate our development efforts with respect to one or more of our products under development at any time , including before or during clinical trials . as a business in a highly regulated and competitive industry , we face many risks and challenges and we also have opportunities . story_separator_special_tag additionally , the effective tax rate is impacted by certain acquisition related non-deductible transaction costs and reversing a portion of a tax benefit recognized in 2009 relating to our production deduction . income tax expense for 2009 includes a net reduction primarily related to the use of research and development credits and application of a manufacturing tax deduction . liquidity and capital resources as of december 31 , 2011 , our principal sources of liquidity consisted of $ 61.3 million in cash and cash equivalents and $ 74.6 million available to us under our senior credit facility , which can fluctuate from time to time due to , among other factors , our funded debt to adjusted earnings before interest , taxes , depreciation and amortization ( adjusted ebitda ) ratio . our working capital as of december 31 , 2011 was $ 71.8 million . cash provided by operating activities was $ 47.0 million during the year ended december 31 , 2011. we had net income of $ 7.6 million , including non-cash charges of $ 25.3 million of depreciation and amortization of intangible assets and property and equipment , and stock-based compensation . the most significant changes in operating assets and liabilities included a decrease in inventories and income tax receivable of $ 3.1 million and $ 8.2 million , respectively . the decrease in inventory is related to the seasonal nature of our influenza business , while the decrease in income tax receivable is due to a tax refund received in 2011. our investing activities used $ 20.8 million during the year ended december 31 , 2011 primarily related to $ 14.0 million for the acquisition of licensed technology associated with the alere amendment as discussed in note 6 in the notes to consolidated financial statements included in this annual report . in addition , we acquired production and scientific equipment and building improvements during the year ended december 31 , 2011 of $ 4.5 million . also , we capitalized $ 1.3 million of software development costs as part of the acquisition of intangible assets . we are currently planning approximately $ 11.6 million in capital expenditures over the next 12 months . the primary purpose for our capital expenditures is to acquire manufacturing and scientific equipment , to purchase or develop information technology , and to implement facility improvements . we plan to fund these capital expenditures with cash flow from operations and other available sources of liquidity . we have $ 0.9 million in firm purchase commitments with respect to such planned capital expenditures as of the date of filing this report . our financing activities generated approximately $ 28.3 million of cash during the year ended december 31 , 2011. this was primarily related to proceeds from the sale of our common stock , partly offset by repayments made under the senior credit facility , both of which occurred during the first quarter of 2011. our $ 120.0 million senior credit facility matures on october 8 , 2013. the senior credit facility bears interest at the lower of either the eurodollar rate or base rate . the eurodollar rate is equal to the eurodollar rate plus the applicable rate , and the base rate is equal to the higher of the federal funds rate plus one-half of one percent plus the applicable rate , or the lenders prime rate . the applicable rate is generally determined in accordance with a performance pricing grid based on our leverage ratio and ranges from 1.50 % to 2.75 % for eurodollar rate loans and from 0.50 % to 1.75 % for base rate loans . the agreement governing the senior credit facility is subject to certain customary limitations , including among others : limitation on liens ; limitation on mergers , consolidations and sales of assets ; limitation on debt ; limitation on dividends , stock redemptions and the redemption and or prepayment of other debt ; limitation on investments ( including loans and advances ) and acquisitions ; limitation on transactions with affiliates ; and limitation on annual capital expenditures . the terms of the senior credit facility require us to comply with certain financial covenants that include a funded debt to adjusted ebitda ratio ( as defined in the senior credit facility , with adjusted ebitda generally calculated as earnings before , among other adjustments , interest , taxes , depreciation and amortization ) not to exceed 3 to 1 as of the end of each fiscal quarter , and an interest coverage ratio of not less than 3.5 to 1 as of the end of each fiscal quarter . the senior credit facility is secured by substantially all present and future assets and properties of the company . our ability to borrow under the senior credit facility fluctuates from time to time due to , among other factors , our borrowings under the facility and our funded debt to adjusted ebitda ratio . at december 31 , 2011 , we had $ 42.0 million outstanding under the senior credit facility which was borrowed in connection with the acquisition of dhi . as of december 31 , 2011 , we were in compliance with all financial covenants . 31 during the third quarter of 2011 , the senior credit facility was amended for various matters , including amending the credit and security agreement to ( i ) permit investments in new foreign subsidiaries and ( ii ) allow certain indebtedness and liens related to the investments in new foreign subsidiaries . our cash requirements fluctuate as a result of numerous factors , such as the extent to which we generate cash from operations , progress in research and development projects , competition and technological developments and the time and expenditures required to obtain governmental approval of our products . in addition , we intend to continue to evaluate candidates for acquisitions or technology licensing . if we determine to proceed with any such transactions , we may need to incur additional debt , or issue additional equity , to successfully complete the transactions .
| results of operations comparison of years ended december 31 , 2011 and 2010 total revenues the following table compares total revenues for the years ended december 31 , 2011 and 2010 ( in thousands , except percentages ) : replace_table_token_5_th for the year ended december 31 , 2011 , total revenue increased 40 % to $ 158.6 million from $ 113.3 million for the year ended december 31 , 2010. the increase in total revenues was primarily due to a more normalized cold and flu season in 2011 and the related increase in sales of our influenza products , as compared to the lack of an influenza season in 2010. additionally , the increase was due to the first quarter of 2011 including a full quarter of revenues from the dhi acquisition compared to the first quarter of 2010 that does not include $ 5.7 million of dhi pre-acquisition revenues and increased revenues from our strep a products . the revenue from our royalty , license fees and grant revenue category for all periods primarily relate to royalty payments earned on our patented technologies utilized by third parties and revenue from grants for research and commercialization activities . 27 cost of sales cost of sales increased 19.5 % to $ 62.9 million , or 40 % of total revenues , for the year ended december 31 , 2011 compared to $ 52.6 million , or 46 % of total revenues , for the year ended december 31 , 2010. the absolute dollar increase in cost of sales is primarily related to the variable nature of direct costs ( material and labor ) associated with the 40 % increase in total revenues , the $ 0.7 million related to the alere amendment as discussed in note 6 in the notes to consolidated financial statements included in this annual report , and $ 0.6 million related to a disposal of inventory associated with a discontinued product .
| 6,886 |
2017 , 2016 and 2015 . the executive overview summarizes information management believes is important for an understanding of the financial condition and results of operations of the company . topics presented in the executive overview are discussed in more detail within , and should be read in conjunction with , this management 's discussion and analysis of financial condition and results of operations and the accompanying consolidated financial statements included in this annual report on form 10-k. the discussion of the critical accounting policies and analysis set forth below is intended to supplement and highlight information contained in the accompanying consolidated financial statements and the selected financial data presented elsewhere in this annual report on form 10-k. executive overview financial performance consolidated net income attributable to the company for 2017 was $ 458.8 million compared to $ 369.5 million earned during 2016 . the increase in net income attributable to the company reflected higher net income before income tax expense primarily as a result of higher net interest income . net interest income increased $ 262.5 million to $ 2.3 billion in 2017 compared to 2016 due in part to an increase in interest and fees on loans as well as a decrease in interest on deposits . the net interest margin for 2017 was 3.10 % compared to 2.64 % for 2016 . net interest income was positively impacted by higher interest rates due to the impact of the federal reserve board benchmark interest rate increases . the provision for loan losses was $ 287.7 million for 2017 compared to $ 302.6 million for 2016 . the decrease in provision for loan losses for 2017 was due in part to a reduction in provision expense stemming from improvements in the overall level of energy loans rated special mention or lower , including loans classified as nonaccrual , during 2017 offset by the impact of additional allowance for loan losses related to the impact of hurricanes harvey and irma on the loan portfolio during 2017. net charge-offs for 2017 totaled $ 283.2 million compared to $ 227.0 million for 2016 . noninterest income was $ 1.0 billion for 2017 , a decrease of $ 10.0 million compared to 2016 . the decrease in noninterest income was largely attributable to a decrease of $ 27.0 million in investment securities gains as well as a $ 7.1 million decrease in mortgage banking income . these decreases were offset by a $ 13.4 million increase in corporate and correspondent investment sales , a $ 7.8 million increase in service charges on deposit accounts and a $ 6.2 million increase on retail investment sales . noninterest expense increased $ 8.1 million to $ 2.3 billion for 2017 compared to 2016 . the higher level of noninterest expense was primarily attributable to a $ 48.9 million increase in other noninterest expense related to an increase in legal reserves and an increase in provision for unfunded commitments . additionally , professional services increased $ 21.3 million and salaries , benefits and commissions increased $ 12.3 million . these increases were offset by a $ 59.9 million decrease in goodwill impairment charges related to the write-off of goodwill associated with the simple reporting unit in 2016. income tax expense was $ 316.1 million for 2017 compared to $ 146.0 million for 2016 . this resulted in an effective tax rate of 40.7 % for 2017 and a 28.2 % effective tax rate for 2016 . the increase in the effective tax rate for 2017 was primarily driven by the $ 121.2 million impact of the remeasurement of deferred tax assets and liabilities due to the impact of the tax cuts and jobs act signed into legislation on december 22 , 2017. the company 's total assets at december 31 , 2017 were $ 87.3 billion , an increase of $ 241 million from december 31 , 2016 levels . total loans excluding loans held for sale were $ 61.6 billion at december 31 , 2017 , an increase of $ 1.6 billion or 2.6 % from december 31 , 2016 levels . the increase in total loans was primarily driven by growth in both the commercial and consumer portfolios . deposits increased $ 2.0 billion or 2.9 % compared to december 31 , 2016 , driven by transaction accounts which increased 2.8 % fueled by savings and money market growth . noninterest bearing demand deposits increased 6.4 % . trading account assets and other short-term borrowings decreased $ 2.9 billion and $ 2.8 billion , respectively due to a decrease in u.s. treasury long and short position securities held by bsi . 44 total shareholder 's equity at december 31 , 2017 was $ 13.0 billion , an increase of $ 263 million compared to december 31 , 2016 . capital the company 's tier 1 and cet1 ratios were 12.15 % and 11.80 % , respectively at december 31 , 2017 , compared to 11.85 % and 11.49 % , respectively at december 31 , 2016 , under the u.s. basel iii transitional provisions . on june 28 , 2017 , the company was informed that the federal reserve board had no objection to the company 's capital plan and capital actions proposed in the capital plan . the company submitted its capital plan , which was approved by its board of directors , to the federal reserve in april 2017 as part of the comprehensive capital analysis and review of the 34 largest u.s. bank holding companies . the capital plan includes proposed potential capital actions covering the period from july 1 , 2017 through june 30 , 2018. on june 22 , 2017 , the federal reserve board disclosed the results of its 2017 dodd-frank act stress test for the same 34 bank holding companies . each of the company 's projected regulatory capital ratios exceeded the applicable regulatory minimums as defined by the federal reserve under the hypothetical supervisory severely adverse scenario . story_separator_special_tag also included in management 's estimate for the allowance for loan losses are considerations with respect to the impact of current economic events . these events may include , but are not limited to , fluctuations in overall interest rates , political conditions , legislation that may directly or indirectly affect the banking industry and economic conditions affecting specific geographical areas and industries in which the company conducts business . while management uses the best information available to establish the allowance for loan losses , future adjustments to the allowance for loan losses and methodology may be necessary if economic or other conditions differ substantially from the assumptions used in making the estimates . such adjustments to original estimates , as necessary , are made in the period in which these factors and other relevant considerations indicate that loss levels vary from previous estimates . a detailed discussion of the methodology used in determining the allowance for loan losses is included in note 1 , summary of significant accounting policies , in the notes to the consolidated financial statements . fair value measurements : a portion of the company 's assets and liabilities is carried at fair value , with changes in fair value recorded either in earnings or accumulated other comprehensive income ( loss ) . these include investment securities available for sale , trading account assets and liabilities , loans held for sale , mortgage servicing assets , and derivative assets and liabilities . periodically , the estimation of fair value also affects investment securities held to maturity when it is determined that an impairment write-down is other than temporary . fair value determination is also relevant for certain other assets such as other real estate owned , which are recorded at the lower of the recorded balance or fair value , less estimated costs to sell . the determination of fair value also impacts certain other assets that are periodically evaluated for impairment using fair value estimates , including goodwill and impaired loans . 46 fair value is generally based upon quoted market prices , when available . if such quoted market prices are not available , fair value is based upon internally developed models that primarily use observable market based parameters as inputs . valuation adjustments may be made to ensure that financial instruments are recorded at fair value . these adjustments may include amounts to reflect counterparty credit quality and the company 's own creditworthiness , among other things , as well as potentially unobservable parameters . any such valuation adjustments are applied consistently over time . while management believes the company 's valuation methodologies are appropriate and consistent with other market participants , the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date . see note 20 , fair value measurements , in the notes to the consolidated financial statements for a detailed discussion of determining fair value , including pricing validation processes . goodwill impairment : it is the company 's policy to assess goodwill for impairment at the reporting unit level on an annual basis or between annual assessments if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount . impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value . accounting standards require management to estimate the fair value of each reporting unit in assessing impairment at least annually . as such , the company engages an independent valuation expert to assist in the computation of the fair value estimates of each reporting unit as part of its annual assessment . this assessment utilizes a blend of income and market based valuation methodologies . the impairment testing process conducted by the company begins by assigning net assets and goodwill to each reporting unit . the company then completes step one of the impairment test by comparing the fair value of each reporting unit with the recorded book value of its net assets , with goodwill included in the computation of the carrying amount . if the fair value of a reporting unit exceeds its carrying amount , goodwill of that reporting unit is not considered impaired , and step two of the impairment test is not necessary . if the carrying amount of a reporting unit exceeds its fair value , step two of the impairment test is performed to determine the amount of impairment . step two of the impairment test compares the implied fair value of goodwill attributable to each reporting unit to the carrying amount of that goodwill . the implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination ; an entity allocates the fair value determined in step one for the reporting unit to all of the assets and liabilities of that unit as if the reporting unit had been acquired in a business combination . if the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill , an impairment loss is recognized in an amount equal to that excess . the computation of the fair value estimate is based upon management 's estimates and assumptions . although management has used the estimates and assumptions it believes to be most appropriate in the circumstances , it should be noted that even relatively minor changes in certain valuation assumptions used in management 's calculation could result in differences in the results of the impairment test . see “ goodwill ” in this management 's discussion and analysis of financial condition and results of operations and see note 8 , goodwill , in the notes to the consolidated financial statements for a detailed discussion of the impairment testing process .
| analysis of results of operations consolidated net income attributable to the company totaled $ 458.8 million , $ 369.5 million , and $ 505.1 million for 2017 , 2016 and 2015 , respectively . the company 's 2017 results reflected higher net income before income tax expense primarily as a result of higher net interest income . net interest income and net interest margin net interest income is the principal component of the company 's income stream and represents the difference , or spread , between interest and fee income generated from earning assets and the interest expense paid on deposits and borrowed funds . fluctuations in interest rates as well as changes in the volume and mix of earning assets and interest bearing liabilities can impact net interest income . the following discussion of net interest income is presented on a fully taxable equivalent basis , unless otherwise noted , to facilitate performance comparisons among various taxable and tax-exempt assets . 2017 compared to 2016 net interest income totaled $ 2.3 billion and $ 2.1 billion in 2017 and 2016 , respectively . net interest income on a fully taxable equivalent basis totaled $ 2.4 billion and $ 2.1 billion in 2017 and 2016 , respectively . the increase in net interest income was primarily the result of an increase in interest income on loans and investment securities as well as a decrease in interest expense on deposits and other-short term borrowings . net interest margin was 3.10 % in 2017 compared to 2.64 % in 2016 . the 46 basis point increase in net interest margin was primarily driven by the impact of higher interest rates . the fully taxable equivalent yield for 2017 for the loan portfolio was 4.17 % compared to 3.74 % for the prior year . the 43 basis point increase was primarily driven by the impact of higher interest rates .
| 6,887 |
on december 29 , 2017 , we acquired the approximately 62 % of hsn , inc. ( “ hsni ” ) we did not already own in an all-stock transaction ( the “ merger ” ) making hsni a wholly-owned subsidiary , attributed to the qvc group . hsni has two main operating segments : its televised shopping business “ hsn ” and its catalog retail business “ cornerstone. ” hsn is a reportable segment , and cornerstone is included in the “ corporate and other ” reportable segment . qvc and hsn are referred to collectively as the “ televised shopping businesses. ” on october 1 , 2015 , we acquired zulily , inc. ( “ zulily ” ) ( now known as zulily , llc ) , an online retailer offering customers a fun and entertaining shopping experience with a fresh selection of new product styles launched every day , which is also a reportable segment . see note 5 of the accompanying consolidated financial statements for further details on the acquisitions of zulily and hsni . our corporate and other category includes entire or majority interests in consolidated subsidiaries , which operate online commerce businesses in a broad range of retail categories , ownership interests in unconsolidated businesses and corporate expenses . these consolidated subsidiaries include evite , inc. ( “ evite ” ) , backcountry.com , inc. ( `` backcountry '' ) ( through june 30 , 2015 , see note 6 of the accompanying consolidated financial statements ) , commercehub , inc. ( “ commercehub ” ) ( through july 22 , 2016 , see note 6 of the accompanying consolidated financial statements ) and bodybuilding.com , llc ( `` bodybuilding '' ) ( through november 4 , 2016 , see note 6 of the accompanying consolidated financial statements ) ( collectively , the “ digital commerce businesses ” ) , and cornerstone . evite is an online invitation and social event planning service on the web . backcountry operates websites offering sports gear and clothing for outdoor and active individuals in a variety of categories . commercehub provides a cloud-based platform for online retailers and their suppliers ( manufacturers and distributors ) to sell products to consumers without physically owning inventory , or managing the fulfillment of those products . bodybuilding manages websites related to sports nutrition , bodybuilding and fitness . we also hold ownership interests in ftd companies , inc. ( “ ftd ” ) and lendingtree , inc. ( “ lendingtree ” ) , which we account for as equity method investments ; an interest in liberty broadband corporation ( “ liberty broadband ” ) , which we account for at fair value ; and we maintain investments and related financial instruments in public companies such as charter communications , inc. ( “ charter ” ) , ilg , inc. ( “ ilg ” ) and time warner inc. ( “ time warner ” ) , which are accounted for at their respective fair market values . tracking stock is a type of common stock that the issuing company intends to reflect or `` track '' the economic performance of a particular business or `` group , '' rather than the economic performance of the company as a whole . liberty has two tracking stocks , qvc group common stock and liberty ventures common stock , which are intended to track and reflect the economic performance of liberty 's qvc group and ventures group , respectively . while the qvc group and the ventures group have separate collections of businesses , assets and liabilities attributed to them , no group is a separate legal entity and therefore no group can own assets , issue securities or enter into legally binding agreements . holders of tracking stock have no direct claim to the group 's stock or assets and are not represented by separate boards of directors . instead , holders of tracking stock are stockholders of the parent corporation , with a single board of directors and subject to all of the risks and liabilities of the parent corporation . the term `` ventures group '' does not represent a separate legal entity , rather it represents those businesses , assets and liabilities that have been attributed to that group . the ventures group consists of our businesses not included in the qvc group including evite and our interests in liberty broadband , lendingtree , ftd , investments in charter and ilg , as well as cash in the amount of approximately $ 573 million ( at december 31 , 2017 ) , including subsidiary cash . the ventures group also has attributed to it certain liabilities related to our exchangeable debentures and certain deferred tax liabilities . ii-5 the ventures group is primarily focused on the maximization of the value of these investments and investing in new business opportunities . on april 4 , 2017 , liberty entered into an agreement and plan of reorganization ( as amended , the “ gci reorganization agreement ” and the transactions contemplated thereby , the “ transactions ” ) with general communication , inc. ( “ gci ” ) , an alaska corporation , and liberty interactive llc , a delaware limited liability company and a direct wholly-owned subsidiary of liberty ( “ li llc ” ) , whereby liberty will acquire gci through a reorganization in which certain ventures group assets and liabilities will be contributed to gci liberty ( as defined below ) in exchange for a controlling interest in gci liberty . story_separator_special_tag the term `` qvc group '' does not represent a separate legal entity , rather it represents those businesses , assets and liabilities that have been attributed to that group . the qvc group is primarily focused on the televised shopping businesses and other online or catalog retail businesses . the qvc group has attributed to it the remainder of our businesses and assets not attributed to the ventures group , including our wholly-owned subsidiaries qvc , zulily ( as of october 1 , 2015 ) , and hsni ( as of december 29 , 2017 ) as well as cash in the amount of approximately $ 330 million ( at december 31 , 2017 ) , including subsidiary cash . disposals on june 30 , 2015 , liberty sold backcountry for aggregate consideration , including assumption of debt , amounts held in escrow , and a noncontrolling interest , of approximately $ 350 million . the sale resulted in a $ 105 million gain , which is included in gains ( losses ) on transactions , net in the accompanying consolidated statements of operations . backcountry is included in the corporate and other segment through june 30 , 2015 and is not presented as a discontinued operation as the sale did not represent a strategic shift that had a major effect on liberty 's operations and financial results . on july 22 , 2016 , liberty completed its previously announced spin-off ( the “ commercehub spin-off ” ) of its former wholly-owned subsidiary commercehub . commercehub is included in the corporate and other segment through july 22 , 2016 and is not presented as a discontinued operation as the commercehub spin-off did not represent a strategic shift that had a major effect on liberty 's operations and financial results . on november 4 , 2016 , liberty completed its previously announced split-off ( the “ expedia holdings split-off ” ) of its former wholly-owned subsidiary liberty expedia holdings , inc. ( “ expedia holdings ” ) . expedia holdings is comprised of , among other things , liberty 's former interest in expedia , inc. ( “ expedia ” ) and liberty 's former wholly-owned subsidiary bodybuilding . on november 2 , 2016 , expedia holdings borrowed $ 350 million under a new margin loan and distributed $ 299 million , net of certain debt related costs , to liberty on november 4 , 2016. liberty viewed expedia and bodybuilding as separate components and evaluated them separately for discontinued operations presentation . based on a quantitative analysis , the split-off of liberty 's interest in expedia represented a strategic shift that had a major effect on liberty 's operations , primarily due to prior year one-time gains on transactions recognized by expedia . accordingly , the consolidated financial statements of liberty have been prepared to reflect liberty 's interest in expedia as a discontinued operation . the disposition of bodybuilding as part of the expedia holdings split-off does not have a major effect on liberty 's historical results nor is it expected to have a major effect on liberty 's future operations . the disposition of bodybuilding does not represent a strategic shift in liberty 's operations . accordingly , bodybuilding is not presented as a discontinued operation in the consolidated financial statements of liberty . bodybuilding is included in the corporate and other segment through november 4 , 2016. strategies and challenges televised shopping businesses . the goal of qvc is to become the preeminent global multimedia shopping community for people who love to shop , and to offer a shopping experience that is as much about entertainment and enrichment as it is about buying . the goal of hsn is to become the preeminent interactive entertainment and lifestyle retailer offering a curated assortment of exclusive products and top brand names to its customers through entertainment , inspiration and personalities providing an entirely unique shopping experience . the objective for both of the televised shopping businesses is to provide an integrated shopping experience that utilizes all forms of media including television , the internet and mobile devices . the televised shopping businesses intend to employ several strategies to achieve these goals and objectives . among these strategies are to ( i ) extend the breadth , relevance and exposure of the qvc and hsn brands ; ( ii ) source products that represent unique quality and value ; ( iii ) create engaging presentation content in televised programming , mobile and online ; ( iv ) leverage customer loyalty and continue multi-platform expansion ; and ( v ) create a ii-7 compelling and differentiated customer experience . in addition , qvc expects to expand globally by leveraging its existing systems , infrastructure and skills in other countries around the world . future net revenue growth will primarily depend on sales growth from e-commerce and mobile platforms , additions of new customers from households already receiving the company 's television programming , and increased spending from existing customers . future net revenue may also be affected by ( i ) the willingness of cable television and direct-to-home satellite system operators to continue carrying the company 's programming services ; ( ii ) the televised shopping businesses ' ability to maintain favorable channel positioning , which may become more difficult due to governmental action or from distributors converting analog customers to digital ; ( iii ) changes in television viewing habits because of personal video recorders , video-on-demand and internet video services ; and ( iv ) general economic conditions . prolonged economic uncertainty in various regions of the world in which the televised shopping businesses ' subsidiaries and affiliates operate could adversely affect demand for our businesses ' products and services since a substantial portion of our businesses ' revenue is derived from discretionary spending by individuals , which typically falls during times of economic instability . global financial markets may experience disruptions , including increased volatility and diminished liquidity and credit availability .
| operating results replace_table_token_7_th revenue . our consolidated revenue decreased 2.3 % and increased 6.6 % for the years ended december 31 , 2017 and 2016 , respectively , as compared to the corresponding prior year periods . corporate and other revenue decreased $ 405 million for the year ended december 31 , 2017 , as compared to the corresponding period in the prior year due to the ii-10 disposition of bodybuilding in november 2016 as part of the expedia holdings split-off ( $ 355 million ) and the commercehub spin-off in july 2016 ( $ 51 million ) . corporate and other revenue decreased $ 392 million for the year ended december 31 , 2016 , as compared to the corresponding prior year period due to the sale of backcountry in june 2015 ( $ 227 million ) , the disposition of bodybuilding in november 2016 as part of the expedia holdings split-off ( $ 109 million ) and the commercehub spin-off in july 2016 ( $ 38 million ) . qvc 's revenue increased $ 89 million and decreased $ 61 million for the years ended december 31 , 2017 and 2016 , respectively , as compared to the corresponding prior year periods . zulily 's revenue increased $ 66 million during the year ended december 31 , 2017 , as compared to the corresponding prior year period . the increase in zulily 's revenue in 2016 compared to the same period in the prior year was due to the acquisition of zulily on october 1 , 2015. with the exception of $ 38 million of severance-related costs incurred on december 30 , 2017 , hsn 's results of operations are not included in our consolidated operating results for the year ended december 31 , 2017. see `` results of operations - businesses `` below for a more complete discussion of the results of operations of qvc , hsn and zulily . operating income ( loss ) .
| 6,888 |
change of year-end on october 1 , 2013 , the company 's board of directors approved a change in fiscal year end from june 30 to december 31 , commencing with the twelve-month period beginning on january 1 , 2014. unless otherwise noted , all references to `` years `` in this report refer to the twelve-month period which ends on december 31 of each year . f- 7 contango oil & gas company and subsidiaries notes to consolidated financial statements - ( continued ) other investments the company has two seats on the board of directors of exaro and has significant influence , but not control , over the company . as a result , the company 's 37 % story_separator_special_tag produ ctive wells productive wells are producing wells and wells capable of producing commercial quantities . completed but marginally producing wells are not considered here as a “ productive ” well . the following table sets forth the number of gross and net productive natural gas and oil wells in which we owned an interest as of december 31 , 2015 : replace_table_token_10_th ( 1 ) a gross well is a well in which we own an interest . ( 2 ) the number of net wells is the sum of our fractional working interests owned in gross wells . nat ural gas and oil reserves estimates of proved reserves and future net revenue as of december 31 , 2015 , 2014 and 20 13 were prepared by netherland , sewell & associates , inc. ( “ nsai ” ) and william m. cobb and associates ( “ cobb ” ) , our independent petroleum engineering firms in accordance with the definitions and regulations of the sec . the technical persons responsible for preparing the reserve estimates are independent petroleum engineers and geoscientists that meet the requirements regarding qualifications , independence , objectivity , and confidentiality set forth in the standards pertaining to the estimating and auditing of oil and gas reserves information promulgated by the society of petroleum engineers ( “ spe ” ) . approximately 61 % and 39 % of the proved reserves estimates shown herein at december 31 , 2015 have been independently prepared by cobb and nsai , respectively . cobb prepared the proved reserves estimates as of december 31 , 2015 , 2014 and 20 13 for all of our offshore properties and nsai prepared the proved reserves estimates as of december 31 , 2015 , 2014 and 20 13 for our onshore propert ies . the technical individual at nsai responsible for the preparation of our reserve estimates as of december 31 , 2015 , 2014 , and 2013 has ove r 15 years of experience in the estimation and evaluation of reserves ; is a licensed professional engineer in the state of texas ; and holds a bachelor of science degree in petroleum engineering from the university of tulsa . the technical individual at cobb responsible for overseeing the preparation of our reserve estimates as of december 31 , 2015 , 2014 , and 2013 has 40 years of experience in the estimation and evaluation of reserves ; is a registered professional engineer in the state of texas ; holds a bachelor of science degree in petroleum engineering from texas a & m university ; is a member of the society of petroleum engineers ; and is a member of the society of petroleum evaluation engineers . the estimates of proved reserves and future net revenue as of december 31 , 2015 , 2014 and 20 13 were reviewed by our corporate reservoir engineering department that is independent of the operations department . the corporate reservoir engineering 38 department interacts with geoscience , operating , accounting , and marketing departments to review the integrity , accuracy and timeliness of the data , methods , and assumptions used in the preparation of the reserves estimates . all relevant data is compiled in a computer database application to which only authorized personnel are given access rights . our senior vice president - engineering is the person primarily responsible for overseeing the preparation of our internal reserve estimates and for reviewing any reserves estimates prepared by an independent petroleum engineering firm . our senior vice president - engineering has a bachelor of science degree in petroleum engineering from the university of texas and over 35 years of industry experience with positions of increasing responsibility . he reports directly to our president and chief executive officer . reserves are also reviewed internally with senior management and presented to our b oard of d irectors in summary form on a quarterly basis . we maintain adequate and effective internal controls over the underlying data upon which reserves estimates are based . the primary inputs to the reserve estimation process are comprised of technical information , financial data , ownership interests and production data . all field and reservoir technical information , which is communicated to our reservoir engineers quarterly , is confirmed when our third-party reservoir engineers hold technical meetings with geologists , operations and land personnel to discuss field performance and to validate future development plans . current revenue and expense information is obtained from our accounting records , which are subject to external quarterly reviews , annual audits and our own set of internal controls over financial reporting . internal controls over financial reporting are assessed for effectiveness annually using criteria set forth in internal controls - integrated framework issued by the committee of sponsoring organizations of the treadway commission . all data such as commodity prices , lease operating expenses , production taxes , field level commodity price differentials , ownership percentages , and well production data are updated in the reserve database by our third-party reservoir engineers and then analyzed by management to ensure that they have been entered accurately and that all updates are complete . story_separator_special_tag prices for natural gas liquids in the table represent average prices for natural gas liquids used in the proved reserve estimates , calculated in accordance with applicable sec rules . all prices , using sec rules , are adjusted for quality , energy content , transportation fees and regional price differentials in determining proved reserves . while we are reasonably certain of recovering our calculated reserves , the process of estimating natural gas and oil reserves is complex . it requires various assumptions , including natural gas and oil prices , drilling and operating expenses , capital expenditures , taxes and availability of funds . our third party engineers must project production rates , estimate timing and amount of development expenditures , analyze available geological , geophysical , production and engineering data , and the extent , quality and reliability of all of this data may vary . actual future production , natural gas and oil prices , revenues , taxes , development expenditures , operating expenses and quantities of recoverable natural gas and oil reserves most likely will vary from estimates . any significant variance could materially affect the estimated quantities and net present value of reserves . in addition , estimates of proved reserves may be adjusted to reflect production history , results of exploration and development , prevailing natural gas and oil prices and other factors , many of which are beyond our control . 41 reserves attributable to our investment in exaro estimates of proved reserves and future net revenue as of december 31 , 2015 and 20 1 4 associated with our investment in exaro , which we account for using the equity method , were prepared by w.d . von gonten and associates ( “ von gonten ” ) in accordance with the definitions and regulations of the sec . the technical persons responsible for preparing the reserve estimates are independent petroleum engineers and geoscientists that meet the requirements regarding qualifications , independence , objectivity , and confidentiality set forth in the standards pertaining to the estimating and auditing of oil and gas reserves information promulgated by the society of petroleum engineers . reserves as of december 31 , 2015 and 201 4 were reviewed by our corporate reservoir engineering department as described above . the technical individual at von gonten responsible for overseeing the preparation of our reserve estimates as of december 31 , 2015 and december 31 , 20 1 4 has over 16 years of practical experience in the estimation and evaluation of reserves ; is a registered professional engineer in the state of texas ; holds a bachelor of science degree in petroleum engineering from texas a & m university ; and is a member in good standing of the society of petroleum engineers . the following table reflects the estimated proved reserves attributable to our investment in exaro : replace_table_token_16_th ( 1 ) the company 's share of the standardized measure of discounted future net cash flows attributable to our investment in exaro does not include the effect of income taxes because exaro is treated a partnership for tax purposes . exaro allocates any income or expense for tax purposes to its partners . ( 2 ) under sec rules , prices used in determining our proved reserves are based upon an unweighted 12-month first day of the month average price per mmbtu ( henry hub spot ) of natural gas and per barrel of oil ( west texas intermediate posted ) . prices for natural gas liquids in the table represent average prices for natural gas liquids used in the proved reserve estimates , calculated in accordance with applicable sec rules . all prices are adjusted for quality , energy content , transportation fees and regional price differentials in determining proved reserves . ( 3 ) during the year ended december 31 , 2015 , exaro 's proved reserves decreased by approximately 31.4 bcfe attributable to the impact of the dramatic decline in commodity prices on the value and volume of proved reserves , and the impact of the significant reduction in capital spending in response to the low and uncertain commodity price environment . prior year reserves our estimated net proved natural gas , oil and natural gas liquids reserves as of december 31 , 20 1 4 , 20 1 3 and 20 1 2 are disclosed in “ item 8. financial statements and supplementary data – supplemental oil and gas disclosures ( unaudited ) ” . reserves as of december 31 , 201 4 and 2013 were based on reserve reports generated by nsai and cobb . reserves as of december 31 , 2012 are based on reserve reports generated by cobb , while the reserves associated with our 37 % investment in exa ro were prepared by von gonten . 42 ite m 3. legal proceedings from time to time , we are involved in legal proceedings relating to claims associated with our properties , operations or business or arising from disputes with vendors in the normal course of business , including the material matters discussed below . in july 2010 , several parties associated with a limited partnership formed to invest in oil and gas properties that was dissolved in 1995 filed suit against a subsidiary of the company and several co-defendants in the district court for madison county in texas . the plaintiffs claim to own or have rights in certain oil and gas properties situated in madison county , texas by virtue of the partnership having interests in addition to those it held of record at the time of its dissolution , which were distributed to the partners in connection with such dissolution . a predecessor of the subsidiary of the company involved in this case acquired a portion of the interests now claimed by the plaintiffs from a successor to the general partner of the aforementioned partnership in 2000. the plaintiffs ' expert has recently provided a range of estimated monetary damages of up to approximately $ 9.4 million as to our s ubsidiary .
| general and administrative expenses general and administrative expenses for the year ended december 31 , 20 15 were approximately $ 2 6.4 million , compared to $ 34.0 million for the year ended december 31 , 20 14 . i ncluded in our current year expense was approximately $ 0.6 million in cash severance costs resulting from an august 2015 reduction in force and $ 6.5 million in non-cash stock based compensation . included in the prior year expense was approximately $ 4.5 million in non-cash stock based compensation and $ 2.6 million in merger-related costs . exclu sive of the stock compensation and severance related costs , cash general and administrative expenses for the current year were $ 19.3 million , compared to cash expenses of $ 29.5 million for the prior year . the 2015 reduction in force was a major step in our ongoing cost cutting efforts necessitated by the current challenging commodity price environment . general and administrative expenses for the year ended december 31 , 20 14 were approximately $ 34 . 0 million , compared to $ 26.5 million for the year ended december 31 , 20 13 . g eneral and administrative expenses for the year ended december 31 , 20 14 included approximately $ 4.5 million in non-cash stock ba sed compensation and $ 2.6 million in merger-related costs . general and administrative expenses for the year ended december 31 , 2013 included approximately $ 3 . 2 million in non-cash stock based compensation and $ 3.9 million attributable to the merger with crimson .
| 6,889 |
references herein to “ first choice bancorp , ” “ bancorp , ” or the “ holding company , ” refer to first choice bancorp on a standalone basis . the words “ we , ” “ us , ” “ our , ” or the “ company ” refer to first choice bancorp , first choice bank and pcb real estate holdings , llc collectively and on a consolidated basis . references to the “ bank ” refer to first choice bank and pcb real estate holdings , llc on a consolidated basis . the bank is a community-based financial institution that serves commercial and consumer clients in diverse communities . the bank specializes in loans to small- to medium-sized businesses and private banking clients , commercial and industrial loans , and commercial real estate loans with a specialization in providing financial solutions for the hospitality industry . the bank is a preferred small business administration ( “ sba ” ) lender . the bank conducts business through eight full-service branches and two loan production offices located in los angeles , orange and san diego counties . effective january 29 , 2021 , the rowland heights branch was sold to a third party financial institution who acquired certain branch assets and assumed certain branch liabilities , including deposit liabilities and the company 's obligations under the rowland heights branch lease . no loans were sold as part of this transaction . as of the date of sale , the rowland heights branch had total deposits of $ 22 million . as a california-chartered member bank , the bank is primarily regulated by the california department of financial protection and innovation ( the “ dfpi ” ) and the board of governors of the federal reserve system ( the “ federal reserve ” ) . the bank 's deposits are insured up to the maximum legal limit by the federal deposit insurance corporation ( the “ fdic ” ) . recent developments the covid-19 pandemic has resulted in , and is likely to continue to result in , significant economic disruption affecting our business and the businesses of our clients . as of the date of this filing , significant uncertainty continues to exist concerning the magnitude of the impact , the duration of the covid-19 pandemic and the efficacy of vaccines and other treatment options . for a more detailed discussion of some risks and uncertainties from or relating to the covid-19 pandemic that could materially and adversely affect our consolidated financial condition and consolidated results of operations , see part 1 , item 1a - risk factors in this annual report . see also “ cautionary note regarding forward-looking statements , ” herein . for accounting policies related to covid-19 loan payment deferrals authorized under the cares act , please refer to note 1. basis of presentation and summary of significant accounting policies - guidance on non-tdr loan modifications due to covid-19 and note 3. loans to the consolidated financial statements included in item 8 financial statements and supplementary data , of this annual report . key events and updates related to covid-19 : the ongoing covid-19 pandemic has caused serious disruptions in the u.s. economy and financial markets , and entire industries within our loan portfolio , such as hospitality and restaurants , have been impacted due to quarantines and travel restrictions and other industries we serve are experiencing or likely to experience similar disruptions and economic hardships as the covid-19 pandemic persists . continued support for employees , clients , and communities . at december 31 , 2020 , all branches were fully re-opened with appropriate safety precautions in place . safety and precautionary measures we have implemented include : germ guards , social distancing markers , ppe ( masks , gloves and hand sanitizer ) , daily enhanced cleaning with cdc recommended disinfectants , limited same time client entry and reduced lobby hours no employee lay-offs , or furloughs $ 120,000 in donations to over 50 non-profit organizations within our footprint that serve communities disproportionately impacted by covid-19 and the economic distress of this pandemic 38 governmental credit assistance programs in response to the market volatility and instability resulting from the pandemic , the federal government passed the cares act in march 2020 which authorized certain government-sponsored credit programs , including the paycheck protection program ( `` ppp '' ) and the main street lending program . the loan programs and the company 's participation in these programs are discussed below : paycheck protection program . on march 27 , 2020 , the cares act was signed into law authorizing the sba to guarantee an aggregate of up to $ 349 billion in forgivable ppp loans to assist small businesses nationwide adversely impacted by the covid-19 pandemic . on april 24 , 2020 , the ppp and health care enhancement act was signed into law and provided an additional $ 310 billion in funding and authority for the ppp . on june 5 , 2020 , the ppp flexibility act of 2020 ( the “ flexibility act ” ) was signed into law which changed key provisions of the ppp , including provisions relating to contractual maturity , the deferral of loan payments , and the forgiveness of such loans . under the flexibility act , the maturity date for ppp loans funded before june 5 , 2020 remained at two years from funding while the maturity date for ppp loans funded after june 5 , 2020 was five years from funding . the flexibility act also increased the period during which ppp loan proceeds may be used for purposes that qualify the loan for forgiveness ( the “ covered period ” ) to 24 weeks . under the flexibility act , borrowers are not required to make any payments of principal or interest before the date on which the sba remits the loan forgiveness amount to the bank ( or notifies the bank that no loan forgiveness is allowed ) . interest continues to accrue during the ppp payment deferral period . story_separator_special_tag at december 31 , 2020 , over 99 % of loans that were granted a deferral under this program have resumed making regular , contractually agreed-upon payments or were paid off and three non-ppp loans totaling $ 3.3 million remained on payment deferral , of which $ 2.8 million were reported as non-accrual and none are reported as tdrs under section 4013 of the cares act . the table below shows the number and balances of loans on payment deferral at the periods indicated : replace_table_token_8_th impacts from covid-19 : the ongoing covid-19 global pandemic has caused significant disruption in the international and united states economies and financial markets and continues to have an adverse effect on our business , consolidated financial condition and consolidated results of operations . in response to the covid-19 pandemic , the state government of california has taken preventative or protective actions which have resulted in significant adverse effects for many different types of businesses , including , among others , those in the travel , hospitality and food and beverage industries , and have resulted in a significant number of layoffs and furloughs of employees nationwide and in the regions in which we operate . because we have not recently experienced a comparable crisis which resulted in , among other things , the complete cessation of operations for entire industries in our portfolio , our ability to be predictive is uncertain . in addition , the magnitude , duration and speed of the global pandemic is uncertain . as a consequence , we can not estimate the impact on our business , consolidated financial condition or near- or longer-term financial or consolidated results of operations with reasonable certainty . net interest income and net interest margin . the federal reserve 's 150 basis point reduction in interest rates in march 2020 negatively impacted our net interest income and net interest margin for the year ended december 31 , 2020 , and put further pressure on our net interest margin during 2020. we have proactively worked to lower interest expense by lowering deposit rates , increasing our noninterest-bearing deposits as a percentage of total deposits and taking advantage of lower interest rate borrowing facilities . participation in the ppp had a significant impact on our asset mix and net interest income for the year ended december 31 , 2020 and will continue to impact both asset mix and net interest income for the year 2021. these loans contributed $ 8.7 million of interest income , of which $ 1.8 million related to accelerated net deferred fee income from loan forgiveness for the year ended december 31 , 2020. the weighted average loan yield for ppp loans was 3.34 % which lowered the total loan yield by 33 basis points for the year ended december 31 , 2020. we anticipate the accelerated deferred fee income as ppp loans payoff or are forgiven will partially offset the decrease in net interest margin from lower ppp interest rates . provision for loan losses . the provision for loan losses during 2020 was negatively impacted by an increase in qualitative factors related to covid-19 and macro-economic conditions , in addition to loan growth . with the extension of stay-at-home orders and an increase in reported covid-19 cases in the fourth quarter of 2020 , the timing of an economic recovery 40 continues to remain uncertain . accordingly , the assumptions underlying the covid-19 related qualitative factors we analyzed in determining the adequacy of the allowance for loan losses included ( a ) uncertain and volatile macroeconomic conditions caused by the pandemic ; ( b ) a high unemployment rate ; and ( c ) the additional government stimulus package signed into law in december of 2020. no provision for loan losses on ppp loans was recognized in 2020 as the sba guarantees 100 % of loans funded under the programs . loans to the hospitality industry . at december 31 , 2020 , our total loan commitments to the hospitality industry was $ 241.2 million , of which $ 212.3 million was outstanding , representing 11.2 % of total loans including loans held for sale , and loans held for investment net of discount and deferred fees . the total outstanding balance consisted of $ 118.4 million cre , $ 10.6 million c & i , $ 28.5 million construction and land and $ 54.8 million sba , of which $ 25.8 million were sba ppp loans which are fully guaranteed by the sba . we originated four hospitality loans under the main street lending program totaling $ 14.4 million in principal and sold 95 % participation interests totaling $ 13.7 million to the spv reducing the company 's net exposure to $ 700 thousand at december 31 , 2020. at december 31 , 2020 , non-accrual hospitality loans totaled $ 82 thousand . at december 31 , 2020 , there were no loans on deferment . loans to the restaurant industry . at december 31 , 2020 , our total loan commitments to the restaurant industry was $ 89.3 million , of which $ 84.5 million was outstanding , representing 4.5 % of total loans including loans held for sale , and loans held for investment net of discounts and deferred fees . the total outstanding balance consisted of $ 7.1 million cre , $ 14.1 million c & i , $ 63.3 million sba , of which $ 45.4 million were sba ppp loans which are fully guaranteed by the sba . we originated three restaurant-related loans under the main street lending program totaling $ 5.8 million in principal and sold 95 % participation interest totaling $ 5.5 million to the spv reducing the company 's net exposure to $ 300 thousand at december 31 , 2020. at december 31 , 2020 , non-accrual restaurant-related loans totaled $ 151.0 thousand . at december 31 , 2020 , there were no loans on deferment . capital and liquidity .
| comparison of operating results general net income was $ 29.0 million or $ 2.47 diluted earnings per share for the year ended december 31 , 2020 compared to $ 27.8 million or $ 2.36 diluted earnings per share for the year ended december 31 , 2019. the $ 1.1 million increase in net income was due to higher net interest income of $ 6.5 million , noninterest income of $ 907 thousand and lower income taxes of $ 50 thousand , partially offset by increases in the provision for loan losses of $ 3.1 million , and noninterest expense of $ 3.2 million for the year ended december 31 , 2020 compared to the year ended december 31 , 2019. the increase in net interest income was a result of higher average loan balances , relating to both ppp loans and organic loan growth , interest income and fees recognized for ppp loan forgiveness and reductions in the costs of interest-bearing deposits and borrowings . noninterest income increased due to higher gains related to loan sales from main street loans , coupled with higher other income . noninterest expense increased due primarily to higher salaries and employee benefits , data processing expenses , fdic assessment fees , and other expenses , partially offset by lower occupancy and equipment expenses and customer service related expenses . 44 net interest income net interest income is affected by changes in both interest rates and the volume of average interest-earning assets and interest-bearing liabilities . the following table summarizes the distribution of average assets , liabilities and shareholders ' equity , as well as interest income and yields earned on average interest-earning assets and interest expense and rates paid on average interest-bearing liabilities for the periods indicated : replace_table_token_12_th ( 1 ) average loans include net discounts and net deferred loan fees and costs .
| 6,890 |
bancorp is uncertain whether it will be able to further reduce the interest rate paid on its interest bearing liabilities by attracting lower cost deposits , due to the general expectation of continued increased competition for deposit accounts . provision for loan losses . bancorp 's loan portfolio is subject to varying degrees of credit risk and an allowance for loan losses is maintained to absorb losses inherent in its loan portfolio . credit risk includes , but is not limited to , the potential for borrower default and the failure of collateral to be worth what the bank determined it was worth at the time of the granting of the loan . the bank monitors its loan portfolio loan delinquencies at least as often as monthly . all loans that are delinquent and all loans within the various categories of the bank 's portfolio as a group are evaluated . the bank 's board , with the advice and recommendation of the bank 's loss mitigation committee , estimates an allowance to be set aside for loan losses . included in determining the calculation are such factors as historical losses for each loan portfolio , current market value of the loan 's underlying collateral , inherent risk contained within the portfolio after considering the state of the general economy , economic trends , consideration of particular risks inherent in different kinds of lending and consideration of known information that may affect loan collectibility . a decrease in the loan loss provision from the beginning of the year to the end of a year is the result after an analysis of the aforementioned factors and applying that rationale to the total portfolio . 51 the total allowance for loan losses decreased $ 3,933,000 , or 13.2 % , to $ 25,938,000 as of december 31 , 2011 , compared to $ 29,871,000 as of december 31 , 2010. the decrease in the allowance was due to a decrease in loans receivable , an improvement in loan delinquencies and non-accrual loans offset in part by an increase in impaired loans primarily due to a slowdown in foreclosed loans transferred to foreclosed real estate . during the year ended december 31 , 2011 , the provision for loan losses was $ 4,612,000 compared to $ 5,744,000 for the year ended december 31 , 2010. this decrease of $ 1,132,000 , or 19.7 % , was a result of management 's determination that less of a provision for loan losses was needed for the level of inherent risk in its portfolio for the year ended december 31 , 2011 as compared to the year ended december 31 , 2010. bancorp 's total loan portfolio has decreased from 2010. in addition , bancorp has experienced a modest decrease in loan delinquencies , which contributed to the decision to reduce the provision for loan losses from 2010. management believes that bancorp will continue to experience improvement in the challenges faced by many financial institutions resulting from the slowdown in the economy and real estate markets . other income and non interest expenses . total other income decreased $ 235,000 , or 8.6 % , to $ 2,510,000 for 2011 compared to $ 2,745,000 for 2010. revenues from mortgage banking activities decreased $ 267,000 , or 31.7 % , to $ 576,000 for the year ended december 31 , 2011 , compared to $ 843,000 for the year ended december 31 , 2010. this decrease was primarily a result of the market conditions which affected our ability to originate loans to be sold in the secondary market . real estate commissions increased $ 63,000 , or 10.6 % , to $ 657,000 for the year ended december 31 , 2011 , compared to $ 594,000 for the year ended december 31 , 2010. this increase was primarily the result of an increase in commercial sales and leasing in 2011 compared to 2010. real estate management fees increased $ 52,000 , or 9.1 % , to $ 625,000 for the year ended december 31 , 2011 , compared to $ 573,000 for the year ended december 31 , 2010. this increase was primarily due to increased fees charged in 2011. other non-interest income decreased $ 83,000 , or 11.3 % , to $ 652,000 for the year ended december 31 , 2011 , compared to $ 735,000 for the year ended december 31 , 2010. this decrease was primarily due to lower credit report and atm surcharges fees offset by higher letter of credit fees , savings charges , and nsf fees . total non-interest expense decreased $ 397,000 , or 1.6 % , to $ 24,611,000 for 2011 compared to $ 25,008,000 for 2010. compensation and related expenses increased $ 572,000 , or 6.0 % , to $ 10,155,000 for the year ended december 31 , 2011 , compared to $ 9,583,000 for the year ended december 31 , 2010. this increase was primarily the result of the hiring of higher level management and other additional personnel in 2011 and the resulting compensation for these employees in 2011 compared to 2010. as of december 31 , 2011 , bancorp had 127 full-time equivalent employees compared to 116 at december 31 , 2010. occupancy expense decreased $ 219,000 , or 14.9 % , to $ 1,247,000 for the year ended december 31 , 2011 , compared to $ 1,466,000 for the year ended december 31 , 2010. this decrease was primarily due to lower maintenance costs incurred at bancorp 's headquarters . 52 foreclosed real estate expenses , net decreased $ 109,000 , or 2.0 % , to $ 5,409,000 for the year ended december 31 , 2011 , compared to $ 5,518,000 for the year ended december 31 , 2010. this decrease was primarily due to a decrease in loans foreclosed on , lower write downs taken on foreclosed property and lower expenses associated with the maintenance of foreclosed property in 2011 compared to 2010. legal story_separator_special_tag bancorp is uncertain whether it will be able to further reduce the interest rate paid on its interest bearing liabilities by attracting lower cost deposits , due to the general expectation of continued increased competition for deposit accounts . provision for loan losses . bancorp 's loan portfolio is subject to varying degrees of credit risk and an allowance for loan losses is maintained to absorb losses inherent in its loan portfolio . credit risk includes , but is not limited to , the potential for borrower default and the failure of collateral to be worth what the bank determined it was worth at the time of the granting of the loan . the bank monitors its loan portfolio loan delinquencies at least as often as monthly . all loans that are delinquent and all loans within the various categories of the bank 's portfolio as a group are evaluated . the bank 's board , with the advice and recommendation of the bank 's loss mitigation committee , estimates an allowance to be set aside for loan losses . included in determining the calculation are such factors as historical losses for each loan portfolio , current market value of the loan 's underlying collateral , inherent risk contained within the portfolio after considering the state of the general economy , economic trends , consideration of particular risks inherent in different kinds of lending and consideration of known information that may affect loan collectibility . a decrease in the loan loss provision from the beginning of the year to the end of a year is the result after an analysis of the aforementioned factors and applying that rationale to the total portfolio . 51 the total allowance for loan losses decreased $ 3,933,000 , or 13.2 % , to $ 25,938,000 as of december 31 , 2011 , compared to $ 29,871,000 as of december 31 , 2010. the decrease in the allowance was due to a decrease in loans receivable , an improvement in loan delinquencies and non-accrual loans offset in part by an increase in impaired loans primarily due to a slowdown in foreclosed loans transferred to foreclosed real estate . during the year ended december 31 , 2011 , the provision for loan losses was $ 4,612,000 compared to $ 5,744,000 for the year ended december 31 , 2010. this decrease of $ 1,132,000 , or 19.7 % , was a result of management 's determination that less of a provision for loan losses was needed for the level of inherent risk in its portfolio for the year ended december 31 , 2011 as compared to the year ended december 31 , 2010. bancorp 's total loan portfolio has decreased from 2010. in addition , bancorp has experienced a modest decrease in loan delinquencies , which contributed to the decision to reduce the provision for loan losses from 2010. management believes that bancorp will continue to experience improvement in the challenges faced by many financial institutions resulting from the slowdown in the economy and real estate markets . other income and non interest expenses . total other income decreased $ 235,000 , or 8.6 % , to $ 2,510,000 for 2011 compared to $ 2,745,000 for 2010. revenues from mortgage banking activities decreased $ 267,000 , or 31.7 % , to $ 576,000 for the year ended december 31 , 2011 , compared to $ 843,000 for the year ended december 31 , 2010. this decrease was primarily a result of the market conditions which affected our ability to originate loans to be sold in the secondary market . real estate commissions increased $ 63,000 , or 10.6 % , to $ 657,000 for the year ended december 31 , 2011 , compared to $ 594,000 for the year ended december 31 , 2010. this increase was primarily the result of an increase in commercial sales and leasing in 2011 compared to 2010. real estate management fees increased $ 52,000 , or 9.1 % , to $ 625,000 for the year ended december 31 , 2011 , compared to $ 573,000 for the year ended december 31 , 2010. this increase was primarily due to increased fees charged in 2011. other non-interest income decreased $ 83,000 , or 11.3 % , to $ 652,000 for the year ended december 31 , 2011 , compared to $ 735,000 for the year ended december 31 , 2010. this decrease was primarily due to lower credit report and atm surcharges fees offset by higher letter of credit fees , savings charges , and nsf fees . total non-interest expense decreased $ 397,000 , or 1.6 % , to $ 24,611,000 for 2011 compared to $ 25,008,000 for 2010. compensation and related expenses increased $ 572,000 , or 6.0 % , to $ 10,155,000 for the year ended december 31 , 2011 , compared to $ 9,583,000 for the year ended december 31 , 2010. this increase was primarily the result of the hiring of higher level management and other additional personnel in 2011 and the resulting compensation for these employees in 2011 compared to 2010. as of december 31 , 2011 , bancorp had 127 full-time equivalent employees compared to 116 at december 31 , 2010. occupancy expense decreased $ 219,000 , or 14.9 % , to $ 1,247,000 for the year ended december 31 , 2011 , compared to $ 1,466,000 for the year ended december 31 , 2010. this decrease was primarily due to lower maintenance costs incurred at bancorp 's headquarters . 52 foreclosed real estate expenses , net decreased $ 109,000 , or 2.0 % , to $ 5,409,000 for the year ended december 31 , 2011 , compared to $ 5,518,000 for the year ended december 31 , 2010. this decrease was primarily due to a decrease in loans foreclosed on , lower write downs taken on foreclosed property and lower expenses associated with the maintenance of foreclosed property in 2011 compared to 2010. legal
| general . bancorp 's net income for the year ended december 31 , 2010 was $ 1,157,000 , or a loss of $ ( 0.06 ) per share diluted after giving effect to dividends paid on preferred stock and amortization of discount on preferred stock . this is compared to net loss of $ ( 15,228,000 ) , or a loss of $ ( 1.68 ) per share diluted in 2009. this increase of $ 16,385,000 was primarily the result of the improved economic environment bancorp experienced in 2010 compared to 2009 , including an increase in net interest income , a decrease in the provision for loan losses and a decrease in non-accrual loans . net interest income . net interest income ( interest earned net of interest charges ) increased $ 3,597,000 , or 13.5 % , to $ 30,204,000 for the year ended december 31 , 2010 , compared to $ 26,607,000 for the year ended december 31 , 2009. this increase was primarily due to an increase in bancorp 's interest rate spread . bancorp 's interest rate spread increased by 0.72 % to 3.36 % for the year ended december 31 , 2010 , compared to 2.64 % for the year ended december 31 , 2009. this increase was the result of interest rates earned on bancorp 's loan portfolio decreasing slower than the decrease in interest rates paid on bancorp 's interest bearing liabilities . in addition , bancorp 's non-accrual loans decreased from $ 60,808,000 at december 31 , 2009 to $ 46,164,000 at december 31 , 2010. this resulted in $ 2,307,000 of interest income not recorded on non-accrual loans in 2010 , compared to $ 3,317,000 of unrecorded interest in 2009. provision for loan losses .
| 6,891 |
our consolidated revenue increased $ 1.3 billion , or 20 % , to $ 8.0 billion , inclusive of acquisitions , while our bookings grew by $ 1.2 billion , or 17 % , to $ 8.1 billion , and our gross profit grew by $ 435 million , or 17 % , to $ 3.1 billion . however , our gross profit margin as a percentage of sales decreased 100 basis points to 38.4 % mainly due to product and customer mix as well as the impact of recent acquisitions , which more than offset operating leverage . earnings from continuing operations increased 23 % to $ 846 million . in addition to our strong financial results , we accomplished several important strategic initiatives in 2011. we realigned our businesses into four new segments to more closely match our key end-markets . this new structure will serve to support our growth strategies and productivity initiatives as we continue to build our company . during 2011 , we deployed $ 1.4 billion on nine acquisitions that added technology , opened new markets , and expanded geography in nearly all of our growth spaces . we also divested three businesses consistent with our strategy of focusing on our higher margin growth spaces . we received proceeds in excess of $ 500 million which we intend to utilize on future acquisitions or internal investments . lastly , we generated $ 786 million in free cash flow , which enabled us to aggressively invest in higher growth economies and innovation , and to continue our long tradition of raising our annual dividend , now standing at 56 consecutive years . as we concluded the fourth quarter , we encountered certain challenges , such as continued weakness in alternative energy , semi-conductor and telecom infrastructure markets and general softness within the european economy , including uncertainty around european credit markets , that may continue to impact our operations going into 2012. despite these challenges , given our strong financial position and the depth and resilience of our business mix , we believe that through continued execution of our strategies around positioning ourselves to capitalize on global growth trends , capturing the benefits of common ownership and disciplined capital allocation , we are well positioned for solid growth in 2012. we expect 2012 full year organic growth to be in the range of 4 % to 7 % and acquisition related growth to be approximately 3 % for acquisitions completed in 2011. based on these revenue assumptions and profitability expectations , we expect our diluted earnings per share from continuing operations for 2012 will be in the range of $ 4.70 to $ 5.00 and expect our earnings to follow a traditional seasonal pattern of being higher in the second and third quarters . 21 consolidated results of operations as discussed in note 3 to the consolidated financial statements in item 8 of this form 10-k , we are reporting three businesses that were sold during the third and fourth quarters of 2011 as discontinued operations . therefore , we have classified the results of operations of these businesses as discontinued operations for all periods presented . replace_table_token_8_th revenue our 2011 consolidated revenue increased $ 1.3 billion or 20 % compared with 2010 , reflecting organic growth of 11 % , growth from acquisitions of 7 % and a favorable impact from currency translation of 2 % . the majority of our organic growth was attributed to increased volumes across all four segments driven by strength in the energy and consumer handset markets and solid growth in fluid solutions , refrigeration equipment and many of the industrial markets served by our engineered systems segment . additionally , approximately 2 % of our growth was generated by new products , particularly in our communication technologies and printing & identification segments . pricing added about 1 % to revenue principally driven by strategic pricing initiatives and price increases implemented to offset higher commodity costs . revenues generated outside of the u.s. increased by 22 % compared with 2010 , with revenue generated in emerging economies of china and latin america increasing 47 % . over 70 % of the revenue growth from acquisitions was generated by harbison-fischer and sound solutions , two large acquisitions that we made in 2011 to expand our operations serving the artificial lift and handset markets , respectively . our 2010 consolidated revenue increased $ 1.3 billion or 24 % compared with 2009 , reflecting organic revenue growth of 20 % , growth from acquisitions of 4 % , and a negligible unfavorable impact from foreign currency translation . the organic growth reflected volume increases across all four of our segments , driven by higher demand in the majority of our end-markets as the global economy continued to rebound in 2010 from the 2009 down cycle . revenues generated outside of the u.s. increased by 30 % compared with 2009 , with much of this growth generated in emerging economies of asia and latin america . gross profit our gross profit increased $ 434.8 million or 17 % in 2011 compared with 2010 , reflecting the benefit of increased sales volumes . however , gross profit margin as a percentage of revenue contracted 100 basis points in 2011 to 38.4 % from 39.4 % in 2010 due principally to the impact of product and customer mix , which more than offset operating leverage , as well as the impact of higher depreciation from recent acquisitions . gross profit increased $ 603.5 million or 30 % in 2010 compared with 2009 , reflecting the benefit of increased sales volumes . gross profit margin as a percentage of revenue was 39.4 % in 2010 , a 170 basis point improvement over the 2009 gross profit margin of 37.7 % , reflecting the increase in sales volumes in 2010 , the impact of lower restructuring charges on a comparative basis , and benefits realized from restructuring initiatives executed in 2009 along with our productivity initiatives . story_separator_special_tag refer to note 3 to the consolidated financial statements for additional information on disposed and discontinued operations . diluted net earnings per share from continuing operations in 2011 increased 23 % to $ 4.48 and diluted net earnings per share increased 28 % to $ 4.74 , as a result of the same factors discussed above . diluted net earnings per share from continuing operations in 2010 increased 83 % to $ 3.65 and diluted net earnings per share increased 94 % to $ 3.70 , as a result of the same factors discussed above . restructuring activity we periodically undertake restructuring programs in response to prevailing business requirements and market conditions . in addition to these factors , 2009 earnings across all segments were also negatively impacted by restructuring charges , while 2011 and 2010 earnings reflect the benefits captured from the businesses ' restructuring and integration programs initiated in 2008 and 2009. in late 2008 , we launched various synergy capture programs and restructuring initiatives in response to the weakening global economic environment at the time . in 2008 and 2009 , we recorded restructuring charges of $ 23.9 million and $ 67.3 million , respectively , relating to these programs . these programs were largely executed throughout 2009 , and we realized incremental savings of approximately $ 125 million and $ 32 million in 2009 and 2010 , respectively . during 2009 , we had a net reduction in our workforce of approximately 2,950 , or 9 % , and a net reduction of 23 manufacturing and warehouse facilities , as a result of these strategic restructuring efforts . by 2010 , we had completed the majority of the initiatives launched in 2008 and 2009. in 2010 and 2011 , our businesses were generally expanding their operations , so our restructuring activities were limited to a few targeted facility consolidations . we incurred restructuring charges of $ 6.2 million and $ 5.7 million , respectively , relating to such activities . we do not currently anticipate significant restructuring activity in 2012 , but will continue to monitor business activity across our end markets and adjust capacity as necessary depending on the economic climate and other internal business factors . 24 segment results of operations as discussed previously , in the fourth quarter of 2011 we reorganized our businesses into four new segments to better align with our key end-markets . as such , the information herein has been recast to conform to the new segment structure for all periods presented . see note 1 5 to the consolidated financial statements in item 8 of this form 10-k for a reconciliation of segment revenue , earnings and operating margin to our consolidated revenue , earnings from continuing operations , and operating margin . communication technologies replace_table_token_9_th 2011 versus 2010 revenue generated by our communication technologies segment increased $ 284.1 million , or 26 % , compared with 2010 , with $ 190.2 million , or 18 % of the growth , attributed principally to the 2011 acquisition of sound solutions , which supplements our product offerings in the growing handset market . although there was an incremental decrease in revenue due to normal pricing concessions for our communication and telecommunication products corresponding to normal product life cycle maturities , this decrease was more than offset by revenue growth from market share gains , new product introductions and product mix . our organic revenue growth of 7 % was largely due to continued strong demand for smart phones serving the communications market which grew significantly year over year . our revenue in the communications market ( representing 31 % of 2011 segment revenue ) increased $ 66.6 million , or 42 % , excluding sound solutions . our microelectronic mechanical ( “ mems ” ) microphones and sisonic technologies were well positioned to capitalize on this market 's growth as we have continued to invest in capacity to meet the growing market demands . we also experienced solid demand in the commercial aerospace market due to increased build rates of commercial aircraft by leading aircraft manufactures and increased demand for our aftermarket products globally . our aerospace/industrial revenue ( 18 % of 2011 segment revenue ) increased $ 59.0 million , or 32 % . this overall growth was partially offset by weakened demand in the global telecom markets , driven in part by deferred industry investment due to service provider consolidation . this contributed to a decrease of $ 7.2 million , or 3 % , in our telecommunication/other revenue ( 17 % of 2011 segment revenue ) . revenue derived from our defense market ( 16 % of 2011 segment revenue ) declined $ 8.2 million , or 4 % , mainly due to timing and funding of certain programs . our life sciences revenue ( 18 % of segment revenue ) also declined by $ 16.4 million , or 6 % , principally due to softer hearing aid demand in the first half of 2011 and overall softer medical equipment demand . communication technologies 2011 earnings increased 10 % compared with 2010 , but operating margin declined 250 basis points . the margin decline mainly resulted from higher acquisition related costs including incremental depreciation and amortization , higher raw material costs , and lower margins from the integration of the sound solutions acquisition . excluding the impact of sound solutions , earnings would have increased by $ 36.6 million , or 18 % , and operating margin would have increased by 160 basis points as compared with 2010. bookings and backlog at the end of 2011 indicate continued strength in the handset and aerospace markets as we head into 2012 , offset by continued softness in the telecommunication market . 2010 versus 2009 communication technologies 2010 revenue and earnings increased 18 % and 44 % , respectively , compared with 2009. the increase in revenues was supported by organic revenue growth of 17 % and growth from acquisitions of 1 % , offset by a negligible impact from foreign currency translation .
| cash flow summary the following table is derived from our consolidated statements of cash flows : replace_table_token_13_th operating activities cash provided by operating activities in 2011 increased $ 156.4 million , primarily due to increased net earnings in 2011 and reduced investment in working capital relative to 2010. higher sales volume increased 2011 net earnings before depreciation and amortization by $ 256 million as compared with 2010. our investment in working capital was $ 151 million lower than in 2010 , at which time a working capital build-up was necessary to support revenue levels recovering from the 2009 declines . these increases in cash flow were partially offset by $ 178 million of higher income tax payments resulting from our higher earnings and 2011 tax settlement activity , as well as higher employee incentive compensation payments and reductions in deferred revenue . cash provided by operating activities in 2010 increased $ 158.5 million from 2009. higher sales volume increased 2010 net earnings before depreciation and amortization by $ 354 million as compared with 2009. this was offset by a $ 220 million increase in working capital necessary to support the increase in 2010 order and revenue levels , compared to a $ 179 million decrease in working capital in the 2009 period when sales levels had declined . other factors contributing to the 2010 increase in operating cash flows included $ 49 million less in restructuring payments , $ 21 million less of post-retirement plan contributions , and a $ 54 million increase in deferred revenue due to additional sales activity in the 2010 period . postretirement costs relating to pension and other employee-related defined benefit plans affect results in all segments .
| 6,892 |
the following discussion should be read in conjunction with “ selected financial data ” and the historical financial statements and the related notes thereto included elsewhere in this annual report on form 10-k. the following discussion contains , in addition to historical information , forward-looking statements that include risks and uncertainties . our actual results may differ materially from those expressed or contemplated in those forward-looking statements as a result of certain factors , including those set forth under the headings “ forward-looking statements ” and “ risk factors ” elsewhere in this annual report on form 10-k. business walker & dunlop , inc. is a holding company , and we conduct the majority of our operations through walker & dunlop , llc , our operating company . we are one of the leading commercial real estate services and finance companies in the united states , with a primary focus on multifamily lending . we originate , sell , and service a range of commercial real estate financing products to owners and developers of commercial real estate across the country and broker sales of multifamily properties primarily in the southeastern united states . we originate and sell multifamily loans through the programs of fannie mae , freddie mac , ginnie mae , and hud , with which we have licenses and long-established relationships . we retain servicing rights and asset management responsibilities on nearly all loans that we originate for the agencies ' programs . we are approved as a fannie mae dus lender nationally , a freddie mac seller/servicer in 23 states and the district of columbia , a freddie mac targeted affordable housing seller/servicer , a hud map lender nationally , a hud lean lender nationally , and a ginnie mae issuer . we broker and service loans for a number of life insurance companies , cmbs conduits , commercial banks , and other institutional investors , in which cases we do not fund the loan but rather act as a loan broker . we also underwrite , asset-manage , and service short-term bridge loans , some of which we hold as an investment and carry on our balance sheet . beginning in the second quarter of 2015 in connection with the efg acquisition , we began offering multifamily investment sales brokerage services . we fund loans for the agencies ' programs , generally through warehouse facility financings , and sell them to investors in accordance with the related loan sale commitment , which we obtain at rate lock . proceeds from the sale of the loan are used to pay off the warehouse facility . the sale of the loan is typically completed within 60 days after the loan is closed , and we retain the right to service substantially all of these loans . in cases where we do not fund the loan , we act as a loan broker . our loan originators who focus on loan brokerage are engaged by borrowers to work with a variety of institutional lenders to find the most appropriate loan . these loans are then funded directly by the institutional lender , and we receive an origination fee for placing the loan and a servicing fee for any of the loans we service . we recognize gains from mortgage banking activities when we make simultaneous commitments to originate a loan to a borrower and sell that loan to an investor . the gains from mortgage banking activities reflect the fair value attributable to loan origination fees , premiums on the sale of loans , net of any co-broker fees , and the fair value of the expected net cash flows associated with servicing the loans , net of any guaranty obligations retained . we retain servicing rights on substantially all the loans we originate and sell and generate revenues from the fees we receive for servicing the loans , from the interest income on escrow deposits held on behalf of borrowers , from late charges , and from other ancillary fees . servicing fees set at the time an investor agrees to purchase the loan are generally paid monthly for the duration of the loan , and are based on the unpaid principal balance of the loan . our fannie mae and freddie mac servicing arrangements generally provide for prepayment fees to us in the event of a voluntary prepayment . for loans serviced outside of fannie mae and freddie mac , we typically do not share in any such payments . we also generate revenues from ( i ) net warehouse interest income we earn while the loan is held for sale through one of our warehouse facilities , ( ii ) net warehouse interest income from loans held for investment while they are outstanding , and ( iii ) broker fees for brokering the sale of multifamily properties . 28 we are currently not exposed to unhedged interest rate risk during the loan commitment , closing , and delivery process . the sale or placement of each loan to an investor is negotiated prior to establishing the coupon rate for the loan . we also seek to mitigate the risk of a loan not closing . we have agreements in place with the agencies that specify the cost of a failed loan delivery in the event we fail to deliver the loan to the investor . to protect us against such fees , we require a deposit from the borrower at rate lock that is typically more than the potential fee . the deposit is returned to the borrower only once the loan is closed . any potential loss from a catastrophic change in the property condition while the loan is held for sale using warehouse facility financing is mitigated through property insurance equal to replacement cost . we are also protected contractually from an investor 's failure to purchase the loan . we have experienced an immaterial number of failed deliveries in our history and have incurred immaterial losses on such failed deliveries . story_separator_special_tag also included in our servicing portfolio is $ 9.6 billion of hud loans , the largest hud primary and master servicing portfolio in the nation according to the survey . the average number of our loan originators increased from 97 during 2016 to 130 during 2017 due to our own organic growth and from acquisitions completed in the current and prior year , resulting in an increase of 49 % in our loan origination volume , from a total of $ 16.7 billion during 2016 to a total of $ 24.9 billion during 2017. fannie mae recently announced that we ranked as its largest dus lender in 2017 , by loan deliveries , and freddie mac recently announced that we ranked as its 3 rd largest seller/servicer in 2017 , by loan deliveries . basis of presentation the accompanying consolidated financial statements include all of the accounts of the company and its wholly owned subsidiaries , and all intercompany transactions have been eliminated . critical accounting policies our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the united states of america ( “ gaap ” ) , which require management to make estimates and assumptions that affect reported amounts . the estimates and assumptions are based on historical experience and other factors management believes to be reasonable . actual results may differ from those estimates and assumptions . we believe the following critical accounting policies represent the areas where more significant judgments and estimates are used in the preparation of our consolidated financial statements . mortgage servicing rights ( “ msrs ” ) . msrs are recorded at fair value at loan sale or upon purchase . the fair value of msrs acquired through a stand-alone servicing portfolio purchase is equal to the purchase price paid . the fair value at loan sale is based on estimates of expected net cash flows associated with the servicing rights and takes into consideration an estimate of loan prepayment . the estimated net cash flows are discounted at a rate that reflects the credit and liquidity risk of the msr over the estimated life of the underlying loan . the discount rates used throughout the periods presented for all msrs recognized at loan sale were between 10-15 % and varied based on the loan type . the life of the underlying loan is estimated giving consideration to the prepayment provisions in the loan . our model for originated msrs assumes no prepayment while the prepayment provisions have not expired and full prepayment of the loan at or near the point where the prepayment provisions have expired . we record an individual msr asset ( or liability ) for each loan at loan sale . for purchased stand-alone servicing portfolios , we record and amortize a portfolio-level msr asset based on the estimated remaining life of the portfolio using the prepayment characteristics of the portfolio . we have had two stand-alone servicing portfolio purchases , one of which occurred in 2016 and one in 2017 . 30 the assumptions used to estimate the fair value of msrs at loan sale are based on internal models and are periodically compared to assumptions used by other market participants . due to the relatively few transactions in the multifamily msr market , we have experienced little volatility in the assumptions we use during the periods presented , including the most-significant assumption – the discount rate . additionally , we do not expect to see much volatility in the assumptions for the foreseeable future . management actively monitors the assumptions used and makes adjustments to those assumptions when market conditions change or other factors indicate such adjustments are warranted . we carry originated and purchased msrs at the lower of amortized cost or fair value and evaluate the carrying value for impairment quarterly . we test for impairment on the purchased stand-alone servicing portfolio separately from our other msrs . the msrs from both stand-alone portfolio purchases and from loan sales are tested for impairment at the portfolio level . we have never recorded an impairment of msrs in our history . we engage a third party to assist in determining an estimated fair value of our existing and outstanding msrs on at least a semi-annual basis . gains from mortgage banking activities income is recognized when we record a derivative asset upon the simultaneous commitments to originate a loan with a borrower and sell the loan to an investor . the commitment asset related to the loan origination is recognized at fair value , which reflects the fair value of the contractual loan origination related fees and sale premiums , net of any co-broker fees , and the estimated fair value of the expected net cash flows associated with the servicing of the loan , net of the estimated net future cash flows associated with any risk-sharing obligations ( the “ servicing component of the commitment asset ” ) . upon loan sale , we derecognize the servicing component of the commitment asset and recognize an msr . all msrs are amortized into expense using the interest method over the estimated life of the loan and presented as a component of amortization and depreciation in the consolidated statements of income . for msrs recognized at loan sale , the individual loan-level msr is written off through a charge to amortization and depreciation when a loan prepays , defaults , or is probable of default . for msrs related to purchased stand-alone servicing portfolios , a constant rate of prepayments and defaults is included in the determination of the portfolio 's estimated life ( and thus included as a component of the portfolio 's amortization ) . accordingly , prepayments and defaults of individual msrs do not change the level of amortization expense recorded for the portfolio unless the pattern of actual prepayments and defaults varies significantly from the estimated pattern .
| results of operations following is a discussion of our results of operations for the years ended december 31 , 2017 , 2016 , and 2015. the financial results are not necessarily indicative of future results . our annual results have fluctuated in the past and are expected to fluctuate in the future , reflecting the interest-rate environment , the volume of transactions , business acquisitions , regulatory actions , and general economic conditions . please refer to the table below , which provides supplemental data regarding our financial performance . supplemental operating data replace_table_token_3_th 38 supplemental operating data ( continued ) replace_table_token_4_th ( 1 ) brokered transactions for life insurance companies , commercial mortgage backed securities , commercial banks , and other capital sources . ( 2 ) this is a non-gaap financial measure . for more information on adjusted ebitda , refer to the section below titled “ non-gaap financial measures. ” ( 3 ) the fair value of the expected net cash flows associated with the servicing of the loan , net of any guaranty obligations retained , as a percentage of agency loan origination volume . 39 year ended december 31 , 2017 compared to year ended december 31 , 2016 the following table presents a period-to-period comparison of our financial results for the years ended december 31 , 2017 and 2016. financial results – 2017 compared to 2016 replace_table_token_5_th overview the increase in revenues was primarily attributable to increases in gains from mortgage banking activities , servicing fees , escrow earnings and other interest income , and other revenues . the increase in gains from mortgage banking activities was largely due to the significant increase in loan origination volume from 2016 to 2017. the growth in loan origination volume is primarily due to an increase in the average number of loan originators from 2016 to 2017. the increase in servicing fees was due to an increase in the average servicing portfolio .
| 6,893 |
you can identify these statements by forward-looking words such as “ may ” “ will , ” “ expect , ” “ anticipate , ” “ believe , ” “ estimate ” and “ continue , ” or similar words . those statements include statements regarding the intent , belief or current expectations of us and members of its management team as well as the assumptions on which such statements are based . prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties , and that actual results may differ materially from those contemplated by such forward-looking statements . readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the securities and exchange commission . important factors currently known to us could cause actual results to differ materially from those in forward-looking statements . we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions , the occurrence of unanticipated events or changes in the future operating results over time . we believe that its assumptions are based upon reasonable data derived from and known about our business and operations and the business and operations of the company . no assurances are made that actual results of operations or the results of our future activities will not differ materially from its assumptions . factors that could cause differences include , but are not limited to , expected market demand for the company 's services , fluctuations in pricing for materials , and competition . business overview we are a specialty pharmaceutical company focusing on developing new pharmaceuticals products that are safer and more effective than widely prescribed cns drugs in large and growing markets . the ongoing advances in science and medicine provide a number of opportunities to apply known active pharmaceutical ingredients to new uses . we use the unfolding understanding of disease and medicine when we search for potential therapeutic solutions among prescription pharmaceutical agents that have been used safely in patients for other conditions . we seek to create new dose and formulation options and that are tailored to the new therapeutic uses for these agents . many cns drugs have been identified by physicians who prescribe drugs for some purpose , but observe unexpected improvements in their patients ' cns conditions . one of our goals is to establish formal clinical study programs to determine if such anecdotal observations are , in fact , reflections of the compound 's ability to treat the cns condition . while some new applications can use the commercially available form of the drug , in other cases reformulating the active ingredient may improve the active ingredient 's safety or effectiveness in treating the condition . if the formal development programs are proven successful in the clinical tests , we will seek marketing approval from the fda . we are currently devoting our efforts to the development of two lead product candidates . our two most advanced programs are new dose formulations of cyclobenzaprine , which is the active pharmaceutical ingredient of two widely prescribed muscle relaxant products . due to the well-characterized history of the main active ingredient , we believe our lead products , referred to herein as tnx-102 and tnx-105 , have the potential to progress through a shorter development pathway than is typical for drug products based on novel active ingredients . we expect tnx-102 could be approved by fda after two efficacy studies and a safety exposure study that together would expose the minimum number of fm patients that satisfy fda 's standards , whereas drug products based on novel active ingredients need exposure to significantly more study subjects . we also have a pipeline of other product candidates . for commercial reasons , we do not disclose the identities of the active ingredients or targeted indications in our pipeline until a u.s. patent has been allowed or issued . consistent with our mission , these product candidates are or likely will be reformulations of active ingredients that have been used in humans in other products and which are designed for new cns therapeutic indications . in other cases , the products will be formulated to match earlier ( “ predicate ” ) products closely enough to be considered generic copies or similar enough to other medications to rely ( in part ) on their regulatory review and approval . the predicate product may be approved by the fda under an nda or may have been reviewed for safety and effectiveness by the national academy of sciences under the desi , in which case they would be considered by fda to be “ unapproved products ” . for desi products , it is our intent to develop nda versions by modernizing the chemistry , manufacturing and controls and to perform new clinical studies to support an nda filing . 39 in august 2010 , we formed krele to commercialize products that are generic versions of predicate nda products . we anticipate that when our branded products lose patent protection , krele may market authorized generic versions of them . krele also may develop or acquire generic products approved under andas and we may market branded versions ( branded generics ) of such products . on october 7 , 2011 , we executed and consummated the share exchange agreement with tonix sub . pursuant to the share exchange , each share of tonix sub 's common stock was exchanged for 0.9 shares of our common stock , and each share of tonix sub 's series a and b preferred stock was exchanged for 4.8 shares of our common stock . upon completion of the share exchange , the tonix sub shareholders , including holders of 1,396,982 restricted shares , which were subject to accelerated vesting , received in exchange for all of their shares , an aggregate of 22,666,667 shares of our common stock and our existing stockholders retained 4,000,000 shares of common stock . story_separator_special_tag we expect to incur increasing research and development expenses , including expenses related to additional clinical trials . we expect that our general and administrative expenses will increase in the future as we expand our business development , add infrastructure and incur additional costs related to being a public company , including incremental audit fees , investor relations programs and increased professional services . our future capital requirements will depend on a number of factors , including the progress of our research and development of product candidates , the timing and outcome of regulatory approvals , the costs involved in preparing , filing , prosecuting , maintaining , defending and enforcing patent claims and other intellectual property rights , the status of competitive products , the availability of financing and our success in developing markets for our product candidates . we believe our existing cash , together with the net proceeds of the 2012 financing , will be sufficient to fund our operating expenses and capital equipment requirements for the next six months . we presently do not have any available credit , bank financing or other external sources of liquidity . due to our history and historical operating losses , our operations have not been a source of liquidity . we will need to obtain additional capital in order to expand operations and become profitable . future financing may include the issuance of equity or debt securities , obtaining credit facilities , or other financing mechanisms . even if we are able to raise the funds required , it is possible that we could incur unexpected costs and expenses , fail to collect significant amounts owed to us , or experience unexpected cash requirements that would force us to seek alternative financing . furthermore , if we issue additional equity or debt securities , stockholders may experience additional dilution or the new equity securities may have rights , preferences or privileges senior to those of existing holders of our common stock . if additional financing is not available or is not available on acceptable terms , we may be required to delay , reduce the scope of or eliminate our research and development programs , reduce our commercialization efforts or obtain funds through arrangements with collaborative partners or others that may require us to relinquish rights to certain product candidates that we might otherwise seek to develop or commercialize independently . notes pqyable on september 9 , 2011 , tonix sub sold $ 500,000 principal amount of convertible notes ( the “ notes ” ) to nine accredited investors . the notes were due one year from the date of issuance , bear interest at the rate of 8 % per annum and were automatically converted into debentures in the financing . 42 2011 private placement between october and november , 2011 we consummated the financing pursuant to which we sold $ 2,075,000 principal amount of debentures for aggregate cash proceeds of $ 1,575,000 and the exchange of $ 500,000 in previously issued notes of tonix sub that were converted into debentures in the principal face amount of $ 500,000. the debentures mature on the earlier of ( i ) the one year anniversary of the date of issuance or ( ii ) the date of closing of a subsequent financing . the debentures bear interest at 8 % per annum and are convertible at the holder 's option into a subsequent financing . in the event that a subsequent financing has not occurred within 12 months from the date of issuance of the debenture , the holder has the option to convert the debenture into the conversion shares . in addition , upon conversion or repayment of the debenture , the holders were entitled to receive , at the holder 's option , either ( i ) the conversion warrant or ( ii ) the incentive shares . the private placement that closed in january 2012 met the requirements of a subsequent financing , therefore , the holders of the debentures elected to receive 275,000 conversion warrants and 594,000 incentive shares . the conversion warrants have three year term and $ 1.00 exercise price . in connection with the financing , we made cash payments to wfg investments and seagate of $ 40,000 and $ 14,000 , respectively , as commissions and attorney fees of $ 20,000. in addition , wfg investments and seagate earned an aggregate of 30,750 prior agent warrants , which have terms similar to the conversion warrants . 2012 private placement between january and march , 2012 , we consummated a private placement financing transaction ( the “ 2012 financing ” ) pursuant to which we issued an aggregate of 264.7106 units ( “ units ” ) to certain investors for aggregate cash proceeds of $ 4,692,765 and the exchange of $ 1,925,000 in previously issued debentures that were converted into units . the 2012 financing satisfied the requirements for the subsequent financing discussed above . each unit had a purchase price of $ 25,000 per unit and consisted of twenty five thousand ( 25,000 ) shares of our common stock , a class a warrant to purchase twenty five thousand ( 25,000 ) shares of common stock ( the “ class a warrants ” ) , and a class b warrant to purchase up to twenty five thousand ( 25,000 ) shares of common stock ( the “ class b warrants ” and together with the class a warrants , the “ warrants ” ) . the class a warrants have an exercise price of $ 1.25 per share of common stock and will be exercisable for a period of five years from the date of issuance . the class b warrants may not be exercised by the purchasers and will be exercised automatically on their expiration date by cashless exercise or expire without exercise .
| results of operations we anticipate that our results of operations will fluctuate for the foreseeable future due to several factors , such as the progress of our research and development efforts and the timing and outcome of regulatory submissions . due to these uncertainties , accurate predictions of future operations are difficult or impossible to make . fiscal year ended december 31 , 2011 compared to fiscal year ended december 31 , 2010 revenues and cost of goods sold . we had no revenues or cost of goods sold during the fiscal years ended december 31 , 2011 and 2010. research and development expenses . research and development expenses for the fiscal year ended december 31 , 2011 were $ 1,158,167 , an increase of $ 573,869 , or 98.2 % , from $ 584,298 for the fiscal year ended december 31 , 2010. in 2011 , we incurred $ 342,398 and $ 318,616 in clinical cost and activities , respectively , as compared to $ 0 in 2010 for both . general and administrative expenses . general and administrative expenses for the fiscal year ended december 31 , 2011 were $ 2,220,361 , an increase of $ 875,971 , or 65 % , from $ 1,344,390 incurred in the fiscal year ended december 31 , 2010. this increase is primarily due to payroll related expenses and professional services . payroll related expenses increased to $ 731,284 in the current year from $ 413,954 for the fiscal year ended december 31 , 2010 , an increase of $ 317,330 , or 77 % . payroll related expenses include both cash and non-cash compensation associated with the vesting of restricted stock grants . the increase in payroll related costs was a result of a full year of payments to our members of the core management team who joined in june through august of 2010 , along with the acceleration of vesting in conjunction with our reverse merger in 2011 of restricted stock previously issued to our employees .
| 6,894 |
5. income taxes the principal components of eog 's net deferred income tax liabilities at december 31 , 2011 and 2010 were as follows ( in thousands ) : replace_table_token_28_th f-15 the components of income before income taxes for the years indicated below were as follows ( in thousands ) : replace_table_token_29_th the principal components of eog 's income tax provision for the years indicated below were as follows ( in thousands ) : replace_table_token_30_th the differences between taxes computed at the united states federal statutory tax rate and eog 's effective rate were as follows : replace_table_token_31_th the difference in the effective tax rate and the united states federal statutory rate of 35 % is attributed principally to state and foreign story_separator_special_tag overview eog resources , inc. , together with its subsidiaries ( collectively , eog ) , is one of the largest independent ( non-integrated ) crude oil and natural gas companies in the united states with proved reserves in the united states , canada , trinidad , the united kingdom and china . eog operates under a consistent business and operational strategy that focuses predominantly on maximizing the rate of return on investment of capital by controlling operating and capital costs and maximizing reserve recoveries . this strategy is intended to enhance the generation of cash flow and earnings from each unit of production on a cost-effective basis , allowing eog to deliver long-term production growth while maintaining a strong balance sheet . eog implements its strategy by emphasizing the drilling of internally generated prospects in order to find and develop low-cost reserves . maintaining the lowest possible operating cost structure that is consistent with prudent and safe operations is also an important goal in the implementation of eog 's strategy . net income for 2011 totaled $ 1,091 million as compared to $ 161 million for 2010. at december 31 , 2011 , eog 's total estimated net proved reserves were 2,054 million barrels of oil equivalent ( mmboe ) , an increase of 104 mmboe from december 31 , 2010. during 2011 , net proved crude oil and condensate and natural gas liquids reserves increased by 207 million barrels ( mmbbl ) and net proved natural gas reserves decreased by 619 billion cubic feet ( bcf ) or 103 mmboe . operations several important developments have occurred since january 1 , 2011. united states and canada . eog 's efforts to identify plays with large reserve potential has proven a successful supplement to its base development and exploitation program in the united states and canada . eog continues to drill numerous wells in large acreage plays , which in the aggregate are expected to contribute substantially to eog 's crude oil and natural gas production . eog has placed an emphasis on applying its horizontal drilling and completion expertise gained from its natural gas resource plays to unconventional crude oil and liquids-rich reservoirs . in 2011 , eog focused its efforts on developing its existing north american crude oil and condensate and liquids-rich acreage . in addition , eog continues to evaluate certain potential liquids-rich exploration and development prospects . during 2011 , crude oil and condensate and natural gas liquids production accounted for approximately 37 % of total company production as compared to 27 % during 2010. north american liquids production accounted for approximately 42 % of total north american production during 2011 as compared to 31 % in 2010. this liquids growth reflects production from eog 's 572,000 net acre position in the oil window of the eagle ford shale play near san antonio , texas , and increasing amounts of crude oil and condensate and natural gas liquids production in the fort worth basin barnett shale area . in 2011 , eog 's net eagle ford shale production averaged 34.1 thousand barrels per day ( mbbld ) of crude oil and condensate and natural gas liquids as compared to 4.3 mbbld in 2010. based on current trends , eog expects its 2012 crude oil and condensate and natural gas liquids production to continue to increase both in total and as a percentage of total company production as compared to 2011. eog 's major producing areas are in louisiana , new mexico , north dakota , texas , utah , wyoming and western canada . eog delivers its crude oil to various markets in the united states , including sales points on the gulf coast . most recently , with increases in crude oil production from the eagle ford shale play , eog has increased sales to the gulf coast and is receiving pricing for those sales based on the light louisiana sweet price . in order to create further market diversification for its growing crude oil production , eog is expanding its crude-by-rail system to have the capability to increase deliveries of crude oil to st. james , louisiana , beginning in the second quarter of 2012. in addition , to further reduce well completion costs , eog began using sand from its wisconsin sand mine and sand processing facilities in late 2011 . 31 in march 2011 , eog 's wholly-owned canadian subsidiary , eog resources canada inc. ( eogrc ) , purchased an additional 24.5 % interest in the proposed pacific trail pipelines ( ptp ) for $ 25.2 million . the ptp is intended to link western canada 's natural gas producing regions to the planned liquefied natural gas ( lng ) export terminal to be located at bish cove , near the port of kitimat , north of vancouver , british columbia ( kitimat lng terminal ) . a portion of the purchase price ( $ 15.3 million ) was paid at closing with the remaining amount to be paid contingent on the decision to proceed with the construction of the kitimat lng terminal . additionally , in march 2011 , eogrc and an affiliate of apache corporation ( apache ) , through a series of transactions , sold a portion of their interests in the kitimat lng terminal and ptp to an affiliate of encana corporation ( encana ) . story_separator_special_tag on march 7 , 2011 , eog completed the sale of 13,570,000 shares of eog common stock , par value $ 0.01 per share ( common stock ) , at the public offering price of $ 105.50 per share . net proceeds from the sale of the common stock were approximately $ 1,388 million after deducting the underwriting discount and offering expenses . proceeds from the sale were used for general corporate purposes , including funding capital expenditures . total anticipated 2012 capital expenditures are expected to range from $ 7.4 to $ 7.6 billion , excluding acquisitions . the majority of 2012 expenditures will be focused on united states and canada crude oil and liquids-rich gas drilling activity and , to a much lesser extent , natural gas drilling activity in the haynesville , marcellus and british columbia horn river basin plays to hold acreage . eog expects capital expenditures to be greater than cash flow from operating activities for 2012. eog 's business plan includes selling certain non-core assets in 2012 to partially cover the anticipated shortfall . however , eog has significant flexibility with respect to financing alternatives , including borrowings under its commercial paper program and other uncommitted credit facilities , bank borrowings , borrowings under the 2011 facility and equity and debt offerings . when it fits eog 's strategy , eog will make acquisitions that bolster existing drilling programs or offer eog incremental exploration and or production opportunities . management continues to believe eog has one of the strongest prospect inventories in eog 's history . 33 story_separator_special_tag 1,688 mmcfd in 2010. the decrease was primarily due to lower production in canada ( 68 mmcfd ) and the united states ( 20 mmcfd ) . the decrease in canada primarily reflects sales of certain shallow natural gas assets in 2010 , partially offset by increased production from the horn river basin area . the decrease in the united states was primarily attributable to decreased production in the rocky mountain area ( 36 mmcfd ) , louisiana ( 17 mmcfd ) , mississippi ( 11 mmcfd ) , new mexico ( 8 mmcfd ) and kansas ( 5 mmcfd ) , partially offset by increased production in texas ( 38 mmcfd ) and pennsylvania ( 23 mmcfd ) . during 2011 , eog recognized net gains on the mark-to-market of financial commodity derivative contracts of $ 626 million , which included net realized gains of $ 181 million . during 2010 , eog recognized net gains on the mark-to-market of financial commodity derivative contracts of $ 62 million , which included net realized gains of $ 7 million . gathering , processing and marketing revenues represent sales of third-party crude oil and condensate , natural gas liquids and natural gas as well as fees associated with gathering third-party natural gas . for the years ended december 31 , 2011 , 2010 and 2009 , gathering , processing and marketing revenues were primarily related to sales of third-party crude oil and natural gas . the purchase and sale of third-party crude oil and natural gas are utilized in order to balance firm transportation capacity with production in certain areas and to utilize excess capacity at eog-owned facilities . marketing costs represent the costs of purchasing third-party crude oil and natural gas and the associated transportation costs . during 2011 , gathering , processing and marketing revenues and marketing costs increased primarily as a result of increased crude oil marketing activities . gathering , processing and marketing revenues less marketing costs in 2011 increased $ 19 million to $ 44 million from $ 25 million in 2010 , primarily as a result of increased crude oil marketing activities . 2010 compared to 2009. wellhead crude oil and condensate revenues in 2010 increased $ 909 million , or 83 % , to $ 1,999 million from $ 1,090 million in 2009 , due to a higher composite average wellhead crude oil and condensate price ( $ 533 million ) and an increase of 20 mbbld , or 35 % , in wellhead crude oil and condensate deliveries ( $ 376 million ) . the increase in deliveries primarily reflects increased production in texas ( 8 mbbld ) , north dakota ( 7 mbbld ) , canada ( 3 mbbld ) and trinidad ( 2 mbbld ) . production increases in texas were the result of increased production from the fort worth basin barnett combo and the eagle ford plays . production increases in north dakota resulted from increased deliveries from the bakken and three forks plays . eog 's composite average wellhead crude oil and condensate price for 2010 increased 36 % to $ 74.29 per barrel compared to $ 54.46 per barrel in 2009 . 36 natural gas liquids revenues in 2010 increased $ 203 million , or 79 % , to $ 462 million from $ 259 million in 2009 , due to a higher composite average price ( $ 129 million ) and an increase of 7 mbbld , or 29 % , in natural gas liquids deliveries ( $ 74 million ) . the increase in deliveries primarily reflects increased volumes in the fort worth basin barnett shale area . eog 's composite average natural gas liquids price in 2010 increased 39 % to $ 41.73 per barrel compared to $ 30.05 per barrel in 2009. wellhead natural gas revenues in 2010 increased $ 369 million , or 18 % , to $ 2,420 million from $ 2,051 million in 2009. the increase was due to a higher composite average wellhead natural gas price ( $ 316 million ) and increased natural gas deliveries ( $ 53 million ) .
| results of operations the following review of operations for each of the three years in the period ended december 31 , 2011 should be read in conjunction with the consolidated financial statements of eog and notes thereto beginning with page f-1 . net operating revenues during 2011 , net operating revenues increased $ 4,026 million , or 66 % , to $ 10,126 million from $ 6,100 million in 2010. total wellhead revenues , which are revenues generated from sales of eog 's production of crude oil and condensate , natural gas liquids and natural gas , in 2011 increased $ 1,977 million , or 41 % , to $ 6,858 million from $ 4,881 million in 2010. during 2011 , eog recognized net gains on the mark-to-market of financial commodity derivative contracts of $ 626 million compared to net gains of $ 62 million in 2010. gathering , processing and marketing revenues , which are revenues generated from sales of third-party crude oil and condensate , natural gas liquids and natural gas as well as gathering fees associated with gathering third-party natural gas , increased $ 1,206 million , or 133 % , during 2011 , to $ 2,116 million from $ 910 million in 2010. gains on asset dispositions , net , totaled $ 493 million and $ 224 million in 2011 and 2010 , respectively , primarily as a result of asset dispositions in the rocky mountain area and texas in 2011 and in the rocky mountain area in 2010 . 34 wellhead volume and price statistics for the years ended december 31 , 2011 , 2010 and 2009 were as follows : replace_table_token_15_th ( 1 ) thousand barrels per day or million cubic feet per day , as applicable . ( 2 ) other international includes eog 's united kingdom and china operations . ( 3 ) dollars per barrel or per thousand cubic feet , as applicable . excludes the impact of financial commodity derivative instruments ( see note 11 to consolidated financial statements ) .
| 6,895 |
our diversified segments each provide a suite of unique technical products to niche sectors of the global energy , industrial and infrastructure markets , and each has established a strong or leading position in the markets in which it participates . with an underlying focus on generating free cash flow , our objective is to sustain and grow the market share of our businesses through increased market penetration , development of new applications , and research and development of new and adjacent products that can be sold across our global network of sales and distribution facilities . we routinely explore acquisitions of related businesses that could strengthen or add to our existing product portfolios , or expand our geographic footprint and market presence . we also seek acquisition opportunities outside our current markets that would complement our existing businesses and enable us to build a stronger and more diverse company . nobelclad nobelclad is a global leader in the production of explosion-welded clad metal plates for use in the construction of corrosion resistant industrial processing equipment and specialized transition joints . while a significant portion of the demand for our clad metal products is driven by maintenance and retrofit projects at existing chemical processing , petrochemical processing , oil refining , and aluminum smelting facilities , new plant construction and large plant expansion projects also account for a significant portion of total demand . these industries tend to be cyclical in nature and timing of new order inflow remains difficult to predict . we use backlog as a primary means to measure the immediate outlook for our nobelclad business . we define “ backlog ” at any given point in time as all firm , unfulfilled purchase orders and commitments at that time . most firm purchase orders and commitments are realized , and we expect to fill most backlog orders within the following 12 months . nobelclad 's backlog decreased to $ 29,879 at december 31 , 2018 from $ 37,529 at december 31 , 2017 . dynaenergetics dynaenergetics designs , manufactures and distributes products utilized by the global oil and gas industry principally for the perforation of oil and gas wells . these products are sold to oilfield service companies in the u.s. , europe , canada , south america , africa , the middle east , russia , and asia . dynaenergetics also sells directly to end-users . the market for perforating products , which are used during the well completion process , generally corresponds with oil and gas exploration and production activity . well completion operations are increasingly complex , which in turn , has increased the demand for intrinsically-safe , reliable and technically advanced perforating systems . cost of products sold for dynaenergetics includes the cost of metals , explosives and other raw materials used to manufacture shaped charges , detonating products and perforating guns as well as employee compensation and benefits , depreciation of manufacturing facilities and equipment , manufacturing supplies and other manufacturing overhead expenses . story_separator_special_tag style= '' line-height:120 % ; text-align : left ; font-size:10pt ; '' > changes in global economic conditions ; the ability to obtain new contracts at attractive prices ; the size and timing of customer orders and shipments ; product pricing and margins ; our ability to realize sales from our backlog and our ability to adjust our manufacturing and supply chain ; fluctuations in customer demand ; our ability to manage periods of growth and contraction effectively ; general economic conditions , both domestic and foreign , impacting our business and the business of the end-market users we serve ; competitive factors ; the timely completion of contracts ; the timing and size of expenditures ; the timely receipt of government approvals and permits ; the price and availability of metal and other raw material ; the adequacy of local labor supplies at our facilities ; current or future limits on manufacturing capacity at our various operations ; our ability to successfully integrate acquired businesses ; the ability to remain an innovative leader in our fields of business ; the impacts of pending or future litigation or regulatory matters ; the application of governmental regulation and oversight of our operations and products and the industries in which our customers operate ; the impacts of trade and economic sanctions or other restrictions imposed by the european union , the united states or other countries ; exposure under the united states foreign corrupt practices act ( “ fcpa ” ) or similar legislation ; the availability and cost of funds ; and fluctuations in foreign currencies . the effects of these factors are difficult to predict . new factors emerge from time to time and we can not assess the potential impact of any such factor on our business or the extent to which any factor , or combination of factors , may cause results to differ materially from those contained in any forward-looking statement . all forward-looking statements speak only as of the date of this annual report , and we do not undertake any obligation to update any forward-looking statement to reflect 34 events or circumstances after the date of such statement or to reflect the occurrence of unanticipated events . in addition , see “ risk factors ” for a discussion of these and other factors that could materially affect our results of operations and financial condition . consolidated results of operations year ended december 31 , 2018 compared to year ended december 31 , 2017 replace_table_token_4_th net sales increased compared with 2017 primarily due to higher activity levels in the north american unconventional onshore oil and gas well completions sector and growth in customer demand for dynaenergetics ' advanced perforating systems combined with higher project volume in nobelclad . gross profit percentage increased compared with 2017 primarily due to a higher proportion of net sales in dynaenergetics relative to nobelclad , higher average selling prices and better product mix and the favorable impact of higher sales on fixed manufacturing overhead expenses . story_separator_special_tag gross profit percentage increased compared with 2016 primarily due to higher average selling prices and improved product mix in dynaenergetics and better project mix in nobelclad . general and administrative expenses increased compared with 2016 primarily due to higher outside legal expenses related to patent infringement defense costs in dynaenergetics , higher salaries and wages from headcount additions and increased variable incentive compensation , and higher stock-based compensation expense . 37 selling and distribution expenses increased compared with 2016 principally due to higher salaries and benefits and increased outside professional services partially offset by a reduction in bad debt expense . restructuring expenses in 2017 related to the announced closures of nobelclad 's manufacturing facility in france and dynaenergetics ' sales and distribution operations in kazakhstan . in 2016 , restructuring expenses related to severance for headcount reductions at dynaenergetics ' troisdorf , germany and austin , texas locations , lease termination costs to exit administrative offices in austin , texas , costs related to the relocation of perforating gun manufacturing operations in germany , and the accelerated vesting of stock awards in connection with the elimination of certain positions . goodwill impairment charge was recorded in 2017 to fully impair nobelclad 's goodwill balance . operating loss increased compared with 2016 due to the goodwill impairment charge and restructuring expenses combined with higher corporate unallocated and stock-based compensation expenses . the one-time impairment and restructuring charges and increased operating expenses partially were offset by increased sales volume , higher average selling prices , and favorable product mix in dynaenergetics . corporate unallocated and stock-based compensation expenses are not allocated to our business segments . other income ( expense ) , net in 2017 primarily was made up of realized and unrealized foreign currency losses . in 2016 , other income ( expense ) , net principally consisted of realized and unrealized foreign currency gains . our subsidiaries frequently enter into inter-company and third party transactions that are denominated in currencies other than their functional currency . changes in exchange rates with respect to these transactions will result in unrealized gains or losses if unsettled at the end of the reporting period or realized gains or losses at settlement of the transaction . during the third quarter of 2017 , we began using foreign currency forward contracts , generally with maturities of one month , to offset foreign exchange rate fluctuations on certain foreign currency-denominated asset and liability positions . none of these contracts are designated as accounting hedges , and all changes in the fair value of the forward contracts are recognized immediately in `` other income ( expense ) , net '' within our consolidated statements of operations . interest expense , net increased compared with 2016 primarily due to expensing $ 261 of deferred debt issuance costs in conjunction with amending our credit facility in march 2017 combined with higher interest rates on a higher average outstanding long-term debt balance . income tax provision of $ 3,569 for 2017 compared to an income tax benefit of $ 797 for 2016 . the 2017 income tax provision included $ 946 of which was a transition tax related to the tcja . the transition tax is a tax on previously untaxed accumulated and current earnings and profits ( “ e & p ” ) of certain of our foreign subsidiaries . to determine the amount of the transition tax , we had to determine , among other things , the amount of post-1986 e & p of the relevant subsidiaries , as well as the amount of non-u.s. income taxes paid on such earnings . we made a reasonable estimate of the transition tax and recorded a provisional transition tax obligation of $ 946 , of which $ 871 was recorded in other long-term liabilities in our consolidated balance sheets . the tcja 's transition tax is payable over eight years beginning in 2018. additionally , we were unable to recognize tax benefits associated with losses incurred in certain jurisdictions due to valuation allowances recorded against deferred tax assets in those jurisdictions . net loss in 2017 primarily was a result of the non-cash goodwill impairment charge and restructuring expenses and the other factors discussed above . net loss in 2017 was $ 18,853 , or $ 1.31 per diluted share , compared with a net loss of $ 6,505 , or $ 0.46 per diluted share , in 2016 . adjusted ebitda increased compared with 2016 primarily due to the factors discussed above . see `` overview '' above for the explanation of the use of adjusted ebitda . the following is a reconciliation of the most directly comparable gaap measure to adjusted ebitda . 38 replace_table_token_7_th 39 business segment financial information we primarily evaluate performance and allocate resources based on segment revenues , operating income and adjusted ebitda as well as projected future performance . segment operating income ( loss ) is defined as revenues less expenses identifiable to the segment . dmc operating income ( loss ) and adjusted ebitda include unallocated corporate expenses and stock-based compensation expense , which are not allocated to our business segments . segment operating income will reconcile to consolidated income ( loss ) before income taxes by deducting unallocated corporate expenses , including stock-based compensation , net other expense , net interest expense , and income tax provision ( benefit ) . net sales , segment operating income or loss , and adjusted ebitda for each segment were as follows for years ended december 31 : replace_table_token_8_th replace_table_token_9_th replace_table_token_10_th 40 dynaenergetics year ended december 31 , 2018 compared to year ended december 31 , 2017 replace_table_token_11_th net sales increased compared with 2017 primarily due to higher activity levels in north america 's unconventional onshore oil and gas well completions sector , increased customer demand for dynaenergetics ' advanced perforating systems and higher average selling prices . gross profit percentage increased compared with 2017 due to higher average selling prices and the favorable impact of higher volume on fixed overhead expenses .
| factors affecting results the following items impacted the comparability of the company 's results for the years ended december 31 , 2018 and 2017 : dynaenergetics ' sales of $ 237,448 in 2018 increased 96 % compared with 2017 due to increased activity levels in the north american unconventional well-completions sector and growth in demand from operators and service companies for dynaenergetics ' advanced perforating systems . 32 nobelclad 's sales of $ 88,981 in 2018 increased 24 % compared with 2017 primarily due to shipping three large capital equipment projects in 2018 coupled with higher volume in core repair and maintenance projects . consolidated gross profit of 34 % in 2018 increased from 31 % in 2017 due to a higher proportion of dynaenergetics sales relative to nobelclad sales , higher average selling prices in dynaenergetics and the favorable impact of higher volume on fixed manufacturing overhead expenses in both segments . restructuring expenses of $ 1,114 in 2018 were related to the closure of nobelclad 's manufacturing operations in france . restructuring expenses of $ 4,283 in 2017 related to the planned closure of nobelclad 's manufacturing operations in france and the closure of dynaenergetics ' sales and distribution facility in kazakhstan . a goodwill impairment charge of $ 17,584 related to the nobelclad reporting unit was recorded in the third quarter of 2017 to reflect the decline in activity levels in nobelclad 's primary end markets during the second half of 2017. consolidated selling , general , and administrative expenses were $ 61,213 in 2018 compared with $ 45,724 in 2017 . the increase primarily was due to an increase of $ 3,700 in legal costs over 2017 related to the successful defense of patent infringement lawsuits in dynaenergetics , increased salaries and wages from headcount additions and higher variable incentive compensation expense .
| 6,896 |
we determine the fair value of awards that contain market conditions using a monte carlo simulation model . changes to these estimates would result in different fair values of awards . we recognize the effect of awards for which the requisite service period is not story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read in conjunction with item 1a risk factors and our consolidated financial statements and related notes included elsewhere in this annual report on form 10-k. the following discussion and analysis presents financial information denominated in millions of dollars which can lead to differences from rounding when compared to similar information contained in the consolidated financial statements and related notes , which are primarily denominated in thousands of dollars . story_separator_special_tag this caused us to re-evaluate our workforce strategy and when employees return to the office , we expect to have more employees working remotely either part-time or full time , even within our hub locations . as a result , we revisited our real estate strategy with a focus on optimizing our footprint for the future of work at blackbaud , including the purchase of our leed gold certified global headquarters facility and exit of certain office leases globally . our aim is optimizing our office utilization , improving our geographic sales coverage and enhancing our employees ' daily experience to improve productivity and effectiveness . financial summary total revenue ( $ m ) income from operations ( $ m ) yoy growth ( % ) yoy growth ( % ) total revenue increased by $ 12.8 million during 2020 , driven largely by the following : + increase in transactional revenue , including an accelerated shift toward virtual and online fundraising and charitable giving related to covid-19 + increase in contractual recurring revenue related to positive demand from customers across our portfolio of cloud solutions - decrease in one-time consulting revenue primarily from less one-time sales related to changes in our compensation plans to place greater emphasis on subscription sales of our cloud solutions - decrease in one-time analytics revenue as analytics are generally integrated in our cloud solutions 34 2020 form 10-k blackbaud , inc. income from operations increased by $ 10.1 million during 2020 , driven largely by the following : + growth in total revenue , as described above + decrease in compensation costs ( excluding stock-based compensation expense ) of $ 43.7 million primarily associated with the decision to replace our 2020 cash bonus plans with grants of performance-based equity awards , which are being recognized as stock-based compensation expense between may 1 , 2020 and may 1 , 2021. these awards may be earned and become eligible for vesting on may 1 , 2021 subject to meeting certain performance conditions and the recipient 's continued employment with us + decrease in travel costs of $ 11.0 million due to our restriction on non-essential employee travel in response to the covid-19 pandemic + decrease in amortization of intangible assets from business combinations of $ 8.2 million + decrease in restructuring costs of $ 5.6 million as our facilities optimization restructuring plan was largely completed as of december 31 , 2019 + decrease in acquisition-related expenses and integration costs of $ 3.3 million - increase in stock-based compensation expense of $ 28.6 million primarily related to the decision to replace our 2020 cash bonus plans with grants of performance-based equity awards - increase in real estate activity costs of $ 23.1 million due to our workforce strategy changes in response to the covid-19 pandemic . for additional details , see `` results of operations - general and administrative '' below . - increase in corporate costs of $ 6.3 million primarily related to increases in bad debt expense ; for additional details , see note 2 to our consolidated financial statements in this report - increase in cost of revenue from a $ 4.3 million impairment charge during the three months ended june 30 , 2020 , against certain previously capitalized software development costs , resulting from our decision to accelerate the end of customer support for certain solutions - other increases in cost of revenue related to increases in data center costs , amortization of software development costs and transaction-based costs there are three primary revenue categories with related business drivers that we continue to monitor closely in light of the covid-19 pandemic : 1. contractual recurring revenue ( approximately two thirds of total revenue in 2020 ) recurring subscription contracts are typically for a term of three years at contract inception , billed annually in advance , and we have been for several years successfully shifting our legacy customer base away from annual renewals and moving them onto multi-year renewal contracts . our contracted recurring revenue has performed well as our renewal rate during 2020 finished favorable to our original plan . we expect the shortfall in bookings during 2020 to put pressure on our revenue growth during 2021. we are closely monitoring our customer receivable balances , payment terms , and creditworthiness . while we experienced an increase in our aging of receivables during the second and third quarters of 2020 primarily associated with the covid-19 pandemic , we have seen some improvement in our customers ' payment behavior since that time . we also saw fewer of our customers go out of business during 2020 than 2019 , which demonstrated the resiliency of our market . 2. transactional revenue ( approximately one quarter of total revenue in 2020 ) transactional revenue is non-contractual and less predictable given the susceptibility to certain drivers such as timing and number of events and marketing campaigns , as well as fluctuations in donation volumes and tuition payments . we have historically experienced seasonal highs during the fourth quarter due to year-end giving campaigns and during the second quarter when a large number of events are held . during the fourth quarter , we saw our payments transaction volumes exceed our expectations due primarily to year-end giving to our customers . story_separator_special_tag cost of recurring revenue is primarily comprised of compensation costs for customer support and production it personnel , hosting and data center costs , third-party contractor expenses , third-party royalty and data expenses , allocated depreciation , facilities and it support costs , amortization of intangible assets from business combinations , amortization of software development costs , transaction-based costs related to payments services including remittances of amounts due to third-parties and other costs incurred in providing support and recurring services to our customers . 2020 form 10-k 37 blackbaud , inc. our customers continue to prefer cloud subscription offerings with integrated analytics , training and payment services . recurring subscription contracts are typically for a term of three years at contract inception with one to three-year renewals thereafter . we intend to continue focusing on innovation , quality and integration of our cloud solutions , which we believe will drive future revenue growth . 2020 vs. 2019 recurring revenue increased by $ 19.1 million , or 2.3 % , driven primarily by the following : + increase in transactional revenue of $ 18.3 million , including an accelerated shift toward virtual and online fundraising and charitable giving related to covid-19 + increase in contractual recurring revenue of $ 15.5 million related to positive demand from customers across our portfolio of cloud solutions - decrease in maintenance revenue of $ 14.7 million primarily related to our continuing efforts to migrate customers from legacy on-premises solutions onto our solutions powered by blackbaud sky , our modern cloud platform partially offsetting contractual recurring revenue was a decrease in the mix of retained and managed services contracts we present in recurring revenue . revenue from retained and managed service contracts that we do not expect to have a term consistent with our cloud solution contracts is included in one-time services and other revenue beginning january 1 , 2020. this change in presentation resulted in a decrease in recurring revenue and an offsetting increase to one-time services and other revenue of $ 16.7 million during the twelve months ended december 31 , 2020. cost of recurring revenue increased by $ 11.7 million , or 3.3 % , driven primarily by the following : + increase in transaction-based costs of $ 7.5 million related to payment services integrated in our cloud solutions + increase in amortization of software development costs of $ 6.8 million due to investments made on innovation , quality and the integration of our cloud solutions + impairment charge of $ 4.3 million during the three months ended june 30 , 2020 , against certain previously capitalized software development costs that reduced the carrying value of those assets to zero . the impairment charge resulted primarily from our decision to accelerate the end of customer support for certain solutions . + increase in hosting and data center costs of $ 3.8 million as we are migrating our cloud infrastructure to leading public cloud service providers - decrease in amortization of intangible assets from business combinations of $ 5.7 million - decrease in compensation costs primarily associated with the decision to replace our 2020 cash bonus plans with grants of performance-based equity awards , which are being recognized as stock-based compensation expense between may 1 , 2020 and may 1 , 2021. these awards may be earned and become eligible for vesting on may 1 , 2021 subject to meeting certain performance conditions and the recipient 's continued employment with us - decrease in costs associated with certain retained and managed services contracts for which revenue is included in one-time services and other revenue beginning january 1 , 2020 , as discussed above recurring gross margin decreased by 0.4 % , driven primarily by an increase in the mix of payments revenue , which generally have lower gross margins than our contractual recurring revenue , the impairment of previously capitalized software development costs , and incremental costs associated with our continued shift toward selling cloud solutions , including data center costs and amortization of software development costs . we expect continued pressure on recurring gross margin largely driven by duplicate data center costs as we migrate our cloud infrastructure to leading cloud service providers . 2019 vs. 2018 recurring revenue increased by $ 69.4 million , or 9.1 % , driven primarily by the following : + increase in subscriptions revenue of $ 87.8 million related to positive demand across our portfolio of cloud solutions and , to a lesser extent , the inclusion of yourcause , an increase in services embedded in our renewable cloud solution contracts and increased sales of subscription-based retained professional services - decrease in maintenance revenue of $ 18.4 million primarily related to our continuing efforts to migrate customers from legacy on-premises solutions onto our solutions powered by blackbaud sky , our modern cloud platform 38 2020 form 10-k blackbaud , inc. cost of recurring revenue increased by $ 52.5 million , or 17.2 % , driven primarily by the following : + increase in transaction-based costs of $ 13.0 million , related to payment services integrated in our cloud solutions + increase in compensation costs of $ 11.2 million , primarily attributable to an increasing portion of our resources providing subscription-based retained services as opposed to one-time + increase in hosting and data center costs of $ 5.4 million due to the migration of our cloud infrastructure to leading public cloud service providers + increase in third-party data and tool costs of $ 5.1 million + increase in allocated corporate costs of $ 5.1 million primarily due to investments in corporate it , including cyber security and increases in related headcount + increase in amortization of software development costs of $ 4.1 million due to investments made on innovation , quality and the integration of our cloud solutions recurring gross margin decreased by 3.0 % , driven primarily by incremental costs associated with our continued shift toward selling cloud solutions and retained services , including hosting and data center costs , compensation costs and amortization of software development costs .
| executive summary we are the world 's leading cloud software company powering social good . serving the entire social good community—nonprofits , higher education institutions , k–12 schools , healthcare organizations , faith communities , arts and cultural organizations , foundations , companies and individual change agents—we connect and empower organizations and individuals to increase their impact through cloud software , services , expertise and data intelligence . our portfolio is tailored to the unique needs of vertical markets , with solutions for fundraising and crm , marketing , advocacy , peer-to-peer fundraising , corporate social responsibility , school management , ticketing , grantmaking , financial management , payment processing and analytics . serving the industry for nearly four decades , we are headquartered in charleston , south carolina , and have operations in the united states , australia , canada , costa rica and the united kingdom . as of december 31 , 2020 , we had over 45,000 global customers . our revenue is primarily generated from the following sources : ( i ) charging for the use of our software solutions in cloud and hosted environments ; ( ii ) providing payment and transaction services ; ( iii ) providing software maintenance and support services ; and ( iv ) providing professional services , including implementation , consulting , training , analytic and other services . covid-19 impact the outbreak of covid-19 in countries across the globe , including each country in which we currently operate , has adversely impacted the u.s. and global economies . we began 2020 with strong execution against our financial plan . in march 2020 , we began to experience disruptions to our business from covid-19 , and the pandemic continues to impact each of our markets .
| 6,897 |
we early adopted the provisions of this amendment during the third quarter of 2015 in connection with an amendment to certain of our u.s. pension plans during the period . see note 10 for additional information on the adoption of this amendment and the impact on our consolidated financial statements . in november 2015 , the fasb story_separator_special_tag and results of operations ( all currency and share amounts are in millions ) the following should be read in conjunction with our consolidated financial statements and the related notes thereto . unless otherwise indicated , amounts provided in item 7 pertain to continuing operations only . executive overview spin-off of spx flow on september 26 , 2015 , we completed the spin-off of spx flow ( the `` spin-off '' ) . the results of spx flow are reflected as a discontinued operation for all periods presented . during 2015 and 2014 , we incurred $ 30.8 and $ 8.5 , respectively , of professional fees and other costs in connection with the spin-off . these costs have been reflected within discontinued operations . new segment reporting structure during the third quarter of 2015 , we realigned our segment reporting structure . under the realigned structure , we have aggregated our operating segments into the following three reportable segments : hvac , detection and measurement , and power . see note 5 to our consolidated financial statements for additional information on our new segment reporting structure . summary of operating results revenues for 2015 were 12.0 % lower than 2014 , with the decrease attributable to a decline in organic revenue , the impact of a stronger u.s. dollar in 2015 , and a third quarter 2015 revision to the expected revenues and profits on our large power projects in south africa , which resulted in a reduction in revenues of $ 57.2. the organic revenue decline of $ 125.0 ( or 6.5 % ) was primarily attributable to lower sales by certain businesses within our power segment , while the stronger u.s. dollar during 2015 resulted in a decrease in revenues of $ 76.0 ( or 3.9 % ) . during 2015 and 2014 , we incurred operating losses of $ 170.0 and $ 179.5 , respectively . operating results for 2015 and 2014 were impacted by the following significant items : reductions in operating profit of $ 95.0 and $ 25.0 in 2015 and 2014 , respectively , associated with revisions to our estimates of expected revenue and profit on our large power projects in south africa . see notes 5 and 14 to our consolidated financial statements for additional details . net charges associated with our pension and postretirement plans of $ 18.9 and $ 106.1 in 2015 and 2014 , respectively , with the largest portion of the charges resulting from actuarial losses recorded during each of the years . see note 10 to our condensed consolidated financial statements for additional details . impairment charges of $ 13.7 and $ 28.9 in 2015 and 2014 , respectively , associated with the goodwill and other long-term assets of certain businesses within our power segment . see note 8 to our consolidated financial statements for additional details . special charges during 2015 and 2014 of $ 17.8 and $ 9.3 , respectively , for severance and other costs associated with restructuring actions primarily within our power segment . see note 6 to our consolidated financial statements for additional details . the operating losses for the years ended december 31 , 2015 and december 31 , 2014 also included corporate expenses of $ 100.8 and $ 131.7 , respectively . these general overhead costs included amounts related to a corporate structure that supported the spx business prior to the spin-off . a portion of these costs relate to support that was provided to spx flow and , thus , we expect future corporate expenses for spx to be significantly lower than the recent historical trends . cash flows used in continuing operations totaled $ 82.0 in 2015 , compared to $ 323.3 in 2014. the decrease in cash flows used in operating activities was due primarily to the fact that the amount for 2014 included income tax payments of $ 235.0 associated with the 2014 sales of our interest in the egs electrical group llc and subsidiaries ( “ egs ” ) joint venture and the thermal product solutions ( “ tps ” ) , spx precision components ( “ precision components ” ) , and fenn llc ( “ fenn ” ) businesses . cash used in continuing operations for both 2015 and 2014 included 24 disbursements for general corporate overhead costs related to a corporate structure that supported the spx business prior to the spin-off . as previously noted , a portion of these costs relate to support that was provided to spx flow and , thus , we expect future disbursements for general corporate overhead to be significantly lower than the recent historical trends . other matters of note summarized below are some additional matters of note that had an impact on our financial results for the periods presented herein : as indicated in notes 1 and 18 to our consolidated financial statements , we identified certain misstatements associated with previously reported amounts . we have evaluated the effects of these misstatements on our consolidated financial statements for the prior years impacted in accordance with the guidance provided by sec staff accounting bulletin no . 108 , codified as sab topic 1.n , “ considering the effects of prior year misstatements when quantifying misstatements in the current year financial statements , ” and concluded that none of these prior years are materially misstated . to correct these misstatements , and as permitted by sab topic 1.n , we have restated prior period consolidated financial results included herein . story_separator_special_tag the reduction in gross profit associated with our large power projects in south africa resulted from a third quarter 2015 revision to the expected revenue and profits on the projects , which resulted in a reduction in gross profit of $ 95.0. the decrease in gross profit and gross profit as a percentage of revenue in 2014 compared to 2013 , was primarily due to ( i ) the fourth quarter 2014 revision to the expected revenues and profits on our large power projects in south africa , which resulted in a reduction in gross profit of $ 25.0 , ( ii ) lower sales of fare collection systems during 2014 , and ( iii ) an increase in sales of lower margin power transformers during 2014.— selling , general and administrative ( `` sg & a '' ) expense — for 2015 , the decrease in sg & a expense , compared to 2014 , was due primarily to a decline in pension and postretirement expense of $ 86.5 ( an overall decrease in pension and postretirement expense of $ 87.2 , with $ 0.7 included in `` cost of products sold '' ) and , to a lesser extent , a decline in corporate expense of $ 30.9 and a decline in sg & a at our segments associated with cost savings from restructuring 26 activities , decreases in incentive compensation , and the impact of currency translation . the decrease in pension and postretirement expense in 2015 was due to a decrease in actuarial losses during the year . for 2014 , the increase in sg & a expense , compared to 2013 , was due primarily to an increase in pension and postretirement expense of $ 123.6 ( an overall increase in pension and postretirement expense of $ 128.7 , with $ 5.1 included in `` cost of products sold '' ) and , to a lesser extent , increases in incentive compensation expense of $ 9.0 and stock-based compensation of $ 6.6 . these increases were offset partially by the impact of cost reductions from restructuring actions completed in 2013 and 2014 and currency translation . the increase in pension and postretirement expense in 2014 was due to an increase in actuarial losses during the year . intangible amortization — for 2015 , compared to 2014 , and 2014 , compared to 2013 , the decreases in intangible amortization were due to the impact of foreign currency translation . impairment of goodwill and other long-term assets — during 2015 , we recorded an impairment charge of $ 13.7 related to the goodwill of our balcke duerr reporting unit . during 2014 , we recorded an impairment charge of $ 10.9 related to the trademarks of a business within our power segment . in addition , we recorded an impairment charge of $ 18.0 related to our power segment 's investment in a joint venture with shanghai electric . see note 8 to our consolidated financial statements for further discussion of impairment charges . special charges , net — special charges , net , related primarily to restructuring initiatives to consolidate manufacturing , distribution , sales and administrative facilities , reduce workforce , and rationalize certain product lines . see note 6 to our consolidated financial statements for the details of actions taken in 2015 , 2014 and 2013. the components of special charges , net , were as follows : replace_table_token_7_th other income ( expense ) , net — other expense , net , for 2015 was composed primarily of charges of $ 8.0 associated with asbestos product liability matters , foreign currency transaction losses of $ 7.8 , losses on foreign currency forward contracts ( `` fx forward contracts '' ) of $ 6.5 , partially offset by gains of $ 4.9 on currency forward embedded derivatives ( “ fx embedded derivatives ” ) and a gain of $ 3.8 related to death benefits on life insurance contracts . other income , net , for 2014 was composed primarily of the gain on sale of our interest in egs of $ 491.2 and , to a much lesser extent , investment earnings of $ 2.7 and gains on fx embedded derivatives of $ 2.8 , partially offset by losses on fx forward contracts of $ 5.4 and foreign currency transaction losses of $ 1.9 . other expense , net , for 2013 was composed primarily of foreign currency transaction losses of $ 9.5 and losses on fx forward contracts of $ 1.3 , partially offset by gains on fx embedded derivatives of $ 1.0 and investment earnings of $ 4.2. interest expense , net — interest expense , net , includes both interest expense and interest income . the increase in interest expense , net , during 2015 , compared to 2014 , was primarily a result of a decrease in interest income during 2015 due to the lower average cash balances during the year , partially offset by the impact of refinancing our senior credit facilities during the third quarter in preparation for the spin-off , which resulted in a decrease in our outstanding term loan and our average outstanding borrowings on our revolving credit facilities . ( see `` md & a — liquidity and financial condition '' and note 12 to our consolidated financial statements for further details pertaining to our 2015 debt activity . ) the decrease in interest expense , net , during 2014 , compared to 2013 , was primarily a result of the redemption of all our 7.625 % senior notes during the first quarter of 2014 and , to a lesser extent , lower average interest rates and fees related to our senior credit facilities . 27 loss on early extinguishment of debt — as previously noted , in the third quarter of 2015 , we refinanced our senior credit facilities in connection with the spin-off .
| results of discontinued operations spin-off of spx flow as indicated in note 1 to our consolidated financial statements , we completed the spin-off of spx flow on september 26 , 2015. the results of spx flow are reflected as a discontinued operation for all periods presented . major classes of line items constituting pre-tax income and after-tax income of spx flow for the years ended december 31 , 2015 , 2014 and 2013 are shown below : 28 replace_table_token_8_th ( 1 ) represents financial results for spx flow through the date of spin-off ( i.e. , the nine months ended september 26 , 2015 ) , except for a revision to increase the income tax provision by $ 1.4 that was recorded during the fourth quarter of 2015 . ( 2 ) includes $ 30.8 and $ 3.5 for the years ended december 31 , 2015 and december 31 , 2014 , respectively , of professional fees and other costs that were incurred in connection with the spin-off . ( 3 ) includes , for the year ended december 31 , 2014 , $ 5.0 of costs incurred to obtain the consents required of the holders of our 6.875 % senior notes to amend certain provisions of the indenture governing such senior notes , with such consent obtained in connection with the spin-off . the assets and liabilities of spx flow have been reclassified to assets and liabilities of discontinued operations as of december 31 , 2014. the components of spx flow 's assets and liabilities as of december 31 , 2014 are shown below : replace_table_token_9_th 29 the following table presents selected financial information regarding cash flows of spx flow that are included within discontinued operations in the consolidated statements of cash flows : replace_table_token_10_th ( 1 ) represents amounts for spx flow through the date of spin-off ( i.e. , the nine months ended september 26 , 2015 ) .
| 6,898 |
the remaining 13 stores operated by an od pc are not consolidated and we recognize as management fee revenue only the cash flows we earn pursuant to the terms of management agreements for those 13 od pc-operated stores . our net revenues are comprised of optical sales , net of discounts and promotions , from our 374 consolidated stores as well as management fees from the 13 stores owned by od pcs that are not consolidated in our results . optical sales include sales of frames , lenses ( including lens treatments ) , contact lenses and eyeglass warranties at all of our 374 consolidated stores , as well as the professional fees of the optometrists at 184 of the stores . these 179 stores include 87 stores where the optometrist is our employee or an independent contractor , the 54 stores operated by an od pc that are consolidated in our results and the 43 stores with independent optometrists for whom we provide management services . the management fees from the 13 unconsolidated od pc-operated stores are based on the performance of the stores . our operating costs and expenses are comprised of costs of goods sold and selling , general and administrative expenses . cost of goods sold primarily includes the cost of eyeglass frames , opthamalic lenses , contact lenses , lab manufacturing costs and buying , warehousing , distribution , shipping and delivery costs . selling , general and administrative expenses primarily include retail payroll , doctor payroll , occupancy , overhead , advertising and depreciation . occupancy , overhead and depreciation are less variable relative to sales levels than other components of selling , general and administrative expenses . in this management 's discussion and analysis we use the terms gross profit , gross margin , comparable store sales , comparable transaction volume and average ticket price to compare our period-over-period performance . gross profit is defined as optical sales less cost of goods sold in a period . gross margin is defined as gross profit as a percentage of optical sales in a period . comparable store sales is calculated by comparing net revenues for a period to net revenues of the equivalent prior period for all stores open at least twelve months during such prior period . comparable transaction volume is based on the number of comparable store sales in a period . average ticket price is calculated by dividing net revenues by transaction volume in a period . we believe that the key driver of our performance is our ability to grow revenue without increasing costs at the same rate by ( i ) increasing comparable transaction volume by offering value and convenience , ( ii ) actively managing our store base in targeted markets and ( iii ) pursuing fee-for-service funded managed vision care relationships . our performance is also affected by general economic conditions and consumer confidence . we primarily grow optical sales by offering value and convenience to our customers . since fiscal 2001 , we have focused on our value strategy , which includes a promotion of two complete 38 index to financial statements pairs of single vision eyewear for $ 99. we believe our value strategy results in increased comparable transaction volume and also believe it encourages customers to purchase higher margin lenses , lens treatments and accessories , which increases average ticket price . we also grow optical sales and leverage costs through selective store base expansion by opening new stores in targeted markets . until a new store matures , its operating costs as a percentage of optical sales are generally higher than that of an established store . accordingly , the expenses related to opening new stores adversely affect our results in that period . over the longer term , opening a new store in an existing market allows us to leverage existing advertising , field management and overhead to mitigate margin pressure . when entering a new market , we seek to achieve sufficient market penetration to generate brand awareness and economies of scale in advertising , field management and overhead . consistent with our strategic objectives , management believes the opportunity exists to open approximately 25 new stores in both 2007 and 2008 in existing and new markets . we also manage costs by closing stores that do not meet our performance expectations . store openings and store closures affect period over period comparisons . we have made a strategic decision to pursue fee-for-service funded managed vision care plans . fee-for-service funded managed vision care plans consist of insurance relationships where we receive set fees for services provided to participants of a plan as opposed to capitated funded managed vision care plans where we receive a set fee per plan participant to provide any and all services requested by participants of such plan . under a fee-for-service funded managed vision care plan we benefit from participants ' utilization of the plan , whereas under a capitated funded managed vision care plan we bear risk related to the level at which participants utilize such plan . substantially all of our current funded managed vision care plans are fee-for-service funded managed vision care plans . our managed vision care plans also include discount managed vision care plans where participants receive a set discount on eye care products . we believe that participation in managed vision care plans will continue to benefit us and other large optical retail chains with strong local market shares , broad geographic coverage and sophisticated management information and billing systems . we expect that optical revenues derived from managed vision care plans will continue to account for approximately 30 % of our net revenues , but that the percentage attributable to fee-for-service funded managed vision care plans will increase as revenues from discount managed vision care plans decline . story_separator_special_tag the amendment primarily reduces the interest rate on the credit agreement as well as changes several covenants . a prepayment of $ 25 million in principal was made in conjunction with the lenders ' 43 index to financial statements approval and a prepayment of approximately $ 9.0 million in principal is due in conjunction with the filing of this annual report . amortization payments . prior to the maturity date , funds borrowed under the revolver may be borrowed , repaid and re-borrowed , without premium or penalty . the term loan quarterly amortization began in the third quarter of fiscal 2005 and continues through the date of maturity in fiscal 2012 for the term loan facility according to the following schedule : replace_table_token_9_th interest . our borrowings under the new credit facility bear interest at a floating rate , which can either be , at our option , a base rate or a eurodollar rate , in each case plus an applicable margin . the base rate is defined as the higher of ( i ) the jpmorgan chase bank prime rate or ( ii ) the federal funds effective rate , plus one half percent ( 0.5 % ) per annum . the eurodollar rate is defined as the rate for eurodollar deposits for a period of one , two , three , six , nine or twelve months ( as selected by us ) . the applicable margins , as amended in the december 2006 amendment , are : new facility base rate margin eurodollar margin term loan facility 1.50 % 2.50 % revolver 1.75 % 2.75 % in addition to paying interest on outstanding principal under the new credit facility , we are required to pay a commitment fee to the lenders under the revolver in respect of the unutilized commitments thereunder at a rate equal to 0.50 % . we will also pay customary letter of credit fees . security and guarantees . the new credit facility is secured by a valid first-priority perfected lien or pledge on ( i ) 100 % of the capital stock of each of our present and future direct and indirect domestic subsidiaries , ( ii ) 65 % of the capital stock of each of our future first-tier foreign subsidiaries , ( iii ) 100 % of our capital stock and ( iv ) substantially all our present and future property and assets and those of each guarantor , subject to certain exceptions . our obligations under the new credit facility are guaranteed by each of our existing and future direct and indirect domestic subsidiaries and ecca holdings . covenants . the new credit facility documentation contains customary affirmative and negative covenants and financial covenants . during the term of the new credit facility , the negative covenants restrict our ability to do certain things , including but not limited to : incur additional indebtedness , including guarantees ; 44 index to financial statements create , incur , assume or permit to exist liens on property and assets ; make loans and investments and enter into ggc moulin acquisitions and joint ventures ; engage in sales , transfers and other dispositions of our property or assets ; prepay , redeem or repurchase our debt ( including the notes ) , or amend or modify the terms of certain material debt ( including the notes ) or certain other agreements ; declare or pay dividends to , make distributions to , or make redemptions and repurchases from , equity holders ; and agree to restrictions on the ability of our subsidiaries to pay dividends and make distributions . the following financial covenants are included : maximum consolidated leverage ratio ; maximum capital expenditures ; and minimum rent-adjusted interest coverage ratio . as of december 30 , 2006 , we were in compliance with all of our financial covenants . mandatory prepayment . our mandatory prepayment for fiscal 2006 was waived by the december 2006 amendment which required a $ 25 million prepayment at the time of the amendment , as well as a $ 9.0 million prepayment in march 2007. beginning with fiscal 2007 , we are required to make a mandatory annual prepayment of the term loan facility in an amount based on our leverage ratio of excess cash flows as defined in the new credit facility , which percentage we expect to be reduced upon our achieving certain consolidated leverage ratios . in addition , we are required to make a mandatory prepayment of the term loan facility with : 100 % of the net cash proceeds of any property or asset sale or casualty , subject to certain exceptions and reinvestment rights ; 100 % of the net cash proceeds of certain debt issuances , subject to certain exceptions ; and 50 % of the net cash proceeds from the issuance of additional equity interests , subject to certain exceptions . mandatory prepayments will be applied to the term loan facility , first to the scheduled installments of the term loan occurring within the next 12 months in direct order of maturity , and second , ratably to the remaining installments of the term loan . in conjunction with the december 2006 amendment , we prepaid $ 25.0 million . we may voluntarily repay outstanding loans under the new credit facility at any time without premium or penalty , other than customary breakage costs with respect to eurodollar loans . notes on february 4 , 2005 , we issued $ 152.0 million aggregate principal amount of our 10 3/4 % senior subordinated notes ( the initial notes ) due 2015. we filed a registration statement with the securities and exchange commission with respect to an offer to exchange the initial notes for notes which have terms substantially identical in all material respects to the initial notes , except such notes are freely transferable by the holders thereof and are issued without any covenant regarding registration ( the notes ) .
| results of operations the following table sets forth the percentage relationship to net revenues of certain income statement data . replace_table_token_7_th ( a ) percentages based on optical sales only the following is a discussion of certain factors affecting our results of operations and our liquidity and capital resources . this discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this prospectus . fiscal 2006 compared to fiscal 2005. net revenues . net revenues increased to $ 437.7 million in fiscal 2006 from $ 406.2 million in fiscal 2005. the increase was largely the result of a comparable store sales increase of 6.0 % compared to fiscal 2005. we opened fourteen stores and closed seven stores in fiscal 2006. net revenues attributable to the new stores opened in fiscal 2006 were $ 6.3 million . the increase in net revenues attributable to the effect of stores opened in fiscal 2005 being open all of fiscal 2006 was $ 3.5 million . comparable transaction volume increased by 4.1 % compared to fiscal 2005 while average ticket prices increased by 1.9 % compared to fiscal 2005. the increase in comparable store sales and average ticket prices was the result of a continued increase in the sales mix of premium lenses . the increase in transactions was aided by 285 less store closure days than in fiscal 2005 when severe hurricane activity generated multiple store closure days during the one of the seasonal peaks in sales . total managed vision care sales increased by 7.4 % compared to fiscal 2005. the total managed vision care sales increase was primarily due to an increase in plans offered by our two largest managed vision care partners . the growth is from both new and existing accounts which they administer . gross profit .
| 6,899 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.