document stringlengths 8.64k 13.4k | summary stringlengths 179 2.97k | __index_level_0__ int64 0 16.8k |
|---|---|---|
liabilities for uncertainty in income taxes are measured based on the largest amount of benefit that is greater than 50 % likely of being realized upon ultimate settlement . deferred tax assets and liabilities are netted by taxable jurisdiction and classified as noncurrent on the consolidated balance sheets . costs allocated to contracts the company classifies indirect costs as overhead ( included in cost of revenues ) or general and administrative expenses in the same manner as such costs are defined in the company 's disclosure statements under u.s. government cost accounting standards ( cas ) . cash , cash equivalents and story_separator_special_tag the following discussion and analysis of our financial condition and results of operations , and quantitative and qualitative disclosures about market risk should be read in conjunction with our consolidated financial statements and the related notes included in this form 10-k , as well as part ii , item 7 `` management 's discussion and analysis of financial condition and results of operations ” of our form 10-k for the year ended january 31 , 2020 , which provides additional information on comparisons of fiscal 2020 and 2019. it contains forward-looking statements ( which may be identified by words such as those described in “ risk factors—forward-looking statement risks ” in part i of this report ) , including statements regarding our intent , belief , or current expectations with respect to , among other things , trends affecting our financial condition or results of operations ; backlog ; our industry ; government budgets and spending ; market opportunities ; the impact of competition ; and the impact of the unisys federal and engility acquisitions . such statements are not guarantees of future performance and involve risks and uncertainties , and actual results may differ materially from those in the forward-looking statements as a result of various factors . risks , uncertainties and assumptions that could cause or contribute to these differences include those discussed below and elsewhere in this report , particularly in “ risk factors ” in part i of this report . due to such risks , uncertainties and assumptions you are cautioned not to place undue reliance on such forward-looking statements , which speak only as of the date hereof . we do not undertake any obligation to update these factors or to publicly announce the results of any changes to our forward-looking statements due to future results or developments . we use the terms `` saic , '' the “ company , ” “ we , ” “ us ” and “ our ” to refer to science applications international corporation and its consolidated subsidiaries . the company utilizes a 52/53 week fiscal year ending on the friday closest to january 31 , with fiscal quarters typically consisting of 13 weeks . fiscal 2019 began on february 3 , 2018 and ended on february 1 , 2019 , fiscal 2020 began on february 2 , 2019 and ended on january 31 , 2020 , and fiscal 2021 began on february 1 , 2020 and ended on january 29 , 2021. business overview we are a leading technology integrator providing full life cycle services and solutions in the technical , engineering and enterprise information technology ( it ) markets . we developed our brand by addressing our customers ' mission critical needs and solving their most complex problems for over 50 years . as one of the largest pure-play technical service providers to the u.s. government , we serve markets of significant scale and opportunity . our primary customers are the departments and agencies of the u.s. government . we serve our customers through approximately 2,100 active contracts and task orders and employ approximately 26,000 individuals who are led by an experienced executive team of proven industry leaders . our long history of serving the u.s government has afforded us the ability to develop strong and longstanding relationships with some of the largest customers in the markets we serve . substantially all of our revenues and tangible long-lived assets are generated by or owned by entities located in the united states . economic opportunities , challenges and risks in fiscal 2021 , we generated greater than 95 % of our revenues from contracts with the u.s. government , including subcontracts on which we perform . our business performance is affected by the overall level of u.s. government spending and the alignment of our offerings and capabilities with the budget priorities of the u.s. government . appropriations measures passed in december 2020 provided full funding for the federal government through the end of government fiscal year ( gfy ) 2021. these bills are funded at levels for defense and non-defense spending based on the august 2019 bipartisan budget act agreement that raises the budget control act spending caps enacted in august 2011 and suspends the federal debt ceiling until july 31 , 2021. adverse changes in fiscal and economic conditions could materially impact our business . some changes that could have an adverse impact on our business include the implementation of future spending reductions ( including sequestration ) and government shutdowns . currently , the government is operating under full funding as part of the december 2020 budget deal . it is possible , but unlikely , that there will be a government shutdown in october 2021 when that measure expires . the u.s. government has increasingly relied on contracts that are subject to a competitive bidding process ( including indefinite delivery , indefinite quantity ( idiq ) , u.s. general services administration ( gsa ) schedules , and other multi-award contracts ) , which has resulted in greater competition and increased pricing pressure . we expect 21 science applications international corporation that a majority of the business that we seek in the foreseeable future will be awarded through a competitive bidding process . despite the budget and competitive pressures affecting the industry , we believe we are well-positioned to protect and expand existing customer relationships and benefit from opportunities that we have not previously pursued . story_separator_special_tag we can not currently estimate the overall impact of the covid-19 pandemic . the longer the duration of the event the more likely that there may be an adverse impact on our business , financial position , results of operations and or cash flows . see “ risk factors ” in part i of this report for additional discussion of the risks associated with the covid-19 pandemic . management of operating performance and reporting our business and program management process is directed by professional managers focused on satisfying our customers by providing high quality services in achieving program requirements . these managers carefully monitor contract margin performance by constantly evaluating contract risks and opportunities . through each contract 's life cycle , program managers review performance and update contract performance estimates to reflect their understanding of the best information available . for performance obligations satisfied over time , updates to estimates are recognized on inception-to-date activity , during the period of adjustment , resulting in either a favorable or unfavorable impact to operating income . we evaluate our results of operations by considering the drivers causing changes in revenues , operating income and operating cash flows . given that revenues fluctuate on our contract portfolio over time due to contract awards and completions , changes in customer requirements , and increases or decreases in ordering volume of materials , we evaluate significant trends and fluctuations in these terms . whether performed by our employees or by our subcontractors , we primarily provide services and , as a result , our cost of revenues are predominantly variable . we also analyze our cost mix ( labor , subcontractor or materials ) in order to understand operating margin because programs with a higher proportion of saic labor are generally more profitable . changes in costs of revenues as a percentage of revenue other than from revenue volume or cost mix are normally driven by fluctuations in shared or corporate costs , or cumulative revenue adjustments due to changes in estimates . changes in operating cash flows are described with regard to changes in cash generated through the delivery of services , significant drivers of fluctuations in assets or liabilities and the impacts of changes in timing of cash receipts or disbursements . 23 science applications international corporation story_separator_special_tag style= '' color : # 000000 ; font-family : 'arial ' , sans-serif ; font-size:10pt ; font-weight:400 ; line-height:120 % '' > net bookings represent the estimated amount of revenues to be earned in the future from funded and negotiated unfunded contract awards that were received during the period , net of adjustments to estimates on previously awarded contracts . we calculate net bookings as the period 's ending backlog plus the period 's revenues less the prior period 's ending backlog and initial backlog obtained through acquisitions . 25 science applications international corporation backlog represents the estimated amount of future revenues to be recognized under negotiated contracts as work is performed . we do not include in backlog estimates of revenues to be derived from idiq contracts , but rather record backlog and bookings when task orders are awarded on these contracts . given that much of our revenue is derived from idiq contract task orders that renew annually , bookings on these contracts tend to refresh annually as the task orders are renewed . additionally , we do not include in backlog contract awards that are under protest until the protest is resolved in our favor . we segregate our backlog into two categories as follows : funded backlog . funded backlog for contracts with government agencies primarily represents estimated amounts of revenue to be earned in the future from contracts for which funding is appropriated less revenues previously recognized on these contracts . it does not include the unfunded portion of contracts in which funding is incrementally appropriated or authorized on a quarterly or annual basis by the u.s. government and other customers even though the contract may call for performance over a number of years . funded backlog for contracts with non-government customers represents the estimated value on contracts , which may cover multiple future years , under which we are obligated to perform , less revenues previously recognized on these contracts . negotiated unfunded backlog . negotiated unfunded backlog represents estimated amounts of revenue to be earned in the future from negotiated contracts for which funding has not been appropriated or otherwise authorized and from unexercised priced contract options . negotiated unfunded backlog does not include any estimate of future potential task orders expected to be awarded under idiq , gsa schedules or other master agreement contract vehicles . we expect to recognize revenue from a substantial portion of our funded backlog within the next twelve months . however , the u.s. government can adjust the scope of services of or cancel contracts at any time . similarly , certain contracts with commercial customers include provisions that allow the customer to cancel prior to contract completion . most of our contracts have cancellation terms that would permit us to recover all or a portion of our incurred costs and fees ( contract profit ) for work performed . the estimated value of our total backlog as of the dates presented was : replace_table_token_3_th we had net bookings worth an estimated $ 11.9 billion and $ 7.9 billion during fiscal 2021 and fiscal 2020 , respectively . fiscal 2021 total backlog has increased from the prior year primarily due to several large awards received during the period from the u.s. army , the intelligence community , and other various federal government customers . in addition , $ 1.5 billion of acquired backlog from unisys federal was recorded as an increase to backlog as of the acquisition date . as described above , our backlog represents the estimated amount of future revenues to be recognized under negotiated contracts as work is performed and is reduced as revenue is recognized or as our customers take action to close contracts and or de-obligate funds .
| results of operations the primary financial performance measures we use to manage our business and monitor results of operations are revenues , operating income and cash flows from operating activities . the following table summarizes our results of operations : replace_table_token_1_th revenues . revenues increased $ 677 million from fiscal 2020 to fiscal 2021 due to the acquisition of unisys federal ( $ 669 million ) , revenue on new contracts primarily supporting the intelligence community and u.s. air force ( $ 166 million ) , and increased volume on existing programs ( $ 150 million ) , partially offset by the impacts of covid-19 ( $ 248 million ) and completion of contracts ( $ 60 million ) . adjusting for the impact of acquired revenues , revenues grew 0.6 % . cost of revenues . cost of revenues increased $ 591 million from fiscal 2020 to fiscal 2021 primarily due to the acquisition of unisys federal ( $ 550 million ) . cost of revenues as a percentage of revenues decreased due to the acquisition of unisys federal and lower indirect costs , partially offset by lower net profit write-ups in the current year . selling , general and administrative expenses . sg & a increased $ 64 million from fiscal 2020 to fiscal 2021 primarily due to increased intangible asset amortization and the acquisition of unisys federal . operating income . operating income as a percentage of revenues decreased to 5.5 % for fiscal 2021 , compared to 5.8 % for fiscal 2020 , primarily due to increased intangible asset amortization and the impacts of covid-19 , partially offset by the acquisition of unisys federal and gains related to the resolution of certain program contract matters . net income attributable to common stockholders . net income attributable to common stockholders decreased $ 17 million from fiscal 2020 to fiscal 2021 primarily due to higher interest expense , partially offset by higher operating income . cash flows provided by operating activities .
| 7,200 |
each autozone store carries an extensive product line for cars , sport utility vehicles , vans and light trucks , including new and remanufactured automotive hard parts , maintenance items , accessories and non-automotive products . at august 29 , 2015 , in 4,141 of our domestic autozone stores , we also have a commercial sales program that provides commercial credit and prompt delivery of parts and other products to local , regional and national repair garages , dealers , service stations and public sector accounts . we also have commercial programs in select autozone stores in mexico and brazil . imc branches carry an extensive line of original equipment quality import replacement parts . we also sell the alldata brand automotive diagnostic and repair software through www.alldata.com and www.alldatadiy.com . additionally , we sell automotive hard parts , maintenance items , accessories , and non-automotive products through www.autozone.com , and accessories and performance parts through www.autoanything.com , and our commercial customers can make purchases through www.autozonepro.com and www.imcparts.net . we do not derive revenue from automotive repair or installation services . executive summary we achieved strong performance in fiscal 2015 , delivering record net income of $ 1.160 billion , an 8.5 % increase over the prior year , and sales growth of $ 712.0 million , a 7.5 % increase over the prior year . we are pleased with the results of our retail business and the increase in our commercial business , where we continue to build our internal sales force and refine our parts assortment . our business is impacted by various factors within the economy that affect both our consumer and our industry , including but not limited to fuel costs , unemployment rates , and other economic conditions . given the nature of these macroeconomic factors , we can not predict whether or for how long certain trends will continue , nor can we predict to what degree these trends will impact us in the future . one macroeconomic factor affecting our customers and our industry during fiscal 2015 was gas prices . during fiscal 2015 , the average price per gallon of unleaded gasoline in the united states was $ 2.69 per gallon , compared to $ 3.48 per gallon during fiscal 2014. we believe reduced gas prices gave our customers additional disposable income . with approximately 11 billion gallons of unleaded gas consumption each month across the u.s. , each $ 1 decrease at the pump contributes approximately $ 11 billion of additional spending capacity to consumers each month . given the unpredictability of gas prices , we can not predict whether gas prices will increase or decrease , nor can we predict how any future changes in gas prices will impact our sales in future periods . 20 during fiscal 2015 , failure and maintenance related categories represented the largest portion of our sales mix , at approximately 84 % of total sales , with failure related categories continuing to be our strongest performers . while we have not experienced any fundamental shifts in our category sales mix as compared to previous years , we did experience a slight increase in mix of sales of the failure related categories . we believe the increase in failure related products is largely due to increased miles driven and favorable weather related impacts in various regions of the u.s. our primary response to fluctuations in the demand for the products we sell is to adjust our advertising message , store staffing , and product assortment . specifically , during fiscal 2014 and 2015 , we have closely studied our hub distribution model and store inventory levels and assortment and performed strategic tests on increased frequency of delivery to our stores and significantly expanding parts assortments in select stores . during fiscal 2015 , we concluded our tests on these specific new concepts and have plans to continue to roll out these strategic initiatives in fiscal 2016 and beyond . the two statistics we believe have the closest correlation to our market growth over the long-term are miles driven and the number of seven year old or older vehicles on the road . miles driven we believe that as the number of miles driven increases , consumers ' vehicles are more likely to need service and maintenance , resulting in an increase in the need for automotive hard parts and maintenance items . while over the long-term we have seen a close correlation between our net sales and the number of miles driven , we have also seen certain time frames of minimal correlation in sales performance and miles driven . during the periods of minimal correlation between net sales and miles driven , we believe net sales have been positively impacted by other factors , including the number of seven year old or older vehicles on the road . since the beginning of the fiscal year and through june 2015 ( latest publicly available information ) , miles driven increased compared to the same period last year . seven year old or older vehicles between 2008 and 2012 , new vehicle sales were significantly lower than historical levels , which we believe contributed to an increasing number of seven year old or older vehicles on the road . we estimate vehicles are driven an average of approximately 12,500 miles each year . in seven years , the average miles driven equates to approximately 87,500 miles . our experience is that at this point in a vehicle 's life , most vehicles are not covered by warranties and increased maintenance is needed to keep the vehicle operating . according to the latest data provided by the auto care association , as of january 1 , 2015 , the average age of vehicles on the road is 11.5 years as compared to 11.4 years as of january 1 , 2014. although the average age of vehicles continues to increase , it is increasing at a decelerated rate primarily driven by the improvement in new car sales in recent years . story_separator_special_tag we had an accounts payable to inventory ratio of 112.9 % at august 29 , 2015 , 114.9 % at august 30 , 2014 , and 115.6 % at august 31 , 2013. the decrease from fiscal 2014 to fiscal 2015 was driven by the inclusion of imc . we plan to continue leveraging our inventory purchases ; however , our ability to do so may be limited by our vendors ' capacity to factor their receivables from us . certain vendors participate in financing arrangements with financial institutions whereby they factor their receivables from us , allowing them to receive payment on our invoices at a discounted rate . depending on the timing and magnitude of our future investments ( either in the form of leased or purchased properties or acquisitions ) , we anticipate that we will rely primarily on internally generated funds and available borrowing capacity to support a majority of our capital expenditures , working capital requirements and stock repurchases . the balance may be funded through new borrowings . we anticipate that we will be able to obtain such financing in view of our credit ratings and favorable experiences in the debt markets in the past . our cash balances are held in various locations around the world . as of august 29 , 2015 , and august 30 , 2014 , cash and cash equivalents of $ 64.9 million and $ 19.3 million , respectively , were held outside of the u.s. and were generally utilized to support liquidity needs in our foreign operations . we intend to continue to permanently reinvest the cash held outside of the u.s. in our foreign operations . for the fiscal year ended august 29 , 2015 , our after-tax return on invested capital ( roic ) was 31.2 % as compared to 32.1 % for the comparable prior year period . roic is calculated as after-tax operating profit ( excluding rent charges ) divided by average invested capital ( which includes a factor to capitalize operating leases ) . the decrease in roic is primarily due to the increase in average debt , along with the impact of recent investments in the business . the return on these investments is currently diluting our operating margins . we use roic to evaluate whether we are effectively using our capital resources and believe it is an important indicator of our overall operating performance . 24 debt facilities on december 19 , 2014 , we amended and restated our existing revolving credit facility ( the multi-year credit agreement ) by increasing the amount of capital leases allowable to $ 225 million , extending the expiration date by two years and renegotiating other terms and conditions . this credit facility is available to primarily support commercial paper borrowings , letters of credit and other short-term unsecured bank loans . the capacity of the credit facility is $ 1.25 billion and may be increased to $ 1.5 billion prior to the maturity date at our election and subject to bank credit capacity and approval , may include up to $ 200 million in letters of credit and may include up to $ 225 million in capital leases each fiscal year . under the revolving credit facility , we may borrow funds consisting of eurodollar loans or base rate loans . interest accrues on eurodollar loans at a defined eurodollar rate , defined as libor plus the applicable percentage , as defined in the revolving credit facility , depending upon our senior , unsecured , ( non-credit enhanced ) long-term debt rating . interest accrues on base rate loans as defined in the credit facility . we also have the option to borrow funds under the terms of a swingline loan subfacility . the revolving credit facility expires in december 2019. on december 19 , 2014 , we entered into a new revolving credit facility ( the 364-day credit agreement ) . the credit facility is available to primarily support commercial paper borrowings and other short-term unsecured bank loans . the 364-day credit agreement provides for loans in the principal amount of up to $ 500 million . under the credit facility , we may borrow funds consisting of eurodollar loans , base rate loans , or a combination of both . interest accrues on eurodollar loans at a defined eurodollar rate , defined as libor plus the applicable margin , as defined in the revolving credit facility , depending upon our senior , unsecured , ( non-credit enhanced ) long-term debt rating . interest accrues on base rate loans as defined in the credit facility . this credit facility expires on december 19 , 2015 , but we may request an extension of the termination date for 364 days no later than 45 days prior to december 19 , 2015 , subject to bank approval . in addition , we have the right to convert to a term-loan , at least 15 days prior to december 19 , 2015 , up to one year from the termination date , subject to a 1 % penalty . as of august 29 , 2015 , we had no outstanding borrowings under each of the revolving credit facilities and $ 3.5 million of outstanding letters of credit under the multi-year credit agreement . the revolving credit facility agreement requires that our consolidated interest coverage ratio as of the last day of each quarter shall be no less than 2.50:1. this ratio is defined as the ratio of ( i ) consolidated earnings before interest , taxes and rents to ( ii ) consolidated interest expense plus consolidated rents .
| results of operations fiscal 2015 compared with fiscal 2014 for the fiscal year ended august 29 , 2015 , we reported net sales of $ 10.187 billion compared with $ 9.475 billion for the year ended august 30 , 2014 , a 7.5 % increase from fiscal 2014. this growth was driven primarily by domestic same store sales increase of 3.8 % , net sales of $ 185.1 million from new stores , and the inclusion of imc sales . 21 at august 29 , 2015 , we operated 5,141 domestic autozone stores , 441 stores in mexico , seven stores in brazil , and 20 imc branches compared with 4,984 domestic autozone stores , 402 stores in mexico and five stores in brazil at august 30 , 2014. we reported a total auto parts ( domestic , mexico , brazil , and imc ) sales increase of 7.6 % for fiscal 2015. gross profit for fiscal 2015 was $ 5.327 billion , or 52.3 % of net sales , compared with $ 4.935 billion , or 52.1 % of net sales for fiscal 2014. the improvement in gross margin was attributable to higher merchandise margins , partially offset by the impact of the imc acquisition finalized during september 2014 ( -25 basis points ) and higher supply chain costs associated with current year inventory initiatives ( -13 basis points ) . operating , selling , general and administrative expenses for fiscal 2015 increased to $ 3.374 billion , or 33.1 % of net sales , from $ 3.105 billion , or 32.8 % of net sales for fiscal 2014. the increase in operating expenses , as a percentage of sales , was primarily due to higher legal costs ( -14 basis points ) and the impact of imc ( -13 basis points ) .
| 7,201 |
risk factors in this annual report on form 10-k. the following section is qualified in its entirety by the more detailed information , including our financial statements and the notes thereto , which appears elsewhere in this annual report . this section discusses 2019 and 2018 items and year-to-year comparisons between 2019 and 2018. discussions of 2017 items and year-to-year comparisons between 2018 and 2017 have been excluded in this form 10-k and can be found in “ management 's discussion and analysis of financial condition and results of operations ” in part ii , item 7 of our annual report on form 10-k for the year ended december 31 , 2018. overview organization we are a diversified , global company that provides products , services and solutions to enhance the quality , energy efficiency and comfort of air in homes and buildings , transport and protect food and perishables and increase industrial productivity and efficiency . our business segments consist of climate and industrial , both with strong brands and highly differentiated products within their respective markets . we generate revenue and cash primarily through the design , manufacture , sale and service of a diverse portfolio of industrial and commercial products that include well-recognized , premium brand names such as american standard ® , aro ® , club car ® , ingersoll-rand ® , thermo king ® and trane ® . to achieve our mission of being a world leader in creating comfortable , sustainable and efficient environments , we continue to focus on growth by increasing our recurring revenue stream from parts , service , controls , used equipment and rentals ; and to continuously improve the efficiencies and capabilities of the products and services of our businesses . we also continue to focus on operational excellence strategies as a central theme to improving our earnings and cash flows . trends and economic events we are a global corporation with worldwide operations . as a global business , our operations are affected by worldwide , regional and industry-specific economic factors , as well as political factors , wherever we operate or do business . our geographic and industry diversity , and the breadth of our product and services portfolios , have helped mitigate the impact of any one industry or the economy of any single country on our consolidated operating results . given the broad range of products manufactured and geographic markets served , management uses a variety of factors to forecast the outlook for the company . we monitor key competitors and customers in order to gauge relative performance and the outlook for the future . we regularly perform detailed evaluations of the different market segments we are serving to proactively detect trends and to adapt our strategies accordingly . in addition , we believe our order rates are indicative of future revenue and thus a key measure of anticipated performance . in those industry segments where we are a capital equipment provider , revenues depend on the capital expenditure budgets and spending patterns of our customers , who may delay or accelerate purchases in reaction to changes in their businesses and in the economy . current economic conditions have moderated during the year and are mixed between the businesses in which we participate . heating , ventilation , and air conditioning ( hvac ) equipment , replacement , services , controls and aftermarket continue to experience healthy demand . in addition , residential and commercial markets have seen continued momentum in the united states , positively impacting the results of our hvac businesses . while geopolitical uncertainty exists in markets such as europe , asia and latin america , we expect growth in our hvac markets in 2020. transport markets moderated in the second half of 2019 and we expect softer transport markets in 2020. global industrial markets have moderated during the year and are now mixed with continued economic uncertainty driving weak short-cycle industrial investment spending . we expect growth at the enterprise level to continue in 2020 , benefiting from operational excellence initiatives , new product launches and continued sales excellence programs . we believe we have a solid foundation of global brands that are highly differentiated in all of our major product lines . our growing geographic and industry diversity coupled with our large installed product base provides growth opportunities within our service , parts and replacement revenue streams . in addition , we are investing substantial resources to innovate and develop new products and services which we expect will drive our future growth . 22 significant events separation of industrial segment businesses in april 2019 , ingersoll-rand plc and gardner denver holdings , inc. ( gdi ) announced that they entered into definitive agreements pursuant to which we will separate our industrial segment businesses ( ir industrial ) by way of spin-off to our shareholders and then combine with gdi to create a new company focused on flow creation and industrial technologies . this business is expected to be renamed ingersoll-rand inc. our remaining hvac and transport refrigeration businesses , reported under the climate segment , will focus on climate control solutions for buildings , homes and transportation and be renamed trane technologies plc . the transaction is expected to close by early 2020 , subject to approval by gdi 's shareholders , regulatory approvals and customary closing conditions . acquisitions and equity investments during 2019 , we acquired several businesses that complement existing products and services . in may 2019 , we acquired 100 % of the outstanding stock of precision flow systems ( pfs ) . pfs , reported in the industrial segment , is a manufacturer of precision flow control equipment including precision dosing pumps and controls that serve the global water , oil and gas , agriculture , industrial and specialty market segments . acquisitions within the climate segment consisted of an independent dealer to support the ongoing strategy to expand our distribution network in north america as well as other businesses that strengthen our product portfolio . story_separator_special_tag the components of the period change are as follows : volume 5.2 % pricing 1.9 % currency translation ( 1.2 ) % total 5.9 % segment operating margin increased 30 basis points to 14.6 % for the year ended december 31 , 2019 , compared with 14.3 % for the same period of 2018 . the increase was primarily driven by higher volume , improved pricing and productivity gains , partially offset by increased spend on investments and restructuring , material and other inflation and a shift in product mix , primarily related to faster growth in equipment sales compared to higher margin service and parts sales . industrial net revenues for the year ended december 31 , 2019 increased by 6.0 % or $ 198.6 million , compared with the same period of 2018 . the components of the period change are as follows : volume ( 0.6 ) % acquisitions 7.4 % pricing 1.2 % currency translation ( 2.0 ) % total 6.0 % segment operating margin increased 70 basis points to 12.9 % for the year ended december 31 , 2019 compared with 12.2 % for the same period of 2018 . the increase was primarily driven by productivity benefits , decreased spending on restructuring and pricing improvements , partially offset by lower volumes , unfavorable foreign currency movements , material and other inflation and a shift in product mix , primarily related to faster growth in equipment sales compared to higher margin service and parts sales . unallocated corporate expense unallocated corporate expense for the year ended december 31 , 2019 increased by 36.1 % or $ 91.8 million , compared with the same period of 2018 . the primary drivers of the increase were due to industrial segment separation-related costs of $ 94.6 million and pfs acquisition-related transaction costs of $ 12.9 million . these costs were partially offset by lower functional costs . liquidity and capital resources we assess our liquidity in terms of our ability to generate cash to fund our operating , investing and financing activities . in doing so , we review and analyze our current cash on hand , the number of days our sales are outstanding , inventory turns , capital expenditure commitments and income tax payments . our cash requirements primarily consist of the following : funding of working capital funding of capital expenditures dividend payments debt service requirements our primary sources of liquidity include cash balances on hand , cash flows from operations , proceeds from debt offerings , commercial paper , and borrowing availability under our existing credit facilities . we earn a significant amount of our operating income in jurisdictions where it is deemed to be permanently reinvested . our most prominent jurisdiction of operation is the u.s. we expect existing cash and cash equivalents available to the u.s. operations , the cash generated by our u.s. operations , our committed credit lines as well as our expected ability to access the capital and debt markets will be sufficient to fund our u.s. operating and capital needs for at least the next twelve months and thereafter for the foreseeable future . in addition , we expect existing non-u.s. cash and cash equivalents and the cash generated by our non-u.s. operations will be sufficient to fund our non-u.s. operating and capital needs for at least the next twelve months and thereafter for the foreseeable future . as of december 31 , 2019 , we had $ 1,303.6 million of cash and cash equivalents on hand , of which $ 931.3 million was held by non-u.s. subsidiaries . cash and cash equivalents held by our non-u.s. subsidiaries are generally available for use in our u.s. operations via intercompany loans , equity infusions or via distributions from direct or indirectly owned non-u.s. subsidiaries for 27 which we do not assert permanent reinvestment . as a result of the tax cuts and jobs act in 2017 , additional repatriation opportunities to access cash and cash equivalents held by non-u.s. subsidiaries have been created . in general , repatriation of cash to the u.s. can be completed with no significant incremental u.s. tax . however , to the extent that we repatriate funds from non-u.s. subsidiaries for which we assert permanent reinvestment to fund our u.s. operations , we would be required to accrue and pay applicable non-u.s. taxes . as of december 31 , 2019 , we currently have no plans to repatriate funds from subsidiaries for which we assert permanent reinvestment . share repurchases are made from time to time in accordance with management 's capital allocation strategy , subject to market conditions and regulatory requirements . in february 2017 , our board of directors authorized the repurchase of up to $ 1.5 billion of our ordinary shares under a share repurchase program ( the 2017 authorization ) upon completion of the prior authorized share repurchase program . repurchases under the 2017 authorization began in may 2017 and ended in december 2018 , completing the program . in october 2018 , our board of directors authorized the repurchase of up to $ 1.5 billion of our ordinary shares under a share repurchase program ( 2018 authorization ) upon completion of the 2017 authorization . no material amounts were repurchased under this program in 2018. during the year ended december 31 , 2019 , we repurchased and canceled approximately $ 750 million of our ordinary shares leaving approximately $ 750 million remaining under the 2018 authorization . in june 2018 , we announced an increase in our quarterly share dividend from $ 0.45 to $ 0.53 per ordinary share . this reflected an 18 % increase that began with our september 2018 payment and an 83 % increase since the beginning of 2016. looking forward , we expect to maintain our current quarterly share dividend through 2020 and then continue our long-standing capital deployment priorities to raise the dividend with earnings growth for 2021 and beyond . we continue to be active with acquisitions and joint venture activity .
| results of operations our climate segment delivers energy-efficient products and innovative energy services . it includes trane ® and american standard ® heating & air conditioning which provide heating , ventilation and air conditioning ( hvac ) systems , and commercial and residential building services , parts , support and controls ; energy services and building automation through trane building advantage tm and nexia tm ; and thermo king ® transport temperature control solutions . our industrial segment delivers products and services that enhance energy efficiency , productivity and operations . it includes compressed air and gas systems and services , power tools , material handling systems , fluid management systems , as well as club car ® golf , utility and consumer low-speed vehicles . year ended december 31 , 2019 compared to the year ended december 31 , 2018 - consolidated results replace_table_token_5_th net revenues net revenues for the year ended december 31 , 2019 increased by 5.9 % , or $ 930.7 million , compared with the same period of 2018 . the components of the period change are as follows : volume 4.0 % acquisitions 1.5 % pricing 1.7 % currency translation ( 1.3 ) % total 5.9 % the increase was primarily driven by higher volumes in our climate segment . improved pricing , along with incremental revenues from acquisitions , further contributed to the year-over-year increase . however , each segment was impacted by unfavorable foreign currency exchange rate movements . refer to the `` results by segment '' below for a discussion of net revenues by segment . 24 cost of goods sold cost of goods sold for the year ended december 31 , 2019 increased by 5.6 % , or $ 603.9 million , compared with the same period of 2018 . the increase was primarily driven by volume growth , with equipment sales growing faster than service and parts sales , which are lower cost .
| 7,202 |
our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors , including those we discuss under `` risk factors , '' `` cautionary note regarding forward-looking statements '' and elsewhere in this annual report on form 10-k. we are an independent exploration and production company focused on the application of modern drilling and completion techniques to oil-prone resources in the upper gulf coast tertiary trend onshore in louisiana , which we refer to as our `` gulf coast '' operating area , and , with the october 1 , 2012 closing of the acquisition ( `` eagle property acquisition '' ) of interests in producing oil and natural gas assets , unevaluated leasehold acreage in oklahoma and kansas and related hedging instruments from eagle energy production , llc ( `` eagle energy '' ) , in the mississippian lime trend in oklahoma and kansas , which we refer to as our `` mid-continent '' operating area . 49 as of december 31 , 2012 , our properties consisted of approximately 294 gross active producing wells , 92 % of which we operate , and in which we held an average working interest of approximately 83 % across our approximate 250,000 net acre leasehold . as of december 31 , 2012 , our estimated net proved reserves were 75.5 mmboe , of which 69 % was oil or ngls and 37 % was proved developed . during the three months and year ended december 31 , 2012 , our properties had aggregate average net daily production of approximately 15,592 boe per day and 9,999 boe per day , respectively . prior to the october 1 , 2012 eagle property acquisition , all of our growth has been driven through the development of our leasehold acreage . we initiated operations in 1993 in our north cowards gully project area and slowly aggregated leasehold acreage in that project area and others over the next eighteen years . in august 2008 , first reserve acquired a majority interest in us and , along with members of our senior management , provided a significant amount of growth capital to expand our exploration and development program . our current activities are focused on evaluating and developing our asset base , optimizing our acreage position , and identifying potential expansion areas across our operating areas . as of december 31 , 2012 , we had drilled 136 wells ( including six in our mid-continent assets during the fourth quarter of 2012 ) , approximately 92 % of which produced commercially , since the third quarter of 2008. acquisitions on october 1 , 2012 , we closed on the acquisition of all of eagle energy 's producing properties as well as their developed and undeveloped acreage primarily in the mississippian lime oil play in oklahoma and kansas for $ 325 million in cash , before customary post-closing adjustments , and 325,000 shares of the company 's newly designated series a mandatorily convertible preferred stock with an initial liquidation preference value of $ 1,000 per share ( the `` series a preferred stock '' ) . the company funded the cash portion of the eagle property acquisition purchase price with a portion of the net proceeds from the private placement ( which also closed on october 1 , 2012 ) of $ 600 million in aggregate principal amount of 10.75 % senior unsecured notes due october 1 , 2020 ( the `` senior notes '' ) . subsequent to the closing of the eagle property acquisition , we now have oil and gas operations in louisiana and oklahoma , and undeveloped acreage in kansas . sources of our revenue oil , natural gas and natural gas liquids . our revenues are derived from the sale of oil and natural gas production , as well as the sale of ngls that are extracted from our high btu content natural gas . our oil and gas revenues do not include the effects of derivatives , and may vary significantly from period to period as a result of changes in production volumes or commodity prices . realized and unrealized gain ( loss ) on commodity derivative financial contracts . we utilize commodity derivatives to reduce our exposure to fluctuations in the prices of oil , natural gas and natural gas liquids . in addition , we utilize derivatives to help mitigate our exposure to fluctuations in louisiana light sweet ( `` lls '' ) oil prices , which is the index price we receive for our gulf coast oil production , as compared to west texas intermediate ( `` nymex wti '' ) benchmark oil prices . accordingly , our income statements reflect ( i ) the recognition of unrealized gains and losses associated with our open derivative contracts as commodity prices change and commodity derivatives contracts expire or new ones are entered into , and ( ii ) our realized gains or losses on the settlement of these commodity derivative contracts . unrealized gains and losses result from changes in market valuations of derivatives as future commodity price expectations change compared to the contract prices on the derivatives . if the expected future commodity prices increase compared to the contract prices on the derivatives , unrealized losses are recognized . conversely , if the expected future commodity prices decrease compared to the contract prices on the derivatives , unrealized gains are recognized . since we have elected not to apply hedge accounting to our derivatives , we reflect the unrealized and realized gains and losses in our current income statement periods based on the mark-to-market value at the end 50 of each month . cash flows associated with derivative financial instruments are reflected in cash flow from operations in our consolidated statement of cash flows . commodity prices . our revenues are heavily influenced by commodity prices , which are subject to wide fluctuations in response to changes in supply and demand . story_separator_special_tag the eagle property acquisition qualifies as the acquisition of a business under accounting standards codification topic 805 , business combinations ( `` asc 805 '' ) . acquisition and transaction costs are costs the company has incurred as a result of the eagle property acquisition and include finders ' fees ; advisory , legal , accounting , valuation and other professional and consulting fees ; and general and administrative costs . asc 805 requires these types of acquisition related costs to be expensed as incurred and as services are received . interest expense . we issued $ 600 million in senior notes on october 1 , 2012. additionally , we finance a portion of our working capital requirements and capital expenditures with borrowings under our revolving credit facility . as a result , we incur interest expense , a portion of which is affected by both fluctuations in interest rates and our financing decisions . we reflect interest paid to our note holders and the lenders under our revolving credit facility in interest expense , net of amounts capitalized to unproved properties . 52 story_separator_special_tag compared to a realized loss of $ 16.7 million for the year ended december 31 , 2011. with the closing of the eagle property acquisition , we assumed hedges on natural gas and natural gas liquids . therefore , our realized gains/losses for the year ended december 31 , 2012 included realized gains/losses on these commodities in addition to oil . prior to assuming these derivatives as part of this acquisition , we only hedged oil . see the following table ( in thousands ) : year ended december 31 , 2012 realized gain ( loss ) average sales price oil commodity contracts $ ( 19,460 ) $ 95.05 natural gas commodity contracts 2,273 $ 3.21 natural gas liquids commodity contracts 1,362 $ 40.48 $ ( 15,825 ) year ended december 31 , 2011 as compared to the year ended december 31 , 2010 our mtm derivative positions moved from an unrealized loss of $ 25.4 million as of december 31 , 2010 to an unrealized gain of $ 11.9 million as of december 31 , 2011. the mtm change results from higher average hedge volumes and prices on december 31 , 2011 compared to the open positions and price on december 31 , 2010. the nymex wti closing price on december 30 , 2011 ( the last trading day of 2011 ) was $ 98.83 per barrel compared to a closing price of $ 91.38 per barrel on december 31 , 2010. the realized loss on derivatives for the year ended december 31 , 2011 was $ 16.7 million compared to a realized loss of $ 0.9 million for the year ended december 31 , 2010. the loss for the year ended december 31 , 2011 was a result of realized oil prices rising substantially for the year versus the prices at which we had oil production hedged for the period . realized oil sales prices , without realized 55 derivatives , averaged $ 110.25 per barrel for the year ended december 31 , 2011 compared with $ 80.29 per barrel for the year ended december 31 , 2010. expenses replace_table_token_19_th lease operating and workover . year ended december 31 , 2012 as compared to the year ended december 31 , 2011 lease operating and workover expenses increased $ 14.4 million , or 89 % , to $ 30.5 million for the year ended december 31 , 2012 compared to $ 16.1 million for the year ended december 31 , 2011. lease operating expenses increased $ 12.5 million , or 89 % , to $ 26.5 million for the year ended december 31 , 2012 as compared to $ 14.0 million for the year ended december 31 , 2011. this increase was due to the eagle property acquisition completed on october 1 , 2012 and the associated lease operating costs of $ 2.6 million , as well as increased surface maintenance costs of $ 3.0 million , saltwater disposal costs of $ 1.3 million and an increase in costs associated with higher producing well count of $ 5.4 million . during the fourth quarter of 2012 , we completed saltwater disposal wells in the pine prairie , south bearhead creek and west gordon areas which we believe will reduce our saltwater disposal costs in the future . workover expenses increased $ 1.9 million , or 90 % , to $ 4.0 million for the year ended december 31 , 2012 , of which the eagle property acquisition accounted for $ 1.0 million , as compared to $ 2.1 million for the year ended december 31 , 2011. we completed 28 workovers in 2012 , which was an increase of four projects over the 24 workovers completed in 2011. lease operating and workover expenses increased to $ 8.34 per boe for the year ended december 31 , 2012 from $ 5.89 per boe for the year ended december 31 , 2011 , an increase of 42 % , which was primarily attributable to the factors discussed above . year ended december 31 , 2011 as compared to the year ended december 31 , 2010 lease operating and workover expenses increased $ 3.2 million , or 25 % , to $ 16.1 million for the year ended december 31 , 2011 compared to $ 12.9 million for the year ended december 31 , 2010. of this change , lease operating expenses increased $ 5.8 million , or 71 % , to $ 14.0 million , due to 31 additional producing wells in operation during the period , which resulted in additional salt water disposal costs of $ 2.9 million , additional compression charges of $ 0.8 million , additional gas dehydration and chemical costs of $ 1.0 million , with the remaining variance primarily attributable to increases in labor related costs .
| results of operations the following tables summarize our revenues , production and price data for the periods indicated : revenues replace_table_token_16_th production replace_table_token_17_th prices replace_table_token_18_th ( a ) the company did not have hedges in place on its natural gas or ngl production prior to october 1 , 2012 . 53 oil , natural gas and natural gas liquids revenues . year ended december 31 , 2012 as compared to the year ended december 31 , 2011 our oil sales revenues increased by $ 40.9 million , or 23 % , to $ 218.4 million during the year ended december 31 , 2012 as compared to $ 177.5 million for the year ended december 31 , 2011. oil volumes sold increased 483 mbbls or 30 % to 2,093 mbbls for the year ended december 31 , 2012 from 1,610 mbbls for the year ended december 31 , 2011. the increase in oil volumes sold was attributable to a 279 mbbls increase in production from our gulf coast area , plus the addition of 204 mbbls of production volumes from our mid-continent area , beginning on october 1 , 2012. average oil sales prices , without realized derivatives , decreased by $ 5.90 per barrel , or 5 % , to $ 104.35 per barrel for the year ended december 31 , 2012 as compared to $ 110.25 for the year ended december 31 , 2011 partly due to lower oil prices during 2012 , as well as lower oil prices received for our mid-continent production , which is priced off wti as opposed to lls for our gulf coast production . of the $ 218.4 million in total oil sales revenues , $ 201.9 million was from gulf coast operations and $ 16.5 million was from mid-continent .
| 7,203 |
`` risk factors '' and `` special note regarding forward-looking statements '' in this annual report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis . executive overview story_separator_special_tag lastly , we can not ignore that tens of millions of people around the world have lost their jobs due to covid-19 and that the global economy has experienced , and may continue to experience , economic distress . governments around the world , including the u.s. federal government and european union , have enacted historic fiscal and monetary stimulus programs in an effort to mitigate the economic impact of covid-19 , and we believe these programs have helped support consumer spending . whether and when , and to what extent , future stimulus programs are enacted is difficult to predict . therefore , the risk of continued global economic distress remains high and may impact consumer demand and , hence , e-commerce volumes . how long this economic climate lasts , and whether or not the impact on consumer demand is more than offset by the shift to online shopping that we have seen since march 2020 is not knowable at this point . for all of these reasons , it has remained difficult to forecast our revenue and profitability for future periods , especially as continued outbreaks of covid-19 could disrupt our operations and or those of our customers . however , we believe we currently have sufficient liquidity and that our business model , which is substantially based on subscription revenues , positions us to continue to manage through the challenges presented by covid-19 . trends in our business the following trends have contributed to the results of our consolidated operations , and we anticipate that they will continue to affect our future results : growth in online shopping . consumers continue to move more of their spending from offline to online . the continuing shift to online shopping and overall growth has contributed to our historical growth and we expect that this online shift will continue to benefit our business . global efforts to implement social distancing , including stay-at-home orders and similar mobility and gathering restrictions , due to the covid-19 pandemic , have increased e-commerce as consumers have increasingly turned to online purchasing for many products they would have purchased at brick and mortar stores . however , it is unclear to what degree this recent shift in favor of e-commerce will continue once the public health impacts of the covid-19 pandemic have begun to subside . product offering expansion . as online shopping evolves , we continue to expand our product offerings to reflect the needs of companies seeking to attract consumers . we continue to enhance our product offerings by increasing online shopping channel integrations , including marketplace and first-party retail programs , and providing capabilities that allow brands and retailers to be more competitive . this includes support for advertising , advanced algorithmic repricing , machine learning-based demand forecasting , improving our analytics capabilities , most recently with our acquisition of blueboard , a private limited company organized under the laws of france , or blueboard , fulfillment features and user experience . growth in mobile usage . we believe the shift toward mobile commerce will increasingly favor aggregators such as amazon , ebay , google and walmart , all of which are focal points of our platform . these systems understand the identity of the buyer , helping to reduce friction in the mobile commerce process , while offering a wide selection of merchandise in a single location . we believe that the growth in mobile commerce may result in increased revenue for us . evolving fulfillment landscape . consumers have been conditioned to expect fast , efficient delivery of products . we believe that determining and executing on a strategy to more expeditiously receive , process and deliver online orders , which we refer to collectively as fulfillment , is critical to success for online sellers . therefore , it will be increasingly important for us to facilitate and optimize fulfillment services on behalf of our customers , which in turn may result in additional research and development investment . focus on employees . we strive to provide competitive compensation and benefits programs to help attract and retain employees who are focused on facilitating the success of our customers . we implemented a covid-19 global work-from-home policy beginning in march 2020 to help protect our employees and support our communities ' efforts 37 table of contents to slow the transmission of covid-19 . this transition went smoothly , as our workforce is globally distributed and employees have the equipment they need to work from home , including global video communications systems . we are not substantially dependent on our physical office locations or travel for our business operations . in response to recent external events , we formed a diversity , equity and inclusion ( de & i ) task force tasked with five key de & i objectives for the company : driving awareness , accelerating opportunity , improving access , advocacy , and accountability . we are proud of our long history of inclusion and our merit-based culture , but also believe there is more work to do to promote de & i internally and externally . we conduct periodic surveys to assess employee engagement and our surveys reflect a high level of employee engagement . seasonality . our revenue fluctuates as a result of seasonal variations in our business , principally due to the peak consumer demand and related increased volume of our customers ' gmv during the year-end holiday season . as a result , we have historically had higher revenue in our fourth quarter than other quarters due to increased gmv processed through our platform , resulting in higher variable fees . story_separator_special_tag some of these limitations are : although depreciation and amortization are non-cash charges , the assets being depreciated and amortized may have to be replaced in the future , and adjusted ebitda does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements ; adjusted ebitda does not reflect changes in , or cash requirements for , our working capital needs ; adjusted ebitda does not reflect the potentially dilutive impact of equity-based compensation ; adjusted ebitda does not reflect interest or income tax payments that may represent a reduction in cash available to us ; and other companies , including companies in our industry , may calculate adjusted ebitda differently , which reduces its usefulness as a comparative measure . because of these and other limitations , you should consider adjusted ebitda together with other gaap-based financial performance measures , including various cash flow metrics , net income ( loss ) and our other gaap results . replace_table_token_3_th 40 table of contents revenue we derive the majority of our revenue from subscription fees paid to us by our customers for access to and usage of our saas solutions for a specified contract term , which is typically one year . a customer typically pays a recurring subscription fee based on a specified minimum amount of gmv or advertising spend that the customer expects to process through our platform . subscription fees may also include implementation fees such as launch assistance and training fees . the remaining portion of a customer 's fee is variable and is based on a specified percentage of gmv or advertising spend processed through our platform in excess of the customer 's specified minimum gmv or advertising spend amount . in most cases , the specified percentage of excess gmv or advertising spend on which the variable fee is based is fixed and does not vary depending on the amount of the excess . because our customer contracts generally contain both subscription and variable pricing components , changes in gmv between periods do not translate directly or linearly into changes in our revenue . we use customized pricing structures for each of our customers depending upon the individual situation of the customer . for example , some customers may commit to a higher specified minimum gmv amount per month in exchange for a lower percentage fee on that committed gmv . in addition , the percentage fee assessed on the variable gmv in excess of the committed minimum for each customer is typically higher than the fee on the committed portion . as a result , our overall revenue could increase or decrease even without any change in overall gmv between periods , depending on which customers generated the gmv . in addition , changes in gmv from month to month for any individual customer that are below the specified minimum amount would have no effect on our revenue from that customer , and each customer may alternate between being over the committed amount or under it from month to month . for these reasons , while gmv is an important qualitative and long-term directional indicator , we do not regard it as a useful quantitative measurement of our historic revenues or as a predictor of future revenues . we recognize subscription fees and implementation fees ratably over the contract period beginning on the date the customer has access to the software . in determining the amount of revenue to be recognized , we apply the following steps : identify the promised services in the contract ; determine whether the promised services are performance obligations , including whether they are distinct in the context of the contract ; determine the transaction price ; allocate the transaction price to the performance obligations based on estimated selling prices ; and recognize revenue as we satisfy each performance obligation . 41 table of contents our customers are categorized as follows : retailers . we generally categorize a customer as a retailer if it primarily focuses on selling third-party products . brands . we generally categorize a customer as a brand if it primarily focuses on selling its own proprietary products . other . other is primarily comprised of strategic partnerships . ( 1 ) certain prior period amounts have been reclassified to conform to current period presentation . these reclassifications had no impact on the reported total revenue for the period . we generally invoice our customers for recurring subscription fees in advance , in monthly , quarterly , semi-annual or annual installments . we generally also invoice our customers for any implementation fees at the inception of the arrangement . fees that have been invoiced in advance are initially recorded as deferred revenue and are generally recognized ratably over the contract term . in general , we invoice and recognize revenue from the variable portion of fees in the period in which the related gmv or advertising spend is processed . comparison of 2020 to 2019 revenue increased by 11.6 % , or $ 15.1 million , to $ 145.1 million for the year ended december 31 , 2020 compared with $ 130.0 million for the prior year . the change was primarily due to an $ 11.3 million increase in variable revenue , primarily driven by sustained and broad-based growth in gmv processed on our platform as e-commerce spending remained elevated for most of the year , consistent with broader e-commerce trends as the covid-19 pandemic caused a shift in consumer buying behavior . subscription revenue increased $ 3.8 million compared to the prior year , driven by strong net bookings , particularly from brands customers . revenue from our brands customers increased 24.8 % , or $ 9.5 million , compared to the prior year , driven by an increase in new customers , expansions with existing customers and improved customer retention , as well as an increase in transaction volume and variable revenue during the period as mentioned above .
| financial highlights total revenue of $ 145.1 million for the year ended december 31 , 2020 increased 11.6 % from the prior year ; revenue was comprised of 73.9 % subscription revenue and 26.1 % variable revenue for the year ended december 31 , 2020 compared with 79.6 % subscription revenue and 20.4 % variable revenue for the prior year ; revenue from our brands customers represented 33.1 % of total revenue for the year ended december 31 , 2020 , up from 29.6 % for the prior year ; revenue derived from customers located outside of the united states as a percentage of total revenue was 25.2 % for the year ended december 31 , 2020 compared with 25.3 % for the prior year ; gross margin of 79.1 % for the year ended december 31 , 2020 improved by 140 basis points compared with gross margin of 77.7 % for the prior year ; operating margin of 13.2 % for the year ended december 31 , 2020 improved 1,030 basis points compared with operating margin of 2.9 % for the prior year ; net income was $ 18.8 million for the year ended december 31 , 2020 compared with $ 3.5 million for the prior year ; adjusted ebitda , a non-gaap measure , of $ 36.3 million for the year ended december 31 , 2020 increased 80.0 % compared with adjusted ebitda of $ 20.2 million for the prior year ; cash and cash equivalents were $ 71.5 million at december 31 , 2020 compared with $ 51.8 million at december 31 , 2019 ; operating cash flow was $ 34.3 million for the year ended december 31 , 2020 compared with $ 13.0 million for the prior year ; and free cash flow , a non-gaap measure , was $ 29.6 million for the year ended december 31 , 2020 compared with $ 9.3 million for the prior year .
| 7,204 |
sales to customers in different geographic areas , expressed as a percentage of revenue , for the years ended december 31 , 2011 , 2010 and 2009 , were : replace_table_token_24_th for the year ended december 31 , 2011 , comcast , office depot story_separator_special_tag the following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this form 10-k. the following discussion includes forward-looking statements . please see the section entitled “ forward-looking statements and risk factors ” in item 1a of this report for important information to consider when evaluating these statements . overview support.com is a provider of cloud-based technology services and software for consumers and small business . our technology services and software products help install , set up , connect , secure , repair and optimize personal computers , printers , tablets , smartphones , digital cameras , gaming devices , music players , servers , networks , and other technology . we offer one-time and subscription services , and perpetual as well as subscription period licenses of our software products . our personal technology experts ( “ ptes ” ) deliver our services to customers online and by telephone , leveraging our proprietary cloud-based technology platform . they generally work from their homes rather than in brick and mortar facilities . our software products include tools designed to address some of the most common technology issues including computer maintenance , optimization and security . we market our services through channel partners and directly . our channel partners include leading retail , internet service provider , and technology brands . we market our software products directly , principally online , and through channel partners . we offer free trial versions to encourage customers to experience the products before buying and free versions to encourage customers to upgrade to premium versions for which we charge license fees . our sales and marketing efforts principally target north american customers . total revenue for the year ended december 31 , 2011 increased by $ 9.6 million , or 22 % , from 2010. services revenue for the year ended december 31 , 2011 increased by $ 4.9 million , or 15 % , from 2010. the increase in services revenue was primarily driven by expansion of the comcast program . software revenue for the year ended december 31 , 2011 increased by $ 4.7 million , or 39 % , from 2010. the increase in software revenue was driven by growth in an existing channel partnership , optimization of the monetization of our aro product , and the availability of favorably-priced advertising inventory during the first half of 2011. the introduction of new software products such as superantispyware also contributed to the year-over-year increase in software revenue . cost of services for the year ended december 31 , 2011 grew by 12 % from 2010 as we added delivery agents to support revenue growth . cost of software and other for year ended december 31 , 2011 grew by 28 % from 2010 , driven by higher royalty rate payments to third-party developers . gross margin for the year ended december 31 , 2011 was 41 % , an increase of 5 points from 2010 , driven mainly by an increased percentage of software in the revenue mix . operating expenses for the year ended december 31 , 2011 grew 18 % from 2010 , driven primarily by the addition of sales agents to support new services programs and increased advertising spend to grow software revenues . our key financial goals for 2012 are to continue to grow and diversify revenue , increase gross margin , and achieve profitability . our strategies for achieving our goals include expanding existing services programs , increasing software revenues , growing our customer base , enhancing service delivery efficiency , optimizing contact center sales operations , and extending our cloud-based technology platform to support each of the foregoing strategies . we intend the following discussion of our financial condition and results of operations to provide information that will assist in understanding our financial statements , the changes in certain key items in those financial statements from year to year , and the primary factors that accounted for those changes , as well as how certain accounting principles , policies and estimates affect our financial statements . 23 critical accounting policies and estimates in preparing our consolidated financial statements in conformity with accounting principles generally accepted in the united states , we make assumptions , judgments and estimates that can have a significant impact on our revenue and operating results , as well as on the value of certain assets and liabilities on our consolidated balance sheet . we base our assumptions , judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances . actual results could differ materially from these estimates under different assumptions or conditions . on a regular basis we evaluate our assumptions , judgments and estimates and make changes accordingly . we believe that the assumptions , judgments and estimates involved in the accounting for revenue recognition , fair value measurements , business combinations , purchase accounting , accounting for goodwill and other intangible assets , stock-based compensation and accounting for income taxes have the greatest potential impact on our consolidated financial statements , so we consider these to be our critical accounting policies . we discuss below the critical accounting estimates associated with these policies . for further information on the critical accounting policies , see note 1 of our notes to consolidated financial statements . revenue recognition our revenue recognition policy is one of our critical accounting policies because revenue is a key component of our results of operations , and revenue recognition is based on complex rules which require us to make judgments . story_separator_special_tag consistent with our determination that we have only one reporting segment , we have determined that there is only one reporting unit and goodwill is evaluated for impairment at the entity level . we test goodwill using the two-step process required by asc 350 , intangibles – goodwill and other . in the first step , we compare the carrying amount of the reporting unit to the fair value based on quoted market prices of our common stock . if the carrying value of the reporting unit exceeds the fair value , goodwill is potentially impaired and the second step of the impairment test must be performed . in the second step , if such comparison reflects potential impairment , we would compare the implied fair value of the goodwill , as defined by asc 350 , to its carrying amount to determine the amount of impairment loss , if any . we performed our annual goodwill impairment tests on september 30 , 2011 , 2010 , and 2009 and concluded that there was no impairment . we assess the impairment of identifiable intangible assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable . an impairment loss would be recognized when the sum of the future net cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount . if our estimates regarding future cash flows derived from such assets were to change , we may record an impairment to the value of these assets . such impairment loss would be measured as the difference between the carrying amount of the asset and its fair value . stock-based compensation we account for stock-based compensation in accordance with the provisions of asc 718 , compensation – stock compensation . under the fair value recognition provisions of asc 718 , stock-based compensation cost is estimated at the grant date based on the fair value of the award and is recognized as expense ratably over the requisite service period of the award . we estimate the fair value of stock-based awards on the grant date using the black-scholes-merton option-pricing model . determining the appropriate fair value model and calculating the fair value of stock-based awards requires judgment , including estimating stock price volatility , forfeiture rates and expected life . if any of these assumptions used in the option-pricing models change , our stock-based compensation expense could change on our consolidated financial statements . accounting for income taxes we are required to estimate our income taxes in each of the tax jurisdictions in which we operate . this process involves management 's estimation of our current tax exposures together with an assessment of temporary differences determined based on the difference between the financial statement and tax basis of certain items . these differences result in net deferred tax assets and liabilities , which are included in our consolidated balance sheet . we must assess the likelihood that we will be able to recover our deferred tax assets . if recovery is not likely , we must increase our provision for taxes by recording a valuation allowance against the deferred tax assets that we estimate will not ultimately be recoverable . we currently have provided a full valuation allowance on our u.s. deferred tax assets and a full valuation allowance on certain foreign deferred tax assets that management determined are not likely to be realized due to cumulative net losses since inception and the difficulty in accurately forecasting the company 's results . if any of our estimates change , we may change the likelihood of recovery and our tax expense as well as the value of our deferred tax assets would change . 25 our deferred tax assets do not include the excess tax benefit related to stock-based compensation that are a component of our federal and state net operating loss carryforwards in the amount of $ 2.6 million as of december 31 , 2011. consistent with prior years , the excess tax benefit reflected in our net operating loss carryforwards will be accounted for as a credit to stockholders ' equity , if and when realized . in determining if and when excess tax benefits have been realized , we have elected to utilize the with-and-without approach with respect to such excess tax benefits . our income tax calculations are based on the application of the respective u.s. federal , state or foreign tax law . the company 's tax filings , however , are subject to audit by the respective tax authorities . accordingly , we recognize tax liabilities based on our estimate of whether , and the extent to which , additional taxes will be due when such estimates are more-likely-than-not to be sustained . an uncertain income tax position will not be recognized if it has less than a 50 % likelihood of being sustained . our policy is to include interest and penalties related to unrecognized tax benefits as a component of income tax expense . to the extent the final tax liabilities are different than the amounts originally accrued , the increases or decreases are recorded as income tax expense or benefit in the consolidated statements of operations . story_separator_special_tag margin-left : 0pt ; margin-right : 0pt '' > replace_table_token_7_th cost of services . cost of services consists primarily of salary–related and contractor expenses for people providing services , technology and telecommunication expenses related to the delivery of services and other personnel-related expenses in service delivery . the increase of $ 3.2 million in cost of services for the year ended december 31 , 2011 compared to 2010 was mainly driven by $ 3.1 million of costs associated with higher numbers of service delivery personnel added to support program growth .
| results of operations the following table presents certain consolidated statements of operations data for the periods indicated as a percentage of total revenue : replace_table_token_4_th 26 years ended december 31 , 2011 , 2010 , and 2009 revenue replace_table_token_5_th services revenue consists primarily of fees for technology services through our channel partners or directly . we provide these services remotely , using work-from-home personal technology experts and contractors who utilize our proprietary technology to deliver the services . services revenue for the year ended december 31 , 2011 increased by $ 4.9 million from 2010. the increase was primarily due to growth in our channel programs , primarily expansion of the comcast program . for the year ended december 31 , 2011 , services revenue generated from our channel partnerships was $ 34.5 million compared to $ 28.8 million for 2010. direct services revenue was $ 2.8 million in 2011 compared to $ 3.6 million in 2010. services revenue for the year ended december 31 , 2010 increased by $ 15.5 million from 2009. the increase was primarily driven by growth in certain channel partnerships . services revenue generated from our channel partnerships was $ 28.8 million for the year ended december 31 , 2010 compared to $ 15.2 million for 2009. direct services revenue was $ 3.6 million in 2010 compared to $ 1.7 million in 2009. we expect services revenue to continue to grow in 2012 as a result of expansion of established programs , development of new partnerships with additional channel partners , and launch of our small business programs .
| 7,205 |
direct costs also story_separator_special_tag this annual report on form 10-k , including the following discussion , contains forward-looking statements within the meaning of the private securities litigation reform act of 1995 that involve substantial risks and uncertainties . for this purpose , any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements . without limiting the generality of the foregoing , the words `` projected , '' `` anticipated , '' `` planned , '' `` expected '' and similar expressions are intended to identify forward-looking statements . in particular , statements regarding future financial targets or trends are forward-looking statements . forward-looking statements are not guarantees of our future financial performance , and undue reliance should not be placed on them . our actual results , performance or achievements may differ significantly from the results discussed in or implied by the forward-looking statement . factors that might cause such a difference include , but are not limited to , the following : the continued success or possible future failure of the retail store initiative ; our ability to effectively manage our operations and growth in a multiple distribution channel environment ; significant changes in customer acceptance of our product offerings ; changes in competition in the apparel industry ; changes in consumer spending , fashion trends and consumer preferences ; changes in , or the failure to comply with , federal and state tax and other government regulations ; the customary risks of purchasing merchandise abroad , including longer lead times , higher initial purchase commitments and foreign currency fluctuations ; possible future increases in expenses and labor and employee benefit costs ; our ability to attract and retain qualified personnel ; business abilities and judgment of management ; the existence or absence of brand awareness ; the existence or absence of publicity , advertising and promotional efforts ; the success or failure of operating initiatives ; the mix of our sales between full price and liquidation merchandise ; general political , economic and business conditions and other factors . see also item 1a , `` risk factors . '' we disclaim any intent or obligation to update any forward-looking statements . overview we are a multi-channel specialty retailer of high quality women 's apparel , accessories and footwear . we market our products through catalogs , retail stores and an e-commerce website . we currently have two reportable business segments , direct and retail . each segment is separately managed and utilizes distinct distribution , marketing and inventory management strategies . the direct segment markets merchandise through catalogs and an e-commerce website . the retail segment markets merchandise through retail stores . our fiscal year ends on the last saturday in december . the twelve months ended december 28 , 2002 ( `` fiscal 2002 '' ) and december 29 , 2001 ( `` fiscal 2001 '' ) were 52-week fiscal years . the twelve months ended december 30 , 2000 ( `` fiscal 2000 '' ) was a 53-week fiscal year . in a 53-week fiscal year , three of the quarters are 13-week periods , and one is a 14-week period . the fourth quarter of fiscal 2000 was a 14-week period . during fiscal 2002 , we effected a three-for-two stock split in the form of a stock dividend paid on june 28 , 2002 to shareholders of record on june 14 , 2002. all share and per share data has been adjusted for the stock split . net sales for fiscal 2002 increased by 21.1 % to $ 347.6 million from $ 287.0 million in fiscal 2001. income before interest , taxes and cumulative effect for fiscal 2002 was $ 32.8 million , or 9.4 % of net sales , compared to $ 23.5 million , or 8.2 % of net sales in the prior year . net income for fiscal 2002 was $ 18.9 million , or $ 0.94 per diluted share , compared to $ 13.1 million , or $ 0.70 per diluted share in fiscal 2001 . 18 story_separator_special_tag assets related to state nol carryforwards where we believe that it is more likely than not that the tax benefit of these nol carryforwards will not be realized . see note j to the accompanying consolidated financial statements . cumulative effect of accounting change effective as of december 26 , 1999 , we changed our revenue recognition policy to be in accordance with the provisions of the securities and exchange commission 's staff accounting bulletin no . 101 ( `` sab 101 '' ) , `` revenue recognition in financial statements . '' under sab 101 , revenue is recognized at time of customer receipt rather than upon shipment of goods to the customer . the cumulative effect of this change for periods prior to fiscal 2000 totaled $ 65,000 , net of taxes of $ 41,000 , and is reflected in the first quarter of fiscal 2000. segment direct contribution we currently have two reportable business segments , direct and retail . segment reporting is intended to give financial statement users a view of our business `` through the eyes of management . '' our internal management reporting is the basis for the information disclosed for our business segments . our internally defined measure of segment profit or loss , direct contribution , is required to be disclosed according to generally accepted accounting principles ( `` gaap '' ) but is not a gaap measure . information related to segment direct contribution should be read in conjunction with the reconciliation to `` income before interest , taxes and cumulative effect '' as determined by gaap . we evaluate our segment profitability based on the direct contribution of each segment . direct contribution represents each segment 's net sales less direct costs related to the segment 's operations . direct costs for both segments include merchandise acquisition and control costs and provisions for markdowns . story_separator_special_tag cash increased by $ 28.6 million during fiscal 2001. approximately $ 32.9 million in cash was generated from operations and $ 28.7 million in cash was raised as a result of our private placement of common stock in february 2001. approximately $ 30.2 million was invested in property and equipment , primarily related to our retail store rollout , and $ 4.0 million was used to pay down debt . during fiscal 2001 , net income before depreciation and amortization , additional deferred credits from landlords and lower inventory balances were the primary sources of cash from operations . the primary use of cash from operations was increases in accounts receivable principally associated with our deferred billing program . on february 6 , 2001 , we issued and sold an aggregate of 1,710,000 shares of our common stock ( the `` restricted shares '' ) to accredited institutional investors in a private placement under rule 506 under the securities act of 1933. the restricted shares were sold for cash at a price of $ 18.00 per share , for gross proceeds of $ 30.8 million . the purchase price was established on january 23 , 2001 and represented an 18 % discount from the nasdaq closing price on that date . we paid a fee of 6.0 % of the gross proceeds from the sale of the restricted shares to our placement agent for the sale of the restricted shares , and incurred other expenses of approximately $ 0.2 million in the transaction , resulting in net proceeds to us , after placement agent fees and other expenses , of $ 28.7 million . on february 21 , 2001 a registration statement on form s-3 relating to resale of the restricted shares became effective . accounts receivable balances at december 28 , 2002 were 56.6 % higher than at december 29 , 2001 , primarily as a result of increased amounts related to our holiday deferred billing program , which was offered for a longer period this year than last year , as well as increased landlord allowance receivables associated with new retail stores opened in fiscal 2002. inventory levels at december 28 , 2002 were 6.7 % higher than at december 29 , 2001 , despite a significant increase in the number of retail stores open , largely as a result of our continued conservative inventory management strategy and the later timing of spring merchandise receipts due to the california dock workers labor dispute . retail segment inventory totaled $ 19.1 million at december 28 , 2002 compared to $ 13.7 million at december 29 , 2001. direct segment inventory totaled $ 14.9 million at december 28 , 2002 compared to $ 18.2 million at december 29 , 2001. we feel that our inventory management in the direct segment was optimized in fiscal 2002. in our retail segment , we feel that our in-store inventory levels were too conservative and therefore restricted potential sales growth . we plan to increase our in-store inventory levels by 8 % to 10 % to return to the level of average in-store inventories maintained in fiscal 2001. accrued expense balances at december 28 , 2002 were 31.0 % higher than at december 29 , 2001 , primarily due to increased accrued amounts related to our deferred compensation plan , gift certificates and our retail store operations . deferred credits from landlords include step rent and allowances from landlords related to our retail store leases . deferred credits from landlords at december 28 , 2002 were 76.3 % higher than at december 29 , 2001 , primarily as a result of the additional 37 retail stores opened since that date . 23 our credit facilities at december 28 , 2002 consisted of ( i ) a $ 50.0 million revolving credit facility ( the `` revolving credit facility '' ) ; ( ii ) a $ 12.0 million real estate loan ( the `` tilton facility loan '' ) ; and ( iii ) a $ 9.5 million equipment loan ( the `` equipment loan '' ) . on july 25 , 2002 , we amended our revolving credit facility to extend its term and change certain lending conditions and compliance requirements including , among other things , changing the maximum number of new retail store openings allowed under the agreement to 90 for the two-year period consisting of fiscal 2002 and fiscal 2003 , and 50 for each subsequent fiscal year . in addition , the debt service coverage ratio was amended to be less restrictive with respect to capital expenditures to the extent that our cash balances exceed a predetermined level . the maturity date of the revolving credit facility , as amended , is june 1 , 2004. the revolving credit facility is collateralized by substantially all our personal property , both tangible and intangible . at december 28 , 2002 , the revolving credit facility bore interest at 4.25 % per annum . the amount available under the revolving credit facility is reduced by outstanding borrowings and outstanding letters of credit . outstanding borrowings may not exceed $ 20.0 million and bear interest at an annual rate equal to the prime lending rate announced by one of the participating banks or the libor lending rate plus 1.75 % per annum . there were no outstanding borrowings on the revolving credit facility at december 28 , 2002 or december 29 , 2001. the maximum amount of borrowings on the revolving credit facility during fiscal 2002 and fiscal 2001 was $ 5.0 million and $ 9.8 million , respectively . outstanding letters of credit totaled $ 28.0 million and $ 15.5 million at december 28 , 2002 and december 29 , 2001 , respectively . availability under the revolving credit facility at december 28 , 2002 and december 29 , 2001 was $ 22.0 million and $ 34.5 million , respectively , subject in each case to the $ 20.0 million borrowing cap . outstanding letters of credit do not bear interest .
| results of operations the following table presents our consolidated statements of operations expressed as a percentage of net sales : replace_table_token_4_th the following table summarizes net sales by segment ( in thousands ) : replace_table_token_5_th ( 1 ) other represents certain sales allowances not specifically attributable to the direct or retail business segments . comparison of fiscal 2002 to fiscal 2001 net sales increased by $ 60.5 million , or 21.1 % , to $ 347.6 million in fiscal 2002 from $ 287.0 million in fiscal 2001. during fiscal 2002 , retail segment net sales increased by 68.0 % to $ 128.1 million from $ 76.2 million in fiscal 2001 primarily as a result of increased store count . during fiscal 2002 , we opened 37 retail stores and one retail outlet store . at december 28 , 2002 , we had 88 retail stores open compared to 51 at december 29 , 2001. direct segment net sales increased by 4.0 % primarily as a result of a 22.0 % increase in square inches circulated during fiscal 2002 compared to fiscal 2001. e-commerce net sales represented 31.1 % of total direct segment net sales during fiscal 2002 compared to 24.9 % during fiscal 2001. sales productivity , as measured by demand per 1,000 square inches circulated in the direct segment and sales per square foot in the retail segment , was lower in fiscal 2002 as compared to fiscal 2001. our direct segment experienced a 17.4 % decline in catalog productivity in fiscal 2002 as compared to fiscal 2001 which was primarily attributable to increased circulation levels and the disappointing results of our fall bestseller catalog , combined with a lower percentage of off price sales . off price catalogs typically generate more sales per square inch circulated than full price catalogs .
| 7,206 |
our actual results could differ materially from those anticipated in the forward-looking statements as a result of a variety of factors and risks including our inability to manage our future growth effectively or profitably , fluctuations in our revenue and quarterly results , our license renewal rate , the impact of competition and our ability to maintain margins or market share , the limited market for our common stock , the volatility of the market price of our common stock , the ability to maintain our listing on the nasdaq capital market , the ability to raise capital , the performance of our products , our ability to respond to rapidly evolving technology and customer requirements , our ability to protect our proprietary technology , dependence on third parties , the security of our software and response to cyber security risks , our ability to meet our financial obligations and commitments , our dependence on our management team and key personnel , our ability to hire and retain future key personnel , our ability to maintain an effective system of internal controls , and our ability to respond to government regulations . these and other risks are more fully described herein and in our other filings with the securities and exchange commission . this section should be read in combination with the accompanying audited consolidated financial statements and related notes prepared in accordance with united states generally accepted accounting principles . overview bridgeline digital , the digital engagement company , helps customers maximize the performance of their full digital experience from websites and intranets to ecommerce experiences . bridgeline 's unbound platform integrates web content management , ecommerce , emarketing , social media management , and web analytics ( insights ) with the goal of assisting marketers to deliver digital experiences that attract , engage , nurture , and convert their customers across all channels . bridgeline offers a core accelerator framework for rapidly implementing digital experiences on the bridgeline unbound platform which provides customers with cost-effective solutions in addition to velocity to market . bridgeline 's unbound platform combined with its professional services assists customers in digital business transformation , driving lead generation , increasing revenue , improving customer service and loyalty , enhancing employee knowledge , and reducing operational costs . the bridgeline unbound platform bridges the gaps between web content management , ecommerce , emarketing , social and web analytics by providing all of these components in one unified and deeply integrated platform . our unbound franchise product empowers large franchises , healthcare networks , associations/chapters and other multi-unit organizations to manage a large hierarchy of digital properties at scale . the platform provides an easy-to-use administrative console that enables corporate marketing to provide consistency in branding and messaging while providing flexible publishing capabilities at the local-market level . the platform empowers brand networks to unify , manage , scale and optimize a hierarchy of web properties and marketing campaigns on a global , national and local level . the unbound platform is delivered through a cloud-based software as a service ( “ saas ” ) multi-tenant business model , whose flexible architecture provides customers with state of the art deployment providing maintenance , daily technical operation and support ; or via a traditional perpetual licensing business model , in which the software resides on a dedicated server in either the customer 's facility or hosted by bridgeline via a cloud-based hosted services model . bridgeline digital was incorporated under the laws of the state of delaware on august 28 , 2000. locations the company 's corporate office is located in burlington , massachusetts . the company maintains regional field offices serving the following geographical locations : boston , ma ; chicago , il ; and new york , ny . the company has three wholly-owned subsidiaries : bridgeline digital pvt . ltd. located in bangalore , india , bridgeline digital canada , inc. located in ontario , canada , and stantive technologies pty , ltd. located in australia . 18 increase in authorized shares and reverse stock split on april 26 , 2019 , the company 's shareholders and the board of directors approved an amendment to the company 's amended and restated certificate of incorporation to increase the total number of shares of common stock , par value $ 0.001 per share ( “ common stock ” ) , authorized for issuance thereunder from 50 million shares to 2.5 billion shares ( the “ increase in authorized ” ) . on the same date the company 's shareholders and the board of directors also approved an amendment to the company 's amended and restated certificate of incorporation to effect a reverse stock split of both its issued and outstanding and authorized shares of common stock , par value $ 0.001 per share , at a ratio of one ( 1 ) share of common stock for every fifty ( 50 ) shares of common stock at any time prior to december 31 , 2019 ( the “ reverse split ” ) pursuant to which all classes of the company 's issued and outstanding shares of common stock at the close of business on such date were combined and reconstituted into a smaller number of shares of common stock in a ratio of one ( 1 ) share of common stock for every fifty ( 50 ) shares of common stock ( “ 1-for-50 reverse stock split ” ) . the 1-for-50 reverse stock split was effective as of close of business on may 1 , 2019 ( the “ effective date ” ) and the company 's stock began trading on a split-adjusted basis on may 2 , 2019. the reverse stock split reduced the number of shares of the company 's common stock authorized from 2.5 billion shares to 50 million shares . story_separator_special_tag during fiscal 2019 and 2018 , the company performed impairment tests and recognized an aggregated impairment charge , for all test dates during the respective periods , of $ 3.7 million and $ 4.9 million , respectively . restructuring and acquisition related expenses commencing in fiscal 2015 and through fiscal 2018 , the company 's management approved , committed to and initiated plans to restructure and further improve efficiencies by implementing cost reductions in line with expected decreases in revenue . the company renegotiated several office leases and relocated to smaller space , while also negotiating sub-leases for the original space . in addition , the company executed a general work-force reduction and recognized costs for severance and termination benefits . these restructuring charges and accruals require estimates and assumptions , including contractual rental commitments or lease buy-outs for vacated office space and related costs , and estimated sub-lease income . the company 's sub-lease assumptions include the rates to be charged to a sub-tenant and the timing of the sub-lease arrangement . all of the vacated lease space is currently contractually occupied by a new sub-tenant for the remaining life of the lease . in the second quarter of fiscal 2017 , the company initiated a plan to shut down its operations in india , which is expected to be completed in early fiscal 2020. in total , restructuring expenses were $ 625 thousand and $ 187 thousand in fiscal 2019 and fiscal 2018 , respectively . these charges consist of the total lease expenses less sub-lease rental income , other miscellaneous lease termination costs , loss on disposal of fixed assets . acquisition related expenses related to the acquisition of stantive technologies group inc. consummated in march 2019 were $ 428 thousand . 23 loss from operations the loss from operations was ( $ 11.1 ) million for fiscal 2019 compared to a loss from operations of ( $ 7.0 ) million for fiscal 2018 , a decrease of ( $ 4.0 ) million or 58 % for fiscal 2019. the loss from operations included a goodwill impairment charge of $ 3.7 million and $ 4.9 million in fiscal 2019 and 2018 , respectively . other income ( expense ) , net during the year ended september 30 , 2019 , we recognized an expense of $ 11.3 million related to the allocation of proceeds from the sale of preferred series c stock and series c preferred warrants . the expense was entirely offset by the aggregate other income recognized related to the change in fair value of the associated warrant liabilities of $ 13.4 million during fiscal 2019. during fiscal 2018 , there were no similar expense charges recognized upon issuance of warrants and the aggregate other income recognized related to the change in fair value of warrant liabilities was $ 160 thousand . provision for income taxes we recorded an income tax expense of $ 4 thousand for fiscal 2019 compared to an income tax benefit of ( $ 3 ) thousand for fiscal 2018. the company has net operating loss carryforwards and other deferred tax benefits , subject to the limitations discussed below , that are available to offset future taxable income . a valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized . the company established a valuation allowance against its net deferred tax assets , excluding the portion attributable to the alternative minimum tax of $ 22 thousand at september 30 , 2019 and 2018. the federal net operating loss ( nol ) carryforward of approximately $ 34 million as of september 30 , 2019 expires on various dates through 2039. internal revenue code section 382 places certain limitations on the amount of taxable income that can be offset by nol carryforwards after a change in control of a loss corporation . generally , after a change in control , a loss corporation can not deduct nol carryforwards in excess of the section 382 limitation . due to these “ change of ownership ” provisions , utilization of nol carryforwards may be subject to an annual limitation on utilization against taxable income in future periods . the company has not performed a section 382 analysis . however , if performed , section 382 may be found to limit potential future utilization of our nol carryforwards . the company also has approximately $ 30 million in state nols which expire on various dates through 2038. adjusted ebitda we also measure our performance based on a non-u.s. gaap ( “ generally accepted accounting principles ” ) measurement of earnings before interest , taxes , depreciation , amortization , stock-based compensation expense , impairment of goodwill and intangible assets , non-cash warrant related expenses , change in fair value of derivative instruments , and restructuring and acquisition related charges ( “ adjusted ebitda ” ) . we believe this non-u.s. gaap financial measure of adjusted ebitda is useful to management and investors in evaluating our operating performance for the periods presented and provides a tool for evaluating our ongoing operations . adjusted ebitda , however , is not a measure of operating performance under u.s. gaap and should not be considered as an alternative or substitute for u.s. gaap profitability measures such as ( i ) income from operations and net income , or ( ii ) cash flows from operating , investing and financing activities , both as determined in accordance with u.s. gaap . adjusted ebitda as an operating performance measure has material limitations because it excludes the financial statement impact of income taxes , net interest expense , amortization of intangibles , depreciation , goodwill impairment , restructuring charges , loss on disposal of assets , other amortization and stock-based compensation , and therefore does not represent an accurate measure of profitability .
| summary of results of operations total revenue for the fiscal year ended september 30 , 2019 ( “ fiscal 2019 ” ) decreased to $ 10.0 million from $ 13.6 million for the fiscal year ended september 30 , 2018 ( “ fiscal 2018 ” ) . loss from operations for fiscal 2019 was ( $ 11.1 ) million , which included a goodwill impairment charge of $ 3.7 million , compared with loss from operations of ( $ 7.0 ) million , which included a goodwill impairment charge of $ 4.9 million , for fiscal 2018. we had a net loss for fiscal 2019 of ( $ 9.5 ) million , including a goodwill impairment charge of $ 3.7 million , compared with a net loss of ( $ 7.2 ) million , including a goodwill impairment charge of $ 4.9 million , for fiscal 2018. basic net loss per share calculation attributable to common shareholders for fiscal 2019 was ( $ 8.16 ) compared with the equivalent basic net loss per share attributable to common shareholders of ( $ 89.05 ) for fiscal 2018. replace_table_token_3_th 20 revenue total revenue for the fiscal year ended september 30 , 2019 decreased $ 3.6 million , or 27 % , to $ 10.0 million from $ 13.6 million in fiscal 2018. our revenue is derived from three sources : ( i ) digital engagement services ; ( ii ) subscription and perpetual licenses ; and ( iii ) managed service hosting . digital engagement services digital engagement services revenue is comprised of bridgeline unbound implementation and retainer related services .
| 7,207 |
forward-looking statements can generally be identified by the fact that they do not relate strictly to historical or current facts . they often include words like “ believe , ” “ expect , ” “ anticipate , ” “ estimate ” and “ intend ” or future or conditional verbs such as “ will , ” “ would , ” “ should , ” “ could ” or “ may. ” statements in this report that are not strictly historical are forward-looking and are based upon current expectations that may differ materially from actual results . these forward-looking statements include , without limitation , those relating to the company 's and community bank of the chesapeake 's future growth and management 's outlook or expectations for revenue , assets , asset quality , profitability , business prospects , net interest margin , non-interest revenue , allowance for loan losses , the level of credit losses from lending , liquidity levels , capital levels , or other future financial or business performance strategies or expectations . these forward-looking statements may also include : any statements of the plans and objectives of management for future operations products or services , including the execution of integration plans relating to the county first acquisition ; plans regarding branch closings or consolidation ; any statement of expectation or belief ; projections related to certain financial metrics ; and any statement of assumptions underlying the foregoing . these forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated by the statements made herein . these risks and uncertainties involve general economic trends , changes in interest rates ; loss of deposits and loan demand to other financial institutions ; substantial changes in financial markets ; changes in real estate value and the real estate market ; regulatory changes ; the possibility of unforeseen events affecting the industry generally ; the uncertainties associated with newly developed or acquired operations ; the outcome of litigation that may arise ; market disruptions and other effects of terrorist activities ; and the matters described in “ item 1a risk factors ” in this annual report on form 10-k for the year ended december 31 , 2017 , and in the company 's other reports filed with the securities and exchange commission ( the “ sec ” ) . the company 's forward-looking statements may also be subject to other risks and uncertainties , including those that the company may discuss elsewhere in this report or in its other filings with the sec , accessible on the sec 's web site at www.sec.gov . the company undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unforeseen events , except as required under the rules and regulations of the sec . use of non-gaap financial measures statements included in management 's discussion and analysis include non-gaap financial measures and should be read along with the accompanying tables , which provide a reconciliation of non-gaap financial measures to gaap financial measures . the company 's management uses these non-gaap financial measures , and believes that non-gaap financial measures provide additional useful information that allows readers to evaluate the ongoing performance of the company . non-gaap financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under gaap , and investors should consider the company 's performance and financial condition as reported under gaap and all other relevant information when assessing the performance or financial condition of the company . non-gaap financial measures have limitations as analytical tools , and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under gaap . see non-gaap reconciliation schedule that immediately follows : item 7 - management 's discussion and analysis of financial condition and results of operations . critical accounting policies critical accounting policies are defined as those that involve significant judgments and uncertainties and could potentially result in materially different results under different assumptions and conditions . the company considers its determination of the allowance for loan losses , the valuation of foreclosed real estate ( oreo ) and the valuation of deferred tax assets to be critical accounting policies . the company 's consolidated financial statements are prepared in accordance with accounting principles generally accepted in the united states of america and the general practices of the united states banking industry . application of these principles requires management to make estimates , assumptions and judgments that affect the amounts reported in the financial statements and accompanying notes . these estimates , assumptions and judgments are based on information available as of the date of the financial statements . accordingly , as this information changes , the financial statements could reflect different estimates , assumptions and judgments . certain policies inherently have a greater reliance on the use of estimates , assumptions and judgments and , as such , have a greater possibility of producing results that could be materially different than originally reported . 44 estimates , assumptions and judgments are necessary when assets and liabilities are required to be recorded at fair value , when a decline in the value of an asset not carried on the financial statements at fair value warrants an impairment write-down or valuation reserve to be established or when an asset or liability needs to be recorded contingent upon a future event . carrying assets and liabilities at fair value inherently results in more financial statement volatility . the fair values and the information used to record valuation adjustments for certain assets and liabilities are based either on quoted market prices or are provided by other third-party sources , when available . when these sources are not available , management makes estimates based upon what it considers to be the best available information . allowance for loan losses the allowance for loan losses is an estimate of the losses that exist in the loan portfolio . story_separator_special_tag deferred tax assets the company accounts for income taxes in accordance with fasb asc 740 , “ income taxes , ” which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities . fasb asc 740 requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion or the entire deferred tax asset will not be realized . management periodically evaluates the ability of the company to realize the value of its deferred tax assets . if management were to determine that it was not more likely than not that the company would realize the full amount of the deferred tax assets , it would establish a valuation allowance to reduce the carrying value of the deferred tax asset to the amount it believes would be realized . the factors used to assess the likelihood of realization are the company 's forecast of future taxable income and available tax-planning strategies that could be implemented to realize the net deferred tax assets . failure to achieve forecasted taxable income might affect the ultimate realization of the net deferred tax assets . factors that may affect the company 's ability to achieve sufficient forecasted taxable income include , but are not limited to , the following : increased competition , a decline in net interest margin , a loss of market share , decreased demand for financial services and national and regional economic conditions . the company 's provision for income taxes and the determination of the resulting deferred tax assets and liabilities involve a significant amount of management judgment and are based on the best information available at the time . the company operates within federal and state taxing jurisdictions and is subject to audit in these jurisdictions . for additional information regarding income taxes and deferred tax assets , refer to notes 1 and 12 of the consolidated financial statements . overview community bank of the chesapeake ( the “ bank ” ) is headquartered in southern maryland with branches located in maryland and virginia . the bank is a wholly owned subsidiary of the community financial corporation ( the “ company ” ) . the company 's branches are located at its main office in waldorf , maryland , and 10 branch offices in waldorf , bryans road , dunkirk , leonardtown , la plata , charlotte hall , prince frederick , lusby , california , maryland ; and fredericksburg , virginia . the company maintains five loan production offices ( “ lpos ” ) in annapolis , la plata , prince frederick and leonardtown , maryland ; and fredericksburg , virginia . the leonardtown lpo is co-located with the branch . the bank has increased assets primarily with organic loan growth . during the past five years the bank 's loan portfolio has increased $ 341.8 million from $ 808.2 million at december 31 , 2013 to $ 1,150.0 million at december 31 , 2017. the bank believes that its ability to offer fast , flexible , local decision-making will continue to attract significant new business relationships . the bank focuses its business generation efforts on targeting small and medium sized commercial businesses with revenues between $ 5.0 million and $ 35.0 million as well as local municipal agencies and not-for-profits . the bank 's marketing is also directed towards increasing its balances of transactional deposit accounts , which are all deposit accounts other than certificates of deposit . the bank believes that increases in these account types will lessen the bank 's dependence on higher-cost funding , such as certificates of deposit and borrowings . although management believes that this strategy will increase financial performance over time , increasing the balances of certain products , such as commercial lending and transaction accounts , may also increase the bank 's noninterest expense . the bank recognizes that certain lending and deposit products increase the possibility of losses from credit and other risks . 46 story_separator_special_tag acquisition method of accounting with the company treated as the acquirer . under the acquisition method of accounting , the assets and liabilities of county first bank , as of january 1 , 2018 , will be recorded by the company at their respective fair values , and the excess of the merger consideration over the fair value of county first bank 's net assets will be allocated to goodwill . at december 31 , 2017 , county first had total assets of approximately $ 227 million , total loans of $ 143 million and total deposits of $ 200 million . county first had five branch offices in la plata , waldorf , new market , prince frederick and california , maryland . the bank intends to keep the la plata branch open and consolidate the remaining four branches with legacy community bank of the chesapeake branch offices in may of 2018. the calculations to determine fair values were not complete at the time of filing of the 2017 annual report on form 10-k. until the determination of the fair values is complete , it is impractical to include disclosures related to the fair value of the assets acquired and liabilities assumed as required by the accounting guidance . merger related costs , which included mainly professional fees and investment banking costs , for the year ended december 31 , 2017 were $ 829,000 . 2 efficiency ratio - noninterest expense divided by the sum of net interest income and noninterest income . 3 operating leverage occurs when the company increases its assets , and by extension its net interest income , while limiting increases in noninterest expense . in order for this to be effective , the company must simultaneously pursue the following : increase the asset size while maintaining asset quality , increase funding at an economically viable cost , and control noninterest expense growth .
| 2017 operations summary net income for year ended december 31 , 2017 was $ 7.2 million or $ 1.56 per diluted share after the inclusion of the additional tax expense under the recently enacted tax cuts and jobs act and the expenses associated with the acquisition of county first bank . the additional income tax and merger and acquisition costs of $ 724,000 , net of tax , resulted in a reduction of earnings per share of approximately $ 0.75 per share for 2017. net income for the year ended december 31 , 2016 was $ 7.3 million or $ 1.59 per diluted share . income before taxes ( pretax income ) increased $ 619,000 or 18.3 % to $ 4.0 million for the three months ended december 31 , 2017 compared to $ 3.4 million for the three months ended december 31 , 2016. the company 's pretax returns on average assets and common stockholders ' equity for the fourth quarter of 2017 were 1.14 % and 14.15 % , respectively , compared to 1.04 % and 12.84 % , respectively , for the fourth quarter of 2016. the company 's after-tax returns on average assets and common stockholders ' equity for the fourth quarter of 2017 were ( 0.13 % ) and ( 1.62 % ) , respectively , compared to 0.62 % and 7.68 % , respectively , for the fourth quarter of 2016. pretax income increased $ 4.6 million or 39.3 % to $ 16.3 million for the year ended december 31 , 2017 compared to $ 11.7 million for the year ended december 31 , 2016. the company 's pretax returns on average assets and common stockholders ' equity for 2017 were 1.19 % and 14.88 % , respectively , compared to 0.96 % and 11.36 % , respectively , for 2016. the company 's after-tax returns on average assets and common stockholders ' equity for 2017 were 0.52 % and 6.55 % , respectively , compared to 0.60 % and 7.09 % , respectively ,
| 7,208 |
f-5 index to financial statements glossary of defined terms corenergy infrastructure trust , inc. consolidated statements of cash flow replace_table_token_10_th f-6 index to financial statements glossary of defined terms for the years ended december 31 , 2017 2016 2015 proceeds from term debt 41,000,000 — 45,000,000 principal payments on secured credit facilities ( 45,600,577 ) ( 60,131,423 ) ( 6,328,000 ) purchase of non-controlling interest ( 32,800,000 ) — — net cash ( used in ) provided by financing activities $ ( 56,495,063 ) $ ( story_separator_special_tag certain statements included or incorporated by reference in this annual report on form 10-k may be deemed `` forward-looking statements '' within the meaning of the federal securities laws . in many cases , these forward-looking statements may be identified by the use of words such as `` will , '' `` may , '' `` should , '' `` could , '' `` believes , '' `` expects , '' `` anticipates , '' `` estimates , '' `` intends , '' `` projects , '' `` goals , '' `` objectives , '' `` targets , '' `` predicts , '' `` plans , '' `` seeks , '' or similar expressions . any forward-looking statement speaks only as of the date on which it is made and is qualified in its entirety by reference to the factors discussed throughout this report . although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions , forward-looking statements are not guarantees of future performance or results and we can give no assurance that these expectations will be attained . our actual results may differ materially from those indicated by these forward-looking statements due to a variety of known and unknown risks and uncertainties . such risks and uncertainties include , without limitation , the risk factors discussed in part i , item 1a of this report . we disclaim any obligation to update or revise any forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking information . business objective corenergy primarily owns assets in the midstream and downstream u.s. energy sectors that perform utility-like functions , such as pipelines , storage terminals , and transmission and distribution assets . our objective is to provide stockholders with a stable and growing cash dividend , supported by long-term contracted revenue from operators of our assets , primarily under triple-net participating leases . we believe our leadership team 's energy and utility expertise provides corenergy with a competitive advantage to own and acquire u.s. energy infrastructure assets in a tax-efficient , transparent reit . we also may provide other types of capital , including loans secured by energy infrastructure assets . the assets we own and seek to acquire include pipelines , storage tanks , transmission lines , and gathering systems , among others . the assets are primarily mission-critical , in that utilization of the assets is necessary for the business the operators of those assets seek to conduct and their rental payments are an essential operating expense . we acquire assets that will enhance the stability of our dividend through diversification , while offering the potential for long-term distribution growth . these sale-leaseback or real property mortgage 40 glossary of defined terms transactions provide the energy company with a source of capital that is an alternative to sources such as corporate borrowing , bond offerings , or equity offerings . basis of presentation the consolidated financial statements include corenergy infrastructure trust , inc. , as of december 31 , 2017 , and its direct and indirect wholly-owned subsidiaries . all significant intercompany accounts and transactions have been eliminated in consolidation . story_separator_special_tag 46,271,065 49,725,329 operating income $ 47,185,463 $ 42,979,521 $ 21,563,606 other income ( expense ) net distributions and dividend income $ 680,091 $ 1,140,824 $ 1,270,755 net realized and unrealized gain ( loss ) on other equity securities 1,531,827 824,482 ( 1,063,613 ) interest expense ( 12,378,514 ) ( 14,417,839 ) ( 9,781,184 ) loss on extinguishment of debt ( 336,933 ) — — total other expense ( 10,503,529 ) ( 12,452,533 ) ( 9,574,042 ) income before income taxes 36,681,934 30,526,988 11,989,564 income tax expense ( benefit ) , net 2,345,318 ( 464,420 ) ( 1,947,553 ) net income 34,336,616 30,991,408 13,937,117 less : net income attributable to non-controlling interest 1,733,826 1,328,208 1,617,206 net income attributable to corenergy stockholders $ 32,602,790 $ 29,663,200 $ 12,319,911 preferred dividend requirements 7,953,988 4,148,437 3,848,828 net income attributable to common stockholders $ 24,648,802 $ 25,514,763 $ 8,471,083 other financial data ( 1 ) adjusted ebitda $ 67,944,360 $ 67,768,945 $ 51,283,331 nareit ffo 46,308,969 45,573,219 25,176,275 ffo 46,046,781 45,396,401 25,793,873 affo 50,536,194 52,438,268 40,306,355 ( 1 ) refer to the `` non-gaap financial measures '' section that follows for additional details . year ended december 31 , 2017 compared to year ended december 31 , 2016 revenue . consolidated revenues were $ 88.7 million for the year ended december 31 , 2017 compared to $ 89.3 million for the year ended december 31 , 2016 , representing a decrease of $ 501 thousand . lease revenue was $ 68.8 million and $ 68.0 million for the years ended december 31 , 2017 and 2016 , respectively , with the increase of approximately $ 810 thousand driven primarily by variable rent collected on the pinedale lease during 2017. transportation and distribution revenue from our subsidiaries mogas and omega was $ 19.9 million and $ 21.1 million for the years ended december 31 , 2017 and 2016 , respectively . the $ 1.1 million decrease primarily resulted from projects performed in the prior year by omega for fort leonard wood and other construction projects at mogas . transportation and distribution expenses . transportation and distribution expenses were $ 6.7 million and $ 6.5 million for the years ended december 31 , 2017 and 2016 , respectively , representing an increase of $ 266 thousand . story_separator_special_tag for the years ended december 31 , 2017 and 2016 , we recorded net gains on other equity securities of $ 1.5 million and $ 824 thousand , respectively , resulting in an increase of $ 707 thousand . the net gains recorded are directly related to fluctuations in the valuation of lightfoot , which was dependent on the historical public share price of arc logistics , the valuation of its gulf lng interest and its gp interest . in august 2017 , arc logistics and lightfoot entered into a purchase agreement and plan of merger with zenith , completed in december 2017 , pursuant to which zenith acquired the outstanding units of arc logistics held by lightfoot , as well as lightfoot 's gulf lng and gp interests . the net gain recorded during the year ended december 31 , 2017 is primarily due to gains realized related to lightfoot upon completion of the arc logistics merger and valuation of the remaining investment in the lightfoot lp and gp interests . the increase in the prior-year period was primarily the result of fluctuations in the public share price of arc logistics . interest expense . for the years ended december 31 , 2017 and 2016 , interest expense totaled approximately $ 12.4 million and $ 14.4 million , respectively . this decrease was attributable to ( i ) the company internally refinancing its pro rata share of the pinedale credit facility on march 30 , 2016 , which resulted in a reduction of the outstanding debt balance with third parties , ( ii ) lower outstanding borrowings on the corenergy revolver during 2017 and ( iii ) refinancing the corenergy credit facility during 2017 , which included the payment of outstanding borrowings on the corenergy term loan . loss on extinguishment of debt . for the year ended december 31 , 2017 , a loss on extinguishment of debt totaling approximately $ 337 thousand was recorded in connection with entering into the amended and restated corenergy credit facility on july 28 , 2017 and amended pinedale term credit facility on december 29 , 2017. there was no loss on extinguishment of debt recorded for the year ended december 31 , 2016 . for additional information , see part iv , item 15 , note 11 ( `` debt '' ) . income tax expense ( benefit ) . income tax expense was $ 2.3 million for the year ended december 31 , 2017 compared to an income tax benefit of $ 464 thousand for the year ended december 31 , 2016 . income tax expense for the year ended december 31 , 2017 was primarily attributable to ( i ) the transition tax adjustment associated with application of lower effective tax rates from the tax cuts and jobs act enacted in december 2017 to existing deferred tax asset balances at our trs entities , ( ii ) the write-off of certain deferred tax assets in connection with the reorganization of omega from a trs subsidiary to a reit subsidiary and ( iii ) realized and unrealized gains recorded associated with our lightfoot investment . the prior year tax benefit was the result of taxable losses incurred in certain of our trs subsidiaries . net income . net income was $ 34.3 million and $ 31.0 million for the years ended december 31 , 2017 and 2016 , respectively , representing an increase of $ 3.3 million . for the years ended december 31 , 2017 and 2016 , net income attributable to corenergy stockholders was $ 32.6 million and $ 29.7 million , respectively . after deducting $ 8.0 million and $ 4.1 million for the portion of preferred dividends that are allocable to each respective period , net income attributable to common stockholders for the year ended december 31 , 2017 was $ 24.6 million , or $ 2.07 per basic and diluted common share , as compared to $ 25.5 million , or $ 2.14 per basic and diluted common share , for the prior-year period . year ended december 31 , 2016 compared to year ended december 31 , 2015 revenue . consolidated revenues were $ 89.3 million for the year ended december 31 , 2016 compared to $ 71.3 million for the year ended december 31 , 2015 , representing an increase of $ 18.0 million . lease revenue was $ 68.0 million and $ 48.1 million for the years ended december 31 , 2016 and 2015 , respectively , with the increase of approximately $ 19.9 million driven primarily by an increase of $ 20.3 million related to our gigs asset which was acquired in june 2015. the 2016 period includes a full year of lease revenue related to the gigs lease ( $ 40.6 million ) compared with lease revenues from the second half of 2015 in the prior-year period ( $ 20.3 million ) . additionally , base rents for the portland terminal facility increased $ 176 thousand versus the prior-year period related to completion of the planned construction projects in november 2015. these increases were partially offset by a $ 638 thousand decline in lease revenues due to the termination of the pnm lease agreement on april 1 , 2015. beginning in 2016 , mogas and omega revenues have been combined and are presented net of omega 's natural gas and propane costs , subsequent to a new contract with the dod . in accordance with gaap , omega 's historical sales revenue and cost of sales prior to 2016 are presented separately , on a gross basis , and beginning in 2016 are included , net , in the transportation and distribution revenue line in the table above . on a comparative basis for analytical purposes , combined revenues net of cost of sales were $ 21.1 million and $ 18.7 million for the years ended december 31 , 2016 and 2015 , respectively . the $ 2.4 million increase primarily resulted from new projects taking place under the new dod contract .
| results of operations the following tables summarize the financial data and key operating statistics for corenergy for the calendar years ended december 31 , 2017 , 2016 and 2015 . we believe the operating results detail presented below provides investors with information that will assist them in analyzing our operating performance . the following data should be read in conjunction with our consolidated financial statements and the notes thereto included in part iv , item 15 of this report . 41 glossary of defined terms the following table and discussion is a summary of our results of operations for the calendar years ended december 31 , 2017 , 2016 and 2015 : for the years ended december 31 , 2017 2016 2015 revenue lease revenue $ 68,803,804 $ 67,994,130 $ 48,086,072 transportation and distribution revenue 19,945,573 21,094,112 14,345,269 financing revenue — 162,344 1,697,550 sales revenue — — 7,160,044 total revenue 88,749,377 89,250,586 71,288,935 expenses transportation and distribution expenses 6,729,707 6,463,348 4,609,725 cost of sales — — 2,819,212 general and administrative 10,786,497 12,270,380 9,745,704 depreciation , amortization and aro accretion expense 24,047,710 22,522,871 18,766,551 provision for loan loss and disposition — 5,014,466 13,784,137 total expenses 41,563,914
| 7,209 |
the company 's solutions enable its clients to provide customer-centric healthcare through understanding the voice of the customer to improve patient experience , engagement and loyalty , while also facilitating regulatory compliance and the shift to population-based health management for its clients . the company 's ability to measure what matters most and systematically capture , analyze and deliver to its clients self-reported information from patients , families and consumers is critical in today 's healthcare market . nrc believes that access to and analysis of its extensive consumer-driven information is becoming more valuable as healthcare providers increasingly need to more deeply understand and engage patients and consumers in an effort towards effective population-based health management . the company 's portfolio of subscription-based solutions provide actionable information and analysis to healthcare organizations and payers across a range of mission-critical , constituent-related elements , including patient experience and satisfaction , community population health risks , workforce engagement , community perceptions , and physician engagement . nrc partners with clients across the continuum of healthcare services . the company 's clients range from acute care hospitals and post-acute providers , such as home health , long-term care and hospice , to numerous payer organizations . the company believes this cross-continuum positioning is a unique and an increasingly important capability as evolving payment models drive healthcare providers and payers towards a more collaborative and interactive healthcare system . acquisitions/ investments in october 2014 , nrc made investments in two strategic technologies to advance the company 's commitment to empowering consumer-centric healthcare across the continuum . the first , an acquisition of digital assent , a company with a healthcare technology platform , created a center of excellence in atlanta , georgia , responsible for developing novel solutions to enhance consumer decision-making in the selection of healthcare providers . the all-cash consideration paid at closing was $ 2.6 million . the second , an investment which included an option for a potential acquisition of a partner company that had developed a talent-matching solution to accelerate the formation of high-performing teams . the cash consideration paid was $ 800,000 , of which $ 657,000 was allocated to the purchase option and the remaining $ 143,000 to a license and work to be performed . the option provided nrc with the right to acquire the partner company for $ 4.1 million on or before march 31 , 2015. the option was extended until june 30 , 2015. nrc did not exercise the option and , accordingly , it expired in june 2015. divestitures on december 21 , 2015 , the company completed the sale of selected assets and liabilities related to the clinical workflow product of the predictive analytics operating segment , for a net cash amount of approximately $ 1.6 million . the company recorded a gain of approximately $ 1.1 million from the sale in the fourth quarter of 2015 , which is included in other income on the consolidated statement of income . 19 critical accounting policies and estimates the preparation of financial statements requires management to make estimates and assumptions that affect amounts reported therein . the most significant of these areas involving difficult or complex judgments made by management with respect to the preparation of the company 's consolidated financial statements for 2015 include : ● revenue recognition ; ● valuation of goodwill and identifiable intangible assets ; ● income taxes ; and ● business combinations . revenue recognition the company derives a majority of its operating revenue from its annually renewable services , which include performance measurement and improvement services , healthcare analytics and governance education services . the company provides these services to its clients under annual client service contracts , although such contracts are generally cancelable on short or no notice without penalty . services are provided under subscription-based service agreements . the company recognizes subscription-based service revenue over the period of time the service is provided . generally , the subscription periods are for twelve months and revenue is recognized equally over the subscription period . certain contracts are fixed-fee arrangements with a portion of the project fee billed in advance and the remainder billed periodically over the duration of the project . revenue and direct expenses for services provided under these contracts are recognized under the proportional performance method . under the proportional performance method , the company recognizes revenue based on output measures or key milestones such as survey set-up , survey mailings , survey returns and reporting . the company measures its progress based on the level of completion of these output measures and recognizes revenue accordingly . management judgments and estimates must be made and used in connection with revenue recognized using the proportional performance method . if management made different judgments and estimates , then the amount and timing of revenue for any period could differ materially from the reported revenue . the company 's revenue arrangements with a client may include combinations of performance measurement and improvement services , healthcare analytics or governance education services which may be executed at the same time , or within close proximity of one another ( referred to as a multiple-element arrangement ) . each element of a multiple-element arrangement is accounted for as a separate unit of accounting provided each delivered element is sold separately by the company or another vendor ; and for an arrangement that includes a general right of return relative to the undelivered elements , delivery or performance of the undelivered services are considered probable and substantially in the control of the company . the company 's arrangements generally do not include a general right of return related to the delivered services . if these criteria are not met , the arrangement is accounted for as a single unit of accounting with revenue generally recognized equally over the subscription period or recognized under the proportional performance method . story_separator_special_tag 21 the company performed a qualitative analysis as of october 1 , 2015 , which did not indicate that it was more likely than not that the carrying values of the reporting units exceeded fair value . no impairments were recorded during the years ended december 31 , 2015 , 2014 or 2013. income taxes the company uses the asset and liability method of accounting for income taxes . under that method , deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases using enacted tax rates . the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date . valuation allowances , if any , are established when necessary to reduce deferred tax assets to the amount that is more likely than not to be realized . the company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained . recognized income tax positions are measured at the largest amount that is greater than 50 % likely of being realized . changes in recognition or measurement are reflected in the period in which the change in judgment occurs . management judgment is required to determine the provision for income taxes and to determine whether deferred income taxes will be realized in full or in part . such judgments include , but are not limited to , the likelihood we would realize the benefits of net operating loss carryforwards , the adequacy of valuation allowances , the election to capitalize or expense costs incurred , and the probability of outcomes of uncertain tax positions . it is possible that the various taxing authorities could challenge those judgments or positions and reach conclusions that would cause us to incur tax liabilities in excess of , or realize benefits less than , those currently recorded . in addition , changes in the geographical mix or estimated amount of annual pretax income could impact our overall effective tax rate . business combinations the company uses the acquisition method of accounting for acquired businesses . under the acquisition method , the financial statements reflect the operations of an acquired business starting from the completion of the acquisition . the assets acquired and liabilities assumed are recorded at their respective estimated fair values at the date of the acquisition . any excess of the purchase price over the estimated fair values of the identifiable net assets acquired is recorded as goodwill . significant judgment is required in estimating the fair value of assets acquired , especially intangible assets . as a result , in the case of significant acquisitions we typically engage third-party valuation specialists in estimating fair values of tangible and intangible assets . the fair value estimates are based on available historical information and on expectations and assumptions about the future , considering the perspective of marketplace participants . while management believes those expectations and assumptions are reasonable , they are inherently uncertain . unanticipated market or macroeconomic events and circumstances may occur , which could impact the accuracy or validity of the estimates and assumptions . 22 story_separator_special_tag 1.25 '' > selling , general and administrative expenses . selling , general and administrative expenses decreased 0.8 % to $ 25.0 million in 2014 , compared to $ 25.2 million in 2013 , mainly due to a decrease in legal and accounting fees of $ 518,000 that were associated with the may 2013 recapitalization . in addition , non-cash share-based compensation expense , primarily associated with the forfeitures of certain stock options and restricted share awards , decreased by $ 213,000. these decreases were partially offset by increased payroll and benefit costs and legal and accounting costs related to the october 2014 digital assent acquisition and investment . bad debt expense , recruiting fees , contracted service costs and building/equipment lease expense also partially offset these decreases . selling , general , and administrative expenses decreased as a percentage of revenue to 25.3 % in 2014 , from 27.2 % in 2013 , due to the leveraging of these costs over revenue . depreciation and amortization . depreciation and amortization expenses increased 1.9 % to $ 3.8 million in 2014 compared to $ 3.7 million in 2013 primarily due to increased depreciation from investments in computer software and increased amortization from the october 2014 acquisition . depreciation and amortization expenses as a percentage of revenue decreased to 3.8 % in 2014 from 4.0 % during in 2013. provision for income taxes . provision for income taxes was $ 9.9 million ( 35.4 % effective tax rate ) in 2014 , compared to $ 9.0 million ( 36.8 % effective tax rate ) in 2013. the effective tax rate for 2014 is lower than the rate in 2013 primarily due to lower projected state tax rates due to legislative changes , as well as non-deductible fees associated with the may 2013 recapitalization that were incurred during 2013 , partially offset by $ 179,000 increase in the liability for unrecognized tax benefit . inflation and changing prices inflation and changing prices have not had a material impact on revenue or net income in the last three years . liquidity and capital resources the company believes that its existing sources of liquidity , including cash and cash equivalents , borrowing availability , and operating cash flow will be sufficient to meet its projected needs for the foreseeable future . the company made capital contributions to connect totaling $ 2.8 million through december 31 , 2015 and will make additional capital contributions up to $ 1.3 million on an as-needed basis as determined by the board of directors of connect . in july 2015 , the company acquired all of ng customer-connect , llc 's interest in connect and a portion of illuminate health , llc 's interest in connect for combined consideration of $ 2.8 million .
| results of operations the following table sets forth , for the periods indicated , selected financial information derived from the company 's consolidated financial statements , expressed as a percentage of total revenue and the percentage change in such items versus the prior comparable period ( please note that all columns may not add up to 100 % due to rounding ) . the trends illustrated in the following table may not necessarily be indicative of future results . the discussion that follows the table should be read in conjunction with the company 's consolidated financial statements . replace_table_token_6_th year ended december 31 , 2015 , compared to year ended december 31 , 2014 revenue . revenue in 2015 increased 3.5 % to $ 102.3 million , compared to $ 98.8 million in 2014 , which was driven primarily by a combination of continued gains in market share and vertical growth in our existing client base . revenue from subscription-based agreements comprised 86.6 % of the total revenue in 2015 , compared to 82.3 % of total revenue in 2014. direct expenses . direct expenses increased 6.9 % to $ 44.6 million in 2015 , compared to $ 41.7 million in 2014. variable expenses increased $ 1.1 million primarily from increased postage and printing of $ 989,000 , and contracted survey-related costs of $ 416,000 , partially offset by a reduction in labor costs of $ 334,000. fixed expenses increased $ 1.8 million primarily due to increased salary and benefit costs from the digital assent acquisition in 2014 and staffing additions in the customer service area , and increased equipment lease costs from the acquisition . direct expenses increased as a percentage of revenue to 43.6 % in 2015 from 42.2 % in 2014 primarily due to the staffing additions from the acquisition and growth in customer service support . selling , general and administrative expenses . selling , general and administrative expenses increased 8.6 % to $ 27.2 million in 2015 , compared to $ 25.0
| 7,210 |
” overview we are a cable operator providing services in the united states with approximately 6.2 million residential and commercial customers at december 31 , 2014 . we offer our customers traditional cable video programming , internet services , and voice services , as well as advanced video services such as video on demand , hd television and dvr service . we also sell local advertising on cable networks and provide fiber connectivity to cellular towers . see “ part i. item 1. business — products and services ” for further description of these services , including “ customers. ” our most significant competitors are dbs providers and certain telephone companies that offer services that provide features and functions similar to our video , high-speed internet , and voice services , including in some cases wireless services , and they also offer these services in bundles similar to ours . customers have been more willing to consider our competitors ' products , partially because of increased marketing highlighting perceived differences between competitive video products , especially when those competitors are often offering significant incentives to switch providers . some consumers have chosen to receive video over the internet rather than through pay television services including from us , thereby reducing our video revenues . see “ part i. item 1. business — competition. ” in the recent past , we have grown revenues by offsetting basic video customer losses with price increases and sales of incremental services such as high-speed internet , video on demand , dvr and hd television . we expect to continue to grow revenues by increasing the number of products in our current customer homes and obtaining new customers with an improved value offering . in addition , we expect to increase revenues by expanding the sales of services to our commercial customers . however , we can not assure you that we will be able to grow revenues or maintain our margins at recent historical rates . our business plans include goals for increasing customers and revenue . to reach our goals , we have actively invested in our network and operations , and have improved the quality and value of the products and packages that we offer . we have enhanced our video product by moving to an all-digital platform , offering more hd channels and increasing digital and hd-dvr penetration . we simplified our offers and pricing and improved our packaging of products to bring more value to new and existing customers . as part of our effort to create more value for customers , we have focused on driving penetration of our triple play offering , which includes more than 200 hd channels in most of our markets , video on demand , internet service , and fully-featured voice service . in addition , we have implemented a number of changes to our organizational structure , selling methods and operating tactics . we have fully insourced our direct sales workforce and are increasingly insourcing our field operations and call center workforces and modifying the way our sales workforce is compensated , which we believe positions us for better customer service and growth . we expect that our enhanced product set combined with improved customer service will lead to lower customer churn and longer customer lifetimes , allowing us to grow our customer base and revenue more quickly and economically . we expect our capital expenditures to remain elevated as we strive to increase digital and hd-dvr penetration and place higher levels of customer premise equipment per transaction . in july 2013 , charter and charter operating acquired bresnan from a wholly owned subsidiary of cablevision , for $ 1.625 billion in cash , as well as a working capital adjustment and a reduction for certain funded indebtedness of bresnan ( the `` bresnan acquisition '' ) . bresnan managed cable operating systems in colorado , montana , wyoming and utah that passed approximately 670,000 homes and served approximately 375,000 residential and commercial customer relationships at the time they were acquired . total revenue growth was 12 % for the year ended december 31 , 2014 compared to the corresponding period in 2013 , and 9 % for the year ended december 31 , 2013 compared to the corresponding period in 2012 , due to the bresnan acquisition and growth in our video , internet and commercial businesses . total revenue growth on a pro forma basis for the bresnan acquisition as if it had occurred on january 1 , 2012 was 8 % for the year ended december 31 , 2014 compared to the corresponding period in 2013 , and 5 % for the year ended december 31 , 2013 compared to the corresponding period in 2012 . for the years ended december 31 , 2014 , 2013 and 2012 , adjusted ebitda was $ 3.2 billion , $ 2.9 billion and $ 2.7 billion , respectively . adjusted ebitda is defined as net loss plus net interest expense , income tax expense , depreciation and amortization , stock compensation expense , loss on extinguishment of debt , gain ( loss ) on derivative instruments , net , and other operating expenses , such as merger and acquisition costs , special charges and ( gain ) loss on sale or retirement of assets . see “ —use of adjusted ebitda and free cash flow ” for further information on adjusted ebitda . adjusted ebitda increased 12 % for the year ended december 31 , 2014 compared to the corresponding period in 2013 and 6 % for the year ended december 31 , 2013 compared to the corresponding period in 2012 as a result of the bresnan acquisition , which contributed $ 96 million and $ 90 million , respectively , and an increase in residential and commercial revenues offset by increases in programming costs and other operating costs . for the years ended december 31 , 2014 , 2013 and 2012 , our income from operations was $ 971 million , $ 909 million and $ 915 million , respectively . story_separator_special_tag we calculate standards annually ( or more frequently if circumstances dictate ) for items such as the labor rates , overhead rates , and the actual amount of time required to perform a capitalizable activity . for example , the standard amounts of time required to perform capitalizable activities are based on studies of the time required to perform such activities . overhead rates are established based on an analysis of the nature of costs incurred in support of capitalizable activities , and a determination of the portion of costs that is directly attributable to capitalizable activities . the impact of changes that resulted from these studies were not material in the periods presented . labor costs directly associated with capital projects are capitalized . capitalizable activities performed in connection with customer installations include such activities as : dispatching a “ truck roll ” to the customer 's dwelling or business for service connection ; verification of serviceability to the customer 's dwelling or business ( i.e. , determining whether the customer 's dwelling is capable of receiving service by our cable network and or receiving advanced or internet services ) ; customer premise activities performed by in-house field technicians and third-party contractors in connection with customer installations , installation of network equipment in connection with the installation of advanced services , and equipment replacement and betterment ; and verifying the integrity of the customer 's network connection by initiating test signals downstream from the headend to the customer 's digital set-top box . judgment is required to determine the extent to which overhead costs incurred result from specific capital activities , and therefore should be capitalized . the primary costs that are included in the determination of the overhead rate are ( i ) employee benefits and payroll taxes associated with capitalized direct labor , ( ii ) direct variable costs associated with capitalizable activities , consisting primarily of installation and construction vehicle costs , ( iii ) the cost of support personnel , such as dispatchers , who directly assist with capitalizable installation activities , and ( iv ) indirect costs directly attributable to capitalizable activities . while we believe our existing capitalization policies are appropriate , a significant change in the nature or extent of our system activities could affect management 's judgment about the extent to which we should capitalize direct labor or overhead in the future . we monitor the appropriateness of our capitalization policies , and perform updates to our internal studies on an ongoing basis to determine whether facts or circumstances warrant a change to our capitalization policies . we capitalized internal direct labor and overhead of $ 277 million , $ 219 million and $ 202 million , respectively , for the years ended december 31 , 2014 , 2013 and 2012 . valuation and impairment . we evaluate the recoverability of our property , plant and equipment upon the occurrence of events or changes in circumstances indicating that the carrying amount of an asset may not be recoverable . such events or changes in circumstances could include such factors as the impairment of our indefinite life franchises , changes in technological advances , fluctuations in the fair value of such assets , adverse changes in relationships with local franchise authorities , adverse changes in market conditions , or a deterioration of current or expected future operating results . a long-lived asset is deemed impaired when the carrying amount of the asset exceeds the projected undiscounted future cash flows associated with the asset . no impairments of long-lived assets to be held and used were recorded in the years ended december 31 , 2014 , 2013 and 2012 . we utilize the cost approach as the primary method used to establish fair value for our property , plant and equipment in connection with business combinations . the cost approach considers the amount required to replace an asset by constructing or purchasing a new asset with similar utility , then adjusts the value in consideration of all forms of depreciation as of the appraisal date for physical depreciation and function and economic obsolescence . the cost approach relies on management 's assumptions regarding current material and labor costs required to rebuild and repurchase significant components of our property , plant and equipment along with assumptions regarding the age and estimated useful lives of our property , plant and equipment . 42 useful lives of property , plant and equipment . we evaluate the appropriateness of estimated useful lives assigned to our property , plant and equipment , based on annual analysis of such useful lives , and revise such lives to the extent warranted by changing facts and circumstances . any changes in estimated useful lives as a result of this analysis are reflected prospectively beginning in the period in which the study is completed . our analysis of useful lives in 2014 did not indicate a change in useful lives . the effect of a one-year decrease in the weighted average remaining useful life of our property , plant and equipment as of december 31 , 2014 would be an increase in annual depreciation expense of approximately $ 83 million . the effect of a one-year increase in the weighted average remaining useful life of our property , plant and equipment as of december 31 , 2014 would be a decrease in annual depreciation expense of approximately $ 224 million . depreciation expense related to property , plant and equipment totaled $ 1.8 billion , $ 1.6 billion and $ 1.4 billion for the years ended december 31 , 2014 , 2013 and 2012 , respectively , representing approximately 22 % , 22 % and 21 % of costs and expenses , respectively . depreciation is recorded using the straight-line composite method over management 's estimate of the useful lives of the related assets as listed below : cable distribution systems……………………………… 7-20 years customer equipment and installations………………… .. 3-8 years vehicles and equipment………………………………… 3-6 years buildings and leasehold improvements………………… 15-40 years furniture , fixtures and equipment….…………………… 6-10 years intangible assets valuation and impairment of franchises .
| results of operations the following table sets forth the percentages of revenues that items in the accompanying consolidated statements of operations constituted for the periods presented ( dollars in millions , except per share data ) : replace_table_token_5_th revenues . total revenues grew $ 953 million or 12 % in the year ended december 31 , 2014 as compared to 2013 and grew $ 651 million or 9 % in the year ended december 31 , 2013 as compared to 2012 . revenue growth primarily reflects increases in the number of residential internet and triple play customers and in commercial business customers , growth in expanded basic and digital penetration , promotional and annual rate increases , and higher advanced services penetration offset by a decrease in basic video customers . the bresnan acquisition increased revenues in 2014 as compared to 2013 by approximately $ 276 million and approximately $ 270 million in 2013 as compared to 2012 . revenues by service offering were as follows ( dollars in millions ; all percentages are calculated using actual amounts . minor differences may exist due to rounding ) : replace_table_token_6_th 46 video revenues consist primarily of revenues from basic and digital video services provided to our non-commercial customers , as well as franchise fees , equipment rental and video installation revenue . residential video customers decreased by 17,000 in 2014 and increased 188,000 in 2013 . however , after giving effect to the bresnan acquisition , residential basic video customers decreased by 109,000 in 2013 . the changes in video revenues are attributable to the following ( dollars in millions ) : replace_table_token_7_th residential internet customers grew by 383,000 and 598,000 customers in 2014 and 2013 , respectively , or 324,000 customers in 2013 , after giving effect to the bresnan acquisition .
| 7,211 |
the company did not have any derivative instruments with credit-risk related contingent features that would require it to post additional collateral as of september 28 , 2013 or september 29 , 2012. the following tables show story_separator_special_tag this item 7 , management 's discussion and analysis of financial condition and results of operations , and other parts of this form 10-k contain forward-looking statements , within the meaning of the private securities litigation reform act of 1995 , that involve risks and uncertainties . forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact . forward-looking statements can also be identified by words such as future , anticipates , believes , estimates , expects , intends , plans , predicts , will , would , could , can , may , and similar terms . forward-looking statements are not guarantees of future performance and the company 's actual results may differ significantly from the results discussed in the forward-looking statements . factors that might cause such differences include , but are not limited to , those discussed in part i , item 1a of this form 10-k under the heading risk factors , which are incorporated herein by reference . the following discussion should be read in conjunction with the consolidated financial statements and notes thereto included in part ii , item 8 of this form 10-k. all information presented herein is based on the company 's fiscal calendar . unless otherwise stated , references to particular years , quarters , months or periods refer to the company 's fiscal years ended in september and the associated quarters , months and periods of those fiscal years . each of the terms the company and apple as used herein refers collectively to apple inc. and its wholly-owned subsidiaries , unless otherwise stated . the company assumes no obligation to revise or update any forward-looking statements for any reason , except as required by law . overview and highlights the company designs , manufactures , and markets mobile communication and media devices , personal computers , and portable digital music players , and sells a variety of related software , services , peripherals , networking solutions , and third-party digital content and applications . the company sells its products worldwide through its retail stores , online stores , and direct sales force , as well as through third-party cellular network carriers , wholesalers , retailers , and value-added resellers . in addition , the company sells a variety of third-party iphone , ipad , mac and ipod compatible products , including application software , and various accessories through its online and retail stores . the company sells to consumers ; small and mid-sized businesses ; and education , enterprise and government customers . story_separator_special_tag href= '' https : //www.sec.gov/archives/edgar/data/0000320193/000119312513416534/ # toc '' > product performance iphone the following table presents iphone net sales and unit sales information for 2013 , 2012 and 2011 ( net sales in millions and units in thousands ) : replace_table_token_6_th the growth in iphone net sales and unit sales during 2013 resulted from increased demand for iphone in all of the company 's operating segments primarily due to the launch of iphone 5 beginning in september 2012 and strong ongoing demand for iphone 4 and 4s . all of the company 's operating segments experienced increases in net sales and unit sales of iphone during 2013 compared to 2012. the year-over-year impact of higher iphone unit sales in 2013 was partially offset by a 3 % decline in iphone average selling prices ( asps ) in 2013 compared to 2012 primarily as a result of a shift in product mix towards lower-priced iphone models , particularly iphone 4. all of the company 's geographic operating segments experienced a decline in iphone asps during 2013. the year-over-year growth in iphone net sales and unit sales during 2012 reflects strong demand for iphone in all of the company 's operating segments , except for the rest of asia pacific segment . growth in iphone sales during 2012 is primarily a result of the launches of iphone 4s in the first quarter of 2012 and iphone 5 in the fourth quarter of 2012 , ongoing demand during 2012 for iphone 4 and iphone 3gs , and expanded distribution with new carriers and resellers . ipad the following table presents ipad net sales and unit sales information for 2013 , 2012 and 2011 ( net sales in millions and units in thousands ) : replace_table_token_7_th the growth in net sales and unit sales of ipad during 2013 resulted from growth in ipad unit sales in all of the company 's operating segments . this growth was driven by the launch of ipad mini and the fourth generation ipad beginning in the first quarter of 2013. the year-over-year growth rate of total ipad unit sales was significantly higher than the growth rate of total ipad net sales for 2013 due to a reduction in ipad asps of 15 % in 2013 compared to 2012. this decline resulted primarily from introduction of the lower priced ipad mini and the full year impact of the price reduction on ipad 2 made in 2012. the decline in ipad asps was experienced to various degrees by all of the company 's operating segments . the year-over-year increase in ipad net sales and unit sales during 2012 was driven by strong demand for ipad in all of the company 's operating segments as a result of the launch of the third generation ipad in march 2012 , continued demand for ipad 2 , and expanded distribution with new resellers . story_separator_special_tag lower year-over-year growth in net sales in the europe segment during 2012 compared to the company 's other geographic segments reflects growth in iphone unit sales that was well below the growth rates experienced by the company 's other operating segments , partially offset by strong growth in ipad unit sales . net sales in the europe 30 segment were also negatively impacted by the region 's uncertain economic conditions and the strength in the u.s. dollar relative to several european currencies , including the euro . greater china the following table presents greater china net sales information for 2013 , 2012 and 2011 ( in millions ) : replace_table_token_12_th the growth in net sales in the greater china segment during 2013 resulted from two major iphone introductions during the year , iphone 5 in december 2012 and iphone 5c and iphone 5s in september 2013. further contributing to the growth in 2013 was the introduction of the fourth generation ipad and ipad mini during the second quarter of 2013 and an increase in iphone channel inventory as of the end of 2013 compared to the end of 2012. while net sales in the china segment were up 13 % for all of 2013 , net sales for the second half of 2013 declined 4 % compared to the second half of 2012. the growth in net sales during 2012 was mainly due to increased demand for iphone following the launch of iphone 4s and strong demand for the third generation ipad and ipad 2. growth in the greater china segment was affected by the timing of iphone and ipad product launches . iphone 5 was not launched in china during 2012 , and the third generation ipad that was introduced by the company in march 2012 was not launched in china until the fourth quarter of 2012. japan the following table presents japan net sales information for 2013 , 2012 and 2011 ( in millions ) : replace_table_token_13_th the increase in net sales in the japan segment during 2013 reflects significant increases in unit volumes of iphone and ipad , strong growth of itunes store net sales and an increase in iphone channel inventory as of the end of 2013 compared to the end of 2012. these positive factors were partially offset by declines in asps for iphone and ipad and by weakness in the japanese yen relative to the u.s. dollar . the growth in net sales during 2012 was primarily driven by increased demand for iphone following the launches of iphone 4s and iphone 5 , expanded distribution with a new iphone carrier , strong demand for the third generation ipad and ipad 2 , higher sales from the itunes store , and strength in the japanese yen relative to the u.s. dollar . rest of asia pacific the following table presents rest of asia pacific net sales information for 2013 , 2012 and 2011 ( in millions ) : replace_table_token_14_th the growth in net sales during 2013 was primarily driven by the launch of iphone 5 and higher sales from itunes , partially offset by a decrease in net sales of ipad and mac . 31 the growth in net sales during 2012 was mainly due to strong demand for the third generation ipad . the rest of asia pacific segment experienced significantly lower year-over-year growth in net sales compared to all of the company 's other operating segments due primarily to a decrease in iphone sales . this decrease reflects the timing of iphone 5 launches in the rest of asia pacific segment , which only occurred in a limited number of countries during the fourth quarter of 2012. retail the following table presents retail net sales information for 2013 , 2012 and 2011 ( in millions , except for store counts ) : replace_table_token_15_th the growth in net sales during 2013 was primarily driven by increased unit sales of iphone and ipad following the new product introductions in the first half of 2013 and increased sales of services . with an average of 403 and 365 open stores during 2013 and 2012 , respectively , average revenue per store decreased to $ 50.2 million in 2013 , compared to $ 51.5 million in 2012. the growth in net sales during 2012 was driven primarily by increased demand for iphone following the launches of iphone 4s and iphone 5 , strong demand for the third generation ipad and ipad 2 , and higher mac net sales . lower year-over-year growth in net sales in the retail segment during 2012 compared to the company 's other segments reflects the significant growth in ipad indirect distribution channel expansion . with an average of 365 stores and 326 stores during 2012 and 2011 , respectively , average revenue per store increased 19 % to $ 51.5 million in 2012 compared to $ 43.3 million in 2011. the retail segment 's operating income was $ 4.0 billion , $ 4.6 billion and $ 3.1 billion during 2013 , 2012 , and 2011 , respectively . the year-over-year decrease in retail operating income in 2013 is primarily attributable to lower gross margin similar to that experienced by the company overall , partially offset by higher net sales . the year-over-year increase in retail operating income in 2012 is primarily attributable to higher overall net sales that resulted in significantly higher average revenue per store during 2012. gross margin gross margin for 2013 , 2012 and 2011 are as follows ( in millions , except gross margin percentages ) : replace_table_token_16_th the gross margin percentage in 2013 was 37.6 % compared to 43.9 % in 2012. the year-over-year decrease in gross margin in 2013 compared to 2012 was driven by multiple factors including introduction of new versions of existing products with higher cost structures and flat or reduced pricing ; a shift in sales mix to products with lower margins ; introduction of ipad mini with gross margin significantly below the company 's average product margins ; higher expenses associated with changes to certain of the company 's service policies and other 32
| fiscal 2013 highlights net sales rose 9 % or $ 14.4 billion during 2013 compared to 2012. this resulted from growth in net sales of iphone ; itunes , software , and services ; and ipad . growth in 2013 reflects strong sales of iphone 5 , strong continuing sales of iphone 4 and 4s , the introduction of iphone 5c and 5s , strong performance of the ipad mini and fourth generation ipad , and continued growth in the company 's online sales of apps , digital content , and services . growth in these areas was partially offset by declines in net sales of mac and ipod . all of the company 's operating segments experienced increased net sales in 2013 , with net sales growth being particularly strong in the americas , greater china and japan operating segments . similar to 2012 , growth in total net sales was higher during the first half of 2013 , rising $ 12.6 billion or 14.7 % over the same period in 2012. first half growth in 2013 was driven by iphone and ipad introductions at or near the beginning of 2013. during the first quarter of 2013 , the company introduced the fourth generation ipad and ipad mini , a new macbook pro with retina display , a new ipod touch , a new imac , and expanded the rollout of iphone 5 which began in september 2012. in june 2013 at its worldwide developer conference , the company announced ios 7 and os x mavericks , announced itunes radio , introduced a significant upgrade to macbook air , and provided a preview of all new mac pro desktops expected to be introduced during 2014. in september 2013 , the company introduced iphone 5s and iphone 5c , released ios 7 , launched itunes radio , and announced that beginning in september 2013 iphoto , imovie and iwork apps for ios would be available as free downloads with
| 7,212 |
the company incurred advertising costs of $ 3.1 million , $ 2.4 million and $ 1.7 million for the years ended december 31 , 2016 , 2015 and 2014 , respectively . acquisition costs , organizational and offering expenses the company incurs title , legal and story_separator_special_tag you should read the following discussion and analysis of our financial condition and results of operations in conjunction with the financial statements and notes thereto included in item 8 . `` financial statements and supplementary data '' as well as item 1 . `` business , '' item 1a . `` risk factors , '' and item 2 . `` properties , '' respectively , in this annual report on form 10-k. overview national storage affiliates trust is a fully integrated , self-administered and self-managed real estate investment trust organized in the state of maryland on may 16 , 2013. we have elected and we believe that we have qualified to be taxed as a reit commencing with our taxable year ended december 31 , 2015. we serve as the sole general partner of our operating partnership , a delaware limited partnership formed on february 13 , 2013 to conduct our business , which is focused on the ownership , operation , and acquisition of self storage properties located within the top 100 msas throughout the united states . our chairman and chief executive officer , arlen d. nordhagen , co-founded securcare self storage , inc. in 1988 to invest in and manage self storage properties . while growing securcare to over 150 self storage properties , mr. nordhagen recognized a market opportunity for a differentiated public self storage reit that would leverage the benefits of national scale by integrating multiple experienced regional self storage operators with local operational focus and expertise . we believe that his vision , which is the foundation of the company , aligns the interests of our participating regional operators ( `` pros '' ) , with those of our public shareholders by allowing our pros to participate alongside our shareholders in our financial performance and the performance of our pros ' managed portfolios . this structure offers our pros a unique opportunity to serve as regional property managers for their managed portfolios and directly participate in the potential upside of those properties while simultaneously diversifying their investment to include a broader portfolio of self storage properties . our structure our structure promotes operator accountability as subordinated performance units issued to our pros in exchange for the contribution of their properties are entitled to distributions only after those properties satisfy minimum performance thresholds . in the event of a material reduction in operating cash flow , distributions on our subordinated performance units will be reduced before or disproportionately to distributions on our common shares held by our common shareholders . in addition , we expect our pros will generally co-invest subordinated equity in the form of subordinated performance units in each acquisition that they source , and the value of these subordinated performance units will fluctuate with the performance of their managed portfolios . therefore , our pros are incentivized to select acquisitions that are expected to exceed minimum performance thresholds , thereby increasing the value of their subordinated equity stake . we expect that our shareholders will benefit from the higher levels of property performance that our pros are incentivized to deliver . we also seek to opportunistically partner with institutional funds and other institutional investors to acquire attractive portfolios utilizing a promoted return structure . we believe there is significant opportunity for continued external growth by partnering with institutional investors seeking to deploy capital in the self storage industry . our pros the company had seven pros as of december 31 , 2016 : securcare , northwest , optivest , guardian , move it , storage solutions , and hide away . in february 2017 , we entered into definitive agreements with personal mini of orlando , florida , to add personal mini as our eighth pro . we seek to further expand our platform by continuing to recruit additional established self storage operators , while integrating our operations through the implementation of centralized initiatives , including management information systems , revenue enhancement , and cost optimization programs . our national platform allows us to capture cost savings by eliminating redundancies and utilizing economies of scale across the property management platforms of our pros while also providing greater access to lower-cost capital . 39 consolidated properties we seek to own properties that are well located in high quality sub-markets with highly accessible street access and attractive supply and demand characteristics , providing our properties with strong and stable cash flows that are less sensitive to the fluctuations of the general economy . many of these markets have multiple barriers to entry against increased supply , including zoning restrictions against new construction and new construction costs that we believe are higher than our properties ' fair market value . we owned a geographically diversified portfolio of 382 self storage properties , located in 20 states , comprising approximately 23.1 million rentable square feet , configured in approximately 184,000 storage units , as of december 31 , 2016 . of these properties , 237 were acquired by us from our pros and 145 were acquired by us from third-party sellers . during the year ended december 31 , 2016 , we acquired 107 self storage properties with an aggregate fair value of $ 721.4 million , comprising approximately 7.3 million rentable square feet , configured in approximately 61,700 storage units . of these acquisitions , 23 were acquired by us from our pros and 84 were acquired by us from third-party sellers . during the year ended december 31 , 2015 , we acquired 58 self storage properties with an aggregate fair value of $ 313.0 million , comprising approximately 3.7 million rentable square feet , configured in approximately 28,500 storage units . of these acquisitions , 25 were acquired by us from our pros and 33 were acquired by us from third-party sellers . story_separator_special_tag this increase was primarily attributable to incremental rental revenue from 107 self storage properties we acquired between january 1 , 2016 and december 31 , 2016 , increased market rates and fees , regular rental increases for in-place tenants , and management fees and other revenue earned from our unconsolidated real estate venture and an increase in average total portfolio occupancy from 87.9 % to 89.7 % . average occupancy is calculated based on the average of the month-end occupancy immediately preceding the period presented and the month-end occupancies included in the respective period presented . rental revenue rental revenue increased by $ 61.3 million , or 47.2 % , for the year ended december 31 , 2016 , as compared to the year ended december 31 , 2015 . the increase in rental revenue was primarily due to a $ 52.3 million increase in non-same store rental revenue which was attributable to incremental rental revenue of $ 34.6 million from 107 self storage properties acquired between january 1 , 2016 and december 31 , 2016 , and $ 17.7 million from 53 self storage properties acquired from january 2 , 2015 to december 31 , 2015. same store portfolio rental revenues increased $ 9.0 million , or 7.9 % , due to a 5.3 % increase , from $ 10.62 to $ 11.18 , in same store rental revenue divided by average occupied square feet ( `` rental revenue per occupied square foot '' ) , driven primarily by a combination of increased contractual lease rates and fees , and a 210 basis point increase in average occupancy from 87.9 % to 90.0 % . other property-related revenue other property-related revenue represents ancillary income from our self storage properties , such as tenant insurance-related access fees and commissions and sales of storage supplies . other property-related revenue increased by $ 2.0 million , or 49.6 % , for the year ended december 31 , 2016 , as compared to the year ended december 31 , 2015 . this increase primarily resulted from a $ 1.9 million increase in non-same store other property-related revenue which was attributable to incremental other property-related revenue of $ 1.1 million from 107 self storage properties acquired between january 1 , 2016 and december 31 , 2016 , and $ 0.8 million from 53 self storage properties acquired from january 2 , 2015 to december 31 , 2015. management fees and other revenue during the year ended december 31 , 2016 , we earned $ 1.8 million of management and other fees for managing and operating the joint venture properties . these fees included a monthly property management fee equal to 6 % of the joint venture 's monthly gross revenues and net sales revenues , a call center fee equal to 1 % of the joint venture 's monthly gross revenues and net sales revenues , a monthly platform fee equal to $ 1,250 per joint venture property , and an acquisition fee equal to 0.65 % of the gross capitalization ( including debt and equity ) of the original 66 property jv portfolio , of which one quarter is earned each year over the first four years of the joint venture . total operating expenses total operating expenses increase d $ 39.1 million , or 38.2 % , for the year ended december 31 , 2016 , compared to the year ended december 31 , 2015 . as discussed below , this change was primarily due to an increase of $ 19.4 million in property operating expenses , $ 5.3 million in general and administrative expenses , and $ 14.4 million in depreciation and amortization . 42 property operating expenses property operating expenses increase d $ 19.4 million , or 42.7 % , for the year ended december 31 , 2016 compared to the year ended december 31 , 2015 . this increase story_separator_special_tag property sold during the year ended december 31 , 2014. same store portfolio rental revenues increased $ 4.2 million , or 7.9 % , due to a 4.8 % increase in rental revenue per occupied square foot from $ 9.50 to $ 9.96 , driven primarily by a combination of increased contractual lease rates and fees , and an increase in average occupancy from 85.6 % to 88.1 % . average occupancy is calculated based on the average of the month-end occupancy immediately preceding the period presented and the month-end occupancies included in the respective period presented . other property-related revenue other property-related revenue increased by $ 1.9 million , or 89.9 % , for the year ended december 31 , 2015 , as compared to the year ended december 31 , 2014. this increase primarily resulted from a $ 1.9 million increase in non-same store other property-related revenue which was attributable to incremental other property-related revenue of $ 1.2 million from 83 self storage properties acquired between january 1 , 2014 and december 31 , 2014 , and $ 0.7 million from 58 self storage properties acquired during the year ended december 31 , 2015. total operating expenses total operating expenses increased $ 42.4 million , or 70.9 % for the year ended december 31 , 2015 compared to the year ended december 31 , 2014. as discussed below , this change was primarily due to an increase of $ 17.5 million in property operating expenses , $ 8.1 million in general and administrative expenses , and $ 16.9 million in depreciation and amortization .
| resulted from a $ 18.2 million increase in non-same store property operating expenses attributable to incremental property operating expenses of $ 13.0 million from 107 self storage properties acquired between january 1 , 2016 and december 31 , 2016 , and $ 5.2 million from 53 self storage properties acquired from january 2 , 2015 to december 31 , 2015. in addition , same store portfolio property operating expenses increased $ 1.2 million , or 2.9 % , due to increases in personnel and related costs , bad debt expense and property taxes , partially offset by decreases in maintenance expenses and utilities . general and administrative expenses general and administrative expenses increased $ 5.3 million , or 32.4 % , for the year ended december 31 , 2016 , compared to the year ended december 31 , 2015 . this increase was attributable to increases in supervisory and administrative fees charged by our pros of $ 3.5 million , $ 0.8 million of costs related to our property management platform , $ 0.8 million of professional fees and other expenses , $ 0.4 million in salaries and benefits and $ 0.1 million in costs associated with periodic sec reporting and other compliance matters . these increases were partially offset by a $ 0.4 million decrease in equity-based compensation expense . depreciation and amortization depreciation and amortization increased $ 14.4 million , or 35.5 % , for the year ended december 31 , 2016 , compared to the year ended december 31 , 2015 . this increase was attributable to incremental depreciation expense of $ 9.1 million from 107 self storage properties acquired during the year ended december 31 , 2016 , and $ 4.8 million from 58 self storage properties acquired during the year ended december 31 , 2015 .
| 7,213 |
overview our key therapeutic products and product candidates include : prostacyclin analogues ( remodulin® , tyvaso® , orenitram , 314d , transcon treprostinil and transcon beraprost ) : stable synthetic forms of prostacyclin , an important molecule produced by the body that has powerful effects on blood vessel health and function ; phosphodiesterase type 5 ( pde-5 ) inhibitor ( adcirca® ) : a molecule that acts to inhibit the degradation of cyclic guanosine monophosphate ( cyclic gmp ) in cells . cyclic gmp is activated by nitric oxide ( no ) , a naturally occurring substance in the body that mediates the relaxation of vascular smooth muscle ; monoclonal antibody for oncologic applications ( ch14.18 mab ) : an antibody that treats cancer by activating the immune system ; glycobiology antiviral agents : a novel class of small , sugar-like molecules that have shown antiviral activity in a range of pre-clinical settings ; cell-based therapy : a cell-based product known as placental expanded ( plx ) cells we are developing for the treatment of pulmonary hypertension ; and lung transplantation : engineered lungs and lung tissue , which we are developing using xenotransplantation and regenerative medicine technologies , for transplantation in patients suffering from pulmonary arterial hypertension ( pah ) and other lung diseases . we are also developing technologies to increase the supply of donor lungs through collaborations with two ex-vivo lung perfusion companies . we concentrate substantially all of our research and development efforts on the preceding key therapeutic programs . we currently market and sell the following commercial products : ( 1 ) remodulin ( treprostinil ) injection ( remodulin ) ; ( 2 ) tyvaso ( treprostinil ) inhalation solution ( tyvaso ) ; and ( 3 ) adcirca ( tadalafil ) tablets ( adcirca ) . in december 2013 , the united states food and drug administration ( fda ) approved orenitram ( treprostinil ) extended-release tablets ( orenitram ) for the treatment of pah in world health organization ( who ) group 1 patients to improve exercise capacity . we expect to begin selling orenitram in mid-2014 as we are currently preparing for commercial launch . remodulin is approved in the united states for subcutaneous ( under the skin ) and intravenous ( in the vein ) administration , including for the treatment of patients requiring transition from flolan® ( epoprostenol sodium ) for injection . remodulin has also been approved in various countries outside of the united states . 62 tyvaso is an inhaled treatment for pah approved in the united states using the same active ingredient as remodulin and orenitram . adcirca and orenitram are both orally-administered therapies . we acquired exclusive commercialization rights to adcirca in the united states and puerto rico from eli lilly and company ( lilly ) . tyvaso , adcirca and orenitram offer more convenient routes of administration than remodulin , and are capable of reaching a broader range of patients who suffer from pah in various stages of the disease . in addition , we are developing the following products for the treatment of pah : an implantable pump delivery system for remodulin , an extended release , once-daily injectable form of treprostinil ( transcon treprostinil ) , an oral formulation of the prostacyclin analogue beraprost ( 314d ) and an extended release , once-daily injection of beraprost ( transcon beraprost ) . revenues sales of remodulin , tyvaso and adcirca comprise substantially all of our revenues . despite the planned commercial launch of orenitram in 2014 , we anticipate that we will remain substantially reliant on sales of remodulin , tyvaso and adcirca for the next several years as our principal sources of revenue . we have entered into separate , non-exclusive distribution agreements with accredo health group , inc. ( accredo ) and cvs caremark ( caremark ) in the united states , to distribute both remodulin and tyvaso . in april 2012 , express scripts , inc. , the parent company of curascript inc. ( curascript ) , then one of our specialty pharmaceutical distributors , completed its acquisition of medco health solutions , inc. , the parent company of accredo . as a result , curascript 's operations have been integrated into accredo 's , and in december 2013 we consolidated our distribution agreements with the two organizations into one contract . we also sell remodulin to distributors internationally . adcirca is sold through lilly 's pharmaceutical wholesaler network on our behalf . furthermore , lilly determines the wholesale price at which we may sell adcirca . we require our specialty pharmaceutical distributors to maintain reasonable levels of inventory reserves as the interruption of remodulin or tyvaso therapy can be life threatening . our specialty pharmaceutical distributors typically place monthly orders based on estimates of future demand and contractual minimum inventory requirements . as a result , sales of remodulin and tyvaso , our most significant sources of revenue , can vary depending on the timing and magnitude of these orders and may not precisely reflect patient demand . the patient protection and affordable care act , as amended by the health care and education reconciliation act of 2010 ( ppaca ) , contains broad provisions that will be implemented over the next several years . since its enactment in 2010 , we have not been materially impacted by the ppaca . however , the potential long-term impact of the ppaca on our business is inherently difficult to predict , as many details regarding the implementation of this legislation have not yet been determined . the impact of the ppaca depends in part on the issuance of final regulations and how this legislation will affect insurance companies and their relationships with drug manufacturers . we recognize revenues net of : ( 1 ) estimated rebates ; ( 2 ) prompt pay discounts ; ( 3 ) allowances for sales returns ; and ( 4 ) distributor fees . story_separator_special_tag all royalty obligations pertaining to remodulin and tyvaso will expire in october 2014 ; consequently , we anticipate gross margins on these products to increase . we synthesize treprostinil , the active ingredient in remodulin and tyvaso , and treprostinil diolamine , the active ingredient in orenitram , and produce remodulin and tyvaso , at our facility in silver spring , maryland . we produce orenitram in our research triangle park , north carolina facility ( rtp facility ) . we intend to use our own facilities to produce our primary supply of remodulin , tyvaso and orenitram and to continue to contract with third parties to supplement our production capacity and mitigate the risk of shortages . we believe we have ample supply of orenitram to support the drug 's commercial launch , expected to occur in mid-2014 . lastly , we engage a third-party contract manufacturer to produce the tyvaso inhalation system . lilly manufactures adcirca . we take title to adcirca upon its manufacture and bear any losses related to the storage , distribution and sale of adcirca . operating expenses since our inception , we have devoted substantial resources to our various clinical trials and other research and development efforts , which are conducted both internally and through third parties . from time to time , we also license or acquire additional technologies and compounds to be incorporated into our development pipeline . share-based compensation our operating expenses and net income are often materially impacted by the recognition of share-based compensation expense ( benefit ) associated with our share tracking award plans ( stap ) and stock option grants containing a performance requirement . the fair value of stap awards and stock options grants are measured using inputs and assumptions under the black-scholes-merton model that can materially impact the amount of compensation expense for a given period . stap awards are classified as liabilities and their fair value must be re-measured at the end of each financial reporting period until the awards are no longer outstanding . changes in our stap-related liability resulting from such re-measurements are recorded as adjustments to share-based compensation expense ( benefit ) and can create substantial volatility within our operating expenses from financial reporting period to period . some or all of the following factors , among others , can cause substantial volatility in the amount of share-based compensation expense ( benefit ) recognized in connection with the stap from period to period : ( 1 ) volatility in the price of our common stock ( specifically , increases in the price of our common stock will result in an increase in our stap liability and related compensation expense , while decreases in our stock price will generally result in a reduction in our stap liability and related compensation expense ) ; ( 2 ) changes in the number of outstanding awards ; ( 3 ) changes in both the number of vested and partially vested awards ; and ( 4 ) the probability of meeting a performance condition , if any . if we meet annual contractual performance requirements tied to growth in our market capitalization , our chief executive officer will be granted stock options at year-end , which vest 65 immediately upon grant . we accrue compensation expense for her estimated stock option grants when we determine that it is probable that the performance criteria will be met . these preceding factors may cause volatility in our operating expenses and net income from financial reporting period to period . major research and development projects our major research and development projects focus on : ( 1 ) the use of prostacyclin analogues and other therapies , as well as lung transplantation technologies , to treat cardiopulmonary diseases ; ( 2 ) monoclonal antibodies to treat a variety of cancers ; and ( 3 ) glycobiology antiviral agents to treat infectious diseases . cardiopulmonary disease projects remodulin in 2009 , we entered into an agreement with exclusive rights in the united states , united kingdom , france , germany , italy and japan , with medtronic , inc. ( medtronic ) to develop its proprietary intravascular infusion catheter to be used with medtronic 's synchromed® ii implantable infusion pump and related infusion system components ( together referred to as the medtronic system ) in order to deliver remodulin for the treatment of pah . if the medtronic system is successful , it could reduce many of the patient burdens and other complications associated with infused prostacyclin analogues . with our funding , medtronic recently completed the delivery clinical trial , in order to study the safety of the medtronic system while administering remodulin . the primary objective was to demonstrate a rate of catheter-related complications below 2.5 per 1,000 patient-days while using the medtronic system to deliver remodulin . in september 2013 , medtronic informed us that this primary objective was met ( p < 0.0001 ) . in addition to the clinical study , medtronic must complete other stability , compatibility and technical assessments of the medtronic system , including modifications to its hardware and software , and address any outstanding regulatory issues . upon completion of these activities by medtronic , we anticipate medtronic will make preparations to file a premarket approval application seeking fda clearance for the catheter and labeling changes , and will address any fda feedback , to enable the use of the medtronic system with remodulin . in tandem , we plan to seek fda approval of a supplement to remodulin 's label to allow the use of remodulin with the medtronic system . tyvaso we launched commercial sales of tyvaso in 2009 following its approval by the fda . in connection with tyvaso 's approval , we agreed to a post-marketing requirement ( pmr ) and certain post-marketing commitments ( pmcs ) . pmrs and pmcs often obligate sponsors to conduct studies after fda approval to gather additional information about a product 's safety , efficacy , or optimal use . pmrs are required studies , whereas pmcs are voluntary commitments .
| results of operations years ended december 31 , 2013 and 2012 the following table presents the components of net revenues ( dollars in thousands ) : replace_table_token_5_th the growth in revenues for the year ended december 31 , 2013 , compared to the year ended december 31 , 2012 , corresponded to the continued increase in the number of patients being treated with our products . for the years ended december 31 , 2013 and 2012 , approximately 76 percent and 78 percent , respectively , of total revenues were derived from sales of remodulin and tyvaso to u.s.-based specialty pharmaceutical distributors . remaining revenues were derived primarily from sales of adcirca and sales of remodulin to our international distributors . 71 the table below includes a reconciliation of the accounts associated with estimated rebates , prompt-pay discounts , allowances for sales returns and distributor fees ( in thousands ) : replace_table_token_6_th replace_table_token_7_th the table below summarizes research and development expense by major project and non-project components ( dollars in thousands ) : replace_table_token_8_th cardiopulmonary . the decrease in cardiopulmonary program expenses of $ 6.2 million for the year ended december 31 , 2013 , compared to the year ended december 31 , 2012 , resulted from a $ 6.1 million decrease in expenses relating to work on our transcon once-daily injectable prostacyclin analogues program . share-based compensation . the increase in share-based compensation of $ 123.5 million for the year ended december 31 , 2013 , compared to the year ended december 31 , 2012 , resulted from the approximately 112 percent appreciation in the price of our common stock during the year ended december 31 , 2013 , compared to the approximately 13 percent appreciation in the price of our common stock price during the year ended december 31 , 2012 . 72 other . the increase in other research and development expenses of $ 8.7 million for the year ended december 31 , 2013 , compared to the year ended december 31 , 2012 , was attributable to a $ 5.1
| 7,214 |
pursuant to the merger agreement , the shareholders of ibt received approximately 6.6 million shares of old national bancorp stock valued at approximately story_separator_special_tag the following discussion is an analysis of our results of operations for the fiscal years ended december 31 , 2012 , 2011 and 2010 , and financial condition as of december 31 , 2012 and 2011. this discussion and analysis should be read in conjunction with our consolidated financial statements and related notes . this discussion contains forward-looking statements concerning our business . readers are cautioned that , by their nature , forward-looking statements are based on estimates and assumptions and are subject to risks , uncertainties , and other factors . actual results may differ materially from our expectations that are expressed or implied by any forward-looking statement . the discussion in item 1a , risk factors , lists some of the factors that could cause our actual results to vary materially from those expressed or implied by any forward-looking statements , and such discussion is incorporated into this discussion by reference . general overview old national is a financial holding company incorporated in the state of indiana and maintains its principal executive offices in evansville , indiana . old national , through old national bank , provides a wide range of services , including commercial and consumer loan and depository services , lease financing and other traditional banking services . old national also provides services to supplement the traditional banking business including fiduciary and wealth management services , investment and brokerage services , investment consulting , insurance and other financial services . the company 's basic mission is to be the community bank in the cities and towns it serves . the company focuses on establishing and maintaining long-term relationships with customers , and is committed to serving the financial needs of the communities in its market area . old national provides financial services primarily in indiana , eastern and southeastern illinois , and central and western kentucky . corporate developments in fiscal 2012 net income for 2012 was $ 91.7 million , an increase of $ 19.2 million from 2011. diluted earnings per share available to common shareholders were $ 0.95 per share , an increase of $ 0.19 per share from 2011. the improvement in 2012 net income was primarily the result of accretion income associated with acquired loans , lower cost funding sources , modest organic loan growth , and improved credit . partially offsetting the higher net revenue were higher noninterest expenses associated with our recent acquisitions . the company successfully integrated indiana community bancorp at the end of the third quarter . this transaction strengthens our position as the third largest branch network in indiana and allows us to expand our services into columbus , indiana and other vibrant regions in the south central indiana market . subsequent to year-end , the company also announced its intent to enter into the southwest lower michigan market through the acquisition of 24 bank of america branches . the entry into this new market and the full ramp-up of lenders at the former indiana community bancorp locations give rise to our favorable commercial loan growth outlook . business outlook while we believe the interest rate environment will continue to pose challenges for 2013 revenue growth , our clients are expressing more optimism regarding the state of the economy . our goals for 2013 are much the same as they were in 2012 : increase revenue , reduce expenses and target partnership opportunities that align with our financial and strategic goals . while we remain committed to a risk-conscious approach to lending , we know how vital it is to generate new loan growth in 2013 and beyond . we believe our new partnerships , and the new client base they represent , position us well to achieve this growth . 26 as we did in 2012 , we will continue to look for ways to enhance the company 's efficiency ratio through process improvements , organizational streamlining and other cost reduction strategies . we continue to target additional partnerships . we are focused on expanding our wealth management business and community banks in growth markets that are either within or near our existing franchise . such strategic consolidations should improve the company 's bottom line while expanding our distribution network , which helps build long-term shareholder value . results of operations the following table sets forth certain income statement information of old national for the years ended december 31 , 2012 , 2011 , and 2010 : replace_table_token_5_th ( 1 ) efficiency ratio is defined as noninterest expense before amortization of intangibles as a percent of fully taxable equivalent net interest income and noninterest income , excluding net gains from securities transactions . this presentation excludes intangible amortization and net securities gains , as is common in other company disclosures , and better aligns with true operating performance . this is a non-gaap financial measure that management believes to be helpful in understanding old national 's results of operations . comparison of fiscal years 2012 and 2011 net interest income net interest income is the most significant component of our earnings , comprising over 61 % of 2012 revenues . net interest income and margin are influenced by many factors , primarily the volume and mix of earning assets , funding sources and interest rate fluctuations . other factors include level of accretion income on purchased loans , prepayment risk on mortgage and investment-related assets and the composition and maturity of earning assets and interest-bearing liabilities . loans typically generate more interest income than investment securities with similar maturities . funding from client deposits generally cost less than wholesale funding sources . factors such as general economic activity , federal reserve board monetary policy and price volatility of competing alternative investments , can also exert significant influence on our ability to optimize the mix of assets and funding and the net interest income and margin . story_separator_special_tag ( 6 ) changes in fair value are reflected in the average balance ; however , yield information does not give effect to changes in fair value that are reflected as a component of shareholders ' equity . ( 7 ) the 2012 , 2011 and 2010 average balances include $ 23.5 million , $ 146.0 million and $ 152.3 million , respectively , of required and excess balances held at the federal reserve . 29 the following table shows fluctuations in net interest income attributable to changes in the average balances of assets and liabilities and the yields earned or rates paid for the years ended december 31. net interest incomerate/volume analysis ( tax equivalent basis , dollars in thousands ) replace_table_token_8_th the variance not solely due to rate or volume is allocated equally between the rate and volume variances . ( 1 ) interest on investment securities and loans includes the effect of taxable equivalent adjustments of $ 8.8 million and $ 4.4 million , respectively , in 2012 ; $ 7.3 million and $ 4.5 million , respectively , in 2011 ; and $ 8.5 million and $ 5.0 million , respectively , in 2010 ; using the federal statutory rate in effect of 35 % for all periods adjusted for the tefra interest disallowance applicable to certain tax-exempt obligations . provision for loan losses the provision for loan losses was $ 5.0 million in 2012 , a $ 2.5 million decrease from the $ 7.5 million recorded in 2011. impacting the provision over the past twelve months are the following factors : ( 1 ) the loss factors applied to our performing loan portfolio have decreased over time as charge-offs were substantially lower , ( 2 ) the continuing trend in improved credit quality , and ( 3 ) the percentage of our legacy loan portfolio consisting of those loans where higher loss factors are applied ( commercial and commercial real estate loans ) fell while the percentage of our loan portfolio consisting of those loans where lower loss factors are applied ( residential loans ) increased . for additional information about non-performing loans , charge-offs and additional items impacting the provision , refer to the risk managementcredit risk section of item 7 , management 's discussion and analysis of financial condition and results of operations . noninterest income we generate revenues in the form of noninterest income through client fees and sales commissions from our core banking franchise and other related businesses , such as wealth management , investment consulting , investment products and insurance . this source of revenue has decreased as a percentage of total revenue to 38.1 % in 2012 compared to 40.1 % in 2011. noninterest income for 2012 was $ 189.8 million , an increase of $ 6.9 million , or 3.8 % compared to $ 182.9 million reported for 2011. the improvement in 2012 resulted from a $ 6.3 million increase in net securities gains , a $ 1.1 million increase in wealth management fees , a $ 1.6 million increase in investment product fees , a $ 1.1 million increase in revenue from company-owned life insurance and a $ 3.0 million increase in other income . partially offsetting these increases were a $ 1.2 million decrease in debit card and atm card fees , a $ 1.4 million decrease in gain on sale leaseback transactions and a $ 3.8 million decrease from changes in the fdic indemnification asset . despite a full year of fee revenue from the integra acquisition and a little over three months of fee revenue from indiana community bancorp , service charges and overdraft fees , our largest source of noninterest income , declined to $ 51.5 million in 2012 , a $ 0.4 million decrease from $ 51.9 million in 2011. this appears to be a negative trend in the industry and will be a focus of management in 2013 . 30 net securities gains were $ 13.6 million during 2012 compared to $ 7.3 million for 2011. included in 2012 is $ 15.0 million of security gains partially offset by $ 1.4 million of other-than-temporary-impairment charges on two pooled trust preferred securities and six non-agency mortgage-backed securities . included in 2011 is $ 8.7 million of security gains partially offset by $ 1.4 million of other-than-temporary-impairment on one pooled trust preferred security and three non-agency mortgage-backed securities . sales of securities continued during 2011 and 2012 as we adjusted the composition of the investment portfolio to manage the effective duration of the portfolio and reduce the leverage on the balance sheet as proceeds from securities sales were used to reduce other borrowings . wealth management fees , which are dependent on the managed assets performance , continue to be impacted by uncertainties in the investment markets but did increase by $ 1.1 million to $ 21.5 million in 2012. the increase was primarily due to the acquisition of indiana community bancorp on september 15 , 2012 and the trust business of integra bank on june 1 , 2011. debit card and atm fees decreased by $ 1.2 million to $ 24.0 million in 2012 as compared to $ 25.2 million in 2011. a decrease in interchange income is the primary reason for the decrease . investment product fees were $ 12.7 million in 2012 compared to $ 11.1 million in 2011. the increase is primarily a result of increases in mutual fund fees and other investment advisory fees as investment markets improved in 2012. revenue from company-owned life insurance was $ 6.4 million in 2012 compared to $ 5.3 million in 2011. we anticipate this revenue will continue to slowly improve . the $ 1.4 million decrease in gain on sale leaseback transactions is primarily due to the repurchase of a branch in 2011 and acceleration of the deferred gain . other income increased $ 3.0 million in 2012 as compared to 2011. the increase was primarily as a result of increases in customer derivative fee revenue , rental income from an operating lease and other miscellaneous income .
| business line results replace_table_token_11_th the 2012 community banking segment profit increased $ 12.9 million from 2011 levels , primarily as a result of the acquisitions of indiana community bancorp and integra bank , which occurred on july 29 , 2011. the 2011 community banking segment profit increased $ 56.3 million from 2010 levels , primarily as a result of the acquisitions of monroe bancorp and integra bank and a decrease in provision for loan loss expense . the 2012 treasury segment profit increased $ 12.3 million from 2011 primarily as a result of the $ 6.4 million increase in net securities gains in 2012. the 2011 treasury segment profit decreased $ 3.6 million from 2010 primarily as a result of the $ 5.9 million decrease in net securities gains in 2011. the 2012 other segment profit increased approximately $ 2.8 million from 2011 primarily as a result of the increased wealth management revenue . the 2011 other segment profit increased approximately $ 3.5 million from 2010 primarily as a result of the increased trust business associated with the monroe bancorp and integra acquisitions . financial condition overview at december 31 , 2012 , our total assets were $ 9.544 billion , a 10.8 % increase from $ 8.610 billion at december 31 , 2011. the increase is primarily a result of the acquisition of indiana community bancorp , which occurred on september 15 , 2012. we are continuing to reduce our reliance on higher cost deposits and other borrowings . earning assets , comprised of investment securities , portfolio loans , loans and leases held for sale , money market investments and interest earning accounts with the federal reserve , were $ 8.200 billion at december 31 , 2012 , an increase of $ 807.1 million , or 10.9 % , from $ 7.392 billion at december 31 , 2011. the increase in earning assets is primarily a result of the acquisition of indiana community bancorp .
| 7,215 |
note 9. debt debt , net , consists of the following : replace_table_token_41_th on november 18 , 2019 , the company , along with its wholly-owned subsidiaries , outfront media capital llc ( “ finance llc ” ) and outfront media capital corporation ( together with finance llc , the “ borrowers ” ) , and other guarantor subsidiaries party thereto , entered into an amendment ( the “ amendment ” ) to its credit agreement and its related security agreement , each dated january 31 , 2014 ( together , and as amended , restated , amended and restated , supplemented or otherwise modified , the story_separator_special_tag the following management 's discussion and analysis of financial condition and results of operations ( “ md & a ” ) should be read in conjunction with our historical consolidated financial statements and the notes thereto in “ item 8. financial statements and supplementary data. ” this md & a contains forward-looking statements that involve numerous risks and uncertainties . the forward-looking statements are subject to a number of important factors , including , but not limited to , those factors discussed in “ item 1a . risk factors ” and the “ cautionary statement regarding forward-looking statements ” section of this annual report on form 10-k , that could cause our actual results to differ materially from the results described herein or implied by such forward-looking statements . management 's discussion and analysis of financial condition and results of operations for the year ended december 31 , 2018 , as compared to the year ended december 31 , 2017 is included in “ item 7. management 's discussion and analysis of financial condition and results of operations ” of our annual report on form 10-k for the year ended december 31 , 2018 , filed with the securities and exchange commission ( the “ sec “ ) on february 27 , 2019 , overview outfront media is a real estate investment trust ( “ reit ” ) , which provides advertising space ( “ displays ” ) on out-of-home advertising structures and sites in the united states ( the “ u.s. ” ) and canada . we manage our operations through three operating segments— ( 1 ) u.s. billboard and transit , which is included in our u.s. media reportable segment , ( 2 ) international and ( 3 ) sports marketing . international and sports marketing do not meet the criteria to be a reportable segment and accordingly , are both included in other ( see item 8. , note 20. segment information to the consolidated financial statements ) . business we are one of the largest providers of advertising space on out-of-home advertising structures and sites across the u.s. and canada . our inventory consists of billboard displays , which are primarily located on the most heavily traveled highways and roadways in top nielsen designated market areas ( “ dmas ” ) , and transit advertising displays operated under exclusive multi-year contracts with municipalities in large cities across the u.s. and canada . we also have marketing and multimedia rights agreements with colleges , universities and other educational institutions , which entitle us to operate on-campus advertising displays , as well as manage marketing opportunities , media rights and experiential entertainment at sporting events . in total , we have displays in all of the 25 largest markets in the u.s. and 150 markets in the u.s. and canada . our top market , high profile location focused portfolio includes sites in and around both grand central station and times square in new york , various locations along sunset boulevard in los angeles , and the bay bridge in san francisco . the breadth and depth of our portfolio provides our customers with a range of options to address their marketing objectives , from national , brand-building campaigns to hyper-local campaigns that drive customers to the advertiser 's website or retail location “ one mile down the road. ” in addition to providing location-based displays , we also focus on delivering mass and targeted audiences to our customers . geopath , the out-of-home advertising industry 's audience measurement system , enables us to build campaigns based on the size and demographic composition of audiences . as part of our technology platform , we are developing solutions for enhanced demographic and location targeting , and engaging ways to connect with consumers on-the-go . additionally , our outfront mobile network and social influence add-on products allow our customers to further leverage location targeting with interactive mobile advertising and social sharing amplification . we believe out-of-home continues to be an attractive form of advertising , as our displays are always viewable and can not be turned off , skipped , blocked or fast-forwarded . further , out-of-home advertising can be an effective “ stand-alone ” medium , as well as an integral part of a campaign to reach audiences using multiple forms of media , including television , radio , print , online , mobile and social media advertising platforms . we provide our customers with a differentiated advertising solution at an attractive price point relative to other forms of advertising . in addition to leasing displays , we provide other value-added services to our customers , such as pre-campaign category research , consumer insights , print production and post-campaign tracking and analytics . u.s. media . our u.s. media segment generated 23 % of its revenues in the new york city metropolitan area in 2019 , 22 % in 2018 and 23 % in 2017 , and generated 16 % in the los angeles metropolitan area in each of 2019 , 2018 and 2017 . story_separator_special_tag several of our key performance indicators are not prepared in conformity with generally accepted accounting principles in the united states of america ( “ gaap ” ) . we believe these non-gaap performance indicators are meaningful supplemental measures of our operating performance and should not be considered in isolation of , or as a substitute for , their most directly comparable gaap financial measures . replace_table_token_8_th ( a ) organic revenues exclude the impact of foreign currency exchange rates ( “ non-organic revenues ” ) . we provide organic revenues to understand the underlying growth rate of revenue excluding the impact of non-organic revenue items . our management believes organic revenues are useful to users of our financial data because it enables them to better understand the level of growth of our business period to period . since organic revenues are not calculated in accordance with gaap , it should not be considered in isolation of , or as a substitute for , revenues as an indicator of operating performance . organic revenues , as we calculate it , may not be comparable to similarly titled measures employed by other companies . ( b ) see the “ reconciliation of non-gaap financial measures ” and “ revenues ” sections of this md & a for reconciliations of operating income to adjusted oibda , net income attributable to outfront media inc. to ffo attributable to outfront media inc. and affo attributable to outfront media inc. and revenues to organic revenues . adjusted oibda we calculate adjusted oibda as operating income ( loss ) before depreciation , amortization , net ( gain ) loss on dispositions , stock-based compensation , restructuring charges and impairment charges . we calculate adjusted oibda margin by dividing adjusted oibda by total revenues . adjusted oibda and adjusted oibda margin are among the primary measures we use for managing our business , evaluating our operating performance and planning and forecasting future periods , as each is an important indicator of our operational strength and business performance . our management believes users of our financial data are best served if the information that is made available to them allows them to align their analysis and evaluation of our operating results along the same lines that our management uses in managing , planning and executing our business strategy . our management also believes that the presentations of adjusted oibda and adjusted oibda margin , as supplemental measures , are useful in evaluating our business because eliminating certain non-comparable items highlight operational trends in our business that may not otherwise be apparent when relying solely on gaap financial measures . it is management 's opinion that these supplemental measures provide users of our financial data with an important perspective on our operating performance and also make it easier for users of our financial data to compare our results with other companies that have different financing and capital structures or tax rates . 40 ffo and affo when used herein , references to “ ffo ” and “ affo ” mean “ ffo attributable to outfront media inc. ” and “ affo attributable to outfront media inc. , ” respectively . we calculate ffo in accordance with the definition established by the national association of real estate investment trusts ( “ nareit ” ) . ffo reflects net income ( loss ) attributable to outfront media inc. adjusted to exclude gains and losses from the sale of real estate assets , impairment charges , depreciation and amortization of real estate assets , amortization of direct lease acquisition costs and the same adjustments for our equity-based investments and non-controlling interests , as well as the related income tax effect of adjustments , as applicable . we calculate affo as ffo adjusted to include cash paid for direct lease acquisition costs as such costs are generally amortized over a period ranging from four weeks to one year and therefore are incurred on a regular basis . affo also includes cash paid for maintenance capital expenditures since these are routine uses of cash that are necessary for our operations . in addition , affo excludes restructuring charges and losses on extinguishment of debt , as well as certain non-cash items , including non-real estate depreciation and amortization , stock-based compensation expense , accretion expense , the non-cash effect of straight-line rent , amortization of deferred financing costs and the same adjustments for our non-controlling interests , as well as the non-cash portion of income taxes , and the related income tax effect of adjustments , as applicable . we use ffo and affo measures for managing our business and for planning and forecasting future periods , and each is an important indicator of our operational strength and business performance , especially compared to other reits . our management believes users of our financial data are best served if the information that is made available to them allows them to align their analysis and evaluation of our operating results along the same lines that our management uses in managing , planning and executing our business strategy . our management also believes that the presentations of ffo and affo , as supplemental measures , are useful in evaluating our business because adjusting results to reflect items that have more bearing on the operating performance of reits highlight trends in our business that may not otherwise be apparent when relying solely on gaap financial measures . it is management 's opinion that these supplemental measures provide users of our financial data with an important perspective on our operating performance and also make it easier to compare our results to other companies in our industry , as well as to reits .
| segment results of operations we present adjusted oibda as the primary measure of profit and loss for our reportable segments . ( see the “ key performance indicators ” section of this md & a and item 8. , note 20. segment information to the consolidated financial statements . ) we manage our operations through three operating segments— ( 1 ) u.s. billboard and transit , which is included in our u.s. media reportable segment , ( 2 ) international and ( 3 ) sports marketing . international and sports marketing do not meet the criteria to be a reportable segment and accordingly , are both included in other . our segment reporting therefore includes u.s. media and other . the following table presents our revenues , adjusted oibda and operating income ( loss ) by segment in 2019 and 2018 . replace_table_token_14_th ( a ) stock-based compensation is classified as corporate expense . 46 u.s. media replace_table_token_15_th * calculation is not meaningful . total revenues in the u.s. media segment increased $ 161.9 million , or 11 % , in 2019 compared to 2018 , reflecting an increase in average revenue per display ( yield ) , growth in transit digital displays and the conversion of traditional static billboard displays to digital billboard displays . we generated approximately 44 % in each of 2019 and 2018 of revenues in the u.s. media segment from national advertising campaigns . billboard revenues in the u.s. media segment increased $ 74.1 million , or 7 % , in 2019 compared to 2018 , reflecting an increase in average revenue per display ( yield ) and the conversion of traditional static billboard displays to digital billboard displays .
| 7,216 |
the acquisition was funded through a combination of cash on hand and long-term borrowings . the following table summarizes the fair values of the assets acquired and liabilities assumed as a result of the surgiquest acquisition . 50 replace_table_token_20_th the unaudited pro forma information for the years ended december 31 , 2016 and 2015 , assuming surgiquest occurred as of january 1 , 2015 are presented below . this information has been prepared for comparative purposes only and does not purport to be indicative of the results of operations which actually would have resulted had the surgiquest acquisition occurred on the dates indicated , or which may result in the future . december 31 , 2016 2015 net sales $ 763,520 $ 768,726 net income 29,153 ( 9,673 ) these pro forma results include certain adjustments , primarily due to increases in amortization expense due to fair value adjustments of intangible assets , increases in interest expense due to additional borrowings incurred to finance the acquisition , and acquisition related costs including transaction costs such as legal , accounting , valuation and other professional services as well as integration costs such as severance and retention . acquisition related costs included in the determination of pro forma net income for the year ended december 31 , 2015 totaled $ 20.6 million . such amounts are excluded from the determination of pro forma net income for the year ended december 31 , story_separator_special_tag the following discussion should be read in conjunction with selected financial data ( item 6 ) , and our consolidated financial statements and related notes contained elsewhere in this report . overview of conmed corporation conmed corporation ( “ conmed ” , the “ company ” , “ we ” or “ us ” ) is a medical technology company that provides surgical devices and equipment for minimally invasive procedures . the company 's products are used by surgeons and physicians in a variety of specialties including orthopedics , general surgery , gynecology , neurosurgery and gastroenterology . beginning in fiscal year 2017 , we adjusted our product line disclosures to align with the way we review net sales . in doing so , we consolidated our surgical visualization product line into our orthopedic surgery product line for all years presented . our product lines consist of orthopedic surgery and general surgery . orthopedic surgery consists of sports medicine instrumentation and small bone , large bone and specialty powered surgical instruments as well as , imaging systems for use in minimally invasive surgery procedures including 2dhd and 3dhd vision technologies and service fees related to the promotion and marketing of sports medicine allograft tissue . general surgery consists of a complete line of endo-mechanical instrumentation for minimally invasive laparoscopic and gastrointestinal procedures , a line of cardiac monitoring products as well as electrosurgical generators and related instruments . these product lines as a percentage of consolidated net sales are as follows : replace_table_token_7_th a significant amount of our products are used in surgical procedures with approximately 80 % of our revenues derived from the sale of single-use products . our capital equipment offerings also facilitate the ongoing sale of related single-use products and accessories , thus providing us with a recurring revenue stream . we manufacture substantially all of our products in facilities located in the united states and mexico . we market our products both domestically and internationally directly to customers and through distributors . international sales approximated 48 % , 48 % and 50 % in 2017 , 2016 and 2015 , respectively . business environment on january 4 , 2016 , we acquired surgiquest , inc. ( `` surgiquest '' ) for $ 265 million in cash ( on a cash-free , debt-free basis ) . surgiquest develops , manufactures and markets the airseal ® system , the first integrated access management technology for use in laparoscopic and robotic procedures . this proprietary and differentiated access system is complementary to our current general surgery offering . in connection with the surgiquest acquisition , we assumed a lawsuit filed in 2013 by lexion medical ( “ lexion ” ) against surgiquest . on april 11 , 2017 , the trial for this lawsuit concluded with the jury awarding $ 2.2 million in compensatory damages with an additional $ 10.0 million in punitive damages to lexion . refer to note 2 to the consolidated financial statements for further details on this acquisition and note 11 to the consolidated financial statements for further details on the lawsuit . during 2017 , we recorded a deferred tax benefit of $ 31.9 million as a result of the 2017 tax cuts and jobs act . although we are still assessing the overall impact , we believe this act will result in a lower tax on domestic earnings than we have historically recorded . refer to note 7 to the consolidated financial statements for further details . we plan to continue to restructure both operations and administrative functions as necessary throughout the organization . we have successfully executed our restructuring plans over the past few years , however , we can not be certain future activities will be completed in the estimated time period or that planned cost savings will be achieved . critical accounting policies preparation of our financial statements requires us to make estimates and assumptions which affect the reported amounts of assets , liabilities , revenues and expenses . note 1 to the consolidated financial statements describes the significant accounting policies used in preparation of the consolidated financial statements . the most significant areas involving management judgments 19 and estimates are described below and are considered by management to be critical to understanding the financial condition and results of operations of conmed corporation . inventory valuation we write-off excess and obsolete inventory resulting from the inability to sell our products at prices in excess of current carrying costs . the markets in which we operate are highly competitive , with new products and surgical procedures introduced on an on-going basis . story_separator_special_tag in performing a sensitivity analysis on our pension plan expense , we do not believe a 0.25 % increase or decrease in discount rate or investment return would have a material impact on our pension expense . see note 10 to the consolidated financial statements for further discussion . stock-based compensation all share-based payments to employees , including stock options , grants of restricted stock units , performance share units and stock appreciation rights are recognized in the financial statements based at their fair values . compensation expense is generally recognized using a straight-line method over the vesting period . compensation expense for performance share units is recognized using the graded vesting method . income taxes the recorded future tax benefit arising from deductible temporary differences and tax carryforwards is approximately $ 50.2 million at december 31 , 2017 . management believes that earnings during the periods when the temporary differences become deductible will be sufficient to realize the related future income tax benefits . the company is subject to taxation in the united states and various states and foreign jurisdictions . taxing authority examinations can involve complex issues and may require an extended period of time to resolve . our federal income tax returns have been examined by the internal revenue service ( “ irs ” ) for calendar years ending through 2016. tax years subsequent to 2016 are subject to future examination . story_separator_special_tag div > research and development expense research and development expense was $ 32.3 million , $ 32.3 million and $ 27.4 million in 2017 , 2016 and 2015 , respectively . as a percentage of net sales , research and development expense was 4.1 % in 2017 , 4.2 % in 2016 and 3.8 % in 2015 . expense remained flat in 2017 compared to 2016 due to the timing of projects . the increase of 0.4 percentage points in 2016 is due to higher project and registration related costs as the company increased its efforts on new product development and innovation . other expense other expense in 2016 related to costs associated with our fifth amended and restated senior credit agreement entered into on january 4 , 2016 as further described in note 6 to the consolidated financial statements . these costs include a $ 2.7 million charge related to commitment fees paid to certain of our lenders , which provided a financing commitment for the surgiquest acquisition and a loss on the early extinguishment of debt of $ 0.3 million . interest expense interest expense was $ 18.2 million in 2017 compared to $ 15.4 million in 2016 and $ 6.0 million in 2015 . interest expense increased in 2017 and 2016 as compared to 2015 due to the additional borrowings and higher interest rates under the fifth amended and restated senior credit agreement as further described in note 6 to the consolidated financial statements . the weighted average interest rates on our borrowings were 3.52 % in 2017 increasing from 2.93 % in 2016 and 2.23 % in 2015 . provision ( benefit ) for income taxes a provision ( benefit ) for income taxes was recorded at an effective rate of -93.1 % , 24.3 % and 32.4 % in 2017 , 2016 and 2015 , respectively , as compared to the federal statutory rate of 35.0 % . the effective tax rate in 2017 is lower than that recorded in 2016 due to the 2017 tax cuts and jobs act and consolidated group restructuring . the effective tax rate in 2016 is lower than that recorded in 2015 due to a higher proportion of earnings in foreign jurisdictions where the tax rates were lower than the statutory federal rate and benefits recorded in 2016 in connection with the prior year tax return finalization process . these benefits were offset by tax expense related to nondeductible surgiquest acquisition costs recorded in 2016 . a reconciliation of the united states statutory income tax rate to our effective tax rate is included in note 7 to the consolidated financial statements . non-gaap financial measures net sales “ on a constant currency basis ” is a non-gaap measure . the company analyzes net sales on a constant currency basis to better measure the comparability of results between periods . to measure percentage sales growth in constant currency , the company removes the impact of changes in foreign currency exchange rates that affect the comparability and trend of net sales . because non-gaap financial measures are not standardized , it may not be possible to compare this financial measure with other companies ' non-gaap financial measures having the same or similar names . this adjusted financial measure should not be considered in isolation or as a substitute for reported net sales growth , the most directly comparable gaap financial measure . this non-gaap financial measure is an additional way of viewing net sales that , when viewed with our gaap results , provides a more complete understanding of our business . the company strongly encourages investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure . liquidity and capital resources our liquidity needs arise primarily from capital investments , working capital requirements and payments on indebtedness under the fifth amended and restated senior credit agreement , described below . we have historically met these liquidity requirements with funds generated from operations and borrowings under our revolving credit facility . in addition , we have historically used term borrowings , including borrowings under the fifth amended and restated senior credit agreement and borrowings under separate 23 loan facilities , in the case of real property purchases , to finance our acquisitions . we also have the ability to raise funds through the sale of stock or we may issue debt through a private placement or public offering .
| consolidated results of operations the following table presents , as a percentage of net sales , certain categories included in our consolidated statements of comprehensive income for the periods indicated : replace_table_token_8_th 21 net sales the following table presents net sales by product line for the years ended december 31 , 2017 , 2016 and 2015 : replace_table_token_9_th net sales increased 4.3 % to $ 796.4 million in 2017 and 6.2 % in 2016 to $ 763.5 million from $ 719.2 million in 2015 . the increase in 2017 was due to the continued growth in general surgery and the return to growth in orthopedic surgery , as described below . the increase in 2016 sales compared to the same period 2015 was mainly due to growth in our general surgery product line due to the surgiquest acquisition . orthopedic surgery sales increased 1.6 % in 2017 to $ 428.9 million after a decrease of 5.1 % in 2016 to $ 422.1 million from $ 445.0 million in 2015 . in 2017 , the increase was mainly driven by our sports medicine offerings , including new product introductions , partially offset by lower capital sales . in 2016 , the decrease was mainly due to the unfavorable impact of foreign exchange , lower sales in our capital products and resection product offering offset by increases in our procedure specific product offering . general surgery sales increased 7.6 % in 2017 to $ 367.5 million after an increase of 24.5 % in 2016 to $ 341.4 million from $ 274.2 million in 2015 . the increase in 2017 was driven primarily by sales growth of our advanced surgical product offering , particularly in airseal ® and new product introductions , and endoscopic technologies products , particularly in new product introductions . the increase in 2016 was mainly due to the surgiquest acquisition .
| 7,217 |
ltd. staff superannuation fund which holds 1,940,000 shares . ( 4 ) philip a. shiels , chief financial officer and a director of the company , holds the power of attorney for the trustee of the research no . 2 trust which holds 3,198,522 shares . mr. shiels is a trustee and a beneficiary of the shiels superannuation fund which holds 8,250,000 shares . mr. shiels is a trustee and a beneficiary of the shiels trust which holds 7,000,000 shares . ( 5 ) richard lukso , chairman and a director of the company , holds 1,140,000 shares directly and is the beneficial owner of 1,000,000 shares held by the lukso family trust dtd 4/29/97 . ( 6 ) eric p. van der griend is a director and shareholder of ocean view investment pty . ltd. which owns 13,888,889 shares and a director and shareholder of swiss time australia pty . ltd. which owns 268,750 shares . mr. van der griend is considered the beneficial owner of 14,157,639 shares . ( 7 ) david and beverly chalmers are trustees of the broben superannuation fund which holds 10,039,613 shares . ( 8 ) reginald edward gleeson is a trustee of regsher pty . ltd. superannuation fund which owns 12,788,471 shares . ( 9 ) roman lohyn is a trustee of mostyn superannuation fund which owns 10,000,002 shares and a director of roman lohyn pty . ltd. which owns 500,000 shares . 17 item 13. certain relationships and related transactions and director independence . ron chapman , graham chappell , and philip shiels are directors of the company and directors of the company 's former subsidiary asiq pty . ltd. ( `` asiq `` ) . asiq provides technical support for the company 's business jet program , and in the year ended june 30 , 2018 , received a monthly retainer plus outgoings . chapman international pty . ltd. , of which ron chapman is a director and shareholder , was paid marketing and engineering service fees during the year ended june 30 , 2018. shiels and co. , of which philip shiels is the principal , was paid management fees during the year ended june 30 , 2018. bizjetmobile llc , the north and south american agent for bizjetmobile services and systems , is 50 % owned by asiq . the owner of chapman reid , the european and middle east agent for bizjetmobile services and systems , is related to ron chapman . since june 30 , 2017 , the company entered into a license agreement with asiq , under which the company granted asiq the right to develop , manufacture , market and commercialize the company 's intellectual property for global military and government applications . item 14. principal accountant fees and services audit fees audit fees paid to b f borgers in the fiscal year ended june 30 , 2017 and june 30 , 2018 were $ 19,980 and $ 15,000 respectively . audit-related fees there were no fees billed for services reasonably related to the performances of the audit or review of our financial statements other than those disclosed under the caption audit fees for fiscal years 2018 and 2017. tax fees no fees have been paid for income tax return preparation . all other fees there were no other fees filled for services . item 15. exhibits and financial statement schedules ( a ) exhibits exhibit no . description 31.1 certification of the president under rule 13a-14 ( a ) ( section 302 of the sarbanes-oxley act of 2002 ) 31.2 certification of the chief financial officer under rule 13a-14 ( a ) ( section 302 of the sarbanes-oxley act of 2002 ) 32.1 certification pursuant to section 906 of the sarbanes-oxley act of 2002 ( 18 u.s.c . section 1350 ) 32.2 certification pursuant to section 906 of the sarbanes-oxley act of 2002 ( 18 u.s.c . section 1350 ) 18 signatures pursuant to the requirements of section 13 or 15 ( d ) of the securities exchange act of 1934 , the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized . as-ip tech , inc. dated : october 25 , 2019 by : ronald j. chapman president by : philip a. shiels principal financial officer pursuant to the securities exchange act of 1934 , this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated . signature title date richard lukso director 10/25/2019 richard lukso ronald j. chapman director 10/25/2019 ronald j. chapman graham o. chappell director 10/25/2019 graham o. chappell philip a. shiels director 10/25/2019 philip a. shiels 19 story_separator_special_tag overview the company maintains a low-cost structure as it has no employees , contracting the services of executives and support engineers as required . because of the low-cost structure , the company anticipates that the proceeds from stock issues and revenue from service and system sales , will be sufficient to meet the company 's operating and capital requirements for approximately 12 months . story_separator_special_tag the company considers revenue realized or realizable and earned when all of the following criteria are met : ( i ) persuasive evidence of an arrangement exists , ( ii ) the product has been shipped or the services have been rendered to the customer , ( iii ) the sales price is fixed or determinable , and ( iv ) collectability is reasonably assured . going concern the financial statements appearing elsewhere in this report have been prepared assuming that the company will continue as a going concern . as such , they do not include adjustments relating to the recoverability of recorded asset amounts and classification of recorded assets and liabilities . as noted in the auditor 's report included in this 10-k , the accompanying financial statements have been prepared assuming that the company will continue as a going concern . story_separator_special_tag ltd. staff superannuation fund which holds 1,940,000 shares . ( 4 ) philip a. shiels , chief financial officer and a director of the company , holds the power of attorney for the trustee of the research no . 2 trust which holds 3,198,522 shares . mr. shiels is a trustee and a beneficiary of the shiels superannuation fund which holds 8,250,000 shares . mr. shiels is a trustee and a beneficiary of the shiels trust which holds 7,000,000 shares . ( 5 ) richard lukso , chairman and a director of the company , holds 1,140,000 shares directly and is the beneficial owner of 1,000,000 shares held by the lukso family trust dtd 4/29/97 . ( 6 ) eric p. van der griend is a director and shareholder of ocean view investment pty . ltd. which owns 13,888,889 shares and a director and shareholder of swiss time australia pty . ltd. which owns 268,750 shares . mr. van der griend is considered the beneficial owner of 14,157,639 shares . ( 7 ) david and beverly chalmers are trustees of the broben superannuation fund which holds 10,039,613 shares . ( 8 ) reginald edward gleeson is a trustee of regsher pty . ltd. superannuation fund which owns 12,788,471 shares . ( 9 ) roman lohyn is a trustee of mostyn superannuation fund which owns 10,000,002 shares and a director of roman lohyn pty . ltd. which owns 500,000 shares . 17 item 13. certain relationships and related transactions and director independence . ron chapman , graham chappell , and philip shiels are directors of the company and directors of the company 's former subsidiary asiq pty . ltd. ( `` asiq `` ) . asiq provides technical support for the company 's business jet program , and in the year ended june 30 , 2018 , received a monthly retainer plus outgoings . chapman international pty . ltd. , of which ron chapman is a director and shareholder , was paid marketing and engineering service fees during the year ended june 30 , 2018. shiels and co. , of which philip shiels is the principal , was paid management fees during the year ended june 30 , 2018. bizjetmobile llc , the north and south american agent for bizjetmobile services and systems , is 50 % owned by asiq . the owner of chapman reid , the european and middle east agent for bizjetmobile services and systems , is related to ron chapman . since june 30 , 2017 , the company entered into a license agreement with asiq , under which the company granted asiq the right to develop , manufacture , market and commercialize the company 's intellectual property for global military and government applications . item 14. principal accountant fees and services audit fees audit fees paid to b f borgers in the fiscal year ended june 30 , 2017 and june 30 , 2018 were $ 19,980 and $ 15,000 respectively . audit-related fees there were no fees billed for services reasonably related to the performances of the audit or review of our financial statements other than those disclosed under the caption audit fees for fiscal years 2018 and 2017. tax fees no fees have been paid for income tax return preparation . all other fees there were no other fees filled for services . item 15. exhibits and financial statement schedules ( a ) exhibits exhibit no . description 31.1 certification of the president under rule 13a-14 ( a ) ( section 302 of the sarbanes-oxley act of 2002 ) 31.2 certification of the chief financial officer under rule 13a-14 ( a ) ( section 302 of the sarbanes-oxley act of 2002 ) 32.1 certification pursuant to section 906 of the sarbanes-oxley act of 2002 ( 18 u.s.c . section 1350 ) 32.2 certification pursuant to section 906 of the sarbanes-oxley act of 2002 ( 18 u.s.c . section 1350 ) 18 signatures pursuant to the requirements of section 13 or 15 ( d ) of the securities exchange act of 1934 , the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized . as-ip tech , inc. dated : october 25 , 2019 by : ronald j. chapman president by : philip a. shiels principal financial officer pursuant to the securities exchange act of 1934 , this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated . signature title date richard lukso director 10/25/2019 richard lukso ronald j. chapman director 10/25/2019 ronald j. chapman graham o. chappell director 10/25/2019 graham o. chappell philip a. shiels director 10/25/2019 philip a. shiels 19 story_separator_special_tag overview the company maintains a low-cost structure as it has no employees , contracting the services of executives and support engineers as required . because of the low-cost structure , the company anticipates that the proceeds from stock issues and revenue from service and system sales , will be sufficient to meet the company 's operating and capital requirements for approximately 12 months . story_separator_special_tag the company considers revenue realized or realizable and earned when all of the following criteria are met : ( i ) persuasive evidence of an arrangement exists , ( ii ) the product has been shipped or the services have been rendered to the customer , ( iii ) the sales price is fixed or determinable , and ( iv ) collectability is reasonably assured . going concern the financial statements appearing elsewhere in this report have been prepared assuming that the company will continue as a going concern . as such , they do not include adjustments relating to the recoverability of recorded asset amounts and classification of recorded assets and liabilities . as noted in the auditor 's report included in this 10-k , the accompanying financial statements have been prepared assuming that the company will continue as a going concern .
| results and plan of operations the company had accumulated losses from inception to june 30 , 2018 of $ 11,306,527. major components of the loss include capital raising costs , consulting and management fees , engineering fees and operations costs . the company may be required to make significant additional expenditures in connection with the development of the bizjetmobile and fflya programs . the company 's ability to continue its operations is dependent upon its receiving funds through its anticipated sources of financing including capital raisings , borrowings and revenues from operations . 9 year ended june 30 , 2018 compared with year ended june 30 , 2017 the company received revenue of $ 67,807 from its bizjetmobile business in the year ended june 30 , 2018 , compared to $ 170,648 in the year ended june 30 , 2017. revenue from bizjetmobile service fees decreased from $ 94,679 to $ 45,817 and bizjetmobile system sales decreased from $ 75,969 to $ 21,990 in the years ended june 30 , 2017 and june 30 , 2018 respectively . the company 's cost of sales was $ 16,099 and $ 60,711 for the years ended june 30 , 2018 and june 30 , 2017 respectively , comprising mainly of agents ' commissions and system costs . as a result , the company reported a gross profit of $ 51,708 in the year ended june 30 , 2018 , compared to a gross profit of $ 109,937 in the year ended june 30 , 2017. operating expenses increased from $ 787,423 for the twelve-month period ended june 30 , 2017 to $ 834,630 for the twelve month period ended june 30 , 2018 due mainly to increased marketing associated with the company 's fflya program .
| 7,218 |
our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors , including those set forth under “ risk factors ” and elsewhere in this annual report . you should carefully read the “ risk factors ” section of this annual report to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements . please also see the section entitled “ forward-looking statements. ” overview chimerix is a development-stage biopharmaceutical company dedicated to accelerating the advancement of innovative medicines that make a meaningful impact in the lives of patients living with cancer and other serious diseases . our three most advanced clinical-stage development programs are brincidofovir ( bcv ) , onc201 and dociparstat sodium ( dstat ) . bcv is an antiviral drug candidate developed as a potential medical countermeasure for smallpox and is currently under review for regulatory approval in the united states . onc201 is currently being investigated in a number of efficacy studies for recurrent h3 k27m-mutant glioma and a confirmatory response rate assessment , potentially sufficient for accelerated approval , is expected later this year . dstat is in phase 3 development as a potential first-line therapy in acute myeloid leukemia ( aml ) and as a potential treatment for acute lung injury ( ali ) in covid-19 patients . recent developments bcv oral treatment for smallpox we completed the rolling nda submission for bcv tablets and for bcv suspension for the approval of bcv as a medical countermeasure for smallpox . in december 2020 , we announced that the fda had accepted the filing of the nda . the fda granted priority review and set a prescription drug user fee act ( pdufa ) date of april 7 , 2021. in january 2021 , we received notification from the fda that the pdufa date for review of bcv as a medical countermeasure for smallpox has been moved to july 7 , 2021. specifically , fda requested we provide a dose recommendation for infants up to three months of age . in response , we submitted to the fda the requested modelled analyses , which resulted in the same weight-based dosing recommendation previously proposed for older pediatric patients . the ability to dose across all pediatric age groups with a convenient oral suspension formulation is a unique aspect of the bcv smallpox treatment . the fda required an additional three months to review this information . we do not expect a delayed fda action date to impact the timing of the barda request for proposal , which is expected this quarter , nor the potential timing of first shipments of bcv to the strategic national stockpile , expected in the second half of this year . imipridones and onc20 1 imipridones are a potential new class of selective cancer therapies . these drug candidates target specific g protein-coupled receptors ( gpcrs ) and mitochondrial caseinolytic protease p ( clpp ) , in an effort to produce cancer cell death . the imipridone 59 chemical scaffold provides an opportunity to target gpcrs and clpp with differential specificity and function . onc201 selectively targets dopamine receptor d2 ( drd2 ) and clpp . onc201 has selectively induced cell death in cancer by binding to and differentially altering activity of drd2 and clpp . clinical trials of onc201 in glioma patients with the h3 k27m-mutation are underway at several locations in the u.s. based on discussions with the fda , we plan to integrate data from ongoing onc201 trials into a registration cohort with the potential for an nda submission seeking accelerated approval . a blinded independent central review analysis of overall response rate ( orr ) is expected to take place in 2021 which , if favorable , may form the basis for an nda submission seeking accelerated of onc201 in the united states . onc206 and onc212 onc206 is a drd2 antagonist and clpp agonist that demonstrated enhanced non-competitive drd2 antagonism relative to onc201 , in preclinical studies and additionally showed disruption of drd2 homodimers . the first-in-human clinical trial of onc206 for adults with recurrent primary central nervous system tumors is ongoing at the national institute of health ( nct04541082 ) . onc212 is an investigational agonist of the orphan gpcr tumor suppressor gpr132 , as well as clpp . similar to the potential downstream effects of onc201 and onc206 , in vitro studies onc212 has activated the integrated stress response , inhibited ras signaling and selectively killed tumor cells . currently onc212 is in ind-enabling studies . dociparstat for the treatment of acute lung injury ( ali ) in covid-19 patients in april 2020 , we announced the initiation of a phase 2/3 study of dstat in patients with acute lung injury ( ali ) from covid-19 . the study is a randomized , double-blind , placebo-controlled , phase 2/3 trial to determine the safety and efficacy of dstat in adults with severe covid-19 who are at high risk of respiratory failure . eligible patients have confirmed covid-19 and require hospitalization and supplemental oxygen therapy . the primary endpoint of the study is the proportion of patients who survive and do not require mechanical ventilation through day 28. additional endpoints include time to improvement as assessed by the niaid ordinal scale , time to hospital discharge , time to resolution of fever , number of ventilator-free days , all-cause mortality , and changes in key biomarkers . the phase 2 portion of the study enrolled two cohorts of 12 patients each to confirm the maximum safe dose with reviews by the data safety management board ( dsmb ) after completion of each cohort . of the 12 patients enrolled in the first cohort , six received a 4mg/kg bolus dose of dstat followed by a continuous infusion of 0.25mg/kg/hour and six received placebo . although in a small number of patients , subject to demographic imbalances , early indications suggest a possible clinical benefit for patients on dstat compared to patients on placebo . story_separator_special_tag in september 2019 , we entered into a license agreement with symbio for worldwide rights to develop , manufacture and commercialize bcv in all human indications , excluding the use for treatment of orthopoxviruses , including smallpox . under the contract , we received a $ 5.0 million upfront payment in october 2019 and could receive up to an additional $ 180.0 million in potential regulatory and commercial milestones . since the license agreement was entered into in september 2019 , we have recognized all of the $ 5.0 million of revenue related to the upfront payment . the revenue from regulatory and commercial milestones and royalties from net sales will be recognized upon occurrence of the triggering events . in the future , we may generate revenue from a combination of product sales , license fees , milestone payments and royalties from the sales of products developed under licenses of our intellectual property . we expect that any revenue we generate will fluctuate from quarter to quarter as a result of the timing and amount of license fees , milestone and other payments , and the amount and timing of payments that we receive upon the sale of our products , to the extent any are successfully commercialized . if we fail to complete the development of any product candidates in a timely manner or obtain regulatory approval for them , our ability to generate future revenue , and our results of operations and financial position , would be materially adversely affected . 61 research and development expenses since our inception , we have focused our resources on our research and development activities , including conducting preclinical studies and clinical trials , manufacturing development efforts and activities related to regulatory filings for our product candidates . we recognize research and development expenses as they are incurred . costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors . we can not determine with certainty the duration and completion costs of the current or future clinical studies of any product candidates . our research and development expenses consist primarily of : fees paid to consultants and contract research organizations ( cros ) , including in connection with preclinical and clinical trials , and other related clinical trial fees , such as for investigator grants , patient screening , laboratory work , clinical trial database management , clinical trial material management and statistical compilation and analysis ; salaries and related overhead expenses , which include stock option , restricted stock units and employee stock purchase program compensation and benefits , for personnel in research and development functions ; payments to third-party manufacturers , which produce , test and package drug substance and drug product ( including continued testing of process validation and stability ) ; costs related to legal and compliance with regulatory requirements ; and license fees for and milestone payments related to licensed products and technologies . the table below summarizes our research and development expenses for the periods indicated ( in thousands ) . our direct research and development expenses consist primarily of external costs , such as fees paid to investigators , consultants , central laboratories and cros , in connection with our clinical trials , preclinical development , and payments to third-party manufacturers of drug substance and drug product . we typically use our employee and infrastructure resources across multiple research and development programs . replace_table_token_2_th the successful development of product candidates is highly uncertain . at this time , we can not reasonably estimate the nature , timing or costs of the efforts that will be necessary to complete the development of any product candidates or the period , if any , in which material net cash inflows from any product candidates may commence . this is due to the numerous risks and uncertainties associated with our business , as detailed in part ii , item ia , “ risk factors ” in this quarterly report on form 10-q and in our other filings with the sec . dociparstat sodium ( dstat ) in july of 2019 , we acquired dstat from cantex pharmaceuticals . in connection with the transaction , we recorded in 2019 a total of $ 65.0 million in expense . this is comprised of a $ 30.0 million upfront payment , $ 34.9 million for the fair value of the 10.0 million shares of common stock issued and $ 0.1 million in transaction costs . as we continue to focus on the development of dstat for treatment of aml patients and covid-19 , we expect research and development expense to increase with the ongoing and planned clinical trials . we are currently enrolling a phase 2/3 study of dstat in ali for patients with covid-19 and have initiated our phase 3 dash aml trial . brincidofovir we are developing bcv for the treatment of smallpox . under our cost-plus-fixed fee barda contract and additional costs we are not seeking reimbursement for from barda , we incurred expense in connection with the development of orthopoxvirus animal models , the demonstration of efficacy and pharmacokinetics of bcv in the animal models , the conduct of an open label clinical safety study for subjects with dna viral infections , the manufacture and process validation of bulk drug substance and bcv 100 mg tablets , and submission of the nda to the fda . in addition , we have incurred additional supportive costs for the development of bcv for smallpox that we are not seeking reimbursement for from barda .
| results of operations comparison of the years ended december 31 , 2020 and december 31 , 2019 the following table summarizes our results of operations for the years ended december 31 , 2020 and december 31 , 2019 , together with the changes in those items in dollars and percentages ( in thousands , except percentages ) : replace_table_token_6_th revenue for the year ended december 31 , 2020 , contract revenue decreased to $ 5.3 million compared to $ 7.6 million for the year ended december 31 , 2019. the decrease of $ 2.3 million , or 30.6 % , was related to a decrease in reimbursable expenses associated with our contract with barda . for the year ended december 31 , 2020 , license revenue decreased to $ 0.1 million compared to $ 4.9 million for the year ended december 31 , 2019 due to our licensing agreement with symbio . research and development expenses for the year ended december 31 , 2020 , our research and development expenses decreased to $ 36.2 million compared to $ 42.3 million for the year ended december 31 , 2019. the decrease of $ 6.1 million , or 14.3 % , was primarily related to the following : a decrease of $ 9.1 million related to the discontinuation of both the oral and iv bcv development programs and the bcv expanded access programs ; a decrease of $ 3.5 million in smallpox program expenses ; a decrease of $ 2.7 million related to compensation expenses as headcount was reduced as part of the company 's restructuring activities in may 2019 ; offset by an increase of $ 9.5 million in dstat research and development expenses , consisting of an increase of $ 5.4 million in clinical trial initiation activities and $ 4.1 million to conclude animal studies and to develop and manufacture clinical trial material .
| 7,219 |
our actual results could differ materiality from those discussed in the forward-looking statements . factors that could cause or contribute to these differences include those discussed below and elsewhere in this annual report on form 10-k , particularly those discussed under part i , item 1a . “ risk factors. ” our historical results are not necessarily indicative of the results that may be expected for any period in the future . overview we provide wireless broadband networking infrastructure solutions for network operators , including medium-sized wireless internet service providers , enterprises , and government agencies . our scalable , reliable and high-performance solutions create a purpose-built wireless fabric that connects people , places and things across distances ranging from two meters to more than 100 kilometers , indoors and outdoors , using licensed and unlicensed spectrum at attractive economics . our embedded proprietary rf technology and software enables automated optimization of data flow at the outermost points in the network , which we refer to as the “ intelligent edge. ” we were formed in 2011 when cambium networks acquired the ptp and pmp businesses from motorola solutions . prior to the acquisition by cambium networks , motorola solutions had invested over a decade in developing the technology and intellectual property assets that formed the foundation for our business , having launched the canopy pmp business in 1999 and having acquired the orthogon systems ptp business in 2006. following the acquisition , we renamed the business cambium networks and leveraged the technology to continue to develop and offer an extensive portfolio of reliable , scalable and secure enterprise-grade fixed wireless broadband and ptp and pmp platforms , wi-fi and iiot solutions . we offer our wireless broadband solutions in three categories : ptp : our ptp backhaul portfolio is comprised of products operating in unlicensed spectrum below 6 ghz , and those operating in licensed spectrum between 6 and 38 ghz . the mainstay of our backhaul offering is the ptp 670 for commercial applications and ptp 700 for defense and national security applications . in addition , our ptp 820 series offers carrier-grade microwave backhaul in licensed spectrum , and our recently introduced ptp 550 offers price-performance leadership in spectral efficiency in sub-6ghz unlicensed spectrum . pmp : our pmp portfolio ranges from our top-of-the-line pmp 450 series to our epmp solutions for network operators that need to optimize for both price and performance to our cnreach family of narrow-bandwidth connectivity products for industrial communications . the pmp 450 series is optimized for performance in high-density and demanding physical environments , and includes the pmp 450 m with integrated cn medusa massive multi-user multiple input/multiple output , or mu-mimo , technology . for less demanding environments , epmp provides a high-quality platform at a more affordable price . the recently released epmp 3000 supports 4x4 mu-mimo and is complemented by a broad portfolio of epmp force 300 subscriber radios . cnreach products enables iiot applications , such as supervisory control and data acquisition , or scada , processes in the oil and gas , electric utility , water , railroad and other industrial settings . wi-fi : our wi-fi portfolio includes our cnpilot cloud-managed wi-fi solutions , our cnmatrix cloud-managed wireless-aware switching solution , and our xirrus wi-fi solutions . cnpilot is for indoor and outdoor enterprise , small business and home applications and offers a range of access points and rf technology that enable network optimization based on desired geographic coverage and user density . cnmatrix provides the intelligent interface between wireless and wired networks . cnmatrix 's policy-based configuration accelerates network deployment , mitigates human error , increases security , and improves reliability . xirrus has a portfolio of high performance enterprise wi-fi access points and cloud based subscription services . we generate a substantial majority of our sales through our global channel distribution network , including , as of december 31 , 2019 , approximately 150 distributors that we sell to directly , together with over 6,800 value added resellers and system integrators supplied by these distributors . our channel partners provide lead generation , pre-sales support and product fulfillment , along with professional services for network design , installation , commissioning and on-going field support . although we fulfill sales almost exclusively through our channel partners , through our global sales team we engage directly with network operators in our key vertical markets including service providers , enterprises , industrials , defense and national security , and state and local governments . our sales team responds to bids or requests for quotes , typically in collaboration with a channel partner . our distributors carry inventory of our products for resale , and generally have stock rotation rights only if they simultaneously place an off-setting order for product . as such , we generally recognize revenue from sales to distributors on a sell-in basis , and manage our finished goods inventory efficiently to plan for distributor demand . 37 we outsource production to third-party manufacturers , which are responsible for purchasing and maintaining inventory of components and raw materials and , in certain cas es , we resell third-party products on a white-label basis . we believe that this approach gives us the advantages of relatively low capital investment and significant flexibility in scheduling production , managing inventory levels and providing a comprehen sive solution to meet network operator demand . the majority of our products are delivered to us at one of three distribution hubs , where we have outsourced the warehousing and delivery of our products to a third-party logistics provider and from which we manage worldwide fulfillment . story_separator_special_tag research and development in addition to personnel-related costs , research and development expense consists of costs associated with design and development of our products , product certification , travel and recruiting . we generally recognize research and development expense as incurred . for certain of our software projects under development , we capitalize the development cost during the period between determining technological feasibility of the product and commercial release . we amortize the capitalized development cost upon commercial release , generally over three years . we typically do not capitalize costs related to the development of first-generation product offerings as technological feasibility generally coincides with general availability of the software . we expect research and development expense to increase in absolute dollars as we continue to invest in our future products and services . sales and marketing in addition to personnel costs for sales , marketing , service and product line management personnel , sales and marketing expense consists of our training programs , trade shows , marketing programs , promotional materials , demonstration equipment , national and local regulatory approval on our products , travel and entertainment , and recruiting . we expect sales and marketing expense to continue to increase in absolute dollars as we increase the size of our sales , marketing , service , and product line management organization in support of our investment in our growth opportunities , and , in particular , as we continue to expand our global distribution network . general and administrative in addition to personnel costs , general and administrative expense consists of professional fees , such as legal , audit , accounting , information technology and consulting costs , facilities and other supporting overhead costs , as well as loan transaction fees and management fees paid to vector capital . we expect general and administrative expense to increase in absolute dollars as we continue to incur additional costs associated with being a public company , partially offset by the absence of financing and management fees previously paid to vector capital . depreciation and amortization depreciation and amortization expense consist of depreciation related to fixed assets such as computer equipment , furniture and fixtures , and testing equipment , as well as amortization related to acquired and internal use software and definite lived intangibles . provision for income taxes our provision for income taxes consists primarily of income taxes in the jurisdictions in which we conduct business . as we have expanded our international operations , we have incurred additional foreign tax expense , and we expect this to continue . management assesses our deferred tax assets in each reporting period , and if it is determined that it is not more likely than not to be realized , we will record a change in our valuation allowance in that period . 39 story_separator_special_tag style= '' text-align : center ; margin-bottom:0pt ; margin-top:0pt ; margin-left:0pt ; ; text-indent:0pt ; ; ; font-family : times new roman ; font-size:10pt ; font-weight : normal ; font-style : normal ; text-transform : none ; font-variant : normal ; '' > change ( dollars in thousands ) 2018 2019 $ % ( benefit ) provision for income taxes $ ( 799 ) $ 10,280 $ 11,079 nm effective income tax rate 34.6 % ( 140.4 ) % our income tax expense increased $ 11.1 million from a benefit of $ 0.8 million for the year ended december 31 , 2018 to a provision of $ 10.3 million for the year ended december 31 , 2019. the effective tax rates were 34.6 % and ( 140.4 ) % for the years ended 2018 and 2019 , respectively . tax expense was higher in 2019 due to an establishment of a valuation allowance against our deferred tax assets recognized during 2019 of $ 9.6 million , as well as taxation of pre-ipo management incentive unit ( “ miu ” ) equity awards of $ 2.8 million , partially offset by tax benefits on research and development of $ 1.3 million and foreign derived intangible income of $ 1.2 million in the year ended december 31 , 2019 versus a tax benefit on a pre-tax operating loss of $ 2.3 million recognized in the year ended december 31 , 2018. comparison of the year ended december 31 , 2017 to the year ended december 31 , 2018 revenues change ( dollars in thousands ) 2017 2018 $ % revenues $ 216,671 $ 241,762 $ 25,091 11.6 % revenues increased $ 25.1 million , or 11.6 % , from $ 216.7 million in 2017 to $ 241.8 million in 2018 , which was attributable to growth in all of our core products . complementing increased product demand , as described below , revenue growth in 2018 benefitted from continued expansion of our channel , bringing the total registered channel partners to over 5,300 as of december 31 , 2018. revenues by product category replace_table_token_13_th point-to-multipoint our pmp products comprised 66 % of total revenues for 2017 and 61 % of total revenues for 2018. pmp revenue growth was attributable to continued growth in core pmp products and new product introductions including 3 ghz and epmp 3000. point-to-point the increase in our ptp revenue was driven principally by strong sales of new products , primarily for the defense industry . wi-fi wi-fi revenue increased primarily as a result of continued adoption of core wireless products across international regions as discussed further in “ -revenues by geography ” below . 43 revenues by geography replace_table_token_14_th revenues increased in all regions over the period , with north america and emea contributing 78 % of total revenues for 2017 and 76 % of total revenues for 2018. north america sales benefited from new product introductions , specifically for the defense industry . europe , middle east , africa sales increased due to increasing momentum of product adoption of indoor wi-fi products and expansion into new geographies including north africa and saudi arabia . caribbean and latin america sales increased due to infrastructure replacement initiatives , and sales of 3 ghz pmp products .
| results of operations the following table presents the consolidated statements of operations , as well as the percentage relationship to total revenues for items included in our consolidated statements of operations : replace_table_token_5_th replace_table_token_6_th comparison of the year ended december 31 , 2018 to the year ended december 31 , 2019 revenues change ( dollars in thousands ) 2018 2019 $ % revenues $ 241,762 $ 267,028 $ 25,266 10.5 % revenues increased $ 25.3 million , or 10.5 % , from $ 241.8 million in 2018 to $ 267.0 in 2019 , which was attributable to growth in our point-to-multipoint and wi-fi lines , including newer products , as well as pricing actions taken in february 2019. complementing increased product demand , as described below , revenue growth in 2019 also benefitted from continued expansion of our channel , bringing the total registered channel partners to over 6,800 as of december 31 , 2019 . 40 revenues by product category replace_table_token_7_th point-to-multipoint our pmp products comprised 61 % of total revenues for 2018 and 58 % of total revenues for 2019. pmp revenue growth was attributable to continued growth in core pmp products and new product introduction . point-to-point ptp revenue was essentially flat due to funding delays in the defense sector . wi-fi wi-fi revenue increased primarily as a result of recent new product introductions , including cnmatrix as well as sales of xirrus products and services which was acquired in the current year . revenues by geography replace_table_token_8_th revenues increased in all but one region with north america and europe , middle east , africa contributing 76 % and 78 % of total revenues for 2018 and 2019 , respectively . north america sales benefited from new product introductions of pmp products , but were affected by decreased sales to the defense industry due to funding timing .
| 7,220 |
the fair value of options , stock appreciation rights , and employees ' story_separator_special_tag nike designs , develops , markets and sells athletic footwear , apparel , equipment , accessories and services worldwide . we are the largest seller of athletic footwear and apparel in the world . we sell our products through nike-owned retail stores and through digital platforms ( which we refer to collectively as our “ nike direct ” operations ) , to retail accounts and to a mix of independent distributors , licensees and sales representatives in virtually all countries around the world . our goal is to deliver value to our shareholders by building a profitable global portfolio of branded footwear , apparel , equipment and accessories businesses . our strategy is to achieve long-term revenue growth by creating innovative , “ must-have ” products , building deep personal consumer connections with our brands and delivering compelling consumer experiences through digital platforms and at retail . since fiscal 2018 , through the consumer direct offense and our triple double strategy , we have focused on doubling the impact of innovation , increasing our speed and agility to market and growing our direct connections with consumers . in june 2020 , we announced a new digitally empowered phase of the consumer direct offense strategy : consumer direct acceleration . this strategic acceleration will focus on three specific areas . first , creating the marketplace of the future through more premium , consistent and seamless consumer experiences that more closely align with what consumers want and need . this strategy will lead with nike digital and our own stores , as well as through select strategic partners who share our marketplace vision . second , we will align our product creation and category organizations around a new consumer construct focused on men 's , women 's and kids ' . this approach allows us to create product that better meets individual consumer needs , including more specialization of our category approach , while re-aligning and simplifying our offense to accelerate our largest growth opportunities . in particular , we 'll be reinvesting in our women 's and kids ' businesses and will also simplify our operating model across the remainder of the company to optimize effectiveness . third , we will unify investments in data and analytics , demand sensing , insight gathering , inventory management and other areas against an end-to-end technology foundation to accelerate our digital transformation . we believe this unified approach will accelerate growth and unlock more efficiency for our business , while driving speed and responsiveness as we serve consumers globally . on july 22 , 2020 , management announced a series of leadership and operating model changes to streamline and speed up strategic execution . these changes are expected to lead to a net loss of jobs , resulting in pre-tax , one-time employee termination costs of approximately $ 200 million to $ 250 million , which is expected to be incurred primarily during the first half of fiscal 2021 , in the form of cash expenditures . these amounts are subject to change until such time as all details are finalized . this next phase of our consumer direct offense is expected to drive sustainable growth and profitability as we accelerate nike to a digital-first company . we are committed to the execution of this strategy , despite the short-term adverse impacts to our business from a novel strain of coronavirus ( covid-19 ) . as such , our long-term financial goals on average , per year , remain the same and are outlined below : high single-digit revenue growth ; gross margin expansion of as much as 50 basis points ; slight selling and administrative expense leverage ; mid-teens earnings per share growth ; and low-thirties percentage rate of return on invested capital . covid-19 update covid-19 was first identified in wuhan , china in december 2019 , and subsequently declared a pandemic by the world health organization . to date , covid-19 has surfaced in nearly all regions around the world and resulted in travel restrictions and business slowdowns or shutdowns in affected areas . as a result , covid-19 has impacted our business globally , including through store closures , reduced operating hours and decreased retail traffic . in particular , the outbreak and preventive measures taken to help curb the spread had material adverse impacts on our operations and business results in greater china during the third quarter of fiscal 2020 , following the temporary closure of , or reduced operating hours in , approximately 75 % of nike-owned and partner stores within the region . during the fourth quarter of fiscal 2020 , our results of operations were further impacted as approximately 90 % of our nike brand stores across north america , emea and apla , excluding korea , were closed for approximately 8 weeks . the majority of converse direct to consumer stores were also closed for a significant portion of the fourth quarter . additionally , certain of our wholesale partners closed stores or reduced operating hours during the fourth quarter , resulting in lower than expected sales and a slowing of receipt of shipments of our products . the combined effect of store closures and reduced wholesale shipments caused higher than normal inventory levels at may 31 , 2020 , as inventories grew 31 % compared to the prior year . in order to manage future inventory growth and ensure a return to normalized levels we are modifying our buying plans and canceling certain pre-covid-19 factory purchases , shifting product offer dates to meet near-term demand , as well as shifting available inventory into our digital channel and increasing digital fulfillment capacity specifically in 2020 form 10-k 27 north america and emea . additionally , we are investing in targeted promotions and markdowns to accelerate liquidation of excess inventory while continuing to protect the long-term health of our product franchises . story_separator_special_tag during the third quarter of fiscal 2020 , we announced our intention to sell our nike brand businesses in brazil , argentina , chile and uruguay to strategic third-party distributors in an effort to more personally serve consumers in these respective marketplaces while driving 2020 form 10-k 28 sustainable , profitable growth . these transactions are expected to close in the first half of fiscal 2021. as a result of this decision , the related assets and liabilities of these entities were classified as held-for-sale on the consolidated balance sheets as of may 31 , 2020. additionally , we recognized a non-recurring impairment charge of $ 405 million , within other ( income ) expense , net on the consolidated statements of income , classified within corporate . this charge was primarily due to the anticipated release of non-cash cumulative foreign currency translation losses , and could fluctuate due to changes in exchange rates up to the date of close . in future quarters , as we shift from a wholesale and direct to consumer operating model to a distributor operating model within these countries , we expect consolidated nike , inc. and apla revenue growth will be reduced due to differences in commercial terms . however , we expect the future operating model to have a favorable impact on our overall profitability as we reduce selling and administrative expenses , as well as lessen exposure to foreign exchange rate volatility . on october 29 , 2019 , we signed a definitive agreement to sell the assets and liabilities of our wholly-owned subsidiary brand , hurley . the transaction closed on december 6 , 2019 , and the impacts of the divestiture are not considered material to the company . while foreign currency markets remain volatile , in part due to geopolitical dynamics leading to a stronger u.s. dollar , we continue to see opportunities to drive future growth and profitability . we remain committed to effectively managing our business to achieve our financial goals over the long-term by executing against the operational strategies outlined above . for discussion related to the results of operations and changes in financial condition for fiscal 2019 compared to fiscal 2018 refer to part ii , item 7. management 's discussion and analysis of financial condition and results of operations in our fiscal 2019 form 10-k , which was filed with the united states securities and exchange commission on july 23 , 2019. use of non-gaap financial measures throughout this annual report on form 10-k , we discuss non-gaap financial measures , including references to wholesale equivalent revenues , currency-neutral revenues , as well as total nike brand earnings before interest and taxes ( ebit ) and total nike , inc. ebit , which should be considered in addition to , and not in lieu of , the financial measures calculated and presented in accordance with accounting principles generally accepted in the united states of america ( “ u.s . gaap ” ) . references to wholesale equivalent revenues are intended to provide context as to the total size of our nike brand market footprint if we had no nike direct operations . nike brand wholesale equivalent revenues consist of ( 1 ) sales to external wholesale customers and ( 2 ) internal sales from our wholesale operations to our nike direct operations , which are charged at prices comparable to those charged to external wholesale customers . additionally , currency-neutral revenues are calculated using actual exchange rates in use during the comparative prior year period to enhance the visibility of the underlying business trends excluding the impact of translation arising from foreign currency exchange rate fluctuations . ebit is calculated as net income before interest expense ( income ) , net and income tax expense in the consolidated statements of income . management uses these non-gaap financial measures when evaluating the company 's performance , including when making financial and operating decisions . additionally , management believes these non-gaap financial measures provide investors with additional financial information that should be considered when assessing our underlying business performance and trends . however , references to wholesale equivalent revenues , currency-neutral revenues and ebit should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with u.s. gaap and may not be comparable to similarly titled non-gaap measures used by other companies . 2020 form 10-k 29 results of operations replace_table_token_4_th ( 1 ) fiscal 2020 reflects the impacts of covid-19 on our results of operations . refer to discussion of our results below for additional information . ( 2 ) fiscal 2018 reflects the impact from the enactment of the u.s. tax cuts and jobs act . refer to note 9 — income taxes in the accompanying notes to the consolidated financial statements for additional information . 2020 form 10-k 30 story_separator_special_tag style= '' font-family : arial ; font-size:8.5pt ; '' > compared to 44.7 % for fiscal 2019 due to the following : * wholesale equivalent higher product costs were in part due to incremental tariffs in north america . higher other costs , primarily in the fourth quarter of fiscal 2020 due to the impacts of covid-19 , were specifically related to increased factory cancellations costs , higher inventory obsolescence and the adverse rate impact of supply chain costs on a lower volume of wholesale shipments . total selling and administrative expense replace_table_token_6_th ( 1 ) demand creation expense consists of advertising and promotion costs , including costs of endorsement contracts , complimentary product , television , digital and print advertising and media costs , brand events and retail brand presentation . fiscal 2020 compared to fiscal 2019 demand creation expense decreased 4 % for fiscal 2020 compared to fiscal 2019 , due to lower retail brand presentation costs and lower sports marketing investments , as well as decreased advertising and marketing expenses as sporting events were postponed or canceled and a majority of stores were closed globally during the fourth quarter of fiscal 2020. these decreases were partially offset by higher digital brand marketing costs .
| consolidated operating results revenues replace_table_token_5_th ( 1 ) the percent change excluding currency changes and the presentation of wholesale equivalent revenues represent non-gaap financial measures . see `` use of non-gaap financial measures '' for further information . ( 2 ) global brand divisions revenues are primarily attributable to nike brand licensing businesses that are not part of a geographic operating segment . ( 3 ) corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the nike brand geographic operating segments and converse , but managed through our central foreign exchange risk management program . 2020 form 10-k 31 ( 4 ) others include all unisex products , equipment and other products not allocated to men 's , women 's and nike kids ' , as well as certain adjustments that are not allocated to products designated by gender or age . ( 5 ) others include all other categories and certain adjustments that are not allocated at the category level . fiscal 2020 nike brand revenue highlights the following tables present nike brand revenues disaggregated by reportable operating segment , distribution channel and major product line : fiscal 2020 compared to fiscal 2019 on a currency-neutral basis , nike , inc. revenues declined 2 % for fiscal 2020 , driven by lower revenues in both the nike brand and converse as the first nine months of revenue growth was offset by the impacts of lower shipments to wholesale customers and store closures within our nike direct and converse direct to consumer operations due to covid-19 in the fourth quarter . revenues for north america declined in fiscal 2020 , reducing nike , inc. revenues by approximately 4 percentage points , partially offset by revenue growth in greater china contributing approximately 2 percentage points .
| 7,221 |
changes to these estimates are recorded as a cumulative adjustment in the period estimates are revised . the fair value of stock options , restricted stock awards , rsus , psas , and non-employee director awards is estimated story_separator_special_tag f financial condi tion and results of operations the following discussion and analysis should be read in conjunction with the “ selected financial data ” and the consolidated financial statements and related notes included elsewhere in this annual report on form 10-k. this discussion and analysis contains forward-looking statements that involve risks , uncertainties , and assumptions , such as statements of our plans , objectives , expectations , and intentions . the cautionary statements made in this annual report on form 10-k should be read as applying to all related forward-looking statements wherever they appear in this annual report on form 10-k. our actual results could differ materially from those anticipated in the forward-looking statements . factors that could cause or contribute to our actual results differing materially from those anticipated include those discussed in “ risk factors ” and elsewhere in this annual report on form 10-k. overview and outlook we provide professional services and technology-based solutions to government and commercial clients . our services include management , marketing , technology , and policy consulting and implementation services . we help our clients conceive , develop , implement , and improve solutions that address complex natural resource , social , and public safety issues . our clients operate in four key markets : energy , environment , and infrastructure ; health , education , and social programs ; safety and security ; and consumer and financial . drawing from our domain knowledge and staff experience in working in multi-disciplinary teams for clients in a variety of markets , we provide services that deliver value throughout the entire life cycle of a policy , program , project , or initiative , from initial research , analysis , assessment and advice to design and implementation of programs and technology-based solutions , and the provision of engagement services and programs . our clients utilize our services because we combine diverse institutional knowledge and experience with the deep subject matter expertise of our highly educated staff , which we deploy in multi-disciplinary teams . we have successfully worked with many of our clients for decades , with the result that we have a thorough and nuanced perspective of their objectives and needs . we serve both governmental and commercial clients . our government clients include those from departments and agencies of the federal government , state ( including territories ) and local governments , and international governments . our government efforts include work performed under subcontract agreements to commercial clients whose ultimate customer is government agencies and departments . our largest clients are u.s. federal government departments and agencies . in fact , our federal government clients have included every cabinet-level department , most significantly hhs , dos , and dod . federal government clients generated approximately 41 % , 45 % , and 48 % of our revenue in 2018 , 2017 , and 2016 , respectively . state and local government clients generated approximately 14 % , 10 % , and 11 % of our revenue in 2018 , 2017 , and 2016 , respectively . international government clients generated approximately 9 % , 7 % , and 6 % of our revenue in 2018 , 2017 , and 2016 , respectively . we also serve a variety of commercial clients worldwide , including : airlines , airports , electric and gas utilities , oil companies , hospitals , health insurers and other health-related companies , banks and other financial services companies , transportation , travel and hospitality firms , non-profits/associations , law firms , manufacturing firms , retail chains , and distribution companies . our commercial clients , which include clients outside the u.s. , generated approximately 36 % , 38 % , and 35 % of our revenue in 2018 , 2017 , and 2016 , respectively . we report operating results and financial data as a single segment based on the consolidated information used by our chief operating decision-maker in evaluating the financial performance of our business and allocating resources . our single segment represents our core business—professional services for government and commercial clients . although we describe our multiple service offerings to clients that operate in four markets to provide a better understanding of the scope and scale of our business , we do not manage our business or allocate our resources based on those service offerings or client markets . rather , on a project by project basis , we assemble the best team from throughout the enterprise to deliver highly customized solutions that are tailored to meet the needs of each client . in 2018 , our total revenue increased to $ 1,338.0 million , an increase of $ 108.8 million , or 8.9 % , for the year ended december 31 , 2018 compared to $ 1,229.2 million in the prior year . operating income increased $ 9.9 million , or 12.0 % , to $ 92.3 million for the year ended december 31 , 2018 compared to the prior year due to the increase in gross profit which outpaced increases in indirect and selling expenses , and decreases in depreciation and amortization expense , and amortization of intangible assets . indirect and selling expenses increased by $ 14.5 million compared to the prior year primarily due to increases in indirect labor and indirect operating expenses , offset by a reduction in incentive compensation . story_separator_special_tag dms disaster consultants – in august 2018 , we acquired dms , a disaster management and recovery firm , to broaden our capabilities in support of assisting communities , businesses and individuals recover from man-made and nature disasters . dms assists public sector clients with man-made and natural disaster planning and preparedness , and post-disaster response and recovery efforts by assisting clients in obtaining federal funding from federal management agency ( fema ) , insurance companies , and other sources . we are vista limited – in october 2018 , we acquired vista , a communications company headquartered in leeds , u.k. , with an additional presence in london . vista provides advisory services and solutions to clients in the financial , retail , automobile , and energy industries and broadens our capabilities in the region . critical accounting policies our discussion of our financial condition and results of operations is based on our consolidated financial statements prepared in accordance with u.s. gaap . the preparation of these consolidated financial statements requires us to make certain estimates and judgments that affect the reported amounts of assets , liabilities , revenue , and expenses and our application of critical accounting policies , including : revenue recognition , impairment of goodwill and other intangible assets , income taxes , and stock-based compensation . if any of these estimates or judgments prove to be incorrect , our reported results could be materially affected . actual results may differ significantly from our estimates under different assumptions or conditions . we believe that the estimates , assumptions and judgments involved in the accounting practices described below have the greatest potential impact on our financial statements and , therefore , consider them to be critical accounting policies . significant accounting policies , including the critical accounting policies listed below , are more fully described and discussed in “ note 2—summary of significant accounting policies ” in the “ notes to consolidated financial statements. ” 35 revenue recognition we periodically evaluate our critical accounting policies and estimates based on changes in u.s. gaap that may have an effect on our consolidated financial statements . in may 2014 , the financial accounting standards board ( “ fasb ” ) issued accounting standards update ( “ asu ” ) 2014-09 , revenue from contracts with customers ( topic 606 ) . topic 606 provides a single comprehensive revenue recognition framework and supersedes existing revenue recognition guidance . included in the new principles-based revenue recognition model are changes to the basis for determining the timing for revenue recognition . in addition , the standard expands and improves revenue disclosures . we implemented topic 606 on january 1 , 2018 using the modified retrospective method . this method requires that we apply the requirements of the new standard in the year of adoption to new contracts and those that were not completed as of the adoption date , but not retroactively restate prior years . management evaluated those contracts not completed as of january 1 , 2018 ( the adoption date ) and concluded that the impact of adopting asc 606 did not have a material impact on our consolidated financial statements taken as a whole . contract assets and contract liabilities were formerly reported as unbilled accounts receivable and deferred revenue , respectively . for further discussion see “ note 2 – summary of significant accounting policies – revenue recognition ” and “ note 2 – summary of significant accounting policies – recent accounting pronouncements – revenue recognition ” in the “ notes to consolidated financial statements ” in this annual report . under the modified retrospective method , we were required to maintain dual reporting during the year of adoption in order to present revenue under both the previous and new accounting for contracts initiated on or after the date of adoption and for those contracts having remaining obligations as of the adoption date . revenue timing differences between the two methods resulted primarily from contracts with performance incentives . under the new accounting , we have included in revenue the most likely amount of priced incentives earned as contract work was performed rather than , as under the old accounting , waiting to recognize revenue from incentives until specific quantitative goals were achieved , generally at the end of each contractually-stipulated performance assessment period . while there were differences in the amount of revenue recognized during each quarter of the year , the timing differences did not result in a material change to our annual revenue since most incentives have performance assessment periods which are aligned with our fiscal year . we primarily provide services and technology-based solutions for clients that operate in a variety of markets and the solutions may span the entire program life cycle , from initial research and analysis to the design and implementation of solutions . we enter into agreements with clients that create enforceable rights and obligations and for which it is probable that we will collect the consideration to which it will be entitled as services and solutions are transferred to the client . except in certain narrowly defined situations , our agreements with its clients are written and revenue is generally not recognized on oral or implied arrangements . we recognize revenue based on the consideration specified in the applicable agreement and exclude from revenue amounts collected on behalf of third parties . accordingly , sales and similar taxes which are collected for third parties are excluded from the transaction price . we also evaluate whether two or more agreements should be accounted for as one single contract and whether combined or single agreements should be accounted for as more than one performance obligation . for most contracts , the client requires that we perform a number of tasks in providing an integrated output and , hence , each of these contracts are tracked as having only one performance obligation .
| results of operations the following table sets forth certain items from our consolidated statements of comprehensive income , expresses these items as a percentage of revenue for the periods indicated and the period-over-period rate of change in each of them . years ended december 31 , 2018 , 2017 , and 2016 ( dollars in thousands ) replace_table_token_8_th year ended december 31 , 2018 compared to year ended december 31 , 2017 revenue . revenue for the year ended december 31 , 2018 , was $ 1,338.0 million , compared to $ 1,229.2 million for the year ended december 31 , 2017 , representing an increase of $ 108.8 million or 8.9 % . the increase in revenue was attributable to an increase in governmental revenue of $ 81.4 million or 10.6 % and an increase in commercial revenue of $ 27.4 million or 6.0 % . the growth in governmental revenue by client markets was driven by increases in revenue from energy , environment , and infrastructure and safety and security clients , partially offset by our health , education , and social program clients compared to the prior year . the changes in government revenue by client type were driven by the increases in state ( including territorial ) , from our disaster recovery clients , and local and international government revenues , partially offset by a decline in federal government revenue . the increase in our commercial revenue by client market was driven by increases in revenue from health , education , and social program , consumer and financial , and energy , environments and infrastructure clients compared to the prior year . the increase in our revenues is partially attributable to revenue from acquired companies of $ 15.6 million , which positively impacted our commercial clients ‘ consumer and financial market and our government clients ‘ energy , environment and infrastructure market .
| 7,222 |
51 submitted by the compensation committee of the board of directors richard b. giles philip h. coelho david r. stevens , ph.d. the following table sets forth all cash compensation earned , as well as certain other compensation paid or accrued in 2012 , 2011 and 2010 , to each of the following named executive officers . summary compensation of named executive officers name and principal position ( a ) year ( b ) salary ( $ ) ( c ) bonus ( $ ) ( d ) stock award ( $ ) ( e ) option award ( $ ) ( 1 ) ( f ) non-equity incentive plan compensation ( $ ) ( g ) change in pension value and nonqualified deferred compensation earnings ( $ ) ( h ) all other compensation ( $ ) ( i ) total ( $ ) ( j ) current named exective officers michael macaluso chief executive officer effective january 2012 2012 190,938 5,000 509,556 705,494 david bar-or , m.d . chief scientic officer and 2012 300,000 105,000 407,645 812,645 former chairman 2011 281,875 5,000 286,875 2010 227,500 ( 2 ) 451,968 679,468 vaughan clift , m.d . chief regulatory affairs 2012 250,000 5,000 305,734 560,734 officer 2011 228,003 5,000 233,003 2010 198,000 ( 3 ) 29,500 235,669 463,169 mark d. mcgregor chief financial officer 2012 150,000 5,000 152,867 307,867 since april , 2011 2011 111,932 5,000 155,420 272,352 joshua r. disbrow chief operating officer 2012 11,375 1,167,346 1,178,721 since december , 2012 former named executive officers donald b. wingerter , jr. ( 4 ) chief executive officer 2012 555,729 48,000 603,729 to december 2011 2011 242,500 71,250 313,750 2010 145,333 29,000 385,179 559,512 bruce g. miller ( 5 ) former chief financial officer 2012 125,000 125,000 and chief operating officer 2011 180,000 5,000 185,000 and chief executive officer 2010 180,000 ( 6 ) 10,000 190,000 ( 1 ) option awards are reported at fair value at the date of grant . see item 15 of part iv , notes to consolidated financial statements story_separator_special_tag you should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes appearing elsewhere in this report . some of the information contained in this discussion and analysis , including information with respect to our plans and strategy for our business and related financing , includes forward-looking statements that involve risks and uncertainties . you should read the risk factors section of this 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 development stage biopharmaceutical company focused on the rapid development of therapies to treat prevalent inflammatory conditions for which there are limited treatment options . we are focused on providing medicines to improve the health and quality of life of patients with minimal side effects . we are developing compounds that decrease inflammation by ( i ) inhibition of specific pro-inflammatory compounds by affecting specific pathways at the protein expression and at the transcription level or ( ii ) activation of a specific phosphatase or depletion of the available phosphate needed for the inflammation process . we are also focused on monetizing our sexual dysfunction portfolio and a diagnostic device . financing activities on september 30 , 2011 ampio filed a shelf registration statement on form s-3 with the securities and exchange commission ( sec ) to register ampio common stock and warrants in an aggregate amount of up to $ 80 million for offering from time to time in the future . the registration statement also registers for possible resale up to one million shares of common stock to be sold by directors and management ( as selling shareholders ) in future public offerings . on october 13 , 2011 ampio filed an amendment to identify potential selling stockholders and the number of shares they would be eligible to sell in the event of a future public offering . the shelf registration was declared effective on october 28 , 2011 by the sec . at december 31 , 2012 ampio had $ 53.7 million available for future public offerings along with 714,900 shares remaining for future sale by named selling shareholders . in july 2012 ampio completed an underwritten public offering for the sale of 5,203,860 shares of common stock at a price of $ 3.25 per share . gross proceeds to ampio were $ 16,912,545 with net proceeds of $ 15,353,150 after underwriter fees and cash offering expenses . ampio also issued warrants to purchase 138,462 shares of common stock to the underwriters . these warrants have an exercise price of $ 4.0625 and can be exercised from the period july 12 , 2013 through july 12 , 2017. certain shareholders also became selling shareholders and received gross proceeds of $ 926,575 from the offering of 285,100 shares as provided in the registration statement . the net proceeds of the 2012 offering have been or will be used for general corporate purposes and working capital , including completion of the ampion and optina clinical trials and costs related to the regulatory approval and commercialization of zertane . management update on december 15 , 2012 , ampio entered into an employment agreement with joshua r. disbrow to serve as the chief operating officer ( coo ) . story_separator_special_tag the $ 500,000 fair value of the zertane patents acquired in connection with the march 2011 acquisition of biosciences is being amortized over the remaining u.s. patent lives of approximately 11 years beginning april 2011. in-process research and development in-process research and development ( iprd ) relates to the zertane product and clinical trial data acquired in connection with the march 2011 business combination of biosciences . the $ 7,500,000 recorded was based on an independent third party appraisal of the fair value of the assets acquired . iprd is considered an indefinite-lived intangible asset and its fair value will be assessed for impairment annually and written down if impaired . once the zertane product obtains regulatory approval and commercial production begins , iprd will be amortized over its estimated useful life . if the commercialization of zertane becomes impracticable or we abandon this drug , we will expense the $ 7.5 million iprd asset . product technology license ampio acquired a product technology license for an orally disintegrating table ( odt ) formulation for zertane . the $ 2 million license/asset purchase was expensed since the odt formulation has not been petitioned for regulatory approval and the license does not have an alternative future use . research and development research and development costs are expensed as incurred . these costs consist primarily of expenses for personnel engaged in the design and development of product candidates ; the scientific research necessary to produce commercially viable applications of our proprietary drugs or compounds ; early stage clinical testing of product candidates or compounds ; expenditures for design and engineering of the orp product ; and development equipment and supplies , facilities costs and other related overhead . 35 stock-based compensation we account for stock-based payments by recognizing compensation expense based upon the estimated fair value of the awards on the date of grant . we determine the estimated grant fair value of options using the black-scholes option pricing model and recognize compensation costs ratably over the vesting period using the straight-line method . common stock issued in exchange for services is recorded at the fair value of the common stock at the date at which we become obligated to issue the shares . the value of the shares is expensed over the requisite service period . derivatives we account for hybrid financial instruments ( debentures with embedded derivative features conversion options , down-round protection and a mandatory conversion provision ) and related warrants by recording the fair value of each hybrid instrument in its entirety and recording the fair value of the warrant derivative liability . the fair value of the hybrid financial instruments and warrants was calculated using a binomial-lattice-based valuation model . we recorded a derivative expense at the inception of each instrument reflecting the difference between the fair value and cash received . changes in the fair value in subsequent periods were recorded as unrealized gain or loss on fair value of derivative instruments for the hybrid financial instruments and to derivative income or expense for the warrants . income taxes we use the liability method of accounting for income taxes . under this method , we recognize deferred assets and liabilities based on the differences between the tax basis of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years . we establish a valuation allowance for all deferred tax assets for which there is uncertainty regarding realization . results of operationsyear ended december 31 , 2012 , 2011 and 2010 see notes to consolidated financial statements . results of operations for the years ended december 31 , 2012 , 2011 and 2010 reflected losses of $ 11.6 million , $ 18.4 million and $ 8.1 million , respectively . these losses include non-cash charges related to depreciation and amortization expense , derivative expense , stock-based compensation and losses on the fair value of debt instruments in the amount of $ 1.5 million in 2012 , $ 9.1 million in 2011 and $ 4.4 million in 2010. revenue we are a development stage enterprise and have not generated material revenue in our operating history . the $ 50,000 and $ 18,750 license revenue recognized in 2012 and 2011 , respectively , represents the amortization of the upfront payment received on our license agreement . the initial payment of $ 500,000 from the license agreement with a korean pharmaceutical company was deferred and being recognized over 10 years . 36 expenses research and development research and development costs consist of labor , research and development of patents and intellectual property , stock-based compensation as well as drug development and clinical trials . these costs are summarized as follows : replace_table_token_3_th comparison of years ended december 31 , 2012 and 2011 research and development expenses increased approximately 13 % in 2012 over 2011. this was due primarily to costs associated with fda pre-ind filings for our three major drug candidates , the ind submissions for ampion and optina , and clinical trials of ampion and optina . we also incurred costs related to the production of the study drugs for the ampion and optina trials . we continue to maintain and strengthen our patent portfolio while labor and stock compensation costs were relatively flat . these represent costs solely related to research and development without an allocation of general and administrative expenses . comparison of years ended december 31 , 2011 and 2010 research and development expenses increased approximately 237 % in 2011 over 2010 as we refocused from building our corporate foundation to the corporate objective of research and development of drug candidates . the increase in expenses in 2011 relates to our primary product candidates as we began ampion and optina clinical trials early in 2011and acquired a $ 2,000,000 product technology license related to our zertane product .
| general and administrative general and administrative expenses consist of personnel costs for employees in executive , business development and operational functions ; professional fees including legal , auditing and accounting ; occupancy , travel and other including rent , governmental and regulatory compliance ; and outside director fees . these costs are summarized as follows : replace_table_token_4_th comparison of years ended december 31 , 2012 and 2011 there was an overall decrease of approximately 3 % in general and administrative costs in 2012 from 2011. labor costs increased in 2012 as the result of the employment agreement payout to our former ceo upon the granting of an indefinite compassionate leave of absence in january 2012. stock-based compensation decreased in 2012 due to longer vesting periods being incorporated into new awards , resulting in straight line amortization of the fair value over a longer period . professional fees consist primarily of legal , audit 37 and accounting costs , costs related to the chay enterprises merger , public company compliance costs , and consulting related to capital formation . professional fees decreased in 2012 as compared to 2011 since we had only routine filing and reporting requirements in 2012. in 2011 we had additional professional fees related to the filing of a form s-4 with the sec and the acquisition of biosciences . travel and investor/public relations costs increased in 2012 as we pursued business development and financing opportunities . directors ' fees decreased because only regularly scheduled meetings were held during 2012 , compared to 2011 when additional meetings were required . no general and administrative costs are currently being allocated to the research and development activities . comparison of years ended december 31 , 2011 and 2010 general and administrative expenses decreased by 5 % in 2011 from the 2010 expenses . labor costs increased in 2011 over 2010 as we added new positions and transitioned from consultants to employees as workloads necessitated .
| 7,223 |
f- 14 tff pharmaceuticals , inc. notes to consolidated financial statements for the years ended december 31 , 2020 and 2019 note 6 – stockholders ' equity common stock ipo in october 2019 , the company completed an ipo , selling 4,400,000 shares of common stock at an offering price of $ 5.00 per share . the company received gross proceeds of approximately $ 22,000,000 . in addition , the company granted the underwriter a 45-day option to purchase an additional 660,000 shares of common stock at the initial public offering price . the option was exercised and the underwriter purchased an additional 479,300 shares of common stock and the company received additional gross proceeds of approximately $ 2,397,000 . the company received net proceeds from the ipo and the underwriter 's purchase of additional shares of approximately $ 21,754,000 , after deducting underwriting discounts and commissions and offering-related expenses . warrants for 317,155 shares of the company 's common stock were issued to the ipo underwriter at an exercise price of $ 6.25 per share as part of the underwriter 's compensation for the ipo . the estimated fair value of the warrants of approximately $ 977,000 was considered an offering cost and netted against additional paid-in capital . in conjunction with the ipo , the company 's outstanding shares of series a preferred stock automatically converted into 9,571,692 shares of its common stock ( see below ) . also in conjunction with the issuance of shares in the ipo , the company granted options to officers and directors to purchase 627,984 shares of common stock at an exercise price of $ 5.00 . ut agreement in november 2019 , the company achieved a milestone in connection with the ut agreement ( see note 5 ) . as a result of the milestone , the company owed ut 220,666 shares of common stock , which had a fair value of approximately $ 1,132,000 , which was accrued in accrued research and development expense as of december 31 , 2019. in january 2020 , the company issued the 220,666 shares of common stock to ut . august 2020 private placement on august 10 , 2020 , the company entered into a securities purchase agreement ( the “ purchase agreement ” ) and a registration rights agreement ( the “ registration rights agreement ” ) with certain institutional and other accredited investors pursuant to which the company issued and sold to the investors 3,048,654 shares of the company 's common stock at a price of $ 8.50 per share for gross proceeds of approximately $ 25.91 million , before deducting placement agent and other offering expenses . after deducting the placement agent and other offering expenses , the company received net proceeds of approximately $ 24.28 million . the purchase agreement included customary representations , warranties , and covenants by the investors and the company , and an indemnity from the company in favor of the investors . jefferies llc acted as placement agent for the private placement and the private placement closed on august 13 , 2020. pursuant to the terms of the registration rights agreement , the company filed a resale registration statement on form s-1 with the sec that was declared effective on september 15 , 2020. stock option exercises during november and december 2020 , 285,003 shares of common stock were issued in connection with the exercise of stock options for total proceeds of $ 714,382 . cashless warrant exercises during august through december 2020 , 529,559 shares of common stock were issued in connection with the cashless exercise of 659,108 common stock warrants . series a convertible preferred stock prior to our initial public offering in october 2019 , the company 's amended and restated certificate of incorporation authorized the company to issue up to 10,000,000 shares of preferred stock , all of which was designated as series a preferred stock and there were 8,930,000 shares of series a preferred stock issued and outstanding immediately prior to the company 's initial public offering . pursuant to the company 's amended and restated certificate of incorporation , all outstanding shares of series a preferred stock automatically converted to common stock at the close of our initial public offering and thereafter the company was no longer authorized to issue any preferred stock . the series a preferred stock ranked senior to common stock with respect to dividends rights and liquidation preferences and had full voting rights . the series a preferred stock accrued a dividend at a rate of 6 % per annum , and $ 875,359 of dividends accrued during the year ended december 31 , 2019. f- 15 tff pharmaceuticals , inc. notes to consolidated financial statements for the years ended december 31 , 2020 and 2019 note 6 – stockholders ' equity ( deficit ) , continued pursuant to the company 's amended and restated certificate of incorporation , holders of the series a preferred stock had the following methods of conversion : ( i ) automatic conversion into common stock upon the consummation of an ipo at a conversion price of 50 % of the ipo price , ( ii ) automatic conversion into common stock upon the consummation of a subsequent private placement of securities at a conversion price of 50 % of the purchase price of the securities being sold by the company approved by the holders of the series a preferred stock , and ( iii ) at any time after the issuance date and until ten calendar days prior to the consummation of an ipo , each holder shall be entitled to convert into common stock at a conversion price of $ 2.50 per share . story_separator_special_tag the series a preferred stock automatically converted into 9,571,692 common shares upon completion of the ipo in october 2019 , based on the number of shares of series story_separator_special_tag general we were formed as a delaware corporation on january 24 , 2018 for the purpose of developing and commercializing innovative drug products based on our patented thin film freezing , or tff , technology platform ” . since our formation , we have focused on the development of our initial drug candidates , the establishment of strategic relationships with established pharmaceutical companies for the licensing of our tff technology platform and the pursuit of additional working capital . we have not commenced revenue-producing operations . since our organization in 2018 , we have engaged in the following financing transactions : series a preferred stock placements . in march 2018 , we conducted a private placement of 5,662,000 shares of our series a preferred stock , at an offering price of $ 2.50 per share , for the gross proceeds of approximately $ 14.2 million , and in may 2019 we conducted a private placement of 3,268,000 shares of our series a preferred stock , at an offering price of $ 2.50 per share , for the gross proceeds of approximately $ 8.2 million . the shares of our series a preferred stock accumulated dividends at the rate of 6 % per annum . the shares of series a preferred stock , including all accrued but unpaid dividends on the series a preferred stock , which totaled $ 1,603,709 , automatically converted into 9,571,692 shares of our common stock concurrent with the completion of our initial public offering at the conversion price of $ 2.50 . initial public offering . on october 25 , 2019 , we conducted an initial public offering of 4,400,000 shares of common stock at a public offering price of $ 5.00 per share . after the payment of underwriter discounts and offering expenses , and after giving effect to the underwriters ' exercise of its overallotment option on november 20 , 2019 to purchase an additional 479,300 shares of our common stock at the offering price of $ 5.00 per share , we received net proceeds of approximately $ 21.8 million . august 2020 private placement . on august 13 , 2020 , we conducted a private placement of 3,048,654 shares of common stock , at a purchase price per share of $ 8.50 , for aggregate gross proceeds of approximately $ 25,914,000 , before deducting selling commissions and other offering expenses . after deducting the placement agent and other offering expenses , we received net proceeds of approximately $ 24,280,000. story_separator_special_tag 38 critical accounting policies our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the united states of america , or gaap . the preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets , liabilities , costs and expenses in our consolidated financial statements . we base our estimates on historical experience , known trends and events and various other factors that we believe are reasonable under the circumstances , the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources . we evaluate our estimates and assumptions on an ongoing basis . our actual results may differ from these estimates under different assumptions or conditions . while our significant accounting policies are described in more detail in note 3 to our consolidated financial statements included herein , we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements . stock-based compensation we compute stock-based compensation in accordance with authoritative guidance . we use the black-scholes-merton option-pricing model to determine the fair value of its stock options . the black-scholes-merton option-pricing model includes various assumptions , including the fair market value of our common stock , expected life of stock options , the expected volatility and the expected risk-free interest rate , among others . these assumptions reflect our best estimates , but they involve inherent uncertainties based on market conditions generally outside our control . as a result , if other assumptions had been used , stock-based compensation cost , as determined in accordance with authoritative guidance , could have been materially impacted . furthermore , if we use different assumptions on future grants , stock-based compensation cost could be materially affected in future periods . for grants prior to the ipo , the fair value of the common stock was determined by the board of directors based on a variety of factors , including valuations prepared by third parties , our financial position , the status of our development efforts , the current climate in the marketplace and the prospects of a liquidity event , among others . for grants after the ipo , we use the closing stock price on the date of grant as the fair value of the common stock . research and development expenses in accordance with authoritative guidance , we charge research and development costs to operations as incurred . research and development expenses consist of personnel costs for the design , development , testing and enhancement of our technology , and certain other allocated costs , such as depreciation and other facilities related expenditures . common stock warrants we classify as equity any warrants that ( i ) require physical settlement or net-share settlement or ( ii ) provides us with a choice of net-cash settlement or settlement in its own shares ( physical settlement or net-share settlement ) . we classify as assets or liabilities any contracts that ( i ) require net-cash settlement ( including a requirement to net cash settle the contract if an event occurs and if that event is outside our control ) ,
| results of operations we were formed in january 2018 and have not commenced revenue-producing operations . to date , our operations have consisted of the development and early-stage testing of our initial product candidates . in connection with our organization on january 24 , 2018 , we entered into a contribution and subscription agreement with lung therapeutics , inc. , or lti , our former parent , pursuant to which we agreed to acquire from lti certain of lti 's non-core intellectual property rights and other assets , or the acquired assets , all of which relate to our thin film freezing technology . we closed on the acquisition of the acquired assets concurrent with the close of the initial series a preferred stock financing in march 2018. in december 2019 , the company established a wholly-owned australian subsidiary , tff pharmaceuticals australia pty ltd. in order to conduct clinical research . 37 on march 11 , 2020 , the world health organization declared a novel strain of coronavirus disease ( “ covid-19 ” ) a global pandemic . we had expected to commence phase i clinical trials our tff formulation of tacrolimus in australia in the first quarter of 2020 , and on march 13 , 2020 we had received the approval of the australian human research ethics committee to commence phase i trials , however later in march 2020 our contract research organization in australia informed us that because of the spread of the covid-19 virus in australia , there would be a delay in initiating the trial . during the second quarter of 2020 , we were able to begin dosing in the phase i tacrolimus trial in melbourne , victoria , australia . however , due to the resurgence of covid-19 in the melbourne area , in july 2020 the phase i trials were delayed .
| 7,224 |
our services include personal care and assistance with activities of daily living , and adult day care . our consumers are individuals with special needs who are at risk of hospitalization or institutionalization , such as the elderly , chronically ill and disabled . our payor clients include federal , state and local governmental agencies , commercial insurers and private individuals . we provide home and community based services through over 96 locations across 19 states to over 25,000 consumers . effective march 1 , 2013 , we sold substantially all of the assets used in our home health business in arkansas , nevada and south carolina , and 90 % of the home health business in california and illinois , to the purchasers for a cash purchase price of approximately $ 20 million . we retained a 10 % ownership interest in the home health business in california and illinois . the assets sold included 19 home health agencies and two hospice agencies in five states . through these home health agencies , we previously provided physical , occupational and speech therapy , as well as skilled nursing services , to pediatric , adult infirm and elderly patients . we are also holding as assets for sale two agencies located in idaho and pennsylvania . the results of the home health business sold or held for sale are reflected as discontinued operations for all periods presented herein . continuing operations include the results of operations previously included in our home & community segment and three agencies previously included in our home health segment . following the sale of the home health business , we manage and internally report our business in one segment . we believe the sale of the home health business substantially positions us for future growth . the sale allows us to focus both management and financial resources to address changes in the home and community based services industry and to address the needs of managed care organizations as they become responsible for state sponsored programs . we have improved our financial performance by lowering our administrative costs and concentrating our efforts on the business that is growing and providing all of our profitability and disposing of the business that was unprofitable . we have improved our overall financial position by eliminating our debt and adding substantial amounts in cash reserves to our balance sheet . a summary of our results for 2012 and 2011 are provided in the table below : replace_table_token_10_th the home and community based services we provide are primarily social in nature and include assistance with bathing , grooming , dressing , personal hygiene and medication reminders , and other activities of daily living . we provide these services on a long-term , continuous basis , with an average duration of approximately 17 months per consumer . our adult day centers provide a comprehensive program of skilled and support services and designated medical services for adults in a community-based group setting . services provided by our adult 42 day centers include social activities , transportation services to and from the centers , the provision of meals and snacks , personal care and therapeutic activities such as exercise and cognitive interaction . we utilize a coordinated care model that is designed to enhance consumer outcomes and satisfaction as well as lower the cost of acute care treatment and reduce service duplication . through our coordinated care model , we utilize our home care aides to observe and report changes in the condition of our consumers for the purpose of early intervention in the disease process , thereby preventing or reducing the cost of medical services by avoiding emergency room visits , and or reducing the need of hospitalization . these changes in condition are evaluated by appropriately trained managers and referred to appropriate medical personnel including the primary care physicians and managed care plans for treatment and follow-up . we will coordinate the services provided by our team with those of selected health care agencies . we believe this approach to the provision of care to our consumers and the integration of our services into the broader healthcare industry is particularly attractive to managed care providers and others who are ultimately responsible for the healthcare needs of our consumers and over time will increase our business with them . our ability to grow our net service revenues is closely correlated with the number of consumers to whom we provide our services . our continued growth depends on our ability to maintain our existing payor client relationships , establish relationships with new payors , enter into new contracts and increase our referral sources . our continued growth is also dependent upon the authorization by state agencies of new consumers to receive our services . we believe there are several market opportunities for growth . the u.s. population of persons aged 65 and older is growing , and the u.s. census bureau estimates that this population will more than double by 2050. additionally , we believe the overwhelming majority of individuals in need of care generally prefer to receive care in their homes or community-based settings . finally , we believe the provision of home and community based services is more cost-effective than the provision of similar services in an institutional setting for long-term care . we have historically grown our business primarily through organic growth , complemented with selective acquisitions . our acquisitions have historically been focused on facilitating entry into new states . on july 26 , 2010 , we entered into an asset purchase agreement ( the purchase agreement ) , pursuant to which we acquired the operations and certain assets of advantage health systems , inc. , a south carolina corporation ( advantage ) . advantage is a provider of home and community based services in south carolina and georgia , which expanded our services across 19 states . story_separator_special_tag depreciable and leasehold assets are depreciated or amortized on a straight-line method over their useful lives or , if less and if applicable , their lease terms . interest income legislation enacted in illinois entitles designated service program providers to receive a prompt payment interest penalty based on qualifying services approved for payment that remain unpaid after a designated period 45 of time . as the amount and timing of the receipt of these payments are not certain , the interest income is recognized when received and reported in the income statement caption , interest income . while we may be owed additional prompt payment interest , the amount and timing of receipt of such payments remains uncertain and we have determined that we will continue to recognize prompt payment interest income when received . the state amended its prompt payment interest terms , effective july 1 , 2011 , which changed the measurement period for outstanding invoices from a 60-day to a 90-day outstanding period . we believe this change in terms will reduce future amounts paid for prompt payment interest . interest expense interest expense from continuing operations consists of interest costs on our credit facility and other debt instruments . income tax expense all of our income from continuing operations is from domestic sources . we incur state and local taxes in states in which we operate . the differences from the federal statutory rate of 34 % are principally due to state taxes and the use of federal employment tax credits . discontinued operations discontinued operations consists of the results of operations , net of tax for our home health business that was sold effective march 1 , 2013 and the results of operations for assets held for sale . 46 results of operations year ended december 31 , 2012 compared to year ended december 31 , 2011 the following table sets forth , for the periods indicated , our consolidated results of operations . replace_table_token_13_th * percentage information not meaningful net service revenues from state , local and other governmental programs accounted for 94.9 % and 93.5 % of net service revenues for 2012 and 2011 , respectively . private duty and , to a lesser extent , commercial payors accounted for the remainder of net service revenues . net service revenues increased $ 14.2 million , or 6.2 % , to $ 244.3 million for 2012 compared to $ 230.1 million for the same period in 2011. the increase was primarily due to a 5.1 % increase in average census increase and a related 6.5 % increase in billable hours . gross profit , expressed as a percentage of net service revenues , decreased to 26.2 % for 2012 , from 26.7 % in 2011. this decrease as a percent of revenue of 0.5 % is primarily due to an increase in workers ' compensation costs as a result of an increase in average claim costs during 2012 , partially offset by an increase in the average billed hours per census per month while leveraging the fixed wage cost for field staff . 47 general and administrative expenses , expressed as a percentage of net service revenues decreased to 19.0 % for 2012 , from 19.9 % in 2011. general and administrative expenses increased to $ 46.4 million in 2012 as compared to $ 45.9 million in 2011. in 2012 , we had cost increases in administrative wages , telecom and technology related costs , an increase in management bonuses , an increase in corporate infrastructure and consulting expenses for business development initiatives which were partially offset by a decrease in bad debt expense due to improved collections and a decrease in legal related expenses . depreciation and amortization , expressed as a percentage of net service revenues , decreased to 1.0 % for 2012 , from 1.4 % in 2011. amortization of intangibles , which are principally amortized using accelerated methods , totaled $ 1.7 million and $ 2.2 million for 2012 and 2011 , respectively . interest income legislation enacted in illinois entitles designated service program providers to receive a prompt payment interest penalty based on qualifying services approved for payment that remain unpaid after a designated period of time . as the amount and timing of the receipt of these payments are not certain , the interest income is recognized when received and reported in the income statement caption , interest income . we received $ 0.2 million in prompt payment interest in 2012 and $ 2.3 million in 2011. while we may be owed additional prompt payment interest , the amount and timing of receipt of such payments remains uncertain and we have determined that we will continue to recognize prompt payment interest income when received . the state amended its prompt payment interest terms , effective july 1 , 2011 , which changed the measurement period for outstanding invoices from a 60-day to a 90-day outstanding period . we believe this change in terms will reduce future amounts paid for prompt payment interest . interest expense interest expense was $ 1.7 million and $ 2.5 million for 2012 and 2011 , respectively . interest expense decreased $ 0.8 million primarily due to a reduction in outstanding debt . income tax expense ( benefit ) our effective tax rates from continuing operations for 2012 and 2011 were 34.1 % and 33.5 % , respectively . the principal difference between the federal and state statutory rates and our effective tax rate is the use of federal employment opportunity tax credits . our effective tax rate for 2012 does not include any earned 2012 federal employment opportunity tax credits , which will be recognized in 2013 as the federal employment opportunity tax credits were reinstated in january 2013. discontinued operations during the fourth quarter of fiscal year 2012 , we announced that we were pursuing strategic alternatives for our home health business , and in february 2013 , we entered into the home health purchase agreement .
| results of operations year ended december 31 , 2011 compared to year ended december 31 , 2010 the following table sets forth , for the periods indicated , our consolidated results of operations . replace_table_token_15_th * percentage information not meaningful net service revenues from state , local and other governmental programs accounted for 93.5 % and 92.7 % of net service revenues from continuing operations for 2011 and 2010 , respectively . private duty and , to a lesser extent , commercial payors accounted for the remainder of net service revenues . net service revenues were consistent at $ 230.1 million for 2011 and 2010. net service revenue included the advantage acquisition , which contributed $ 4.9 million in service revenues for 2011 over 2010. excluding $ 10.9 million and $ 10.5 million for 2011 and 2010 , respectively , in revenue from the loss of certain programs , locations closed and the impact of the advantage acquisition , organic revenue increased by $ 0.4 million , or 0.2 % . gross profit , expressed as a percentage of net service revenues , increased by 0.7 % to 26.7 % for 2011 , from 26.0 % for 2010. this increase is primarily due to lower workers ' compensation and other insurance related costs .
| 7,225 |
10.33 * second amended and restated securities pledge agreement , dated as of july 8 , 2011 , by sonic financial corporation and bank of america , n.a . , as administrative agent for the lenders ( incorporated by reference to exhibit 10.16 to sonic 's june 2011 quarterly report ) . 10.34 * second amended and restated security agreement , dated as of july 8 , 2011 , by sonic automotive , inc. , the subsidiaries of sonic named therein and bank of america , n.a . , as administrative agent for the lenders ( incorporated by reference to exhibit 10.17 to sonic 's june 2011 quarterly report ) . 10.35 * amended and restated syndicated new and used vehicle floor plan credit agreement , dated july 8 , 2011 , among sonic automotive , inc. ; certain subsidiaries of the company ; each lender ; bank of america , n.a . , as administrative agent , new vehicle swing line lender and used vehicle swing line lender ; and story_separator_special_tag the following discussion and analysis of the results of operations and financial condition should be read in conjunction with the sonic automotive , inc. and subsidiaries consolidated financial statements and the related notes thereto appearing elsewhere in this annual report on form 10-k. the financial and statistical data contained in the following discussion for all periods presented reflects our december 31 , 2012 classification of dealerships between continuing and discontinued operations in accordance with presentation of financial statements in the accounting standards codification ( the asc ) . 2012 events during the year ended december 31 , 2012 , we issued $ 200.0 million in aggregate principal amount of 7.0 % senior subordinated notes due 2022 ( the 7.0 % notes ) and repurchased the remaining outstanding principal amount of the 5.0 % convertible senior notes due 2029 ( the 5.0 % convertible notes ) . see note 6 , long-term debt , to the accompanying consolidated financial statements for further discussion of the 7.0 % notes and 5.0 % convertible notes . during the year ended december 31 , 2012 , we recorded a loss on extinguishment of debt of approximately $ 19.7 million related to the 5.0 % convertible notes , recorded in other income ( expense ) , net , in the accompanying consolidated statements of income . as a result of these refinancing and repurchase activities , other than principal payments due on mortgage notes and certain term notes , we do not have another significant non-floor plan debt maturity until the 2016 maturity of our 2011 credit facilities and the 2018 maturity of the aggregate principal amount outstanding of our 9.0 % notes . overview we are one of the largest automotive retailers in the united states . as of december 31 , 2012 , we operated 111 dealerships in 14 states ( representing 25 different brands of cars and light trucks ) and 21 collision repair centers . for management and operational reporting purposes , we group certain dealerships together that share management and inventory ( principally used vehicles ) into stores. as of december 31 , 2012 , we operated 100 stores . as a result of the way we manage our business , we have a single operating segment for purposes of reporting financial condition and results of operations . our dealerships provide comprehensive services including sales of both new and used cars and light trucks , sales of replacement parts , performance of vehicle maintenance , manufacturer warranty repairs , paint and collision repair services , and arrangement of extended service contracts , financing , insurance and other aftermarket products for our customers . although vehicle sales and sales of associated finance , insurance and other aftermarket products are cyclical and are affected by many factors , including overall economic conditions , consumer confidence , levels of discretionary personal income , interest rates and available credit , our parts , service and collision repair services are not closely tied to vehicle sales and are not as dependent upon near-term sales volume . the automobile industry 's total amount of new vehicles sold in 2012 increased by 13.3 % , to 14.5 million vehicles , from 12.8 million vehicles in 2011 , according to bloomberg financial markets , via stephens inc. from an industry perspective , new vehicle unit sales on a year-over-year basis increased 18.3 % for import brands and 7.8 % for domestic brands . for 2013 , the average industry expectations for new vehicle unit sales volume are between 15.0 million and 15.5 million vehicles , an increase of 3.4 % to 6.9 % from the industry volume in 2012. changes in consumer confidence , availability of consumer financing or changes in the financial stability of the automotive manufacturers could cause 2013 new vehicle industry results to vary . many factors such as brand and geographic concentrations have caused our past results to differ from the industry 's overall trend . 31 use of estimates and 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 amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period . actual results could differ from those estimates . critical accounting policies are those that are both most important to the portrayal of our financial position and results of operations and require the most subjective and complex judgments . the following is a discussion of what we believe are our critical accounting policies and estimates . see note 1 , description of business and summary of significant accounting policies , to the accompanying consolidated financial statements for additional discussion regarding our accounting policies . story_separator_special_tag based on the results of our step one test as of december 31 , 2012 , sonic 's fair value exceeds its carrying value . as such , we were not required to complete step two of the impairment evaluation according to intangibles goodwill and other , in the asc . see note 1 , description of business and summary of significant accounting policies , to the accompanying consolidated financial statements for further discussion . the balance of our goodwill totaled approximately $ 454.2 million at december 31 , 2012. in accordance with intangibles goodwill and other , in the asc , we evaluate franchise assets for impairment annually or more frequently if indicators of impairment exist . we estimate the value of our franchise assets using a discounted cash flow model . the discounted cash flow model used contains inherent uncertainties . we are subject to financial risk to the extent that our franchise assets become impaired due to deterioration of the underlying businesses . the risk of a franchise asset impairment loss may increase to the extent the underlying businesses ' earnings or projected earnings decline . as a result of our impairment testing for the years ended december 31 , 2012 , 2011 and 2010 , no franchise asset impairments were required . the balance of our franchise assets totaled approximately $ 60.6 million at december 31 , 2012. insurance reserves we have various high deductible retention and insurance policies that require us to make estimates in determining the ultimate liability we may incur for claims arising under these policies . we accrue for insurance reserves throughout the year based on current information available . as of december 31 , 2012 , we estimate the ultimate liability under these programs is between $ 22.2 million and $ 24.5 million , and had approximately $ 23.4 million reserved for such programs . changes in significant assumptions used in the development of the ultimate liability for these programs could have a material impact on the level of reserves , our operating results , financial position and cash flows . these significant assumptions would include the volume of claims , medical cost trends , claims handling and reporting patterns , historical claims experience , the effect of related court rulings and current or projected changes in state laws . from a sensitivity analysis perspective , it is difficult to quantify the effect of changes in any of these significant assumptions with the exception of the volume of claims . we 33 believe a 10 % change in the volume of claims would have a proportional effect on our reserves . our actual loss experience has not been materially different from our recorded estimates . lease exit accruals the majority of our dealership properties are leased under long-term operating lease arrangements . when leased properties are no longer utilized in operations , we record lease exit accruals . these situations could include the relocation of an existing facility or the sale of a dealership where the buyer will not be subleasing the property for either the remaining term of the lease or for an amount equal to our obligation under the lease , or in situations where a store is closed as a result of the associated franchise being terminated by the manufacturer and no other operations continue on the leased property . the lease exit accruals represent the present value of the lease payments , net of estimated sublease rentals , for the remaining life of the operating leases and other accruals necessary to satisfy lease commitments to the landlords . as of december 31 , 2012 , we had $ 33.0 million accrued for lease exit costs . a significant change in our assumptions regarding the time period necessary to obtain a subtenant or the amount of the anticipated sublease income could have a material effect on our accrual and , as a result , earnings . for example , assuming all other factors remain the same , a 50 % decrease in our estimated proceeds from subleases would change our lease exit accruals by approximately $ 0.7 million . in addition , based on the terms and conditions negotiated in the sale of dealerships in the future , additional accruals may be necessary if the purchaser of the dealership does not assume any associated lease , or we are unable to negotiate a sublease with the buyer of the dealership on terms that are identical to or better than those associated with the original lease . legal proceedings we are involved , and expect to continue to be involved , in numerous legal proceedings arising out of the conduct of our business , including litigation with customers , employment related lawsuits , contractual disputes and actions brought by governmental authorities . as of december 31 , 2012 , we had accrued approximately $ 3.4 million in legal reserves . although we vigorously defend ourselves in all legal and administrative proceedings , the outcomes of pending and future proceedings arising out of the conduct of our business , including litigation with customers , employment related lawsuits , contractual disputes , class actions , purported class actions and actions brought by governmental authorities , can not be predicted with certainty . an unfavorable resolution of one or more of these matters that are significant could exceed the amount of our legal reserve and have a material adverse effect on our business , financial condition , results of operations , cash flows or prospects . classification of dealerships in continuing and discontinued operations we classify the results from operations of our continuing and discontinued operations in our consolidated statements of income based on the provisions of presentation of financial statements in the asc . many of these provisions involve judgment in determining whether a dealership will be reported as continuing or discontinued operations . such judgments include whether a dealership will be sold or terminated , the period required to complete the disposition and the likelihood of changes to a plan for sale .
| results of operations the following table summarizes the percentages of total revenues represented by certain items reflected in our consolidated statements of income : replace_table_token_6_th ( 1 ) in accordance with the provisions of presentation of financial statements in the asc , prior years ' income statement data reflect reclassifications to ( i ) exclude franchises sold , identified for sale , or terminated subsequent to december 31 , 2011 which had not been included in discontinued operations as of that date or ( ii ) include franchises previously held for sale which subsequently were reclassified to held and used . see notes 1 and 2 to our accompanying consolidated financial statements which discuss these and other factors that affect the comparability of the information for the periods presented . 36 ( 2 ) the cost of sales line item includes the cost of new and used vehicles , vehicle parts and all costs directly linked to servicing customer vehicles . during the year ended december 31 , 2012 , we terminated or disposed of ten dealerships and , at december 31 , 2012 , had no dealerships held for sale . we did not dispose of any dealerships during the year ended december 31 , 2011 , and disposed of seven dealerships during the year ended december 31 , 2010. the results of operations of these dealerships , including gains or losses on disposition , are included in discontinued operations on the accompanying consolidated statements of income for all periods presented . the following discussions are based on reported figures . same store amounts do not vary significantly from reported totals since there were no significant dealership acquisitions in the years ended december 31 , 2012 , 2011 and 2010. new vehicles new vehicle revenues include the sale of new vehicles to retail customers , as well as the sale of fleet vehicles .
| 7,226 |
neratinib is a potent irreversible tyrosine kinase inhibitor , or tki , that blocks signal transduction through the epidermal growth factor receptors , her1 , her2 and her4 . currently , we are primarily focused on the development of the oral version of neratinib , and our most advanced drug candidates are directed at the treatment of her2-positive breast cancer . we believe neratinib has clinical application in the treatment of several other cancers as well , including non-small cell lung cancer and other tumor types that over-express or have a mutation in her2 . our efforts and resources to date have been focused primarily on acquiring and developing our pharmaceutical technologies , raising capital and recruiting personnel . we have had no product sales to date and we will have no product sales until we receive approval from the united states food and drug administration , or fda , or equivalent foreign regulatory bodies to begin selling a drug product . developing drug products , however , is a lengthy and very expensive process . assuming we do not encounter any unforeseen safety issues during the course of developing our drug candidates , we do not expect to receive approval of a product candidate until approximately the second half of 2017 , though we can not assure you that we will receive approval for any of our drug candidates this year or ever . we recently completed a phase iii clinical trial of neratinib for the extended adjuvant treatment of patients with early stage her2-positive breast cancer , which we refer to as the extenet trial . based on the results from the extenet trial , we submitted a new drug application , or nda , with the fda for regulatory approval of neratinib in the extended adjuvant setting in the united states in july 2016 and a marketing authorization application , or maa , with the european medicines agency , or ema , in june 2016. we are continuing to evaluate potential commercialization options for neratinib in this indication , including developing a direct sales force , contracting with third parties to provide sales and marketing capabilities , some combination of these two options or other strategic options . we expect that our expenses will continue to increase as we continue to evaluate our options with regard to commercialization efforts . the license agreement for pb272 established a limit for our expenses related to the pfizer-initiated clinical trials for pb272 that were ongoing at the time of the agreement . this capped our “ out-of-pocket ” costs incurred in conducting these existing trials beginning january 1 , 2012. we reached the cost cap during the fourth quarter of 2012 , which resulted in a reduction of our research and development , or r & d , expenses for the fourth quarter of 2012 and for the year ended december 31 , 2013. in july 2014 the company signed an amendment to the license agreement with the licensor whereby the company would be responsible for the expenses incurred or accrued in conducting the ongoing legacy clinical trials after december 31 , 2013. additionally , our expenses to date have been related to hiring staff , commencing company-sponsored clinical trials and the build out of our corporate infrastructure . as we proceed with clinical development of pb272 ( neratinib ( oral ) ) , and as we further develop pb272 ( neratinib ( intravenous ) ) , and pb357 , our second and third product candidates , respectively , we expect our r & d expenses and expenses related to our third-party contractors will continue to increase . to the extent we are successful in acquiring additional product candidates for our development pipeline , our need to finance r & d will increase . accordingly , our success depends not only on the safety and efficacy of our product candidates , but also on our ability to finance product development . our major sources of working capital have been proceeds from public offerings of our common stock and sales of our common stock in private placements . summary of expenses general and administrative , or g & a , expenses consist primarily of salaries and related personnel costs , including stock-based compensation expense , professional fees , business insurance , rent , general legal activities , and other corporate expenses . r & d expenses include costs associated with services provided by consultants who conduct clinical services on our behalf , contract organizations for manufacturing of clinical materials and clinical trials . during the years ended december 31 , 2016 , 2015 and 2014 , our r & d expenses consisted primarily of clinical research organization , or cro , fees ; fees paid to consultants ; salaries and related personnel costs ; and stock-based compensation . we expense our r & d costs as they are incurred . 51 story_separator_special_tag style= '' margin-bottom:0pt ; margin-top:18pt ; text-indent:0 % ; font-style : italic ; font-family : times new roman ; font-size:10pt ; font-weight : normal ; text-transform : none ; font-variant : normal ; '' > year ended december 31 , 2015 compared to year ended december 31 , 2014 for the year ended december 31 , 2015 , r & d expenses increased approximately $ 85.6 million compared to the same period in 2014. approximately $ 47.8 million of this increase , or 55.8 % of the total increase , is related to an increase in stock-based compensation expense , attributable to our increased headcount and additional incentive awards to existing employees . the remaining approximately $ 37.8 million increase in r & d expense for the year ended december 31 , 2015 compared to the same period in 2014 was primarily attributable to : an approximately $ 22.9 million increase in clinical trial expenses as a result of an increase of approximately $ 9.4 million for cro professional fees and pass-through costs and approximately $ 13.5 million for clinical and pre-clinical services which includes drug manufacturing and supply as well as outside clinical services . story_separator_special_tag further changes in cash flows from operations include an increase in accounts payable and accrued expenses of approximately $ 5.0 million , a decrease in prepaid expenses and other of approximately $ 3.4 million and an increase in the accrued liability for deferred rent of approximately $ 4.1 million . this increase in accrued liability for deferred rent was due to the amendments to the leases for office space , which became effective in april 2016. net cash used in operating activities for the year ended december 31 , 2015 , includes a net loss of $ 239.3 million , adjusted for non-cash items of approximately $ 94.9 million for stock-based compensation expense , build-out allowance of $ 0.2 million and $ 0.8 million for depreciation and amortization of property and equipment . further changes in cash flows from operations include a decrease in accounts payable and accrued expenses of approximately $ 12.0 million , a decrease of $ 1.8 million in licensor receivables , and an increase in prepaid expenses and other assets of approximately $ 1.0 million . the decrease in accrued expenses reflects a payment of approximately $ 16.4 million for employee payroll taxes withheld related to the exercise of employee stock options during december 2014 , paid in january 2015. the increase in prepaid expenses and other assets reflects up-front payments made to various cros for company-initiated clinical trials , for various insurance policies and the comparator inventory . net cash used in operating activities for the year ended december 31 , 2014 , includes a net loss of $ 142.0 million adjusted for non-cash items of approximately $ 39.2 million for stock option expense , build-out allowance of $ 0.2 million and $ 0.6 million for depreciation and amortization of property and equipment . further changes in cash flows from operations include an increase in accounts payable and accrued expenses of approximately $ 25.2 million , a decrease of $ 8.1 million in licensor receivables , and an increase in prepaid expenses and other assets of approximately $ 8.6 million . the increase in both accounts payable and accrued expenses reflect an increase in clinical trial cost and an accrual of approximately $ 16.4 million for employee payroll taxes withheld related to the exercise of employee stock options during december 2014. the proceeds from the exercise of the stock options were primarily received in december 2014 while the payments for taxes withheld were made in january 2015. the increase in prepaid expenses and other assets reflects up-front payments made to various cros for company-initiated clinical trials , various insurance policies and the comparator inventory . 55 investing activities net cash provided by investing activities was approximately $ 142.2 million for the year ended december 31 , 2016. a significant portion represents cash provided by the sale and maturity of available-for-sale securities of approximately $ 231.3 million offset by cash used for the purchase of available-for-sale securities of approximately $ 81.8 million . additionally , cash used included approximately $ 4.3 million used for the purchase of property and equipment and approximately $ 3.0 million for expenditures for leasehold improvements . net cash used in investing activities was approximately $ 85.9 million for the year ended december 31 , 2015. a significant portion of this represents cash used for the purchase of available-for-sale securities of approximately $ 214.8 million offset by the sale and maturity of available-for-sale securities of $ 133.2 million . additionally , approximately $ 3.1 million of net cash used in investing activities was transferred to restricted cash to secure a standby letter of credit for the additional office leases and approximately $ 1.2 million was used for leasehold improvements and the purchase of property and equipment to support corporate growth . net cash used in investing activities was approximately $ 63.3 million for the year ended december 31 , 2014. a significant portion of this represents cash used for the purchase of available-for-sale securities of approximately $ 132.3 million offset by the sale and maturity of available-for-sale securities of $ 70.3 million . additionally , approximately $ 1.3 million of cash used in investing activities was used for leasehold improvements and the purchase of property and equipment to support corporate growth . financing activities october 2016 common stock offering . on october 19 , 2016 , we entered into an underwriting agreement in connection with the public offering , issuance and sale by us of 3,750,000 shares of our common stock at a public offering price of $ 40.00 per share , less underwriting discounts and commissions . under the terms of the underwriting agreement , we also granted the underwriters an option exercisable for 30 days to purchase up to an additional 562,500 shares of our common stock at the public offering price , less underwriting discounts and commissions . on october 20 , 2016 , the underwriters exercised their option to purchase additional shares in full . we received net proceeds from the offering of approximately $ 161.9 million , after deducting underwriting discounts and commissions and estimated offering expenses . in addition , during the year ended december 31 , 2016 , approximately $ 0.6 million was received for employee stock options exercised during 2016. january 2015 common stock offering . on january 27 , 2015 , we completed an underwritten public offering of 1,150,000 shares of our common stock ( including an additional 150,000 shares of our common stock issued and sold pursuant to the underwriters ' option to purchase additional shares ) at a price of $ 190.00 per share , less the underwriting discount . the net proceeds received by us were approximately $ 205.1 million after deducting the underwriting discount and estimated offering expenses . in addition , during the year ended december 31 , 2015 , $ 28.2 million was received for employee stock options exercised during 2015. february 2014 common stock offering .
| results of operations the following summarizes our results of operations for the years ended december 31 , 2016 , 2015 and 2014. general and administrative expenses : replace_table_token_5_th year ended december 31 , 2016 compared to year ended december 31 , 2015 total g & a expenses increased approximately 69.1 % to $ 53.8 million for the year ended december 31 , 2016 from $ 31.8 million for the year ended december 31 , 2015. approximately $ 9.4 million of this increase , or 42.7 % of the total increase , is related to an increase in stock-based compensation expense , attributable to our increased headcount and additional incentive awards to existing employees . the remaining approximately $ 12.6 million increase in g & a expense for the year ended december 31 , 2016 compared to the same period in 2015 was primarily attributable to : an approximately $ 7.1 million increase in professional fees and expenses , which consist primarily of legal , auditing , consulting and investor relations fees . included in this expense is approximately $ 5.3 million in consulting and professional expense for our pre-commercialization efforts . we expect professional fees and expenses to increase as we prepare for commercial product launch , continue to defend against the pending class action , derivative and defamation lawsuits filed against us and as we continue to implement compliance measures related to the sarbanes-oxley act of 2002 , as amended , or sarbanes-oxley . an approximately $ 2.8 million increase in payroll and related costs as administrative headcount increased from 18 to 27. of this increase , approximately $ 2.1 million of the increase was in support of the potential commercial product launch which we anticipate could occur as early as the end of 2017 , though we can not assure you that we will commercialize any product this year or ever . an approximately $ 2.2 million increase in facility and equipment costs .
| 7,227 |
during the second quarter of 2014 , the company entered into a loan agreement with a real estate partnership whereby the company loaned the partnership $ 6.9 million at a rate of 5 % per annum . the partnership used the majority of its loan proceeds to fully redeem its mortgage debt that the company held in the form of bonds . during the third quarter of 2014 , the company entered into a loan agreement with a real estate partnership whereby the company loaned the partnership $ 1.1 million and purchased mortgage debt ( in the form of a bond ) for $ 5.3 million from the real estate partnership at par . at closing , it was determined that the loan was not fully recoverable resulting in $ 0.8 million loan loss impairment . there were story_separator_special_tag general overview the company uses its experience and expertise to partner with institutional capital to create attractive and impactful alternative investment opportunities , to manage them well and to report on them effectively . the company operates through two reportable segments : us operations ( which for periods presented includes corporate operations ) and international operations . beginning in 2015 , the company will separately evaluate the performance of its us operations and its corporate operations and therefore will report performance through three reportable segments − us operations , international operations and corporate operations . us operations our us operations consists of three business lines ; leveraged bonds , lihtcs and other investments and obligations . the leveraged bonds business line finances affordable housing and infrastructure in the us . this business line manages the vast majority of the company 's bonds and associated financings . the bond portfolio is comprised primarily of multifamily tax-exempt bonds , but also includes cdd bonds and other real estate related bond investments . our lihtc business consists primarily of secured loan receivables from mgm and an option to purchase mgm in 2019. we obtained these assets as a result of selling substantially all of our lihtc asset management operations to mgm and as a result of loaning cash to mgm on october 8 , 2014. see “ notes to consolidated financial statements − note 5 , other assets ” for more information . the other investments and obligations business line includes legacy assets and serves as our research and development unit for new business opportunities in the us , which has resulted in the creation of an energy capital business that operates as mma energy capital , llc . currently , the us operations reportable segment also includes our corporate operations which is responsible for accounting , reporting , compliance and planning which are fundamental to our success as a global fund manager and publicly traded company in the united states . international operations we manage our international operations through a 96 % owned subsidiary , ihs , where our strategy is to raise , invest in , and manage private real estate funds . ihs currently manages three funds : the sawhf , which is a multi-investor fund and is fully invested ; ihs residential partners i , which is a single-investor fund targeted at the emerging middle class in south africa ; and ihs fund ii , which is a multi-investor fund targeting investments in green affordable housing in south africa and sub-saharan africa . 11 story_separator_special_tag 2013 mainly due to a decrease in employees . salaries and benefits related to our international operations increased $ 0.7 million for the year ended december 31 , 2014 as compared to 2013 mainly due to an increase in employee bonuses . 14 net gains on assets , derivatives and extinguishment of liabilities the following table summarizes our net gains on assets , derivatives and early extinguishment of liabilities for the years ended december 31 , 2014 and 2013 : replace_table_token_8_th net gains on bonds decreased $ 64.9 million for the year ended december 31 , 2014 as compared to 2013. substantially all of the net gains on bonds recognized during the year ended december 31 , 2013 were due to $ 75.7 million of realized gains associated with bonds transferred as part of the teb sale . these gains had been previously recorded as `` accumulated other comprehensive income '' ( `` aoci `` ) . as a result of the bonds being transferred to the purchaser of teb , the company reduced aoci by $ 75.7 million and increased earnings by $ 75.7 million , which had no net impact on common shareholders ' equity . net gains of $ 12.3 million recognized during the year ended december 31 , 2014 were primarily due to $ 6.5 million of realized gains associated with a bond redeemed during the third quarter of 2014 and $ 4.1 million of realized gains associated with a bond sold during the fourth quarter of 2014. these gains had been previously recorded as aoci and as a result of the bond redemption and sale , the company reduced aoci by $ 10.6 million and increased earnings by $ 10.6 million , which had no net impact on common shareholders ' equity . for the year ended december 31 , 2014 , net gains on extinguishment of liabilities were $ 1.9 million as compared to net gains of $ 36.6 million for the year ended december 31 , 2013. during the year ended december 31 , 2013 , we recognized a $ 37.9 million gain on the repurchase of $ 45.5 million of upb of the subordinate debt of mfh , a wholly owned subsidiary of the company , due may 3 , 2034 , for $ 17.4 million , plus accrued interest . the gain represents the difference between the cash payment of $ 17.4 million and the carrying value of the debt of $ 56.9 million , reduced by the acceleration of $ 1.6 million of debt issuance costs . partially offsetting this gain was a $ 1.5 million loss on the redemption of all of the outstanding series a mandatorily redeemable preferred shares . story_separator_special_tag as reflected in the table above , the company recognized $ 15.2 million of losses during 2014 as compared to $ 5.1 million of income during 2013 related to cfvs . the most significant change was due to $ 15.5 million of losses recognized during the fourth quarter of 2014 reflected in the table above as “ net loss due to deconsolidation of cfvs. ” as a result of the company 's sale of substantially all of its lihtc asset management operations to mgm during the fourth quarter of 2014 as well as other considerations , the company concluded from an accounting standpoint that it no longer controlled a non-profit and its consolidated ltpps and thus these entities were removed from our balance sheet . we also reinstated certain bonds that had been eliminated in consolidation and certain equity investments held by consolidated lihtc funds all of which were either debt or equity associated with the previously consolidated ltpps . as a result , we recorded a $ 15.5 million loss through the statement of operations , the majority of which was offset by unrealized gains recorded through the statement of comprehensive loss . the $ 15.5 million loss was comprised of the following : · $ 6.9 million of equity in losses from ltpps allocated to certain bond interests and associated with the reinstatement of equity investments held by the company 's consolidated lihtc funds . these losses were fully offset by $ 6.9 million of unrealized bond gains recorded through “ accumulated other comprehensive income. ” · $ 7.7 million of bond related losses primarily related to impairments incurred , but not recognized due to consolidation of the real estate as well as losses recognized to reinstate unrealized bond gains that had been removed at the time of initial consolidation . these losses were partially offset by $ 7.1 million of unrealized bond gains recorded through “ accumulated other comprehensive income. ” · $ 0.9 million of gain on sale of certain bonds that had been deferred due to the consolidation of the real estate . · $ 1.8 million of losses resulting from the removal of the non-profit entity 's net assets that had been allocated to the common shareholders . 17 net income to common shareholders from discontinued operations the table below summarizes our net income from discontinued operations for the years ended december 31 , 2014 and 2013 : replace_table_token_12_th during 2013 , the company or one of its cfvs sold three real estate properties that generated cash of $ 58.6 million and gains of $ 21.4 million allocable to the common shareholders from discontinued operations . during 2014 , the company sold five real estate properties that generated cash of $ 59.6 million and gains of $ 18.3 million allocable to the common shareholders from discontinued operations . during 2014 , the company also sold one land investment that generated cash of $ 2.2 million and gains of $ 0.9 million recorded through continuing operations . bond portfolio the table below provides key metrics related to all of our bonds including those bonds that are financed through trss that the company accounted for as derivatives as of december 31 , 2014. because as an economic matter we have the same exposure across all bonds financed by trss regardless of whether those financings are accounted by the company as secured borrowings or derivatives , the asset management of our bond portfolio includes the asset management of all of these bonds . the table below reflects the portfolio from an asset management perspective . see “ notes to consolidated financial statements – note 8 , derivatives. ” replace_table_token_13_th ( 1 ) non-performing is defined as bonds that are 30+ days past due in either principal or interest . ( 2 ) included in this amount were subordinate bonds with must pay coupons and a $ 3.0 million fair value . 18 ( 3 ) included in this amount were subordinate cash flow bonds that do not have must pay coupons and are payable out of available cash flow only . no debt service has been collected on these bonds over the preceding twelve months and debt service is not calculated on these bonds as non-payment of debt service is not a default . ( 4 ) the weighted average pay rate represents the cash interest payments collected on the bonds as a percentage of the bonds ' average upb for the preceding twelve months weighted by the bonds ' average upb over the period for the population of bonds at december 31 , 2014 . ( 5 ) debt service coverage is calculated on a rolling twelve-month basis using property level information as of the prior quarter-end for those bonds with must pay coupons . ( 6 ) the weighted average coupon and pay rate of the multifamily tax-exempt bonds and total bond portfolio excludes the population of subordinate cash flow bonds where non-payment of debt service is not a default . ( 7 ) at december 31 , 2014 , this amount includes 10 bonds financed by trss and accounted for as derivatives . these 10 bonds had an upb of $ 88.9 million and a fair value of $ 92.7 million and were subject to trss with a notional amount of $ 90.2 million , or a net derivative asset of $ 2.5 million . at december 31 , 2014 , this amount , includes an additional 10 bonds financed by trss accounted for as a secured borrowing . these bonds had an upb of $ 87.2 million and a fair value of $ 90.3 million and were subject to trss with a notional amount of $ 87.3 million . multifamily tax-exempt bonds multifamily tax-exempt bonds are issued by state and local governments or their agencies or authorities to finance affordable multifamily rental housing ; typically however , the only source of recourse on these bonds is the collateral , which is the first mortgage or a subordinate mortgage on the underlying properties .
| 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 , 2014 and 2013 : replace_table_token_3_th 12 net interest income the following table summarizes our net interest income for the years ended december 31 , 2014 and 2013 : replace_table_token_4_th total net interest income increased by 5.9 % or $ 0.8 million , for the year ended december 31 , 2014 as compared to 2013. interest income on bonds decreased $ 20.8 million for the year ended december 31 , 2014 as compared to 2013. this decline was mainly due to a $ 375.3 million decline in the weighted average bond upb ( from $ 588.9 million for the year ended december 31 , 2013 to $ 213.6 million for the year ended december 31 , 2014 ) due primarily to the sale of our common shares in munimae te bond subsidiary , llc ( “ teb ” ) . partially offsetting this decline was a $ 1.4 million increase in interest recognized on non-accrual bonds . interest on loans and short-term investments increased by $ 0.5 million for the year ended december 31 , 2014 as compared to 2013. this increase was mainly due to interest earned on the bridge loan we made to mgm during the fourth quarter of 2014. see “ notes to consolidated financial statements − note 5 , other assets '' for more information .
| 7,228 |
the guidance is effective for fiscal years beginning after december 15 , 2019. entities are permitted to early adopt any removed or modified disclosures upon issuance and delay adoption of the additional disclosures until the effective story_separator_special_tag cautionary note regarding forward-looking statements this annual report on form 10-k and certain information incorporated herein by reference contain forward-looking statements within the “ safe harbor ” provisions of the private securities litigation reform act of 1995. all statements included or incorporated by reference in this annual report , other than statements that are purely historical , are forward-looking statements . words such as “ anticipate , ” “ expect , ” “ intend , ” “ plan , ” “ believe , ” “ seek , ” “ estimate , ” “ will , ” “ should , ” “ would , ” “ could , ” “ may , ” and similar expressions also identify forward-looking statements . the forward-looking statements include , without limitation , statements regarding our future operations , financial condition and prospects , operating results , revenues and earnings , liquidity , our estimated income tax rate , unrecognized tax positions , amortization expenses , impact of recent accounting pronouncements , our cost management program , our acquisition strategy and growth plans , expectations regarding our recent acquisitions , dividends , share repurchases , the level of aggregate us mortgage originations , and the reasonableness of the carrying value related to specific financial assets and liabilities . our expectations , beliefs , objectives , intentions , and strategies regarding future results are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from results contemplated by our forward-looking statements . we urge you to carefully consider risks and uncertainties and review the additional disclosures we make concerning risks and uncertainties that may materially affect the outcome of our forward-looking statements and our future business and operating results , including those made in item 1a , “ risk factors ” in this 10-k , as such risk factors may be amended , supplemented , or superseded from time to time by other reports we file with the sec . we assume no obligation to update any forward-looking statements , whether as a result of new information , future events , or otherwise , except as required by applicable law . you are cautioned not to place undue reliance on forward-looking statements , which speak only as of the date of the filing of this annual report on form 10-k. business overview we are a leading global property information , analytics , data-enabled software platforms , and services provider operating in north america , western europe , and asia pacific . our combined data from public , contributory , and proprietary sources provides detailed coverage of property , mortgages , other encumbrances , property risk and replacement cost , consumer credit , tenancy , location , hazard risk , and related performance information . we have more than one million users who rely on our data and predictive decision analytics to reduce risk , enhance transparency , and improve the performance of their businesses . we offer our clients a comprehensive national database covering real property and mortgage information , judgments and liens , building and replacement costs , parcel and geospatial data , criminal background records , eviction information , non-prime lending records , credit information , and tax information , among other data types . our structured property-specific data consisting of over 150 million parcel records covers 99 % of the us , includes both residential and commercial real estate data and is enriched by over 1 billion historical sales , mortgage , and pre-foreclosure transactions . our consortium data covers loan level mortgage performance , appraisal , as well as mortgage application data and is in excess of 300 million records . we are also the industry 's first parcel-based geocoder and have developed a proprietary spatial database covering more than 150 million parcel polygons across the us . we believe the quality of the data we offer is distinguished by our broad range of data sources and our experience in aggregating , organizing , normalizing , processing , and delivering data to our clients . with our data as a foundation , we have built strong analytics capabilities and a variety of value-added business services to meet our clients ' needs for property tax processing , property valuation , mortgage and automotive credit reporting , tenancy screening , hazard risk , property risk and replacement cost , flood plain location determination , other geospatial data , analytics , and related services . 22 overview of business environment and company developments business environment the volume of us mortgage loan originations serves as a key market driver for more than half of our business . we believe the volume of real estate and mortgage transactions is primarily affected by real estate prices , the availability of funds for mortgage loans , mortgage interest rates , housing supply , employment levels , and the overall state of the us economy . we believe mortgage origination unit volumes increased by approximately 10 % in 2019 relative to 2018 , primarily due to significantly higher mortgage refinance volumes in the second half of 2019 , resulting from lower interest rates which favorably impacted overall mortgage volumes . going forward , we expect 2020 mortgage unit volumes to be flat relative to 2019 levels as lower interest rates are expected to enable higher refinance volumes through the first half of 2020. mortgage purchase volumes continue to be impacted by multiple factors such as tight inventory supply , insufficient supply of new housing stock , and affordability , all of which we expect to continue for the foreseeable future . we generate the majority of our revenues from clients with operations in the us residential real estate , mortgage origination , and mortgage servicing markets . story_separator_special_tag loss from discontinued operations , net of tax our consolidated loss from discontinued operations , net of tax was $ 17.5 million for the year ended december 31 , 2019 , primarily reflecting a $ 23.0 million legal settlement , prior to an associated tax benefit , resulting from an appellate court decision . the net loss of $ 0.6 million in 2018 results primarily from legal losses . see note 2 - significant accounting policies for further information . 27 year ended december 31 , 2018 compared to year ended december 31 , 2017 operating revenues our consolidated operating revenues were $ 1.8 billion for the year ended december 31 , 2018 , a decrease of $ 62.7 million when compared to 2017 , and consisted of the following : replace_table_token_3_th our pirm segment revenues increased by $ 2.3 million , or 0.3 % , when compared to 2017 . acquisition activity contributed $ 21.8 million in 2018 . excluding acquisition activity , the decrease of $ 19.5 million was primarily due to lower property insights of $ 6.5 million from lower volumes , lower insurance and spatial solutions of $ 6.9 million from lower weather event-related revenues , the impact of unfavorable foreign exchange translation of $ 3.5 million within property insights , and lower other revenues of $ 2.6 million . our uws segment revenues decreased by $ 63.6 million , or 5.5 % , when compared to 2017 . acquisition activity contributed $ 37.7 million in 2018 . excluding acquisition activity , the decrease of $ 101.3 million was primarily due to lower valuation solutions of $ 85.9 million , credit solutions of $ 9.6 million , flood data solutions of $ 4.2 million , and other revenues of $ 1.6 million , mainly driven by lower mortgage market unit volumes and the impact of planned vendor diversification from key appraisal management clients . we also recorded the benefit of accelerated revenue recognition of approximately $ 23.7 million resulting from the amendment of a long-term contract in property tax solutions , which was entirely offset by lower mortgage market unit volumes . our corporate and eliminations revenues were comprised of intercompany revenue eliminations between our operating segments . cost of services ( exclusive of depreciation and amortization ) our consolidated cost of services was $ 921.4 million for the year ended december 31 , 2018 , a decrease of $ 53.4 million , or 5.5 % , when compared to 2017 . acquisition activity contributed $ 22.3 million of additional cost in 2018 . excluding acquisition activity , the decrease of $ 75.7 million was primarily due to lower operating revenues . selling , general and administrative expense our consolidated selling , general and administrative expenses was $ 444.6 million for the year ended december 31 , 2018 , a decrease of $ 15.2 million , or 3.3 % , when compared to 2017 . acquisition activity contributed an increase of $ 25.4 million in 2018 . excluding acquisition activity , the decrease of $ 40.6 million was primarily related to our ongoing operational efficiency programs , which reduced our personnel-related expenses by $ 36.0 million . in addition , we incurred lower legal settlement costs of $ 14.0 million and other expenses of $ 11.5 million . the decrease was partially offset by higher outsourced services of $ 20.9 million for initiatives and investments on data and technology capabilities . depreciation and amortization our consolidated depreciation and amortization expense was $ 192.0 million for the year ended december 31 , 2018 , an increase of $ 14.2 million , or 8.0 % , when compared to 2017 . the increase was primarily due to acquisitions . impairment loss our consolidated impairment loss increased $ 7.7 million when compared to 2017 which was due to impairment charges of software in 2018 . 28 operating income our consolidated operating income was $ 222.6 million for the year ended december 31 , 2018 , a decrease of $ 16.0 million , or 6.7 % , when compared to 2017 , and consisted of the following : replace_table_token_4_th our pirm segment operating income decreased by $ 2.3 million , or 2.6 % , when compared to 2017 . acquisition-related activity lowered operating income by $ 6.7 million in 2018 primarily due to investments on data and technology capabilities and the amortization of acquisition-related intangible assets . excluding acquisition activity , operating income increased by $ 4.4 million and operating margins increased 101 basis points primarily due to lower legal settlement costs of $ 14.0 million , partially offset by lower operating revenues . our uws segment operating income increased by $ 5.9 million , or 2.5 % , when compared to 2017 . excluding acquisition-related activity of $ 6.1 million , operating income decreased $ 0.2 million primarily due to lower mortgage market unit volumes , unfavorable product mix and higher impairment charges on software of $ 7.7 million . the decrease was partially offset by the benefit of accelerated revenue recognition resulting from the amendment of a long-term contract in our property tax solutions operations . operating margins increased 197 basis points compared to 2017 . corporate and eliminations had an unfavorable variance of $ 19.5 million , or 23.3 % , primarily due to higher investments on data and technology capabilities . total interest expense , net our consolidated total interest expense , net was $ 74.0 million for the year ended december 31 , 2018 , an increase of $ 12.2 million , or 19.7 % , when compared to 2017 . the increase was primarily due to higher average outstanding principal balances and interest rates in 2018 . ( loss ) /gain on investments and other , net our consolidated gain on investments and other , net was $ 18.0 million for the year ended december 31 , 2018 , a favorable variance of $ 25.9 million when compared to 2017 .
| consolidated results of operations year ended december 31 , 2019 compared to year ended december 31 , 2018 operating revenues our consolidated operating revenues were $ 1.8 billion for the year ended december 31 , 2019 , a decrease of $ 26.1 million when compared to 2018 , and consisted of the following : replace_table_token_1_th our pirm segment revenues increased by $ 6.8 million , or 1.0 % , when compared to 2018 . acquisition activity contributed $ 46.2 million in 2019 . excluding acquisition activity , the decrease of $ 39.4 million was primarily due to lower property insights of $ 27.5 million as well as lower insurance and spatial solutions revenues of $ 4.2 million attributable to lower volumes . property insights included unfavorable foreign exchange translation of $ 9.8 million and weaker market conditions in australia which negatively impacted revenues by $ 8.9 million . other revenues decreased by $ 7.7 million . our uws segment revenues decreased by $ 31.0 million , or 2.8 % , when compared to 2018 . acquisition activity contributed $ 13.2 million in 2019 . excluding acquisition activity , the decrease of $ 44.2 million was primarily due to lower credit solutions revenues of $ 21.8 million attributable to lower volumes . additionally , our valuation solutions and other revenues reflect the impact of our business exits and transformation initiatives which lowered our segment revenues by approximately $ 61.9 million offset by higher market volumes of $ 24.9 million . refer to `` business exits & transformation '' for further details . further , tax solutions was also impacted by a discrete prior year benefit of accelerated revenue recognition of approximately $ 23.7 million . these decreases were partially offset by higher market volumes , which increased flood data solutions revenues by $ 11.4 million and tax solutions revenue by $ 3.2 million .
| 7,229 |
you should read the following discussion and analysis of our financial condition and results of operations in conjunction with the accompanying consolidated financial statements and the related notes to consolidated financial statements for the fifty-two weeks ended january 3 , 2016 included in this annual report on form 10-k. our actual results and the timing of events could differ materially from those discussed in these forward-looking statements . factors that could cause or contribute to these differences include those discussed below as well as in other sections of this annual report on form 10-k , particularly in “ business , ” “ risk factors ” and “ special note regarding forward-looking statements. ” we make no guarantees regarding outcomes , and assume no obligation to update the forward-looking statements herein , except as may be required by law . basis of presentation the company 's policy is that fiscal years end on the sunday closest to december 31.the fifty-two weeks ended 2015 ended on january 3 , 2016 and the fifty-two weeks 2014 ended on january 4 , 2015 . the company 's operations are classified in one reportable business segment . although we recently expanded the products that we manufacture and sell to include components used in the appliance , hvac and water heater industries , products for these industries are manufactured at facilities that also manufacture or are capable of manufacturing products for the automotive industries . all of our manufacturing locations have similar capabilities , and most plants serve multiple markets . the manufacturing operations for our automotive , appliance , hvac and water heater products share management and labor forces and use common personnel and strategies for new product development , marketing and the sourcing of raw materials . we qualify as an “ emerging growth company ” under the jobs act . as a result , we are permitted to , and intend to , rely on exemptions from certain disclosure requirements . for so long as we are an emerging growth company , we will not be required to : have an auditor report on our internal controls over financial reporting pursuant to section 404 ( b ) of the sarbanes-oxley act ; comply with any requirement that may be adopted by the public company accounting oversight board regarding mandatory audit firm rotation or a supplement to the auditor 's report providing additional information about the audit and the financial statements ( i.e. , an auditor discussion and analysis ) ; submit certain executive compensation matters to shareholder advisory votes , such as “ say-on-pay ” and “ say-on-frequency ” ; and disclose certain executive compensation and related items such as the correlation between executive compensation and performance and comparisons of the ceo 's compensation to median employee compensation . in addition , section 107 of the jobs act provides that an emerging growth company can take advantage of the extended transition period provided in section 7 ( a ) ( 2 ) ( b ) of the securities act for complying with new or revised accounting standards . in other words , an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies . we have elected to take advantage of the benefits of this extended transition period . our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards . we will remain an “ emerging growth company ” for up to five years , or until the earliest to occur of ( 1 ) the last day of the first fiscal year in which our total annual gross revenues exceed $ 1.0 billion , ( 2 ) the date that we become a “ large accelerated filer ” as defined in rule 12b-2 under the securities exchange act of 1934 , which would occur if the market value of our common stock that is held by non-affiliates exceeds $ 700 million as of the last business day of our most recently completed second fiscal quarter or ( 3 ) the date on which we have issued more than $ 1.0 billion in non-convertible debt during the preceding three year period . story_separator_special_tag style= '' line-height:120 % ; font-size:10pt ; '' > 25 the company 's decision resulted from the tight labor market in murfreesboro and the struggle to staff production levels to meet the ongoing growth strategy for the products manufactured at the plant . to enable the company to service its customers at the increasing volumes projected , the company decided to move existing murfreesboro production to our other manufacturing facilities in evansville , indiana and lafayette , georgia . the company evaluated whether or not this closing met the criteria for discontinued operations and concluded that the closing did not meet the definition as the closing does not represent a strategic shift in the company 's operations and the company will have continuing cash flows from the production being moved to other facilities within the company . the company provided employees severance pay , health benefits continuation and job search assistance . the company incurred approximately $ 0.2 million in one-time employee termination costs in 2015 and $ 0.2 million in other costs related to the closure in 2015 , which primarily consists of moving existing production equipment from murfreesboro to other company facilities . the expenses were recorded to the restructuring expense line in continuing operations in the company 's statement of operations . at this time , the company expects no additional costs related to the one time-employee terminations and expects future cost of $ 0.2 million related to other costs to be incurred in connection with the closure . the company also intends to sell the building in murfreesboro , which the company owns , which has a current net book value of $ 2.0 million , and a current estimated selling price of approximately $ 2.8 million . story_separator_special_tag on february 6 , 2014 , we moved to become more vertically integrated by acquiring , through a newly formed subsidiary , unique-chardan , inc. , substantially all of the assets , of one of our key suppliers , chardan corp. , or chardan , for a cash purchase price of $ 2.20 million paid at closing plus a promissory note in the amount of $ 0.50 million , the principal of which is payable in a lump sum on february 6 , 2019. following the closing , we made a payment to the seller of $ 0.12 million as a result of post-closing calculations of net working capital . for the fifty-two weeks ended january 4 , 2015 , our financial results include transaction related expenses from the chardan and results of operations of the chardan business from february 7 , 2014 through january 4 , 2015 . for the fifty-two weeks ended january 3 , 2016 , chardan 's results are included in our financial results for the entire period . for the fifty-two weeks ended january 3 , 2016 , the company grew net sales compared to the fifty-two weeks ended january 4 , 2015 as a result of the acquisitions of chardan and great lakes , new product introductions and continued growth of our core markets . we financed the acquisition of great lakes on august 31 , 2015 through a $ 11.82 million borrowing on our revolver . we financed the acquisition of chardan on february 6 , 2014 through a $ 2.2 million borrowing on our revolver and the issuance of $ 0.50 million principal amount of a 6 % subordinated note to the seller . 27 fifty-two weeks ended january 3 , 2016 and fifty-two weeks ended january 4 , 2015 net sales fifty-two weeks ended january 3 , 2016 fifty-two weeks ended january 4 , 2015 ( in thousands ) net sales $ 143,309 $ 126,480 net sales for the fifty-two weeks ended january 3 , 2016 were approximately $ 143.31 million compared to $ 126.48 million for the fifty-two weeks ended january 4 , 2015 . the increase in net sales for the fifty-two weeks ended january 3 , 2016 included approximately $ 13.00 million attributable to our increased market penetration and content per vehicle , new product introductions , increased sales from approximately five more weeks of chardan included in the results for the fifty-two weeks ended january 3 , 2016 versus the fifty-two weeks ended january 4 , 2015 , and eighteen weeks of sales from the great lakes acquisition that occurred on august 31 , 2015. other increases in net sales for the fifty-two weeks ended january 3 , 2016 were primarily attributable to a 3.4 % overall increase in north american vehicle production in such period as compared to production during the fifty-two weeks ended january 4 , 2015 . cost of sales the major components of cost of sales are raw materials purchased from third parties , direct labor and benefits , and manufacturing overhead , including facility costs , utilities , supplies , repairs and maintenance , insurance , freight costs of products shipped to customers and depreciation . replace_table_token_4_th cost of sales as a percent of net sales replace_table_token_5_th cost of sales as a percentage of net sales for the fifty-two weeks ended january 3 , 2016 increased to 75.6 % from 74.3 % for the fifty-two weeks ended january 4 , 2015 . the increase in cost of sales as a percentage of net sales was attributable to higher direct labor and benefits as a percentage of net sales , partially offset by lower material costs as a percentage of net sales . material costs decreased to 51.4 % for the fifty-two weeks ended january 3 , 2016 from 51.8 % for the fifty-two weeks ended january 4 , 2015 . material costs for the fifty-two weeks ended january 3 , 2016 were lower compared to the fifty-two weeks ended january 4 , 2015 primarily due to favorable product mix and the acquisition of chardan in february 2014 which eliminated the material markup on the products that chardan supplies to us . these markups were present in 2014 before the acquisition , but not included in any material cost in 2015. direct labor and benefit costs as a percentage of net sales was 14.6 % for the fifty-two weeks ended january 3 , 2016 compared to 13.0 % for the fifty-two weeks ended january 4 , 2015 . labor and 28 benefit costs in the fifty-two weeks ended january 3 , 2016 were higher due to the increase in direct labor hours , directly related to reduced labor productivity due to a new product the company launched in the second quarter of 2015. we also increased labor hours as we built up inventory of this product in anticipation of the closing of the murfreesboro facility that this new product is manufactured at , which we announced in the fourth quarter of 2015. we expect to continue manufacturing this new product at the plant facilities to which we are moving the murfreesboro production . manufacturing overhead costs as a percentage of net sales remained stable as they were at 9.6 % for the fifty-two weeks ended january 3 , 2016 and 9.5 % for the fifty-two weeks ended january 4 , 2015 . gross profit as a result of the increase in cost of sales as a percentage of net sales described above , gross profit as a percentage of net sales for the fifty-two weeks ended january 3 , 2016 decreased to 23.6 % from 24.9 % for the fifty-two weeks ended january 4 , 2015 . selling , general and administrative expenses ( “ sg & a ” ) replace_table_token_6_th sg & a as a percentage of net sales for the fifty-two weeks ended january 3 , 2016 decreased to 16.3 % from 16.9 % for the fifty-two weeks ended january 4 , 2015 .
| overview unique is engaged in the engineering and manufacture of multi-material foam , rubber , and plastic components utilized in noise , vibration and harshness , acoustical management , water and air sealing , decorative and other functional applications . the 24 company combines a long history of organic growth with some more recent strategic acquisitions to diversify both product capabilities and markets served . unique 's market served is the north america automotive and heavy duty truck , appliance , water heater and hvac markets . sales are conducted directly with major automotive and heavy duty truck , appliance , water heater and hvac companies , referred throughout this annual report on form 10-k as oems , or indirectly through the tier 1 suppliers of these oems . the company has its principal executive offices in auburn hills , michigan and has sales , engineering and production facilities in auburn hills , michigan , lafayette , georgia , louisville , kentucky , evansville , indiana , ft. smith , arkansas , murfreesboro , tennessee ( through january 2016 ) , bryan , ohio and monterrey , mexico . the company also has an independent client sales representative who maintains offices in baldham , germany . unique derives the majority of its gross revenues from the sales of foam , rubber and plastic automotive products . these products are produced from a variety of manufacturing processes including die cutting , compression molding , thermoforming and fusion molding . we believe unique has a broader array of processes and materials utilized than any of its direct competitors , based on our product offerings . by sealing out air noise and water intrusion , and by providing sound absorption and blocking , unique 's products improve the interior comfort of a vehicle , increasing perceived vehicle quality and the overall experience of its passengers . unique 's products perform similar functions for appliances , water heaters and hvac systems , improving thermal characteristics , reducing noise and prolonging equipment life .
| 7,230 |
if cdb will no longer provide financing for the projects , we will need to seek construction financing from other sources which could be very difficult given our financial condition and ldk 's majority ownership of us . we have substantially completed projects in greece with a customer that is requesting debt term financing from cdb . if cdb does not provide the term financing , then we will collect its outstanding receivables from the operation 's cash proceeds over an extended period of time of up to six years . 6 · a key term of existing project financing with cdb is that the company must use solar panels manufactured by ldk . currently , however , ldk has demanded payment in advance in order to procure their solar panels . if we are unable to make advance payments required , we have and will continue to need to request that our customers to make the required cash payments for the ldk solar panels to be utilized in projects under development . we continue to maintain relationships with other solar panel manufacturers when circumstances call for an alternative to ldk 's line of solar panels . · in december 2012 , we amended the business loan agreement ( the `` loan agreement '' ) entered into with cathay bank ( `` cathay '' ) on december 26 , 2011. under the original terms of the loan agreement , cathay agreed to extend to us a line of credit of the lesser of $ 9.0 million or 70 % the aggregate amount in certain accounts , which was to mature on december 31 , 2012. ldk , the majority shareholder of us , agreed to guarantee the full amount of the loan under a commercial guaranty by and between ldk and cathay dated december 26 , 2011. under the terms of the amended loan agreement , the facility amount is reduced to the current balance outstanding of $ 7.0 million , with a variable interest rate of 2.00 percentage points above the prime rate and a 6.00 percentage point floor rate . the maturity date is extended to june 30 , 2013 with principal payments of $ 0.5 million due each month beginning december 31 , 2012. the covenants of the loan agreement were amended to include , among other items , the subordination of the net accounts payable due to ldk . in addition , under the commercial security agreement dated december 26 , 2011 ( the `` security agreement '' ) , we granted cathay a security interest in the collateral ( as defined in the security agreement ) , which cathay can close on in the event of a default under the loan agreement . in the event that we do not make the principal payment , the bank could issue a notice of default and declare the amounts immediately due and payable . if we can not remedy the default , we do not have the ability to make the payments without additional sources of financing or accelerating the collection of outstanding receivables . · our existing cdb loans and cathay line of credit contain material adverse change ( “ mac ” ) clauses under which the banks can declare amounts immediately due and payable . due to the subjectivity of the mac clauses , it is not clear whether the events described above regarding ldk would represent a material adverse change . should the banks declare amounts immediately due and payable under the mac clauses , we do not have the ability to make the payments without additional sources of financing or accelerating the collection of our outstanding receivables . · as of december 31 , 2012 and 2011 , we had accounts payable to ldk of $ 51.8 million and $ 62.2 million , respectively . the $ 51.8 million is comprised of $ 38.9 million due to ldk primarily related to u.s. and greek project solar panel purchases and $ 12.6 million due to ldk for solar panels purchased for various italian solar development projects . of the $ 38.9 million due to ldk noted above , approximately $ 26.0 million is currently contractually past due and payable to ldk . payment for the solar development project related panels was contractually due to ldk within four months of their purchases ; however the payment terms with the customer were negotiated to be collected within nine to twelve months from sale . although this portion of the payable to ldk is currently contractually past due , ldk has not demanded payment . although there are no formal agreements , ldk has verbally indicated that it will not demand payment until the receivable from the customer has been collected . should ldk change its position and demand payment for the past due amount prior to collection of the related receivable from the customer , we do not have the ability to make the payment currently due without additional sources of financing or accelerating the collection of our outstanding receivables . · with ldk as a majority shareholder , the significant risks and uncertainties noted at ldk could have a significant negative impact on the financial viability of solar power , inc. as well as indicate an inability for ldk to support the company 's business . the significant risks and uncertainties described above could have a significant negative impact on our financial viability and raise substantial doubt about our ability to continue as a going concern . story_separator_special_tag we act as the general contractor for our customers in connection with the installations of our solar power systems and are subject to risks associated with construction , bonding , cost overruns , delays and other contingencies , which could have a material adverse effect on our business and results of operations . we act as the general contractor for our customers in connection with the installation of our solar power systems . all essential costs are estimated at the time of entering into the sales contract for a particular project , and these are reflected in the overall price that we charge our customers for the project . these cost estimates are preliminary and may or may not be covered by contracts between us or the other project developers , subcontractors , suppliers and other parties to the project . in addition , we require qualified , licensed subcontractors to install most of our systems . shortages of such skilled labor could significantly delay a project or otherwise increase our costs . should miscalculations in planning a project or defective or late execution occur , we may not achieve our expected margins or cover our costs . additionally , many systems customers require performance bonds issued by a bonding agency . due to the general performance risk inherent in construction activities , it is sometimes difficult to secure suitable bonding agencies willing to provide performance bonding . in the event we are unable to obtain bonding , we will be unable to bid on , or enter into sales contracts requiring such bonding . delays in solar panel or other supply shipments , other construction delays , unexpected performance problems in electricity generation or other events could cause us to fail to meet these performance criteria , resulting in unanticipated and severe revenue and earnings losses and financial penalties . construction delays are often caused by inclement weather , failure to timely receive necessary approvals and permits , or delays in obtaining necessary solar panels , inverters or other materials . the occurrence of any of these events could have a material adverse effect on our business and results of operations . if there is an increase in the price of polysilicon , the corresponding increase in the cost of constructing sefs may reduce the demand for sefs , resulting in lower revenues and earnings . increases in polysilicon pricing could result in substantial downward pressure on the demand for sefs due to the overall increase in the cost of production for such projects . lessening demand for new sefs may have a negative impact on our revenue and earnings and adversely affect our business and financial condition . our operating results may fluctuate significantly from period to period ; if we fail to meet the expectations of securities analysts or investors , our stock price may decline significantly . several factors can contribute to significant quarterly and other periodic fluctuations in our results of operations . these factors may include but are not limited to the following : timing of orders and the volume of orders relative to our capacity ; availability of financing for our customers ; 8 availability and pricing of raw materials , such as solar cells and wafers and potential delays in delivery of components or raw materials by our suppliers . solar cells represent over 50 % of our direct material cost and fluctuations in pricing or availability of cells will have material impact to our costs and margins . delays in our product sales , design and qualification processes which vary widely in length based upon customer requirements and market acceptance of new products or new generations of products ; pricing and availability of competitive products and services ; changes in government regulations , tax-based incentive programs , and changes in global economic conditions ; delays in installation of specific projects due to inclement weather ; changes in currency translation rates affecting margins and pricing levels . we base our planned operating expenses in part on our expectations of future revenue , and we believe a significant portion of our expenses will be fixed in the short-term . if revenue for a particular quarter is lower than we expect , we likely will be unable to proportionately reduce our operating expenses for that quarter , which would harm our operating results for that quarter . this may cause us to miss analysts ' guidance or any guidance announced by us . if we fail to meet or exceed analyst or investor expectations or our own future guidance , even by a small amount , our stock price could fluctuate , perhaps substantially . we may not be able to efficiently integrate the operations of our acquisitions , products or technologies . from time to time , we may acquire new and complementary technology , assets and companies . we do not know if we will be able to complete any acquisitions or if we will be able to successfully integrate any acquired businesses , operate them profitably or retain key employees . integrating any newly acquired business , product or technology could be expensive and time-consuming , disrupt our ongoing business and distract our management . we may face competition for acquisition targets from larger and more established companies with greater financial resources . in addition , in order to finance any acquisitions , we might be forced to obtain equity or debt financing on terms that are not favorable to us , and in the case of equity financing , our stockholders interests may be diluted . if we are unable to integrate effectively any newly acquired company , product or technology , our business , financial condition and operating results could suffer . we face intense competition and many of our competitors have substantially greater resources than we do . we compete with major international and domestic companies . some of our current and potential competitors have greater market recognition
| results of operations comparison of the year ended december 31 , 2012 to the year ended december 31 , 2011 acquisition of an entity under common control impacting the results of operations for all periods presented is the accounting treatment prescribed for an acquisition of an entity under common control , as noted above in the overview and in note 5 —acquisition of solar green technology to the consolidated financial statements . due to this accounting treatment , the three months ended march 31 , 2011 now reflect the results of sgt only and not those of the legacy solar power , inc. entity . as such the year ended december 31 , 2011 , reflect the results of legacy solar power , inc. for the nine month period ended december 31 , 2011 combined with those of sgt for the twelve month period ended december 31 , 2011. as a result , excluded from the results of operations , below , are the results of legacy solar power , inc. ( “ spi ” ) for the three months ended march 31 , 2011 , as follows : net sales of $ 5.8 million , cost of goods sold of $ 5.1 million , general and administrative expenses of $ 1.6 million , sales , marketing and customer service expenses of $ 0.5 million , engineering , design and product management expenses of $ 0.1 million , interest expense of $ 0.4 million , interest income of $ 2,000 , other expense of $ 6,000 , and income tax expense of $ 7,000. net sales — net sales were $ 100.0 million and $ 139.8 million for the year ended december 31 , 2012 and 2011 , respectively , a decrease of $ 39.8 million , or 28.5 % .
| 7,231 |
forward-looking statements this annual report contains forward-looking statements and information relating to the company that are based on the beliefs of its management as well as assumptions made by , and information currently available to , its management . when used in this report , the words “ believe , ” “ anticipate , ” “ expect , ” “ estimate , ” “ intend ” , “ plan ” and similar expressions , as they relate to the company or its management , are intended to identify forward-looking statements . these statements reflect management 's current view of the company concerning future events and are subject to certain risks , uncertainties and assumptions , including among many others : a general economic downturn ; a downturn in the securities markets ; federal or state laws or regulations having an adverse effect on proposed transactions that the company desires to effect ; securities and exchange commission regulations which affect trading in the securities of “ penny stocks ” ; and other risks and uncertainties . should any of these risks or uncertainties materialize , or should underlying assumptions prove incorrect , actual results may vary materially from those described in this report as anticipated , estimated or expected . the accompanying information contained in this registration statement , including , without limitation , the information set forth under the heading “ management 's discussion and analysis and plan of operation — risk factors ” identifies important additional factors that could materially adversely affect actual results and performance . you are urged to carefully consider these factors . all forward-looking statements attributable to the company are expressly qualified in their entirety by the foregoing cautionary statement . business overview alliance bioenergy plus , inc ( the “ company ” ) is a technology company focused on emerging technologies in the renewable energy , biofuels , and bioplastics technologies sectors . in january 2018 , the company 's technology experts developed a technology system it calls cellulose-to-sugar or cts 2.0 , and a patent application was filed . cts 2.0 is a mechanical/chemical dry process for converting cellulose material into sugar for use in the biofuels industry . cts 2.0 can convert virtually any cellulosic material – like grasses , wood , paper , farm waste , yard waste , forestry products , energy crops like hemp or king grass , and the cellulosic portion of municipal solid waste – into sugars and subsequently into biofuels and bioplastics without the use of enzymes or liquid acids . cts 2.0 has a near zero carbon footprint , recycles the water and catalyst , and uses no enzymes , expensive chemicals , or strong acids . at commercial scale , management expects to be able to produce ethanol at a lower cost than any competitor due to the fact that the cts 2.0 process is uncomplicated and efficient , and that it uses low cost feedstock as compared to corn . 13 the new technology made it worthwhile to financially restructure the company through chapter 11. the company voluntarily filed for chapter 11 on october 22 , 2018 , in the u.s. bankruptcy court in the southern district of florida . management fought and eliminated millions in debts and disputed debts , and the company exited chapter 11 on september 18 , 2019 , while keeping all classes , including shareholders , unimpaired . having paid all debts that needed to be paid , the bankruptcy case was closed on october 25 , 2019. fresh start accounting is not being applied because existing voting shares immediately before plan confirmation were not less than 50 percent of the voting shares of the emerging entity . the company completed its 4 th generation cts 2.0 prototype system in july 2020 , and has upgraded that later in 2020. the upgraded 4 th generation prototype system is currently being tested to optimize various parameters towards the engineering and scale up to a commercial size reactor . plan of operation the company 's goal is to develop this cts 2.0 technology to a commercial scale and then seek to either joint venture or acquire existing bioenergy and ethanol plants to install the cts technology . to minimize dilution to shareholders , the company will seek project-based financing to build ( or acquire and retrofit ) or joint venture with existing ethanol producers to produce cellulosic ethanol and lignin/bioplastics from its patented cts 2.0 system . retrofitting existing plants with the cts 2.0 technology may achieve more rapid commercialization than building new plants . once the first plant is profitable , the company intends to grow with additional plants both in the united states and internationally . currently , the us government gives a d3 rin to incentivize the production of renewable fuels from cellulosic materials . the value of the d3 rin fluctuates , but as of this filing , it is around $ 2.60 per gallon of ethanol on top of the market price of ethanol . the company believes that its cts 2.0 process can produce ethanol profitably at the market price , and with the d3 rin should generate substantial profits and cash flow in amounts sufficient to cover the company 's operating expenses and debt service . the company has a strategy that includes using its low-cost high-purity lignin co-product to produce biodegradable bioplastics . the company has also licensed the vertimass process to convert ethanol ( from the cts 2.0 process ) into bio-jet fuel . the company believes that its management and consultants have significant experience in the development of technologies from concept to commercialization . as of this date , the company has generated $ 194,319 in revenue , however it has not generated any revenues from its core business . story_separator_special_tag capital formation from december 2019 through march 2020 , the company issued 6,500,000 shares to an insider and a former insider at a price of $ 0.05 per share for total aggregate proceeds of $ 325,000. from may 2020 through january 5 , 2021 , the company issued 10,201,794 shares at prices ranging from 6.5 cents to 9 cents per share , for proceeds of $ 773,130. from july 10 , 2020 through the end of 2020 , 6,639,344 warrants were exercised for proceeds of $ 350,000. from january 1 , 2021 , through the date of filing , 13,655,009 warrants were exercised for proceeds of $ 1,302,817. from january 20 , 2021 , through the date of filing , the company issued 7,100,000 shares at a price of $ 0.25 per share for proceeds of $ 1,775,000. from january 1 , 2021 , through the date of filing , 350,000 options were exercised for proceeds of $ 12,900. from january 1 , 2020 through the date of filing , the company issued an aggregate of 956,130 shares of its common stock for services valued at $ 84,430 . 14 from january 1 , 2020 through the date of filing , the company issued an aggregate of 1,166,667 warrants for services . using a black-scholes asset-pricing model , these warrants were valued at $ 72,090. these warrant agreements have terms of one year with an exercise price of $ 0.15 per share . from january 1 , 2020 through the date of filing , the aggregate number of options the company issued to its employees , consultants , and independent directors , including cancellations , is 39,180,000. the number of vested options that remain are 12,167,099 with exercise prices ranging from $ 0.042 to $ 0.45 and terms range from five ( 5 ) to ten ( 10 ) years . 31,770,000 options vest over the next 5 years or upon the commercialization of the cts 2.0 technology or other performance objectives . purchases of equity securities the company has never purchased , nor does it own , any equity securities of any other issuer . going concern the company has incurred losses since inception , has a working capital deficiency , and may be unable to raise further capital . at december 31 , 2020 the company had a working capital deficiency of $ 766,555 and had incurred accumulated losses of $ 46,682,093 since its inception . the company expects to incur significant additional losses in connection with its continued start-up activities . as disclosed in note 2 to the financial statements , there is substantial doubt as to the company 's ability to continue as a going concern based upon recurring operating losses and its need to obtain additional financing to sustain operations . the company 's ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and repay its liabilities when they become due and to generate sufficient revenues from its operations to pay its operating expenses . story_separator_special_tag justify '' > the company recognizes the cost of all share-based payments under the relevant authoritative accounting guidance . share-based payments include any remuneration paid by the company in shares of the company 's common stock or financial instruments that grant the recipient the right to acquire shares of the company 's common stock . for share-based payments to employees , which consist only of awards made under the stock option plan described below , the company accounts for the payments in accordance with the provisions of asc topic 718 , “ stock compensation ” ( formerly referred to as sfas no . 123 ( r ) ) . share-based payments to consultants , service providers and other non-employees are accounted for under in accordance with asc topic 718 , asc topic 505 , “ equity payments to non-employees ” or other applicable authoritative guidance convertible instruments the company evaluates and accounts for conversion options embedded in convertible instruments in accordance with asc 815 “ derivatives and hedging activities ” . applicable gaap requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria . the criteria include circumstances in which ( a ) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract , ( b ) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other gaap with changes in fair value reported in earnings as they occur and ( c ) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument . the company accounts for convertible instruments ( when we have determined that the embedded conversion options should not be bifurcated from their host instruments ) that are not in default as follows : the company records when necessary , discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note . debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption . notes that are in default are accounted for at the stated default dollar amount , even when the company deems all or a portion of such notes to be in dispute . 17 accounting for derivative instruments the company does not have debentures at this time . the company issues debentures where the number of shares into which a debenture can be converted is not fixed . for example , when a debenture converts at a discount to market based on the stock price on the date
| results of operations comparison of the year ended december 31 , 2020 to december 31 , 2019 for the year ended december 31 , 2020 , the company recognized $ 0 in revenue as opposed to $ 60,000 in 2019. for the year ended december 31 , 2020 , the company 's general and administrative expenses increased by $ 188,962 to $ 1,227,776 from $ 1,038,814 in 2019. this increase is primarily due to non-cash options packages valued at $ 876,291 in 2020 as compared to $ 294,846 non-cash stock compensation in 2019. interest expense increased in the year ended december 31 , 2020 by $ 190,192 from $ 0 in 2019. this increase is due to the company 's decision to accrue interest on the back pay due to management . for the year ended december 31 , 2020 , the company had a gain of $ 0 from the extinguishment of debt as compared to $ 2,125,250 in 2019. the gain in 2019 was attributed to the cancellation of debts during chapter 11. for the year ended december 31 , 2020 , the company had a gain of $ 0 from derivative liabilities as compared to a gain of $ 656,533 in 2019. the gain in 2019 was attributed to the cancellation of debts during chapter 11. research and development the company expenses all research and development costs as incurred . for the years ended december 31 , 2020 , and 2019 , the amounts charged to research and development expenses were $ 763,159 and $ 797,862 , respectively . the reduction is due to conserving resources during the covid pandemic .
| 7,232 |
for example , we tested story_separator_special_tag the following discussion analyzes the financial condition and results of operations of both maa and the operating partnership , of which maa is the sole general partner and in which maa owned a 96.6 % interest as of december 31 , 2020. maa conducts all of its business through the operating partnership and its various subsidiaries . this discussion should be read in conjunction with the consolidated financial statements and notes thereto included in this annual report on form 10-k. maa , an s & p 500 company , is a multifamily-focused , self-administered and self-managed real estate investment trust , or reit . we own , operate , acquire and selectively develop apartment communities primarily located in the southeast , southwest and mid-atlantic regions of the united states . as of december 31 , 2020 , we owned and operated 299 apartment communities through the operating partnership and its subsidiaries , and we had an ownership interest in one apartment community through an unconsolidated real estate joint venture and had eight development communities under construction . in addition , as of december 31 , 2020 , 32 of our apartment communities included retail components . our apartment communities were located across 16 states and the district of columbia as of december 31 , 2020. we report in two segments , same store and non-same store and other . our same store segment represents those apartment communities that have been owned and stabilized for at least 12 months as of the first day of the calendar year . our non-same store and other segment includes recently acquired communities , communities being developed or in lease-up , communities undergoing extensive renovations , communities identified for disposition , communities that have incurred a significant casualty loss and stabilized communities that do not meet the requirements to be same store communities . also included in our non-same store and other segment are non-multifamily activities . additional information regarding the composition of our segments is included in note 13 to the consolidated financial statements included in this annual report on form 10-k. overview for the year ended december 31 , 2020 , net income available for maa common shareholders was $ 251.3 million as compared to $ 350.1 million for the year ended december 31 , 2019. results for the year ended december 31 , 2020 included $ 2.6 million of non-cash income related to the fair value adjustment of the embedded derivative in the maa series i preferred shares and $ 1.0 million of gains related to the sale of real estate assets . results for the year ended december 31 , 2019 included $ 17.9 million of non-cash income related to the embedded derivative in the maa series i preferred shares and $ 93.0 million of gains related to the sale of real estate assets . revenues for the year ended december 31 , 2020 increased 2.3 % as compared to the year ended december 31 , 2019 , driven by a 2.5 % increase in our same store segment . property operating expenses , excluding depreciation and amortization , for the year ended december 31 , 2020 increased by 4.5 % as compared to the year ended december 31 , 2019 , driven by a 4.9 % increase in our same store segment . the drivers of these changes are discussed below in the “ results of operations ” section . covid-19 developments we believe the best way we can help our residents is to work with those who have lost wages or compensation due to the covid-19 pandemic so that they can remain in their homes . during 2020 , we supported our impacted residents in need of assistance by : providing interest-free rent deferral ( assisting over 8,000 households ) ; waiving late payment fees ; waiving lease termination fees ; and posting local and governmental assistance programs and resources on our website . our on-site leasing offices have remained open throughout the covid-19 pandemic while adhering to orders and directives issued by state and local governments . since may 2020 , we have conducted normal operations at our on-site leasing offices , permitting public access and walk-in traffic , subject to social distancing restrictions . further , since may 2020 , property amenities have been open as permitted by governmental orders , directives and guidelines . we have supported our associates with enhanced leave and sick time policies , enhanced flextime arrangements and additional covid-19 paid time off , among other benefits . we continue to monitor and comply with the various federal , state and local laws , orders and directives issued in response to the covid-19 pandemic that affect apartment owners and operators . trends during the year ended december 31 , 2020 , revenue growth for our same store portfolio continued to be favorably impacted by in-place rents and the contribution of average effective rent per unit growth . the average effective rent per unit for our same store portfolio continued to increase from the prior year , up 2.6 % for the year ended december 31 , 2020 as compared to the year ended december 31 , 2019. this growth was partially offset by a slightly lower average physical occupancy for our same store portfolio of 95.6 % , as compared to the average physical occupancy of 95.9 % achieved during the more normal operating conditions for the year ended december 31 , 2019. average effective rent per unit represents the average of gross rent amounts , after the effect of leasing 26 concessions , for occupied apartment units plus prevalent market rates asked for unoccupied apartment units , divided by the total number of units . leasing concessions represent discounts to the current market rate . we believe average effective rent per unit is a helpful measurement in evaluating average pricing ; however , it does not represent actual rental revenue collected per unit . story_separator_special_tag investing activities net cash used in investing activities was $ 484.7 million for the year ended december 31 , 2020 as compared to $ 238.3 million for the year ended december 31 , 2019. the primary drivers of the change were as follows ( dollars in thousands ) : replace_table_token_7_th the decrease in cash outflows for purchases of real estate and other assets was driven by the acquisition activity during the year ended december 31 , 2020 as compared to the year ended december 31 , 2019. the increase in cash outflows for capital improvements , development and other was primarily driven by increased development capital spend as well as increased capital spend on our interior redevelopment program , smart home technology initiative and our amenity and common area upgrade program during the year ended december 31 , 2020 as compared to the year ended december 31 , 2019. the decrease in cash inflows related to proceeds from disposition of real estate assets was primarily due to the sale of one land parcel during the year ended december 31 , 2020 , as compared to the sale of five apartment communities and four land parcels during the year ended december 31 , 2019. no apartment communities were sold during the year ended december 31 , 2020. financing activities net cash used in financing activities was $ 374.1 million for the year ended december 31 , 2020 as compared to $ 524.3 million for the year ended december 31 , 2019. the primary drivers of the change were as follows ( dollars in thousands ) : replace_table_token_8_th the decrease in cash outflows related to the net change in revolving credit facility resulted from no net borrowings during the year ended december 31 , 2020 as compared to the decrease in net borrowings of $ 540.0 million during the year ended december 31 , 2019. the increase in cash inflows related to the net change in commercial paper resulted from the increase in net borrowings of $ 102.0 million on our commercial paper program during the year ended december 31 , 2020 as compared to the increase in net borrowings of $ 70.0 million on our commercial paper program during the year ended december 31 , 2019. the decrease in cash inflows related to proceeds from notes payable primarily resulted from the issuance of $ 450.0 million of senior notes during the year ended december 31 , 2020 , as compared to the issuance of $ 850.0 million of senior notes and $ 191.3 million of property mortgages during the year ended december 31 , 2019. the decrease in cash outflows from principal payments on notes payable primarily resulted from the retirement of a $ 300.0 million term loan and $ 135.7 million of property mortgages during the year ended december 31 , 2020 , as compared to the retirement of $ 600.0 million in term loans , a $ 20.0 million tranche of senior notes and $ 30.4 million of property mortgages during the year ended december 31 , 2019. the increase in cash outflows from dividends paid on common shares primarily resulted from the increase in the dividend rate to $ 4.00 per share during the year ended december 31 , 2020 as compared to the dividend rate of $ 3.84 per share during the year ended december 31 , 2019 . 30 equity as of december 31 , 2020 , maa owned 114,373,727 op units , comprising a 96.6 % limited partnership interest in maalp , while the remaining 4,057,657 outstanding op units were held by limited partners of maalp other than maa . holders of op units ( other than maa ) may require us to redeem their op units from time to time , in which case we may , at our option , pay the redemption price either in cash ( in an amount per op unit equal , in general , to the average closing price of maa 's common stock on the nyse over a specified period prior to the redemption date ) or by delivering one share of maa 's common stock ( subject to adjustment under specified circumstances ) for each op unit so redeemed . maa has registered under the securities act 4,057,657 shares of its common stock that , as of december 31 , 2020 , were issuable upon redemption of op units , in order for those shares to be sold freely in the public markets . we have entered into separate distribution agreements with each of j.p. morgan securities llc , bmo capital markets corp. and keybanc capital markets inc. to establish an atm program allowing maa to sell shares of its common stock from time to time into the existing market at current market prices or through negotiated transactions . under the atm program , maa has the authority to issue up to an aggregate of 4.0 million shares of its common stock , at such times to be determined by maa . the atm program currently has a maturity of september 2021. maa has no obligation to issue shares through the atm program . during the year ended december 31 , 2020 , maa did not sell any shares of common stock under its atm program . during the year ended december 31 , 2019 , maa sold 146,301 shares of common stock for net and gross proceeds of $ 19.6 million and $ 19.9 million , respectively , through its atm program . as of december 31 , 2020 , 3.9 million shares remained issuable under the atm program .
| results of operations for the year ended december 31 , 2020 , we achieved net income available for maa common shareholders of $ 251.3 million , a 28.2 % decrease as compared to the year ended december 31 , 2019 , and total revenue growth of $ 37.0 million , representing a 2.3 % increase in property revenues as compared to the year ended december 31 , 2019. the following discussion describes the primary drivers of the decrease in net income available for maa common shareholders for the year ended december 31 , 2020 , as compared to the year ended december 31 , 2019. a discussion of the results of operations for the year ended december 31 , 2019 as compared to the year ended december 31 , 2018 is found in item 7 of part ii of our annual report on form 10-k for the year ended december 31 , 2019 , filed with the sec on february 20 , 2020 , which is available free of charge on the sec 's website at www.sec.gov and on our website at https : //www.maac.com , on the “ for investors ” page under “ filings and financials—annual reports ” . property revenues the following table reflects our property revenues by segment for the years ended december 31 , 2020 and 2019 ( dollars in thousands ) : replace_table_token_4_th 27 the increase in property revenues for our same store segment for the year ended december 31 , 2020 as compared to the year ended december 31 , 2019 was the primary driver of total property revenue growth . the same store segment generated a 2.5 % increase in revenues for the year ended december 31 , 2020 , primarily a result of average effective rent per unit growth of 2.6 % as compared to the year ended december 31 , 2019 . the rollout of the new high-speed bulk cable internet package contributed 0.6 % in same store segment revenue growth .
| 7,233 |
subject to limitations set forth in its loan agreement with the bank , funds available under the company 's revolving credit facility may also be utilized to finance acquisitions . however , management is not presently evaluating any acquisition opportunities . seasonality the company 's sales volume and , accordingly , its operating income vary significantly during its fiscal year . the highest levels of sales occur during the times of the year when climatic conditions require the greatest use of air conditioning , since the company 's operations are concentrated in the warmer regions of the united states . accordingly , sales will be highest in the company 's second quarter ending august 31 , and will be lowest in its fourth fiscal quarter . inflation the company does not believe that inflation has had a material effect on its results of operations in recent years . generally , manufacturer price increases attributable to inflation uniformly affect both the company and its competitors , and such increases are passed through to customers as an increase in sales prices . recently issued accounting standards in november 2002 , the fasb issued interpretation no . 45 , guarantor 's accounting and disclosure requirements for guarantees , including indirect guarantees of indebtedness of others . the interpretation requires certain guarantees to be recorded at fair value and also requires a guarantor to make certain disclosures regarding guarantees . the interpretation 's initial recognition and initial measurement provisions are applicable on a prospective basis to guarantees issued or modified after december 31 , 2002. the disclosure requirements became effective for the company 's first quarter of fiscal 2004. the adoption of the statement had no material impact on the company 's financial position or results of operations . in january 2003 , the emerging issues task force ( eitf ) reached a final consensus on eitf issue no . 02-16 , accounting by a customer ( including a reseller ) for certain consideration received from a vendor . eitf 02-16 clarifies certain aspects for accounting and recording of consideration received from vendors . certain provisions of the eitf are effective for fiscal years beginning after december 15 , 2002 , and other provisions of the eitf are effective for arrangements entered into after november 21 , 2003. the company 's historical accounting for consideration received from vendors is consistent with the provisions of eitf 02-16. therefore , the adoption of this standard has not had a material impact on the company 's financial statements . in january 2003 , the fasb issued interpretation 46 , consolidation of variable interest entities . in general , a variable interest entity is a corporation , partnership , trust , or other legal structure used for business purposes that either ( a ) does not have equity investors with voting rights or ( b ) has equity investors that do not provide sufficient financial resources for the entity to support its activities . interpretation 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity 's activities or entitled to receive a majority of the entity 's residual returns or both . the interpretation is effective for all interest entities created after january 31 , 2003 and is effective in the third quarter for any variable interest entities created before february 1 , 2003. the adoption of the interpretation did not have nor is expected to have a material impact on its financial statements . 12 safe harbor statement this annual report on form 10-k includes forward-looking statements within the meaning of section 27a of the securities act of 1933 and section 21e of the securities exchange act of 1934. forward-looking statements include statements concerning plans , objectives , goals , strategies , future events or performance and underlying assumptions and other statements , which are other than statements of historical facts . forward-looking statements involve risks and uncertainties , which could cause actual results or outcomes to differ materially . the company 's expectations and beliefs are expressed in good faith and are believed by the company to have a reasonable basis but there can be no assurance that management 's expectations , beliefs or projections will be achieved or accomplished . the forward-looking statements in this document are intended to be subject to the safe harbor protection provided under the securities laws . in addition to other factors and matters discussed elsewhere herein , the following are important factors that , in the view of the company , could cause actual results to differ materially from those discussed in the forward-looking statements : the ability of the company to continue to expand through acquisitions , the availability of debt or equity capital to fund the company 's expansion program , unusual weather conditions , the effects of competitive pricing and general economic conditions . story_separator_special_tag subject to limitations set forth in its loan agreement with the bank , funds available under the company 's revolving credit facility may also be utilized to finance acquisitions . however , management is not presently evaluating any acquisition opportunities . seasonality the company 's sales volume and , accordingly , its operating income vary significantly during its fiscal year . the highest levels of sales occur during the times of the year when climatic conditions require the greatest use of air conditioning , since the company 's operations are concentrated in the warmer regions of the united states . accordingly , sales will be highest in the company 's second quarter ending august 31 , and will be lowest in its fourth fiscal quarter . inflation the company does not believe that inflation has had a material effect on its results of operations in recent years . generally , manufacturer price increases attributable to inflation uniformly affect both the company and its competitors , and such increases are passed through to customers as an increase in sales prices . recently issued accounting standards in november 2002 , the fasb issued interpretation no . 45 , guarantor 's accounting and disclosure requirements for guarantees , including indirect guarantees of indebtedness of others . the interpretation requires certain guarantees to be recorded at fair value and also requires a guarantor to make certain disclosures regarding guarantees . the interpretation 's initial recognition and initial measurement provisions are applicable on a prospective basis to guarantees issued or modified after december 31 , 2002. the disclosure requirements became effective for the company 's first quarter of fiscal 2004. the adoption of the statement had no material impact on the company 's financial position or results of operations . in january 2003 , the emerging issues task force ( eitf ) reached a final consensus on eitf issue no . 02-16 , accounting by a customer ( including a reseller ) for certain consideration received from a vendor . eitf 02-16 clarifies certain aspects for accounting and recording of consideration received from vendors . certain provisions of the eitf are effective for fiscal years beginning after december 15 , 2002 , and other provisions of the eitf are effective for arrangements entered into after november 21 , 2003. the company 's historical accounting for consideration received from vendors is consistent with the provisions of eitf 02-16. therefore , the adoption of this standard has not had a material impact on the company 's financial statements . in january 2003 , the fasb issued interpretation 46 , consolidation of variable interest entities . in general , a variable interest entity is a corporation , partnership , trust , or other legal structure used for business purposes that either ( a ) does not have equity investors with voting rights or ( b ) has equity investors that do not provide sufficient financial resources for the entity to support its activities . interpretation 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity 's activities or entitled to receive a majority of the entity 's residual returns or both . the interpretation is effective for all interest entities created after january 31 , 2003 and is effective in the third quarter for any variable interest entities created before february 1 , 2003. the adoption of the interpretation did not have nor is expected to have a material impact on its financial statements . 12 safe harbor statement this annual report on form 10-k includes forward-looking statements within the meaning of section 27a of the securities act of 1933 and section 21e of the securities exchange act of 1934. forward-looking statements include statements concerning plans , objectives , goals , strategies , future events or performance and underlying assumptions and other statements , which are other than statements of historical facts . forward-looking statements involve risks and uncertainties , which could cause actual results or outcomes to differ materially . the company 's expectations and beliefs are expressed in good faith and are believed by the company to have a reasonable basis but there can be no assurance that management 's expectations , beliefs or projections will be achieved or accomplished . the forward-looking statements in this document are intended to be subject to the safe harbor protection provided under the securities laws . in addition to other factors and matters discussed elsewhere herein , the following are important factors that , in the view of the company , could cause actual results to differ materially from those discussed in the forward-looking statements : the ability of the company to continue to expand through acquisitions , the availability of debt or equity capital to fund the company 's expansion program , unusual weather conditions , the effects of competitive pricing and general economic conditions .
| results of operations net income was $ 2,180,000 ( $ 0.20 per share ) , $ 620,000 ( $ 0.06 per share ) , $ 419,000 ( $ 0.04 per share ) in fiscal 2004 , 2003 and 2002 , respectively . an accounting change in fiscal 2003 , and significant differences in the provisions for income taxes affect the comparability of net income among such years . income before taxes and cumulative effect of accounting change was $ 3,433,000 , $ 1,433,000 , $ 542,000 in fiscal 2004 , 2003 , and 2002 , respectively . the increase in income before taxes and cumulative effect of accounting change from fiscal 2003 to fiscal 2004 was principally attributable to improved operating results at several business units , particularly in texas , california and florida , the three states that utilize the most air-conditioning in the country . the business units in california and florida are also the company 's newest business units and have grown rapidly . in fiscal 2004 , for the first time , all of the company 's branch operations in both california and florida generated operating income . additionally , the company sold the operating assets of two single-branch business units in fiscal 2004. the sales of the assets were at approximately net book value . both business units had been recently unprofitable , generating aggregate operating losses of approximately $ 280,000 and $ 250,000 in fiscal 2002 and 2003 , respectively , which declined to $ 100,000 in fiscal 2004. effective march 1 , 2002 , the company adopted statement of financial accounting standards ( sfas ) no . 142 , goodwill and other intangible assets , which established new accounting and reporting requirements for goodwill and other intangible assets . under sfas no . 142 , all goodwill amortization ceased effective march 1 , 2002. goodwill amortization for fiscal 2003 and 2004 would otherwise have been $ 227,000 in each year . sfas no .
| 7,234 |
paul , minnesota ; tampa , orlando and sarasota , florida ; austin , dallas/fort worth , houston and san antonio , texas ; charlotte and raleigh , north carolina ; and the virginia and maryland suburbs of washington , d.c. included in this management 's discussion and analysis of financial condition and results of operations are the following topics relevant to the company 's performance and financial condition : application of critical accounting estimates and policies ; results of operations ; discussion of our liquidity and capital resources ; summary of our contractual obligations ; discussion of our utilization of off-balance sheet arrangements ; and impact of interest rates and inflation . application of critical accounting estimates and policies the preparation of financial statements in conformity with accounting principles generally accepted in the united states of america ( “ gaap ” ) requires management to make estimates and assumptions 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 revenue and expenses during the reporting period . management bases its estimates and assumptions on historical experience and on various other factors that it believes are 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 . on an ongoing basis , management evaluates such estimates and assumptions and makes adjustments as deemed necessary . actual results could differ from these estimates using different estimates and assumptions , or if conditions are significantly different in the future . see “ forward - looking statements ” above in part i. listed below are those estimates and policies that we believe are critical and require the use of complex judgment in their application . our critical accounting estimates should be read in conjunction with the notes to our consolidated financial statements . revenue recognition . revenue from the sale of a home is recognized when the delivery has occurred , title has passed , the risks and rewards of ownership are transferred to the buyer , and an adequate initial and continuing investment by the homebuyer is received , or when the loan has been sold to a third-party investor . revenue for homes that close to the buyer having a down payment of 5 % or greater , home deliveries financed by third parties , and all home deliveries insured under federal housing administration ( “ fha ” ) , u.s. veterans administration ( “ va ” ) and other government-insured programs are recorded in the financial statements on the date of closing . revenue related to all other home deliveries initially funded by our 100 % -owned subsidiary , m/i financial , llc ( “ m/i financial ” ) , is recorded on the date that m/i financial sells the loan to a third-party investor , because the receivable from the third-party investor is not subject to future subordination , and the company has transferred to this investor the usual risks and rewards of ownership that is in substance a sale and does not have a substantial continuing involvement with the home . we recognize the majority of the revenue associated with our mortgage loan operations when the mortgage loans are sold and or related servicing rights are sold to third party investors or retained and managed under a third party subservice arrangement . the revenue recognized is reduced by the fair value of the related guarantee provided to the investor . the fair value of the guarantee is recognized in revenue when the company is released from its obligation under the guarantee . we recognize financial services revenue associated with our title operations as homes are delivered , closing services are rendered , and title policies are issued , all of which generally occur simultaneously as each home is delivered . all of the underwriting risk associated with title insurance policies is transferred to third-party insurers . home cost of sales . all associated homebuilding costs are charged to cost of sales in the period when the revenues from home deliveries are recognized . homebuilding costs include : land and land development costs ; home construction costs ( including an 23 estimate of the costs to complete construction ) ; previously capitalized interest ; real estate taxes ; indirect costs ; and estimated warranty costs . all other costs are expensed as incurred . sales incentives , including pricing discounts and financing costs paid by the company , are recorded as a reduction of revenue in the company 's consolidated statements of income . sales incentives in the form of options or upgrades are recorded in homebuilding costs . inventory . inventory includes the costs of land acquisition , land development and home construction , capitalized interest , real estate taxes , direct overhead costs incurred during development and home construction , and common costs that benefit the entire community , less impairments , if any . land acquisition , land development and common costs ( both incurred and estimated to be incurred ) are typically allocated to individual lots based on the total number of lots expected to be closed in each community or phase , or based on the relative fair value , the relative sales value or the front footage method of each lot . any changes to the estimated total development costs of a community or phase are allocated proportionately to the homes remaining in the community or phase and homes previously closed . the cost of individual lots is transferred to homes under construction when home construction begins . home construction costs are accumulated on a specific identification basis . costs of home deliveries include the specific construction cost of the home and the allocated lot costs . such costs are charged to cost of sales simultaneously with revenue recognition , as discussed above . when a home is closed , we typically have not yet paid all incurred costs necessary to complete the home . story_separator_special_tag warranty reserves are established by charging cost of sales and crediting a warranty reserve for each home delivered . the warranty reserves for the company 's home builder 's limited warranty ( “ hblw ” ) are established as a percentage of average sales price and adjusted based on historical payment patterns determined , generally , by geographic area and recent trends . factors that are given consideration in determining the hblw reserves include : ( 1 ) the historical range of amounts paid per average sales price on a home ; ( 2 ) type and mix of amenity packages added to the home ; ( 3 ) any warranty expenditures not considered to be normal and recurring ; ( 4 ) timing of payments ; ( 5 ) improvements in quality of construction expected to impact future warranty expenditures ; and ( 6 ) conditions that may affect certain projects and require a different percentage of average sales price for those specific projects . changes in estimates for warranties occur due to changes in the historical payment experience and differences between the actual payment pattern experienced during the period and the historical payment pattern used in our evaluation of the warranty reserve balance at the end of each quarter . actual future warranty costs could differ from our current estimated amount . our warranty reserves for our 30-year ( offered on all homes sold after april 25 , 1998 and on or before december 1 , 2015 in all of our markets except our texas markets ) , 15-year ( offered on all homes sold after december 1 , 2015 in all of our markets except our texas markets ) or 10-year ( offered on all homes sold in our texas markets ) transferable structural warranty programs are established on a per-unit basis . while the structural warranty reserve is recorded as each house is delivered , the sufficiency of the structural warranty per unit charge and total reserve is reevaluated on an annual basis , with the assistance of an actuary , using our own historical data and trends , as well as industry-wide historical data and trends , and other project specific factors . the reserves are also evaluated quarterly and adjusted if we encounter activity that is not consistent with the historical experience used in the annual analysis . these reserves are subject to variability due to uncertainties regarding structural defect claims for products we build , the markets in which we build , claim settlement history , insurance and legal interpretations , among other factors . while we believe that our warranty reserves are sufficient to cover our projected costs , there can be no assurances that historical data and trends will accurately predict our actual warranty costs . our warranty reserves have been adversely affected by stucco-related repairs in certain of our florida communities in each of 2016 and 2017. please see note 1 and note 8 to our consolidated financial statements for additional information related to our warranty reserves . self-insurance reserves . self-insurance reserves are made for estimated liabilities associated with employee health care , workers ' compensation , and general liability insurance . the reserves related to employee health care and workers ' compensation are based on historical experience and open case reserves . our workers ' compensation claims and our general liability claims are insured by a third party , except for workers compensation claims made in the state of ohio where the company is self-insured . the company records a reserve for general liability claims falling below the company 's deductible . the reserve estimate is based on an actuarial evaluation of our past history of general liability claims , other industry specific factors and specific event analysis . because of the high degree of judgment required in determining these estimated accrual amounts , actual future costs could differ from our current estimated amounts . please see note 1 to our consolidated financial statements for additional information related to our self-insurance reserves . stock-based compensation . we measure and recognize compensation expense associated with our grant of equity-based awards in accordance with asc 718 , compensation-stock compensation ( “ asc 718 ” ) , which generally requires that companies measure and recognize stock-based compensation expense in an amount equal to the fair value of share-based awards granted under compensation arrangements over the related vesting period . as discussed further in notes 1 and 2 to our consolidated financial statements , we have granted share-based awards to certain of our employees and directors in the form of stock options , director stock units and performance share units ( “ psu 's ” ) . determining the fair value of share-based awards requires judgment to identify the appropriate valuation model and develop the assumptions . the grant date fair value for stock option awards and psu 's with a market condition ( as defined in asc 718 ) is estimated using the black-scholes option pricing model and the monte carlo simulation methodology , respectively . the grant date fair value for the director stock units and psu 's with a performance condition ( as defined in asc 718 ) is based upon the closing price of our common shares on the date of grant . we recognize stock-based compensation expense for our stock option awards and psu 's with a market condition over the requisite service period of the award while stock-based compensation expense for our director stock units , which vest immediately , is fully recognized in the period of the award . for the portion of the psu 's 25 awarded subject to the satisfaction of a performance condition , we recognize compensation expense on a straight-line basis over the performance period based on the probable outcome of the related performance condition . if satisfaction of the performance condition is not probable , compensation expense recognition is deferred until probability is attained and a cumulative stock-based compensation expense adjustment is recorded and recognized ratably over the remaining service period .
| results of operations overview for the year ended december 31 , 2017 , we achieved record levels of new contracts , homes delivered , and revenue . our complementary financial services business also achieved record results in 2017 . conditions in most of our markets remained steady with modest improvement in demand for new homes compared with the same period in 2016 , supported by favorable fundamentals , including improved levels of household formation , continued increases in employment , low interest rates , improved consumer confidence and continued mortgage availability , along with a constrained supply of both existing and new homes . these conditions , the continued execution of our strategic business initiatives and strong performance in our financial services business enabled us to achieve the following improved company results , in comparison to the year ended december 31 , 2016 : new contracts increased 11 % to 5,299 - a record high for our company homes delivered increased 14 % to 5,089 - a record high for our company average price of homes delivered increased 3 % to $ 369,000 number of homes in backlog increased 12 % , and our total sales value in backlog increased 15 % to $ 791 million average sales price of homes in backlog increased 3 % to $ 393,000 - a record high for our company revenue increased 16 % to $ 1.96 billion - a record high for our company number of active communities at december 31 , 2017 increased 6 % to 188 - a record high for our company income before income taxes for the twelve months ended december 31 , 2017 increased 31 % from $ 91.8 million for the year ended december 31 , 2016 to $ 120.3 million for the year ended december 31 , 2017 .
| 7,235 |
there was $ 225,000 of unrecognized compensation expense related to nonvested dsas , which is expected to be recognized over a weighted average period of one year . there were 450 anti-diluted dsa shares on december 31 , 2015 . 64 the following table summarizes information for equity compensation plans in effect as of december 31 , 2015 : number of securities to be issued upon exercise of outstanding options ( 1 ) weighted-average exercise price of outstanding options number of securities remaining available for future issuance under equity compensation plan ( excluding securities reflected in story_separator_special_tag the following is management 's discussion and analysis of certain significant factors that have affected aspects of the company 's financial position , results of operations , comprehensive income and cash flows during the periods included in the accompanying consolidated financial statements . this discussion should be read in conjunction with the company 's consolidated financial statements and notes thereto presented elsewhere in this report . overview dril-quip designs , manufactures , sells and services highly engineered offshore drilling and production equipment that is well suited for use in deepwater , harsh environment and severe service applications . the company designs and manufactures subsea equipment , surface equipment and offshore rig equipment for use by major integrated , large independent and foreign national oil and gas companies in offshore areas throughout the world . the company 's principal products consist of subsea and surface wellheads , subsea and surface production trees , subsea control systems and manifolds , mudline hanger systems , specialty connectors and associated pipe , drilling and production riser systems , liner hangers , wellhead connectors and diverters . dril-quip also provides technical advisory assistance on an as-requested basis during installation of its products , as well as rework and reconditioning services for customer-owned dril-quip products . in addition , dril-quip customers may rent or purchase running tools from the company for use in the installation and retrieval of the company 's products . oil and gas prices both the market for offshore drilling and production equipment and services and the company 's business are substantially dependent on the condition of the oil and gas industry and , in particular , the willingness of oil and gas companies to make capital expenditures on exploration , drilling and production operations offshore . oil and gas prices and the level of offshore drilling and production activity have historically been characterized by significant volatility . see item 1a . risk factorsa material or extended decline in expenditures by the oil and gas industry could significantly reduce our revenue and income. according to the energy information administration ( eia ) of the u.s. department of energy , brent crude oil prices per barrel are listed below for periods covered by this report : replace_table_token_9_th according to the february 2016 release of the short-term energy outlook published by the eia , brent crude oil prices are projected to average $ 37.52 per barrel in 2016 and $ 50.00 in 2017. the international energy agency projected the global oil demand to grow by 1.2 million barrels per day in 2016 to a total of 95.7 million barrels per day based on its february 2016 oil market report . according to the eia , between january 4 , 2016 and february 5 , 2016 , the price of brent crude oil ranged from $ 26.01 per barrel to $ 36.28 per barrel , closing at $ 32.35 per barrel on february 5 , 2016 . 30 rig count detailed below is the average contracted offshore rig count ( rigs currently drilling as well as rigs committed , but not yet drilling ) for the company 's geographic regions for the years ended december 31 , 2015 , 2014 and 2013. the rig count data includes floating rigs ( semi-submersibles and drillships ) and jack-up rigs . the company has included only these types of rigs as they are the primary assets used to deploy the company 's products . replace_table_token_10_th source : ihspetrodata rigbasedecember 31 , 2015 , 2014 and 2013 according to ihs-petrodata rigbase , as of december 31 , 2015 , there were 579 rigs contracted for the company 's geographic regions ( 217 floating rigs and 362 jack-up rigs ) , which represents a 19.3 % decrease from the rig count of 717 rigs ( 274 floating rigs and 443 jack-up rigs ) as of december 31 , 2014. the december 31 , 2014 rig count represented a 1.0 % decrease from the rig count on december 31 , 2013 of 724 rigs ( 278 floating rigs and 446 jack-up rigs ) . the company believes that the number of rigs ( semi-submersibles , drillships and jack-up rigs ) under construction impacts its backlog and resulting revenues because in certain cases , its customers order some of the company 's products during the construction of such rigs . as a result , an increase in rig construction activity tends to favorably impact the company 's backlog while a decrease in rig construction activity tends to negatively impact the company 's backlog . according to ihs-petrodata rigbase , at the end of 2015 , 2014 and 2013 , there were 198 , 228 and 233 rigs , respectively , under construction . the expected delivery dates for the rigs under construction on december 31 , 2015 are as follows : replace_table_token_11_th regulation the demand for the company 's products and services is also affected by laws and regulations relating to the oil and gas industry in general , including those specifically directed to offshore operations . the adoption of new laws and regulations , or changes to existing laws or regulations that curtail exploration and development drilling for oil and gas for economic or other policy reasons , could adversely affect the company 's operations by limiting demand for its products . business environment oil and gas prices and the level of offshore drilling and production activity have been characterized by significant volatility in recent years . story_separator_special_tag during 2014 , there were 17 projects that were accounted for using the percentage-of-completion method , which represented 11 % of the company 's total revenues and 13 % of the company 's product revenues . during 2013 , there were 21 projects that were accounted for using the percentage-of-completion method , which represented 15 % of the company 's total revenues and 18 % of the company 's product revenues . this percentage may fluctuate in the future . revenues accounted for in this manner are generally recognized based upon a calculation of the percentage complete , which is used to determine the revenue earned and the appropriate portion of total estimated cost of sales . accordingly , price and cost estimates are reviewed periodically as the work progresses , and adjustments proportionate to the percent complete are reflected in the period when such estimates are revised . losses , if any , are recorded in full in the period they become known . amounts received from customers in excess of revenues recognized are classified as a current liability . see item 1a . risk factorswe may be required to recognize a charge against current earnings because of percentage-of-completion accounting. cost of sales . the principal elements of cost of sales are labor , raw materials and manufacturing overhead . cost of sales as a percentage of revenues is influenced by the product mix sold in any particular period , costs from projects accounted for under the percentage-of-completion method , over/under manufacturing overhead absorption and market conditions . the company 's costs related to its foreign operations do not significantly differ from its domestic costs . selling , general and administrative expenses . selling , general and administrative expenses include the costs associated with sales and marketing , general corporate overhead , business development expenses , compensation expense , stock-based compensation expense , legal expenses , foreign currency transaction gains and losses and other related administrative functions . engineering and product development expenses . engineering and product development expenses consist of new product development and testing , as well as application engineering related to customized products . income tax provision . the company 's overall effective income tax rate has historically been lower than the statutory rate primarily due to foreign income tax rate differentials , research and development credits and deductions related to domestic manufacturing activities . 33 story_separator_special_tag provision . income tax expense for 2014 was $ 70.7 million on income before taxes of $ 279.4 million , resulting in an effective income tax rate of approximately 25.3 % . income tax expense in 2013 was $ 54.3 million on income before taxes of $ 224.1 million , resulting in an effective tax rate of approximately 24.2 % . the increase in the effective income tax rate reflects the $ 1.2 million research and development tax credit from the american taxpayer relief act of 2012 recognized on the 2012 u.s. income tax return , but not recorded until 2013 for financial statement purposes in accordance with accounting principles generally accepted in the united states of america . also contributing to the increased tax rate is the difference in income tax rates between the company 's three geographic areas . net income . net income was approximately $ 208.7 million in 2014 and $ 169.8 million in 2013 for the reasons set forth above . liquidity and capital resources cash flows provided by ( used in ) operations by type of activity were as follows : replace_table_token_14_th statements of cash flows for entities with international operations that are local currency functional exclude the effects of the changes in foreign currency exchange rates that occur during any given year , as these are non-cash changes . as a result , changes reflected in certain accounts on the consolidated statements of cash flows may not reflect the changes in corresponding accounts on the consolidated balance sheets . the primary liquidity needs of the company are ( i ) to fund capital expenditures to improve and expand facilities and manufacture additional running tools and ( ii ) to fund working capital . the company 's principal source of funds is cash flows from operations . net cash provided by operating activities increased $ 40.8 million in 2015 compared to 2014 , primarily due to increases in operating assets and liabilities of $ 57.1 million , offset by lower net income of $ 16.7 million . net 36 cash provided by operating activities decreased $ 12.9 million in 2014 compared to 2013 , primarily due to decreases in operating assets and liabilities of $ 54.4 million , offset by higher net income of $ 38.9 million and non-cash income adjustments of $ 2.6 million . net income decreased by $ 16.7 million to $ 192.0 million in 2015 from $ 208.7 million in 2014. net income increased by $ 38.9 million to $ 208.7 million in 2014 from $ 169.8 million in 2013. the reasons for the changes in net income are set forth in the results of operations section above . the change in operating assets and liabilities of $ 42.1 million during 2015 primarily reflected a decrease in trade receivables of $ 36.7 million and a decrease in inventory of $ 28.5 million . trade receivables decreased primarily due to increased collection efforts and an overall downward shift of market activities . inventory decreased due to lower balances in finished goods and an increase in the allowance for excess and slow-moving inventory . prepaids and other assets increased by $ 17.9 million mostly from advances to suppliers related to long-term projects . accounts payable and accrued expenses were lower by approximately $ 89.4 million which included a decrease of $ 52.8 million in customer prepayments . the change in operating assets and liabilities of $ 99.1 million during 2014 primarily reflected an increase in trade receivables of $ 102.7 million and an increase in inventory of $ 36.8 million .
| results of operations the following table sets forth , for the periods indicated , certain consolidated statements of income data expressed as a percentage of revenues : replace_table_token_12_th the following table sets forth , for the periods indicated , a breakdown of our products and service revenues : replace_table_token_13_th year ended december 31 , 2015 compared to year ended december 31 , 2014 revenues . revenues decreased by $ 86.7 million , or approximately 9.3 % , to $ 844.3 million in 2015 from $ 931.0 million in 2014. the overall decrease in revenues was impacted by a 12.9 % decrease in the average contracted offshore rig count ( including floating and jack-up rigs ) in 2015 as compared to 2014. product revenues decreased by approximately $ 87.8 million for the year ended december 31 , 2015 compared to the same period in 2014 as a result of decreased revenues of $ 77.5 million in subsea equipment , $ 9.6 million in surface equipment and $ 0.7 million in offshore rig equipment . product revenues decreased in the western hemisphere by $ 98.1 million and in asia-pacific by $ 19.4 million , partially offset by a $ 29.7 million increase in the eastern hemisphere . in any given time period , the revenues recognized between the various product lines and geographic areas will vary depending upon the timing of shipments to customers , completion status of the projects accounted for under the percentage-of-completion accounting method , market conditions and customer demand . service revenues increased by approximately $ 1.1 million resulting from increased service revenues in the western 34 hemisphere of $ 13.8 million , partially offset by decreases of $ 6.8 million in the eastern hemisphere and $ 5.9 million in asia-pacific . the majority of the increases in service revenues related to increased rental of the company 's running and installation tools , partially offset by a decrease in technical advisory assistance . cost of sales .
| 7,236 |
we utilize a proprietary technology platform to compile and analyze data from our multi-modal network of transportation providers to satisfy the transportation and logistics needs of our clients . this model enables us to quickly adapt to and offer efficient and cost-effective solutions for our clients ' shipping needs . we focus primarily on arranging transportation by truckload ( `` tl '' ) and less than truckload ( `` ltl '' ) carriers . we also offer intermodal ( which involves moving a shipment by rail and truck ) , small parcel , domestic air , expedited and international transportation services . our core logistics services include carrier selection , dispatch , load management and tracking . we procure transportation and provide logistics services for clients across a wide range of industries , such as manufacturing , construction , food and beverage , consumer products and retail . our clients fall into two categories , transactional and managed transportation . we provide brokerage and transportation management services to our transactional clients on a shipment-by-shipment basis , typically with individual , or spot market pricing . we typically enter into multi-year contracts with our managed transportation clients , which are often on an exclusive basis for a specific transportation mode or point of origin . as part of our value proposition , we also provide core logistics services to these clients . covid-19 spread throughout the united states , including in the regions and communities in which we operate . in response to the pandemic , government authorities have imposed mandatory closures , work-from-home orders and social distancing protocols . our employees were able to move to remote working as necessary with minimal business interruption in response to these orders and protocols . these responsive measures have severely disrupted economic and commercial activity tied to the production and sale of goods , which have impacted supply chains and routes , and , as a result , transportation and supply chain companies such as ours have experienced uncertainty and volatility . while these disruptions did not have a significant impact on our results as of december 31 , 2020 , we are closely monitoring the impact of the covid-19 global outbreak , and there remains significant uncertainty related to the public health situation globally . although we can not predict the magnitude , it is possible that there is a period of decreased volumes and revenue and possible adverse effects on our operating results . this section of this form 10-k generally discusses 2020 and 2019 items and year-to-year comparisons between 2020 and 2019. discussions of 2018 items and year-to-year comparisons between 2019 and 2018 that are not included in this form 10-k can be found in “ management 's discussion and analysis of financial condition and results of operations ” in part ii , item 7 of the company 's annual report on form 10-k for the fiscal year ended december 31 , 2019 filed with the sec on february 28 , 2020 , and which is incorporated by reference herein . 20 results of operations the following table represents certain results of operations data : replace_table_token_5_th ( 1 ) transportation costs exclude internal use software depreciation of $ 19.1 million , $ 17.9 million , and $ 15.0 million for year ended december 31 , 2020 , 2019 , and 2018 , respectively . internal use software depreciation is included in depreciation expense on the consolidated statements of operations . ( 2 ) adjusted gross profit is a non-gaap measure of profitability calculated as revenue less transportation costs . see item 6 , `` selected financial data '' of this form 10-k , for a reconciliation of adjusted gross profit to gross profit , the most comparable gaap measure . 21 revenue we generate revenue through the sale of brokerage and transportation management services to our clients . for our brokerage and transportation management services , revenue is recognized as the client 's shipment travels from origin to destination by a third-party carrier . our revenue was $ 2.5 billion and $ 2.2 billion for the years ended december 31 , 2020 and 2019 , respectively , reflecting a 14.9 % increase in 2020. our revenue is generated from two different types of clients : transactional and managed transportation . most of our clients are categorized as transactional . we provide services to our transactional clients on a shipment-by-shipment basis . we categorize a client as a managed transportation client if we have a contract with the client for the provision of services on a recurring basis . our contracts with managed transportation clients typically have a multi-year term and are often on an exclusive basis for a specific transportation mode or point of origin . in several cases , we provide substantially all of a client 's transportation and logistics requirements . on a per client basis , our managed transportation relationships typically generate higher dollar amounts and volume than our transactional relationships . in both 2020 and 2019 , transactional clients accounted for 77.1 % of our revenue , and managed transportation clients accounted for 22.9 % of our revenue . we expect to continue to expand both our transactional and managed transportation client base in the future , although the rate of growth for each type of client will vary depending on opportunities in the marketplace . revenue recognized per shipment will vary depending on the transportation mode , fuel prices , shipment weight , density and mileage of the product shipped . the primary shipment modes that we transact in are tl and ltl . other transportation modes include intermodal , small parcel , domestic air , expedited and international . material shifts in the percentage of our revenue by transportation mode could have a significant impact on our revenue growth . in 2020 , tl accounted for 70.0 % of our revenue , ltl accounted for 26.3 % of our revenue and other transportation modes accounted for 3.8 % of our revenue . story_separator_special_tag interest expense the interest expense included in our consolidated statement of operations consists of interest expense related to our abl facility and our convertible senior notes issued in may 2015 ( the `` notes '' ) . in october 2018 , we entered into amendment no . 2 to the abl facility ( the `` amended abl facility '' ) which provides for a senior secured revolving credit facility in an initial aggregate principal amount of up to $ 350 million . we amortize the debt discount and issuance costs related to the notes over the 5 year life of the notes using the effective interest method . we amortize the issuance costs related to our abl facility and the amended abl facility over the remaining 5 year life of the amended abl facility using straight-line amortization , as the amount drawn on the line ( and thus the interest rate and commitment fee paid by echo ) will fluctuate from period to period . on may 1 , 2020 , the company paid the notes remaining outstanding principal balance and accrued interest . refer to note 10 , long-term debt , of the consolidated financial statements included in this form 10-k. interest expense included in our consolidated statements of operations also consists of the recognized loss on extinguishment of debt upon our repurchase of the notes . interest expense was $ 6.0 million and $ 12.6 million for 2020 and 2019 , respectively . critical accounting policies leases we adopted accounting standards codification ( `` asc '' ) topic 842 leases ( `` asc topic 842 '' ) on january 1 , 2019. results for reporting periods beginning on or after january 1 , 2019 are presented under asc 842 , of which prior amounts are not adjusted and continue to be reported in accordance with the account standards in effect for those periods . under asc topic 842 , a lessee is required to record , on the balance sheet , the assets and liabilities for the right-of-use assets and lease obligations created by leases with lease terms of more than 12 months . we lease office space for purposes of conducting our business . leases with an initial term of 12 months or less are not recorded on the balance sheet ; lease expense for these leases is recognized on a straight-line basis over the lease term . all company leases , consisting primarily of facility leases , are considered operating leases . for leases with a lease term of greater than 12 months , we use an incremental borrowing rate as the discount rate when measuring operating lease liabilities . the incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease within a particular currency environment . refer to note 3 , new accounting pronouncements , and note 20 , leases , of the consolidated financial statements included in this form 10-k. 23 revenue recognition we adopted asc topic 606 revenue from contracts with customers ( `` asc topic 606 '' ) on january 1 , 2018. results for reporting periods beginning on or after january 1 , 2018 are presented under asc topic 606 , of which prior amounts are not adjusted and continue to be in accordance with the accounting standards in effect for those periods . under asc topic 606 , revenue is recognized when control of the promised goods or services is transferred to our customers , in an amount that reflects the consideration we expect to receive in exchange for services . we generate revenue from two different client types : transactional and managed transportation . most clients are categorized as transactional clients . for our transactional business , we provide brokerage and transportation management services on a shipment-by-shipment basis . carrier selection , dispatch , load management and tracking are integrated services that occur within the brokerage and transportation management performance obligation . we categorize a client as a managed transportation client if there is an agreement with the client for the provision of services , typically for a multi-year term . brokerage and transportation management services is typically the performance obligation for our managed transportation clients . for the brokerage and transportation management services performance obligation , revenue is recognized as the client 's shipment travels from origin to destination by a third-party carrier . we are the principal in these transactions and recognize revenue on a gross and relative transit time basis . other performance obligations for managed transportation clients may include transportation management services , which includes the integrated services of dispatch , tracking and carrier payment . for these types of transactions , revenue is recorded on a net basis as we do not have latitude in carrier selection or establish rates with the carrier . we also perform project-based services , such as compliance management , customized re-billing services and freight studies for certain managed transportation clients . refer to note 5 `` revenue '' of the note to consolidated financial statements , included in item 8. accounts receivable and allowance for doubtful accounts accounts receivable are uncollateralized customer obligations due under normal trade terms . we extend credit to certain clients in the ordinary course of business based on the clients ' credit history . invoices require payment within 30 to 90 days from the invoice date . accounts receivable are stated at the amount billed to the client . client account balances with invoices past due 90 days are considered delinquent . we generally do not charge interest on past due amounts . the carrying amount of accounts receivable is reduced by an allowance for doubtful accounts that reflects management 's best estimate of amounts that will not be collected . the allowance is based on historical loss experience and any specific risks identified in client collection matters . accounts receivable are charged off against the allowance for doubtful accounts when it is determined that the receivable is uncollectible .
| quarterly results of operations the following table represents our unaudited results of operations data for our most recent eight fiscal quarters . the following table should be read in conjunction with our consolidated financial statements and related notes in item 8 , `` financial statements and supplementary data '' in this form 10-k. the results of operations of any quarter are not necessarily indicative of the results that may be expected for any future period . replace_table_token_6_th ( 1 ) adjusted gross profit is a non-gaap measure of profitability calculated as revenue less transportation costs . see item 6 , `` selected financial data '' of this form 10-k , for a reconciliation of adjusted gross profit to gross profit , the most comparable gaap measure . liquidity and capital resources as of december 31 , 2020 , we had $ 41.3 million in cash and cash equivalents , $ 116.3 million in working capital and $ 194.9 million available under our abl facility . cash provided by operating activities for the year ended december 31 , 2020 , net cash provided by operating activities was $ 63.8 million . we generated $ 68.5 million in cash from net income ( adjusted for noncash operating items ) , which was offset by $ 4.7 million cash outflow primarily related to changes in working capital . for the year ended december 31 , 2019 , net cash provided by operating activities was $ 84.5 million . we generated $ 76.6 million in cash from net income ( adjusted for noncash operating items ) and the remaining $ 7.9 million from changes in working capital , partially offset by the impact of the contingent earn-out payments from acquisitions . cash used in investing activities cash used in investing activities was $ 21.6 million and $ 24.0 million for the years ended december 31 , 2020 and 2019 , respectively . in 2020 and 2019 , the primary investing activities were capital expenditures , primarily internal use software .
| 7,237 |
apollo immediately assigns the profits interests received to its employees . such assignments of profits interests are treated as compensation and benefits when assigned . the investment period for fund vii and anrp for the management fee waiver plan was terminated as of december 31 , 2012. deferred revenue apollo earns management fees subject to the management fee offset . when advisory and transaction fees are earned by the management company , the management fee offset reduces the management fee obligation of the fund . when story_separator_special_tag the following discussion should be read in conjunction with apollo global management , llc 's consolidated financial statements and the related notes as of december 31 , 2012 and 2011 and for the years ended december 31 , 2012 , 2011 and 2010. this discussion contains forward-looking statements that are subject to known and unknown risks and uncertainties . actual results and the timing of events may differ significantly from those expressed or implied in such forward-looking statements due to a number of factors , including those included in the section of this report entitled item 1a . risk factors. the highlights listed below have had significant effects on many items within our consolidated financial statements and affect the comparison of the current period 's activity with those of prior periods . general our businesses founded in 1990 , apollo is a leading global alternative investment manager . we are contrarian , value-oriented investors in private equity , credit and real estate with significant distressed expertise and a flexible mandate in the majority of our funds that enables our funds to invest opportunistically across a company 's capital structure . we raise , invest and manage funds on behalf of some of the world 's most prominent pension , endowment and sovereign wealth funds as well as other institutional and individual investors . apollo conducts its management and incentive businesses primarily in the united states and substantially all of its revenues are generated domestically . these businesses are conducted through the following three reportable segments : ( i ) private equity primarily invests in control equity and related debt instruments , convertible securities and distressed debt instruments ; ( ii ) credit primarily invests in non-control corporate and structured debt instruments ; and ( iii ) real estate primarily invests in legacy commercial mortgage-backed securities , commercial first mortgage loans , mezzanine investments and other commercial real estate-related debt investments . additionally , the company sponsors real estate funds that focus on opportunistic investments in distressed debt and equity recapitalization transactions . during the third quarter of 2012 , the company changed the name of its capital markets business to the credit segment . the company believes this new name provides a more accurate description of the types of assets which are managed within this segment . in addition , this segment name change is consistent with the company 's management reporting and organization structure , as well as the manner in which resource deployment and compensation decisions are made . these business segments are differentiated based on the varying investment strategies . the performance is measured by management on an unconsolidated basis because management makes operating decisions and assesses the performance of each of apollo 's business segments based on financial and operating metrics and data that exclude the effects of consolidation of any of the affiliated funds . our financial results vary since carried interest , which generally constitutes a large portion of the income we receive from the funds that we manage , as well as the transaction and advisory fees that we receive , can vary significantly from quarter to quarter and year to year . as a result , we emphasize long-term financial growth and profitability to manage our business . in addition , the growth in our fee-generating aum during the last year has primarily been in our credit segment . the average management fee rate for these new credit products is at market rates for such -73- products and in certain cases is below our historical rates . also , due to the complexity of these new product offerings , the company has incurred and will continue to incur additional costs associated with managing these products . to date , these additional costs have been offset by realized economies of scale and ongoing cost management . as of december 31 , 2012 , we had total aum of $ 113.4 billion across all of our businesses . our latest private equity buyout fund , fund vii , completed its closing in december 2008 , raising a total of $ 14.7 billion , and as of december 31 , 2012 fund vii had $ 4.7 billion of uncalled commitments , or dry powder , remaining . we have consistently produced attractive long-term investment returns in our private equity funds , generating a 39 % gross irr and a 25 % net irr on a compound annual basis from inception through december 31 , 2012. for further detail related to fund performance metrics across all of our businesses , see the historical investment performance of our funds. as of december 31 , 2012 , approximately 93 % of our total aum was in funds with a contractual life at inception of seven years or more , and 10 % of our total aum was in permanent capital vehicles with unlimited duration . holding company structure the diagram below depicts our current organizational structure : -74- note : the organizational structure chart above depicts a simplified version of the apollo structure . it does not include all legal entities in the structure . ownership percentages are as of the date of the filing of this annual report on form 10-k. ( 1 ) the strategic investors hold 45.4 % of the class a shares outstanding . the class a shares held by investors other than the strategic investors represent 23.1 % of the total voting power of our shares entitled to vote and 19.4 % of the economic interests in the apollo operating group . story_separator_special_tag for example , as of december 31 , 2012 , fund vi and its underlying portfolio companies purchased or retired approximately $ 19.8 billion in face value of debt and captured approximately $ 9.7 billion of discount to par value of debt in portfolio companies such as ceva logistics , caesars entertainment , realogy and momentive performance materials . additionally , the portfolio companies of fund vi have implemented approximately $ 3.8 billion of cost savings programs on an aggregate basis from the date fund vi invested in them through december 31 , 2012 , which we believe will positively impact their operating profitability . in certain situations , funds managed by apollo are the largest owner of the total outstanding debt of the portfolio company . in addition to the attractive return profile associated with these portfolio company debt purchases , we believe that building positions as senior creditors within the existing portfolio companies is strategic to the existing equity ownership positions . during the recovery and expansionary periods of 1994 through 2000 and late 2003 through the first half of 2007 , our private equity funds invested or committed to invest approximately $ 13.7 billion primarily in traditional and corporate partner buyouts . during the recessionary periods of 1990 through 1993 , 2001 through late 2003 and the current recessionary and post recessionary periods ( second half of 2007 through the year end of 2012 ) , our private equity funds have invested $ 27.4 billion , of which $ 16.2 billion was in distressed buyouts and debt investments when the debt securities of quality companies traded at deep discounts to par value . our average entry multiple for fund vii , vi and v was 6.2x , 7.7x and 6.6x , respectively as of december 31 , 2012. the average entry multiple for a private equity fund is the average of the total enterprise value over an applicable ebitda which we believe captures the true economics for our purchases of portfolio companies . market considerations our revenues consist of the following : management fees , which are calculated based upon any of net asset value , gross assets , adjusted costs of all unrealized portfolio investments , capital commitments , adjusted assets , invested capital or stockholders ' equity , each as defined in the applicable management agreement of the unconsolidated funds ; advisory and transaction fees relating to the investments our funds make , or individual monitoring agreements with individual portfolio companies of the private equity funds and certain credit funds as well as advisory services provided to certain credit funds ; and carried interest with respect to our funds . -76- our ability to grow our revenues depends in part on our ability to attract new capital and investors , which in turn depends on our ability to appropriately invest our funds ' capital , and on the conditions in the financial markets , including the availability and cost of leverage , and economic conditions in the united states , western europe , asia , and to some extent , elsewhere in the world . the market factors that impact this include the following : the strength of the alternative investment management industry , including the amount of capital invested and withdrawn from alternative investments . allocations of capital to the alternative investment sector are dependent , in part , on the strength of the economy and the returns available from other investments relative to returns from alternative investments . our share of this capital is dependent on the strength of our performance relative to the performance of our competitors . the capital we attract and our returns are drivers of our assets under management , which , in turn , drive the fees we earn . in light of the current volatile conditions in the financial markets , our funds ' returns may be lower than they have been historically and fundraising efforts may be more challenging . the strength and liquidity of the u.s. and relevant global equity markets generally , and the initial public offering market specifically . the strength of these markets affects the value of , and our ability to successfully exit , our equity positions in our private equity portfolio companies in a timely manner . the strength and liquidity of the u.s. and relevant global debt markets . our funds and our portfolio companies borrow money to make acquisitions and our funds utilize leverage in order to increase investment returns that ultimately drive the performance of our funds . furthermore , we utilize debt to finance the principal investments in our funds and for working capital purposes . to the extent our ability to borrow funds becomes more expensive or difficult to obtain , the net returns we can earn on those investments may be reduced . stability in interest rate and foreign currency exchange rate markets . we generally benefit from stable interest rate and foreign currency exchange rate markets . the direction and impact of changes in interest rates or foreign currency exchange rates on certain of our funds are dependent on the funds ' expectations and the related composition of their investments at such time . for the most part , we believe the trends in these factors have historically created a favorable investment environment for our funds . however , adverse market conditions may affect our businesses in many ways , including reducing the value or hampering the performance of the investments made by our funds , and or reducing the ability of our funds to raise or deploy capital , each of which could materially reduce our revenue , net income and cash flow , and affect our financial condition and prospects . as a result of our value-oriented , contrarian investment style which is inherently long-term in nature , there may be significant fluctuations in our financial results from quarter to quarter and year to year .
| summary below is the summary of our total reportable segments including management and incentive businesses and a reconciliation of eni to net loss attributable to apollo global management , llc reported in our consolidated statements of operations : replace_table_token_38_th liquidity and capital resources historical although we have managed our historical liquidity needs by looking at deconsolidated cash flows , our historical consolidated statement of cash flows reflects the cash flows of apollo , as well as those of our consolidated apollo funds . the primary cash flow activities of apollo are : generating cash flow from operations ; making investments in apollo funds ; meeting financing needs through credit agreements ; and distributing cash flow to equity holders and non-controlling interests . primary cash flow activities of the consolidated apollo funds are : raising capital from their investors , which have been reflected historically as non-controlling interests of the consolidated subsidiaries in our financial statements ; using capital to make investments ; generating cash flow from operations through distributions , interest and the realization of investments ; and distributing cash flow to investors . while primarily met by cash flows generated through fee income and carried interest income received , working capital needs have also been met ( to a limited extent ) through borrowings as follows : replace_table_token_39_th ( 1 ) includes the effect of interest rate swaps . we determine whether to make capital commitments to our funds in excess of our minimum required amounts based on a variety of factors , including estimates regarding our liquidity resources over the estimated time period during which commitments will have to be funded , estimates regarding the amounts of capital that may be appropriate for other funds that we are in the process of raising or are considering raising , and our general working capital requirements .
| 7,238 |
continuing operations the company sells a wide array of industrial and general business hard goods and supplies and to a lesser extent products that would fall into the generally recognizable category of maintenance , repair and operations ( “ mro ” ) products , which are marketed in north america . many of these products are manufactured by other companies . some products are manufactured for us and sold under our brand as a white label product , and some are manufactured to our own design and sold under our brand as a private label product , in each case marketed under our trademarks : global , globalindustrial.com , nexel paramount and interion . discontinued operations the company 's discontinued operations include the results of the france business sold in august 2018 , the sarl businesses sold in march 2017 and the natg business sold in december 2015 ( see note 1 and note 5 ) . total net sales from discontinued operations were $ 0.0 million , $ 352.0 million and $ 590.6 million in 2019 , 2018 , and 2017 , respectively . 20 operating conditions the north american industrial products market is highly fragmented and we compete against numerous competitors in multiple distribution channels . industrial products distribution is working capital intensive , requiring us to incur significant costs associated with the warehousing of many products , including the costs of maintaining inventory , leasing warehouse space , inventory management systems , and employing personnel to perform the associated tasks . we supplement our on-hand product availability by maintaining relationships with major distributors and manufacturers , utilizing a combination of stock and drop-shipment fulfillment . the primary component of our operating expenses historically has been employee-related costs , which includes items such as wages , commissions , bonuses , employee benefits and equity-based compensation , as well as marketing expenses , primarily comprised of digital marketing spend , and occupancy related charges associated with our leased distribution and call center facilities . we continually assess our operations to ensure that they are efficient , aligned with market conditions and responsive to customer needs . in the discussion of our results of operations , constant currency refers to the adjustment of the results of our foreign operations to exclude the effects of period to period fluctuations in currency exchange rates . in order to provide more meaningful information to investors , the company is presenting its operating income and operating margin on a non-gaap basis in the `` reconciliation of consolidated gaap operating income from continuing operations to consolidated non-gaap operating income from continuing operations '' table , as it depicts the operations that are currently generating sales and that will continue to do so in future periods . this non-gaap presentation reflects the misco germany and the entire natg operations as discontinued operations for all periods presented . additional non-gaap adjustments for executive separation and transition costs , one-time benefit from state audit settlements , net of impairment charges recorded on certain intangible assets , intangible amortization and equity compensation are made to continuing operations . the company has elected to omit discussion of the earliest year presented , december 31 , 2017 , in md & a . this discussion can be found in item 7. management 's discussion and analysis of financial condition and results of operations in form 10-k for the year ended december 31 , 2018 , filed on march 14 , 2019 . 21 highlights from 2019 the following discussion of our results of operations and financial condition will provide information that will assist in understanding our financial statements and information about how certain accounting principles and estimates affect the consolidated financial statements . this discussion should be read in conjunction with the consolidated financial statements included herein . consolidated sales increased 5.6 % to $ 946.9 million compared to $ 896.9 million in the prior year . on a constant currency basis , average daily sales increased 5.7 % compared to prior year . consolidated operating income grew 7.1 % to $ 66.1 million compared to $ 61.7 million last year . net income per diluted share from continuing operations increased 0.8 % to $ 1.32 . 22 story_separator_special_tag the company 's operating margin increase of 10 basis points in 2019 compared to 2018 was driven by increased net sales , improved leverage within our fixed cost structure , good spend discipline in regards to marketing and general operating expenses and a gain related to settlements of outstanding obligations of our former german branch . consolidated operating margin was impacted by special gains and charges of $ 0.8 million , $ 0.8 million and $ 0.3 million for the years ended december 31 , 2019 , 2018 and 2017 , respectively . interest and other ( income ) expense , net interest and other ( income ) expense , net from continuing operations was $ 0.0 million for 2019 and $ 1.6 million income in 2018 , primarily attributable to the interest earned on our short-term investments from the cash repatriated to the united states from the sale of the france business , net of interest charges related to our credit facility . income taxes the company recorded net tax expense in continuing operations for 2019 of $ 16.1 million , or 24.4 % , and a net tax benefit in discontinued operations of $ 0.6 million . tax expense from continuing operations was primarily the result of pretax income in the u.s. and was benefited by approximately $ 0.5 million of stock option exercises and approximately $ 0.2 million from dividend equivalent payments . non-deductible expense , including executive compensation , was approximately $ 0.8 million . tax benefit in discontinued operations is primarily attributed to pretax losses incurred in the discontinued natg business . the company recorded net tax expense in continuing operations for 2018 of $ 13.4 million and net tax expense in discontinued operations of $ 23.0 million . story_separator_special_tag in 2018 , cash used in financing activities was primarily related to the special dividend and regular quarterly dividend payments in total of $ 109.3 million . these payments included $ 55.7 million dividend declared in december 2017 but paid in january 2018 , the special dividend of $ 37.2 million paid in june 2018 and the regular quarterly dividends of $ 4.1 million for each of the four quarters of 2018. the company repurchased $ 9.1 million of treasury shares under the share repurchase program and repaid $ 0.1 million of outstanding capital lease obligations . proceeds from stock option exercises of $ 5.4 million were offset by payments of payroll taxes on stock-based compensation through shares withheld of $ 1.9 million . in 2017 , cash used in financing activities was primarily for dividends paid during 2017 totaling $ 13.0 million , $ 0.1 million used to repay outstanding capital lease obligations and $ 0.8 million used as payment of payroll taxes on stock-based compensation through shares withheld offset by $ 2.4 million from proceeds from stock option exercises . on july 31 , 2018 the company 's board of director 's approved a share repurchase program with a repurchase authorization of up to two million shares of the company 's common stock . under the share repurchase program , the company is authorized to purchase shares from time to time through open market purchases , tender offerings or negotiated purchases , subject to market conditions and other factors . during the third quarter of 2018 , the company repurchased 232,550 common shares for approximately $ 9.1 million . details of the purchase is as follows : fiscal month/year total number of shares purchased average price paid per share total number of shares purchased as part of publicly announced plans or programs maximum number of shares that may yet be purchased under the plans or programs july 2018 232,550 $ 38.96 232,550 1,767,450 the company maintains a $ 75.0 million secured revolving credit agreement with one financial institution which has a five-year term , maturing on october 28 , 2021 and provides for borrowings in the united states . the credit agreement contains certain operating , financial and other covenants , including limits on annual levels of capital expenditures , availability tests related to payments of dividends and stock repurchases and fixed charge coverage tests related to acquisitions . the revolving credit agreement requires that a minimum level of availability be maintained . if such availability is not maintained , the company will be required to maintain a fixed charge coverage ratio ( as defined ) . the borrowings under the agreement are subject to borrowing base limitations of up to 85 % of eligible accounts receivable and the inventory advance rate computed as the lesser of 60 % or 85 % of the net orderly liquidation value ( “ nolv ” ) . borrowings are secured by substantially all of the borrower 's assets , as defined , including all accounts receivable , inventory and certain other assets , subject to limited exceptions , including the exclusion of certain foreign assets from the collateral . the interest rate under the amended and restated facility is computed at applicable market rates based on the london interbank offered rate ( “ libor ” ) , the federal reserve bank of new york ( “ nyfrb ” ) or the prime rate , plus an applicable margin . the applicable margin varies based on borrowing base availability . as of december 31 , 2019 , eligible collateral under the credit agreement was $ 75.0 million , total availability was $ 72.5 million , total outstanding letters of credit were $ 1.3 million , excess availability was $ 71.2 million and there were no outstanding borrowings . the company was in compliance with all of the covenants of the credit agreement in place as of december 31 , 2019. levels of earnings and cash flows are dependent on factors such as consolidated gross margin and selling , distribution and administrative costs , product mix and relative levels of domestic and foreign sales . unusual gains or expense items , such as special ( gains ) charges and settlements , may impact earnings and are separately disclosed . we expect that past performance may not be indicative of future performance due to the competitive nature of our business segments where the need to adjust prices to gain or hold market share is prevalent . 28 macroeconomic conditions , such as business and consumer sentiment , may affect our revenues , cash flows or financial condition . however , we do not believe that there is a direct correlation between any specific macroeconomic indicator and our revenues , cash flows or financial condition . we are not currently interest rate sensitive , as we have minimal debt . the expenses , capital expenditures and exit activities described above will require significant levels of liquidity , which we believe can be adequately funded from our currently available cash resources . in 2020 we anticipate capital expenditures in the range of $ 3.0 to $ 5.0 million , though at this time we are not contractually committed to incur these expenditures . in the past we have engaged in opportunistic acquisitions , choosing to pay the purchase price in cash , and may do so in the future as favorable situations arise . however , a deep and prolonged period of reduced business spending could adversely impact our cash resources and force us to either forego future acquisition opportunities or to pay the purchase price using debt , which could have an adverse effect on our earnings . we believe that our cash balances , future cash flows from operations and our availability under credit facilities will be sufficient to fund our working capital and other cash requirements for at least the next twelve months .
| gaap results of operations key performance indicators * ( in millions ) : replace_table_token_4_th * excludes discontinued operations ( see note 5 of notes to consolidated financial statements ) . * * excludes special charges , net ( see note 5 of notes to consolidated financial statements ) . replace_table_token_5_th 23 systemax inc. reconciliation of consolidated gaap operating income from continuing operations to consolidated non-gaap operating income from continuing operations – unaudited ( in millions ) replace_table_token_6_th * average daily sales is calculated based upon the number of selling days in each period , converted to us dollars on a constant currency basis . ipg had 253 selling days for the year ended december 31 , 2019 , 2018 and 2017 . 1 on august 31 , 2018 , the company closed on the sale of the france operations . prior and current year results of these divested operations , along with the associated gain , have been classified as discontinued operations . on march 24 , 2017 , the company closed on the sale of its european technology group businesses , other than its operations in france . prior and current year results of these divested businesses , along with the associated loss on the sale recorded in 2017 , have been classified as discontinued operations . the company believes that the non-gaap presentation conveys additional meaningful information to investors as it depicts the operations that are currently generating sales and that will continue to do so in future periods . see accompanying gaap reconciliation tables . 2 systemax manages its business and reports using a 52-53 week fiscal year that ends at midnight on the saturday closest to december 31. for clarity of presentation , fiscal years and quarters are described as if they ended on the last day of the respective calendar month . the actual fiscal quarter ended on december 28 , 2019 , december 29 , 2018 and december 30 , 2017 , respectively .
| 7,239 |
in addition , the company established valuation allowances totaling $ 4.6 million for acquired deferred tax assets during 2013. as of december 31 , 2015 , the company had $ 53.5 million in u.s. federal operating loss carryforwards which will expire from 2022 to 203 1 ; state operating loss carryforwards of approximately $ 80.3 million which will expire from 2017 to 2031 ; foreign operating loss carryforwards of approximately $ 25.0 million with indefinite carryforward periods ; and foreign operating loss carryforwards of approximately $ story_separator_special_tag . the following discussion should be read in conjunction with the consolidated financial statements and notes thereto in item 8 of this report . you should also bear in mind the risk factors set forth in item 1a , any of which could materially and adversely affect the company 's business , operating results , financial condition and the actual results of the matters addressed by the forward-looking statements contained in the following discussion . 2015 highlights on november 12 , 2015 , we acquired secure technology for a purchase price of $ 230 million subject to a working capital adjustment . the secure acquisition deepens benchmark 's engineering capabilities and enhances its ability to serve customers in the highly regulated industrial , aerospace and defense markets through state-of-the art design , engineering , and manufacturing facilities in santa ana and anaheim , california and tijuana , mexico . the preliminary allocation of the net purchase price resulted in $ 153.3 million of goodwill . in connection with the acquisition , we borrowed $ 230.0 million under a new term loan facility that was used to finance the purchase price . sales for 2015 were $ 2.5 billion , a 9 % decrease from sales of $ 2.8 billion in 2014. during 2015 , sales to customers in our various industry sectors fluctuated from 2014 as follows : · industrials decreased by 3 % , · telecommunications decreased by 26 % , · computing decreased by 4 % , · medical increased by 13 % , and · test & instrumentation decreased by 13 % . a significant portion of the overall decrease in sales resulted from a decrease in telecommunications revenue primarily related to product life cycle transitions at one of our top customers that had strong demand in 2014. in addition , many of our telecommunications customers experienced order declines during the last half of 2015 related to broader demand weakness associated with reduced infrastructure spending . these customers are offering a cautious outlook regarding near-term market recovery and have reduced spending as they await positive future catalysts . our sales depend on the success of our customers , some of which operate in businesses associated with rapid technological change and consequent product obsolescence . developments adverse to our major customers or their products , or the failure of a major customer to pay for components or services , can adversely affect us . a substantial percentage of our sales are made to a small number of customers , and the loss of a major customer , if not replaced , would adversely affect us . sales to our ten largest customers represented 47 % and 50 % of our sales in 2015 and 2014 , respectively . in both 2015 and 2014 , sales to international business machines corporation represented 11 % of our sales . we experience fluctuations in gross profit from period to period . different programs contribute different gross profits depending on factors such as the types of services involved , location of production , size of the program , complexity of the product and level of material costs associated with the various products . moreover , new programs can contribute relatively less to our gross profit in their early stages when manufacturing volumes are usually lower , resulting in inefficiencies and unabsorbed manufacturing overhead costs . in addition , a number of our new and higher volume programs remain subject to competitive constraints that could exert downward pressure on our margins . during periods of low production volume , we generally have idle capacity and reduced gross profit . we have undertaken initiatives to restructure our business operations with the intention of improving utilization and reducing costs . during 2015 , the company recognized $ 5.6 million ( pre-tax ) of integration and acquisition-related costs , primarily related to acquisition costs of the secure acquisition , and $ 8.3 million ( pre-tax ) of restructuring charges in connection with reductions in workforce of certain facilities primarily in the americas . 29 story_separator_special_tag style= '' font-size:10.0pt ; line-height:115 % ; '' > 31 interest expense interest expense increased to $ 3.0 million in 2015 from $ 1.9 million in 2014 due to the additional debt incurred in connection with the secure acquisition and the accelerated amortization of debt issuance costs from our prior credit facility that was replaced in november 2015. see note 6 to the consolidated financial statements in item 8 of this report . income tax expense income tax benefit of $ 5.4 million represented a negative 6.0 % effective tax rate for 2015 , compared with $ 17.4 million that represented an effective tax rate of 17.4 % for 2014. in 2015 , we recorded discrete tax benefits of $ 21.2 million related to a reduced valuation allowance on u.s. net operating losses and the release of tax reserves associated with a foreign subsidiary for which the statutory period for tax audits expired . we had a tax incentive in china that expired at the end of 2012 , but was extended in the first quarter of 2014 until 2015 and retroactively applied to the 2013 calendar year . story_separator_special_tag atra retroactively restored the research and experimentation credit and other u.s. income tax benefits for 2012 and extends these provisions through the end of 2013. excluding these tax items , the effective tax rate would have been 18.7 % in 2014 compared to 19.1 % in 2013. the decrease in the effective tax rate results primarily from taxable income in geographies with lower tax rates . net income we reported net income of $ 81.2 million , or $ 1.50 per diluted share for 2014 , compared with net income of $ 110.9 million , or $ 2.03 per diluted share for 2013. the net decrease of $ 29.7 million in 2014 was due to the factors discussed above . liquidity and capital resources we have historically financed our organic growth and operations through funds generated from operations . cash and cash equivalents totaled $ 466.0 million at december 31 , 2015 and $ 427.4 million at december 31 , 2014 , of which $ 424.0 million and $ 333.3 million , respectively , was held outside the u.s. in various foreign subsidiaries . substantially all of the amounts held outside of the u.s. are intended to be permanently reinvested in foreign operations . under current tax laws and regulations , if cash and cash equivalents held outside the u.s. were to be distributed to the u.s. in the form of dividends or otherwise , we would be subject to additional u.s. income taxes and foreign withholding taxes . cash provided by operating activities was $ 146.8 million in 2015. the cash provided by operations during 2015 consisted primarily of $ 95.4 million of net income adjusted for $ 49.7 million of depreciation and amortization , and a $ 52.8 million decrease in accounts receivable , offset by a $ 41.4 million decrease in accounts payable . the decrease in accounts receivable was primarily driven by the decline in fourth quarter sales from 2014 to 2015. the decrease in accounts payable in 2015 is a result of lower fourth quarter activity in 2015 compared to 2014. working capital was $ 1.1 billion at december 31 , 2015 and $ 1.0 billion at december 31 , 2014. we are continuing the practice of purchasing components only after customer orders or forecasts are received , which mitigates , but does not eliminate , the risk of loss on inventories . supplies of electronic components and other materials used in operations are subject to industry-wide shortages . in certain instances , suppliers may allocate available quantities to us . if shortages of these components and other material supplies used in operations occur , vendors may not ship the quantities we need for production , and we may be forced to delay shipments , which would increase backorders and impact cash flows . cash used in investing activities was $ 266.8 million in 2015 primarily due to the purchase of secure , net of cash acquired totaling $ 229.6 million and the purchases of additional property , plant and equipment totaling $ 37.1 million . these purchases were primarily for machinery and equipment in the americas and asia . cash provided by financing activities was $ 159.6 million in 2015. in connection with the secure acquisition , we borrowed $ 230.0 million under a term loan facility ( the term loan facility ) that was used to finance the purchase price of the acquisition . share repurchases totaled $ 68.4 million , and we received $ 2.0 million from the exercise of stock options . under the terms of our new $ 430.0 million credit agreement ( the credit agreement ) , in addition to the term loan facility , we have a $ 200.0 million five-year revolving credit facility ( the revolving credit facility ) to be used for general corporate purposes with a maturity date of november 12 , 2020. the credit agreement includes an accordion feature pursuant to which total commitments under the facility may be increased by an additional $ 150.0 million , subject to satisfaction of certain conditions . as of december 31 , 2015 , we had $ 230.0 million in borrowings 34 outstanding under the term loan facility and $ 1.6 million in letters of credit outstanding under the revolving credit facility . $ 198.4 million remains available for future borrowings under the revolving credit facility . see note 6 to the consolidated financial statements in item 8 of this report for more information regarding the terms of the credit agreement . our operations , and the operations of businesses we acquire , are subject to certain foreign , federal , state and local regulatory requirements relating to environmental , waste management , health and safety matters . we believe we operate in substantial compliance with all applicable requirements and we seek to ensure that newly acquired businesses comply or will comply substantially with applicable requirements . to date , the costs of compliance and workplace and environmental remediation have not been material to us . however , material costs and liabilities may arise from these requirements or from new , modified or more stringent requirements in the future . in addition , our past , current and future operations , and the operations of businesses we have or may acquire , may give rise to claims of exposure by employees or the public , or to other claims or liabilities relating to environmental , waste management or health and safety concerns . as of december 31 , 2015 , we had cash and cash equivalents totaling $ 466.0 million and $ 198.4 million available for borrowings under the credit agreement . during the next 12 months , we believe our capital expenditures will approximate $ 40 million to $ 50 million , principally for machinery and equipment to support our ongoing business around the globe . on both december 7 , 2015 and december 4 , 2014 , our board of directors approved the repurchase of up to $ 100.0 million of our outstanding common shares .
| results of operations the following table presents the percentage relationship that certain items in our consolidated statements of income bear to sales for the periods indicated . the financial information and the discussion below should be read in conjunction with the consolidated financial statements and notes thereto in item 8 of this report . replace_table_token_7_th 2015 compared with 2014 sales as noted above , sales decreased 9 % in 2015. the percentages of our sales by sector were as follows : replace_table_token_8_th industrials . 2015 sales decreased 3 % to $ 820.3 million from $ 845.9 million in 2014 primarily as a result of lower infrastructure spending and the impact of the strengthening u.s. dollar . telecommunications . 2015 sales decreased 26 % to $ 595.1 million from $ 807.2 million in 2014. the decrease was primarily related to product life cycle transitions at one of our top customers that had strong demand in 2014. in addition , many of our telecommunications customers experienced order declines during the last half of 2015 related to broader demand weakness associated with reduced infrastructure spending . computing . 2015 sales decreased 4 % to $ 551.2 million from $ 577.1 million in 2014. the decrease was primarily due to lower demand from our customers . medical . 2015 sales increased 13 % to $ 350.4 million from $ 310.7 million in 2014 primarily as a result of new programs . testing & instrumentation . 2015 sales decreased 13 % to $ 223.8 million from $ 256.2 million in 2014 primarily due to the loss of the customer that declared bankruptcy in 2014 offset by increased demand from other customers . the bankrupt customer had accounted for $ 50.7 million of our sales during 2014. our international operations are subject to the risks of doing business abroad .
| 7,240 |
asc 350-20-35 states that if the carrying amount of the reporting unit is zero or negative , the second step of the impairment test shall be performed to measure the amount of impairment loss , if any , when it is more likely than not that a goodwill impairment exists based on adverse qualitative factors . as the carrying amount of our one reporting unit was negative as of the date of our annual assessment for 2016 , we performed a qualitative analysis to determine whether it was more likely than not that a goodwill f-15 sirius xm holdings inc. and subsidiaries notes to consolidated financial statements - continued ( dollars and shares in thousands , except per share amounts ) impairment exists . we were not aware of any adverse qualitative factors that would indicate any impairment to our goodwill as of the date of our annual assessment for 2016 and as of december 31 , 2016 . no impairment losses were recorded for goodwill during the years ended december 31 , 2016 , 2015 and 2014 . as of december 31 , 2016 , the cumulative balance of goodwill impairments recorded since the july 2008 merger ( the “ merger ” ) between our wholly owned subsidiary , vernon merger corporation , and xm satellite radio holdings inc. ( 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. actual results and the timing of events could differ materially from those projected in forward-looking statements due to a number of factors , including those described under “ item 1a - risk factors ” and elsewhere in this annual report on form 10-k. see “ special note about forward-looking statements. ” ( all amounts referenced in this item 7 are in thousands , except per subscriber and per installation amounts , unless otherwise stated . ) the following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes included elsewhere in this annual report on form 10-k. executive summary we transmit music , sports , entertainment , comedy , talk , news , traffic and weather channels , as well as infotainment services , in the united states on a subscription fee basis through our two proprietary satellite radio systems . subscribers can also receive music and other channels , plus features such as siriusxm on demand and mysxm , over our internet radio service , including through applications for mobile devices , home devices and other consumer electronic equipment . we are also a leader in providing connected vehicle services . our connected vehicle services are designed to enhance the safety , security and driving experience for vehicle operators while providing marketing and operational benefits to automakers and their dealers . we have agreements with every major automaker ( “ oems ” ) to offer satellite radio in their vehicles . we also acquire subscribers through marketing to owners and lessees of previously owned vehicles that include factory-installed satellite radios that are not currently subscribing to our services . our satellite radios are primarily distributed through automakers ; retail stores nationwide ; and through our website . satellite radio services are also offered to customers of certain rental car companies . as of december 31 , 2016 , we had approximately 31.3 million subscribers of which approximately 26.0 million were self-pay subscribers and approximately 5.4 million were paid promotional subscribers . our subscriber totals include subscribers under our regular pricing plans ; discounted pricing plans ; subscribers that have prepaid , including payments either made or due from automakers for subscriptions included in the sale or lease price of a vehicle ; subscribers to our internet services who do not also have satellite radio subscriptions ; and certain subscribers to our weather , traffic , and data services who do not also have satellite radio subscriptions . subscribers and subscription related revenues and expenses associated with our connected vehicle services and the sirius xm canada service are not included in our subscriber count or subscriber-based operating metrics . our primary source of revenue is subscription fees , with most of our customers subscribing to annual , semi-annual , quarterly or monthly plans . we offer discounts for prepaid , longer term subscription plans , as well as a multiple subscription discount . we also derive revenue from activation and other fees , the sale of advertising on select non-music channels , the direct sale of satellite radios and accessories , and other ancillary services , such as our weather , traffic and data services . in certain cases , a subscription to our radio services is included in the sale or lease price of new vehicles or previously owned vehicles . the length of these subscriptions varies but is typically three to twelve months . we receive payments for these subscriptions from certain automakers . we also reimburse various automakers for certain costs associated with satellite radios installed in new vehicles . as of december 31 , 2016 , liberty media beneficially owned , directly and indirectly , approximately 67 % of the outstanding shares of our common stock . as a result , we are a “ controlled company ” for the purposes of the nasdaq corporate governance requirements . liberty media owns interests in a range of media , communications and entertainment businesses . we hold an equity method investment in sirius xm canada which offers satellite radio services in canada . as of december 31 , 2016 , we owned an approximate 37 % equity interest in sirius xm canada . 23 story_separator_special_tag with an overall increase in subscribers , higher revenue generated from our connected vehicle services , and increased revenue from our canadian affiliate . story_separator_special_tag we recorded a loss on disposal of certain obsolete satellite parts of $ 12,912 in the second quarter of 2016 and a loss on disposal of certain obsolete terrestrial repeaters and related parts of $ 7,384 in the fourth quarter of 2015. excluding the losses on disposal of these assets , the increase was driven by inclusion of wireless transmission costs related to our connected vehicle services that were previously recorded to customer service and billing expense in 2015 , partially offset by lower web streaming costs from in-sourcing certain activities . 26 2015 vs. 2014 : for the years ended december 31 , 2015 and 2014 , satellite and transmission expenses were $ 94,609 and $ 86,013 , respectively , an increase of 10 % , or $ 8,596 , and increased as a percentage of total revenue . the increase was primarily due to the loss on disposal of certain obsolete terrestrial repeaters and related parts of $ 7,384 , and higher costs associated with our internet streaming operations , partially offset by lower satellite insurance costs . we expect satellite and transmission expenses , excluding losses from disposal of assets , to remain relatively unchanged . cost of equipment includes costs from the sale of satellite radios , components and accessories and provisions for inventory allowance attributable to products purchased for resale in our direct to consumer distribution channels . 2016 vs. 2015 : for the years ended december 31 , 2016 and 2015 , cost of equipment was $ 40,882 and $ 42,724 , respectively , a decrease of 4 % , or $ 1,842 , and decreased as a percentage of equipment revenue . the decrease was primarily due to lower aftermarket and direct to consumer sales , partially offset by higher inventory reserves . 2015 vs. 2014 : for the years ended december 31 , 2015 and 2014 , cost of equipment was $ 42,724 and $ 44,397 , respectively , a decrease of 4 % , or $ 1,673 , and decreased as a percentage of equipment revenue . the decrease was primarily due to lower direct to consumer sales , partially offset by higher sales to distributors . we expect cost of equipment to fluctuate with changes in sales and inventory valuations . subscriber acquisition costs include hardware subsidies paid to radio manufacturers , distributors and automakers ; subsidies paid for chipsets and certain other components used in manufacturing radios ; device royalties for certain radios and chipsets ; commissions paid to automakers and retailers ; product warranty obligations ; freight ; and provisions for inventory allowances attributable to inventory consumed in our oem and retail distribution channels . the majority of subscriber acquisition costs are incurred and expensed in advance of , or concurrent with , acquiring a subscriber . subscriber acquisition costs do not include advertising costs , marketing , loyalty payments to distributors and dealers of satellite radios or revenue share payments to automakers and retailers of satellite radios . 2016 vs. 2015 : for the years ended december 31 , 2016 and 2015 , subscriber acquisition costs were $ 512,809 and $ 532,599 , respectively , a decrease of 4 % , or $ 19,790 , and decreased as a percentage of total revenue . the decrease was driven by lower subsidized costs related to the transition of chipsets and reductions to oem hardware subsidy rates , partially offset by higher radio installations . 2015 vs. 2014 : for the years ended december 31 , 2015 and 2014 , subscriber acquisition costs were $ 532,599 and $ 493,464 , respectively , an increase of 8 % , or $ 39,135 , but decreased as a percentage of total revenue . increased costs related to a larger number of satellite radio installations in new vehicles which were partially offset by improved oem and chipset subsidy rates per vehicle . we expect subscriber acquisition costs to fluctuate with oem installations and aftermarket volume ; however , the cost of subsidized radio components is expected to decline . we intend to continue to offer subsidies , commissions and other incentives to acquire subscribers . sales and marketing includes costs for marketing , advertising , media and production , including promotional events and sponsorships ; cooperative marketing ; and personnel . marketing costs include expenses related to direct mail , outbound telemarketing and email communications . 2016 vs. 2015 : for the years ended december 31 , 2016 and 2015 , sales and marketing expenses were $ 386,724 and $ 354,189 , respectively , an increase of 9 % , or $ 32,535 , but decreased as a percentage of total revenue . the increase was primarily due to additional subscriber communications , retention programs and acquisition campaigns as well as higher personnel-related costs . 2015 vs. 2014 : for the years ended december 31 , 2015 and 2014 , sales and marketing expenses were $ 354,189 and $ 336,480 , respectively , an increase of 5 % , or $ 17,709 , but decreased as a percentage of total revenue . the increase was primarily due to additional subscriber communications , retention programs and acquisition campaigns as well as higher personnel-related costs . we anticipate that sales and marketing expenses will increase as we expand programs to retain our existing subscribers , win back former subscribers , and attract new subscribers . 27 engineering , design and development consists primarily of compensation and related costs to develop chipsets and new products and services , including streaming and connected vehicle services , research and development for broadcast information systems and costs associated with the incorporation of our radios into new vehicles manufactured by automakers . 2016 vs. 2015 : for the years ended december 31 , 2016 and 2015 , engineering , design and development expenses were $ 82,146 and $ 64,403 , respectively , an increase of 28 % , or $ 17,743 , and increased as a percentage of total revenue .
| results of operations set forth below are our results of operations for the year ended december 31 , 2016 compared with the year ended december 31 , 2015 and the year ended december 31 , 2015 compared with the year ended december 31 , 2014 . replace_table_token_4_th total revenue subscriber revenue includes subscription , activation and other fees . 2016 vs. 2015 : for the years ended december 31 , 2016 and 2015 , subscriber revenue was $ 4,196,852 and $ 3,824,793 , respectively , an increase of 10 % , or $ 372,059 . the period over period increase was primarily attributable to an 8 % increase in the daily weighted average number of subscribers as well as a 3 % increase in average monthly revenue per subscriber resulting from certain rate increases . 2015 vs. 2014 : for the years ended december 31 , 2015 and 2014 , subscriber revenue was $ 3,824,793 and $ 3,554,302 , respectively , an increase of 8 % , or $ 270,491 . the period over period increase was primarily attributable to an 8 % increase in the daily weighted average number of subscribers as well as a 1 % increase in average monthly revenue per subscriber resulting from certain rate increases . 24 we expect subscriber revenues to increase based on the growth of our subscriber base , including the increases in certain of our subscription rates and the sale of additional services to subscribers . advertising revenue includes the sale of advertising on certain non-music channels . 2016 vs. 2015 : for the years ended december 31 , 2016 and 2015 , advertising revenue was $ 138,231 and $ 122,292 , respectively , an increase of 13 % , or $ 15,939 . the increase was primarily due to a greater number of advertising spots sold and transmitted as well as increases in rates charged per spot .
| 7,241 |
one method we use to drive continuous improvement is value engineering continuously evaluating new materials , processes and technologies to insert into products already in production , helping to reduce costs and improve both quality and customer satisfaction . innovation is at the very core of our success , and investment in research and development ( r & d ) represents its foundation . our r & d investments are focused on adding new features to existing products , tailoring offerings for international markets , and creating totally new-to-the-world solutions to address our customers ' toughest communications challenges . innovation also leads to natural extensions of our core capabilities for capturing new opportunities in adjacent markets . innovation provides differentiation and a key competitive advantage for us . to ensure our investment in r & d is cost-effective and supports innovation across the entire company , we have adopted a portfolio management approach , optimizing investment at the company level rather than the business unit level . we have introduced standardized processes and common metrics to track progress and gauge success , and we have established core technology centers to more fully leverage r & d investment across our company . innovation at harris also includes introducing new business models to the marketplace to provide our customers with innovative solutions at lower costs . for example , in the tactical communications market , we provide a commercial off-the-shelf approach that entails investing our own r & d funds to provide new mission-critical communications at a much faster pace and lower cost compared to the lengthy development cycle of the traditional program-of-record approach . we also partnered with the faa to provide a fully-managed service for the faa fti network that provides mission-critical network capabilities to connect controllers and pilots across more than 4,000 nodes , resulting in significantly higher bandwidth and uptime at half the cost of the traditional approach . we also are at the forefront of a unique piggyback approach of using commercially-hosted satellite payloads to provide multiple missions on satellites , speeding time-to-mission and lowering costs compared to the traditional model of building and launching separate exquisite satellites for each mission requirement . key indicators we believe our value drivers , when implemented , will improve our financial results , including : income from continuing operations and income from continuing operations per diluted common share ; revenue ; income from continuing operations as a percentage of revenue ; net cash provided by operating activities ; return on invested capital ; and return on average equity . the measure of our success is reflected in our results of operations and liquidity and capital resources key indicators as discussed below . 31 fiscal 2014 results of operations key indicators : income from continuing operations , income from continuing operations per diluted common share , revenue , and income from continuing operations as a percentage of revenue represent key measurements of our value drivers : income from continuing operations increased 15.7 percent to $ 539.8 million in fiscal 2014 from $ 466.4 million in fiscal 2013 ; income from continuing operations per diluted common share increased 20.2 percent to $ 5.00 in fiscal 2014 from $ 4.16 in fiscal 2013 ; revenue decreased 2.0 percent to $ 5.0 billion in fiscal 2014 from $ 5.1 billion in fiscal 2013 ; and income from continuing operations as a percentage of revenue increased to 10.8 percent in fiscal 2014 from 9.1 percent in fiscal 2013. refer to md & a heading operations review below in this report for more information . liquidity and capital resources key indicators : net cash provided by operating activities , return on invested capital and return on average equity also represent key measurements of our value drivers : net cash provided by operating activities increased to $ 849.2 million in fiscal 2014 from $ 833.0 million in fiscal 2013 ; return on invested capital ( defined as after-tax operating income from continuing operations divided by the two-point average of invested capital at the beginning and ending of the fiscal year , where invested capital equals equity plus debt , less cash and cash equivalents ) increased to 20.4 percent in fiscal 2014 from 17.1 percent in fiscal 2013 ; and return on average equity ( defined as income from continuing operations divided by the two-point average of equity at the beginning and ending of the fiscal year ) increased to 31.9 percent in fiscal 2014 from 26.6 percent in fiscal 2013. refer to md & a heading liquidity , capital resources and financial strategies below in this report for more information on net cash provided by operating activities . industry-wide opportunities , challenges and risks department of defense and other u.s. federal markets : u.s. government budgets remained constrained in fiscal 2014 , and we anticipate a similarly constrained spending environment in fiscal 2015. contributing to the slow spending environment and similar to u.s. government fiscal year ( gfy ) 2014 , congress has yet to pass the gfy 2015 appropriations bills . this means specific budget allocations by program have not been finalized , and if not passed by october 1 , 2014 , we expect the u.s. government will operate under a continuing resolution . deficit spending has caused u.s. government budgets to come under significant pressure . in particular , the budget control act of 2011 resulted in automatic spending reductions , known as sequestration , through budget caps for both defense and non-defense spending . story_separator_special_tag 34 fiscal 2013 compared with fiscal 2012 : the decrease in revenue in fiscal 2013 compared with fiscal 2012 was primarily due to lower revenue in our rf communications and integrated network solutions segments . the $ 295 million decrease in revenue in our rf communications segment was primarily due to lower tactical communications revenue . the $ 34 million decrease in revenue in our integrated network solutions segment was due to lower it services revenue , partially offset by moderate revenue growth in harris caprock communications and our healthcare operations . see the discussion of business segment results of operations discussion below in this md & a for further information . gross margin percentage fiscal 2014 compared with fiscal 2013 : gross margin as a percentage of revenue ( gross margin percentage ) in fiscal 2014 was essentially unchanged from fiscal 2013 and primarily reflects a 1.0 percentage point increase in gross margin percentage in our government communications systems segment resulting from good program execution , partially offset by a 0.7 percentage point decrease in gross margin percentage in our rf communications segment resulting from weakness at public safety and professional communications . fiscal 2013 compared with fiscal 2012 : the decrease in gross margin percentage in fiscal 2013 compared with fiscal 2012 was primarily due to a lower percentage of our overall sales generated by our higher-margin rf communications segment and a 1.9 percentage point decrease in gross margin percentage in our integrated network solutions segment , partially offset by a 1.4 percentage point increase in gross margin percentage in our rf communications segment . see the discussion of business segment results of operations discussion below in this md & a for further information . engineering , selling and administrative expenses fiscal 2014 compared with fiscal 2013 : the decrease in engineering , selling and administrative ( esa ) expenses and esa expenses as a percentage of revenue ( esa percentage ) in fiscal 2014 compared with fiscal 2013 was primarily due to $ 74.7 million of charges recorded in the fourth quarter of fiscal 2013 for company-wide restructuring and other actions and the benefit in fiscal 2014 from prior-year restructuring actions , and an out-of-period adjustment in the third quarter of fiscal 2014 related to our post-employment benefit plan that reduced general and administrative expenses , partially offset by higher research and development expenses . overall company-sponsored research and development costs were $ 264.1 million in fiscal 2014 compared with $ 254.1 million in fiscal 2013 ( including a $ 17.8 million write-off of capitalized software in our integrated network solutions segment , as described below ) . fiscal 2013 compared with fiscal 2012 : the increase in esa percentage in fiscal 2013 compared with fiscal 2012 was primarily due to a 3.0 percentage point increase in esa percentage in our rf communications segment , partially offset by a 2.5 percentage point decrease in esa percentage in our integrated network solutions segment . the increase in esa percentage in our rf communications segment was primarily driven by esa expenses in fiscal 2013 that were essentially flat with fiscal 2012 relative to a 14 percent decrease in segment revenue . although benefiting from operational excellence initiatives and restructuring actions , rf communications segment esa expenses in fiscal 2013 were higher primarily due to an 8 percent increase in spending on research and development compared with fiscal 2012 and also included a $ 9 million charge for restructuring actions in the fourth quarter of fiscal 2013. the decrease in esa percentage in our integrated network solutions segment was primarily due to lower general and administrative expenses , including the impact of ongoing cost-reduction efforts and $ 58 million of charges recorded in fiscal 2012 for integration and other costs associated with our acquisitions of caprock , schlumberger gcs and carefx , partially offset by $ 44 million of charges recorded in fiscal 2013 for asset impairments and a $ 17.8 million write-off of capitalized software due to a change in accounting estimate . overall company-sponsored research and development costs were $ 254.1 million in fiscal 2013 ( including the $ 17.8 million write-off of capitalized software in our integrated network solutions segment noted above ) compared with $ 218.9 million in fiscal 2012. see the discussion of business segment results of operations discussion below in this md & a for further information . non-operating income ( loss ) fiscal 2014 compared with fiscal 2013 : non-operating income in fiscal 2014 was due to net income related to intellectual property matters . non-operating loss in fiscal 2013 was primarily due to a $ 33.2 million charge associated with our optional redemption on may 28 , 2013 of the entire outstanding $ 300 million principal amount of our 5 % 35 notes due october 1 , 2015 , a $ 10.8 million impairment of a cost-method investment and a $ 6.4 million impairment of an investment in a joint venture , partially offset by a $ 9.0 million gain on the sale of securities available-for-sale . fiscal 2013 compared with fiscal 2012 : non-operating loss in fiscal 2013 was primarily due to the items noted for fiscal 2013 in the discussion above regarding fiscal 2014 compared with fiscal 2013. non-operating income in fiscal 2012 was primarily due to royalty income related to certain patents . see note 20 : non-operating income ( loss ) in the notes for further information . net interest expense fiscal 2014 compared with fiscal 2013 : our net interest expense decreased in fiscal 2014 compared with fiscal 2013 primarily due to lower debt levels as a result of our optional redemption on may 28 , 2013 of the entire outstanding $ 300 million principal amount of our 5 % notes due october 1 , 2015. fiscal 2013 compared with fiscal 2012 : our net interest expense decreased slightly in fiscal 2013 compared with fiscal 2012 primarily due to lower debt levels as a result of our
| discussion of business segment results of operations rf communications segment replace_table_token_6_th fiscal 2014 compared with fiscal 2013 : segment revenue in fiscal 2014 included tactical communications revenue of $ 1,307.2 million , a 4 percent increase from $ 1,255.5 million in fiscal 2013 ; and public safety and professional communications revenue of $ 520.8 million , a 12 percent decrease from $ 593.5 million in fiscal 2013. the increase in tactical communications revenue was primarily due to higher revenue in international markets , mostly offset by lower revenue from dod customers . the decrease in public safety and professional communications revenue was primarily due to continued market weakness . the decrease in segment gross margin percentage in fiscal 2014 compared with fiscal 2013 was primarily due to weakness in public safety and professional communications and a $ 7 million benefit from the cumulative effect of a correction made in the fourth quarter of fiscal 2013 in the timing of cost recognition on tactical radio programs . the decrease in segment esa percentage in fiscal 2014 compared with fiscal 2013 was primarily driven by a $ 9 million charge for restructuring actions in the fourth quarter of fiscal 2013 and an out-of-period adjustment in the third quarter of fiscal 2014 related to our post-employment benefit plan that reduced segment general and administrative expenses , partially offset by an 8 percent increase in spending on research and development and the impact of accruals in the first quarter of fiscal 2014 for legal matters related to a public safety and professional communications program . the decrease in segment operating income and operating income as a percentage of revenue ( operating margin percentage ) in fiscal 2014 compared with fiscal 2013 reflected the items discussed above regarding this segment .
| 7,242 |
the following information contains forward-looking statements , which are subject to risks and uncertainties . should one or more of these risks or uncertainties materialize , our actual results may differ from those expressed or implied by the forward-looking statements . see “ forward-looking statements ” at the beginning of this report . performance indicators our management reviews and analyzes several key performance indicators in order to manage our business and assess the quality and potential variability of our earnings and cash flows . these key performance indicators include : total revenue , which is an indicator of our overall business growth ; subscriber growth and churn rate , which are both indicators of the satisfaction of our customers ; average monthly revenue per user , or arpu , which is an indicator of our pricing and ability to obtain effectively long-term , high-value customers . we calculate arpu separately for each type of our subscriber-driven revenue , including duplex , commercial iot and spot ; operating income and adjusted ebitda , both of which are indicators of our financial performance ; and capital expenditures , which are an indicator of future revenue growth potential and cash requirements . comparison of the results of operations for the years ended december 31 , 2020 and 2019 our results of operations for the twelve months ended december 31 , 2020 were impacted by covid-19 . while we can not predict the full extent or duration of the future impact of covid-19 , certain trends or uncertainties related to covid-19 that impact revenue or expense items are discussed below . revenue : our revenue is categorized as service revenue and equipment revenue . we provide services to customers using technology from our satellite and ground network . equipment revenue is generated from the sale of devices that work over our network . during the twelve months ended december 31 , 2020 , total revenue decreased $ 3.2 million to $ 128.5 million from $ 131.7 million in 2019. this variance was due primarily to an out-of-period adjustment , which increased duplex service revenue by $ 3.9 million during 2019 , related to a change in the calculation of the estimated impact from the initial adoption of asc 606. see below for a further discussion of the fluctuation in revenue . the following table sets forth amounts and percentages of our revenue by type of service ( dollars in thousands ) . replace_table_token_1_th ( 1 ) as previously disclosed , we recorded an out-of-period adjustment of $ 3.9 million during 2019 as a result of a change in the estimated impact of asc 606. this adjustment , which increased duplex service revenue , is excluded from duplex service revenue in the table above . the percentages of total revenue calculations also exclude this adjustment . 30 the following table sets forth amounts and percentages of our revenue generated from equipment sales ( dollars in thousands ) . replace_table_token_2_th the following table sets forth our average number of subscribers and arpu by type of revenue . replace_table_token_3_th ( 1 ) as previously disclosed , we recorded an out-of-period adjustment of $ 3.9 million during 2019 as a result of a change in the estimated impact of asc 606. this adjustment , which increased duplex service revenue , is excluded from duplex arpu in the table above . when the out-of-period adjustment is included in the calculation , arpu for the twelve months ended december 31 , 2019 is $ 64.02. the numbers reported in the above table are subject to immaterial rounding inherent in calculating averages . during the twelve months ended december 31 , 2020 , gross duplex and spot subscriber additions increased 1 % and 12 % , respectively . the increase in duplex gross subscriber additions from 2019 to 2020 was driven primarily by activations of sat-fi2 ® due to increased demand as we launched an improved version in september 2019 ; fewer activations from legacy devices partially offset this increase . also , lower service plan prices continue to drive gross duplex activations . spot gross subscriber activations increased from 2019 to 2020 driven by a higher volume of unit sales , particularly of our spot x ® device as well as spot gen4 tm , our refreshed spot satellite gps messenger launched in 2020. we are also seeing changes in consumer behavior resulting from covid-19 , driving more customers to purchase our spot products for outdoor recreational activities . because our commercial iot subscribers are able to activate and deactivate their units several times during the year , gross commercial iot subscriber additions are not considered to be a meaningful metric . we count `` subscribers '' based on the number of devices that are subject to agreements that entitle them to use our voice or data communications services rather than the number of persons or entities who own or lease those devices . 31 engineering and other service revenue includes revenue generated primarily from certain governmental and engineering service contracts which are not subscriber driven . accordingly , we do not present arpu for engineering and other service revenue in the table above . service revenue excluding the out-of-period adjustment discussed above , duplex service revenue decreased 15 % in 2020 due primarily to a decline in average subscribers and arpu of 12 % and 3 % , respectively . the decrease in average subscribers was driven by normal churn in the subscriber base exceeding gross activations over the last twelve months . the decrease in arpu was driven primarily by lower priced service plans and promotional pricing in place during 2020 , as well as unfavorable exchange rate movements for various currencies . spot service revenue decreased 8 % in 2020 due to lower arpu and average subscribers . the 5 % decrease in arpu was due primarily to lower priced service plans introduced to new subscribers in mid-2019 . story_separator_special_tag marketing , general and administrative marketing , general and administrative expenses ( `` mg & a '' ) decreased $ 3.5 million , or 8 % , to $ 41.7 million in 2020 from $ 45.2 million in 2019. mg & a expense was lower in 2020 due in part to the impact of covid-19 , including lower subscriber acquisition costs ( such as advertising and trade shows ) of $ 1.8 million and lower travel costs of $ 1.0 million . other smaller items , such as personnel costs and credit losses also reduced mga expense during 2020. offsetting these decreases were higher professional and legal fees related to strategic opportunities of $ 2.3 million . additionally , during 2019 , we wrote off $ 3.1 million of financing costs associated with our efforts to refinance our debt obligations . this write-off was recorded following our decision to pursue an amendment to our existing first lien facility agreement instead of issuing new first lien debt . reduction in the value of long-lived assets during 2019 , we recorded a reduction in the carrying value of long-lived assets of $ 1.1 million resulting from the change in classification from held and used to held for sale of our former gateway location in nicaragua . we reduced the carrying value to the lower of cost or fair value less estimated cost to sell during the fourth quarter of 2019. during the fourth quarter of 2020 , we signed a contract for the sale of this property ; the final selling price ( net of estimated cost to sell ) is $ 0.3 million and , as a result , the company recorded an additional impairment totaling $ 0.2 million during 2020. additionally , during the fourth quarter of 2020 , we wrote down $ 0.2 million related to the ground portion of construction in progress for one of our gateways resulting from an analysis made over these balances . 33 depreciation , amortization and accretion depreciation , amortization , and accretion expense increased $ 1.0 million to $ 96.8 million in 2020 compared to $ 95.8 million in 2019. this increase was due primarily to placing into service our new billing system implemented in 2020. other ( expense ) income : interest income and expense interest income and expense , net , decreased $ 14.1 million to expense of $ 48.4 million for 2020 compared to expense of $ 62.5 million for 2019. this decrease was driven by lower gross interest costs totaling $ 14.7 million as well as an increase to capitalized interest of $ 0.8 million ( which decreases interest expense ) . interest income and expense , net , was also impacted by a decrease in interest income totaling $ 1.4 million . gross interest costs were impacted by lower interest associated with the first lien facility agreement , the loan agreement with thermo , and the june 2019 subordinated loan agreement ; these items were offset by higher interest on the second lien facility agreement that we entered into in november 2019. lower interest costs for the first lien facility agreement were due to the modification of the first lien facility agreement in november 2019 , which reduced the principal balance outstanding and the balance of deferred financing costs ( resulting in lower amortization of deferred financing costs ) , as well as a decrease in the interest rate driven by a reduction in libor . lower interest costs for the loan agreement with thermo were driven by thermo 's conversion of the entire principal balance outstanding under the loan agreement in february 2020. lower interest costs for the subordinated loan agreement are due to the full repayment of this loan in november 2019. interest costs associated with the first lien facility agreement decreased $ 24.2 million ( including $ 11.7 million of amortization of deferred financing costs ) , interest costs associated with the loan agreement with thermo decreased $ 16.6 million ( including $ 3.4 million of accretion of debt discount ) and interest costs associated with the subordinated loan agreement decreased $ 4.5 million ( including $ 0.5 million of amortization of deferred financing costs ) . these decreases were offset by $ 30.6 million of interest ( including $ 4.0 million of accretion of debt discount and amortization of deferred financing costs ) associated with the second lien facility agreement . derivative gain we recorded derivative gains of $ 2.9 million and $ 145.1 million in 2020 and 2019 , respectively . we recognize gains or losses due to the change in the value of certain embedded features within our debt instruments that require standalone derivative accounting . the gains recorded during 2020 were primarily impacted by fluctuations in the discount yield used in the valuation of the embedded derivative associated with our second lien facility agreement . the gains recorded during 2019 were impacted primarily by the assumed probability of conversion of the loan agreement with thermo , which occurred in february 2020 , and decreased the value of the associated derivative liability . see note 8 : fair value measurements to our consolidated financial statements for further discussion of the computation of the fair value of our derivatives . foreign currency ( loss ) gain foreign currency ( loss ) gain fluctuated by $ 0.8 million to a loss of $ 0.7 million in 2020 from a gain of $ 0.1 million in 2019. changes in foreign currency gains and losses are driven by the significant financial statement items we have denominated in various currencies . the strengthening of the u.s. dollar relative to the brazilian real unfavorably impacted our consolidated statement of operations $ 4.0 million ; this unfavorable impact was partially offset by the strengthening of the canadian dollar and the euro relative to the u.s. dollar , $ 1.3 million and $ 1.7 million , respectively . other smaller items contributed to the remaining fluctuation .
| overview as of december 31 , 2020 , we held cash and cash equivalents of $ 13.3 million and restricted cash of $ 54.7 million , of which $ 3.6 million and $ 51.1 million are recorded as current and non-current restricted cash , respectively , on our consolidated balance sheet required under our first lien facility agreement . the current portion of restricted cash on our consolidated balance sheet will be used towards the next principal payment , which is scheduled for june 2021. the non-current portion of restricted cash on our consolidated balance sheet will generally be used towards the final scheduled payment due upon maturity of the first lien facility agreement in december 2022 ( see below for further discussion ) . as of december 31 , 2019 , we held cash and cash equivalents of $ 7.6 million and had $ 51.5 million in restricted cash . the carrying amount of our long-term debt outstanding was $ 385.4 million at december 31 , 2020 , compared to $ 464.2 million at december 31 , 2019. at december 31 , 2020 , the current portion of our debt outstanding was $ 58.8 million and represents the scheduled principal payments under our first lien facility agreement and the ppp loan due within one year of the balance sheet date . we had no current debt outstanding at december 31 , 2019. the $ 78.8 million decrease in the carrying amount of our total debt balance was due primarily to the conversion of the loan agreement with thermo in february 2020 into shares of common stock , resulting in a $ 116.5 million reduction in net debt .
| 7,243 |
effective may 12 , 2017 , the company entered into an amended and restated employment agreement with michael thornton , our chief technology officer . the term of the employment agreement runs through december 31 , 2019. the employment agreement provides for an annual base salary of $ 245,000 . under the employment agreement , mr. thornton is eligible for an annual cash bonus based upon achievement of performance-based objectives established by the board of directors . pursuant to mr. thornton 's employment agreement , upon the closing of our initial public offering he was granted options to purchase 313,338 shares of common stock . the options have an exercise price of $ 5.00 per share of common stock and vest in three equal annual installments beginning on may 12 , 2018. upon termination without cause , any portion of mr. thornton 's option scheduled to vest within 12 months will automatically vest , and upon termination without cause within 12 months following a change of control , the entire unvested portion of the option will automatically vest . upon termination for any other reason , the entire unvested portion of the option will terminate . if mr. thornton 's employment is terminated by the company without cause , mr. thornton will be entitled to receive 12 months ' continuation of his current base salary and a lump sum payment equal to 12 months of continued healthcare coverage ( or 24 months ' continuation of his current base salary and a lump sum payment equal to 24 months of continued healthcare coverage if such termination occurs within one year following a change in control ) . under his employment agreement , mr. thornton is eligible to receive benefits that are substantially similar to those of the company 's other senior executive officers . david r. wells . on may 12 , 2017 , the company entered into a consulting agreement with storycorp consulting ( “ storycorp ” ) , pursuant to which david wells provides services to the company as its chief financial officer . pursuant to the consulting agreement , the company pays to storycorp a monthly fee of $ 9,000 . additionally , pursuant to the consulting agreement , the company granted to mr. wells a stock option to purchase 15,000 shares of common stock in connection with the closing of our initial public offering , having an exercise price per share equal to $ 5.00 and vesting in twelve equal quarterly installments , and , for so long as the consulting agreement is in place , will grant to mr. wells a stock option to purchase the same number of shares of common stock with the same terms on each annual anniversary of the date of the consulting agreement . litigation from time to time the company may become a party to litigation in the normal course of business . management believes that there are no current legal matters that would have a material effect on the company 's financial position or results of operations . note 10 – subsequent events subsequent to december 31 , 2017 , the company granted warrants to purchase 20,000 shares of common stock with an exercise price of $ 5.50 per share for services . subsequent to december 31 , 2017 , the company awarded stock options to purchase 38,790 shares of common stock with an exercise price of $ 4.95 per share to its consultants and non-employee members of the board of directors . f-15 item 9. changes in and disagreements with accountants on accounting and financial disclosure . none . item 9a . controls and procedures . evaluation of disclosure controls and procedures as of the end of the period covered by this report , management performed , with the participation of our principal executive and principal financial officers , an evaluation of the effectiveness of our disclosure controls and procedures as defined in rules 13a-15 ( e ) and 15d-15 ( e ) of the exchange act . our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the exchange act is recorded , processed , summarized , and reported within the time periods specified in the sec 's forms , and that such information is accumulated and communicated to our management , including our principal executive officer and principal financial officer , to allow timely decisions regarding required disclosures . based on the evaluation , our principal executive and principal financial officers concluded that , as of december 31 , 2017 , our disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting . a material weakness is a deficiency , or a combination of deficiencies , in internal control over financial reporting , such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis . we identified the following material weakness as of december 31 , 2017 : insufficient personnel resources within the accounting function to segregate the duties over financial transaction processing and reporting . to remediate our internal control weakness , management intends to implement the following measures : ● add sufficient accounting personnel or outside consultants to properly segregate duties and to effect a timely , accurate preparation of the financial statements . ● upon the hiring of additional accounting personnel or outside consultants , develop and maintain adequate written accounting policies and procedures . the additional hiring is contingent upon our efforts to obtain additional funding and the results of our operations . story_separator_special_tag on january 30 , 2018 , we and ge healthcare entered into an amendment to our agreement , extending its term by 21 months to january 22 , 2020 . 41 on november 2 , 2017 we announced that we have partnered with starfish medical ( “ starfish ” ) , a medical device development and contract manufacturing company , and critech research inc. ( “ critech ” ) , a u.s. firm specializing in medical device software development , to commence productization of our taeus device targeting nafld . the agreements call for starfish and critech to provide us with the specialized engineering resources necessary to translate our current prototype taeus device into a clinical product meeting ce regulatory requirements required for commercial launch in the european union followed by fda submission for the u.s. market . in november 2017 , we also contracted the centre for imaging technology commercialization ( cimtec ) to initiate human studies with our taeus device . financial operations overview revenue to date our revenue has been generated by the placement and sale of our nexus 128 system for use in pre-clinical applications . cost of goods sold our cost of goods sold is related to our direct costs associated with the development and shipment of our thermoacoustic imaging systems placed in pre-clinical settings . research and development expenses our research and development expenses primarily include wages , fees and equipment for the development of our taeus technology platform and our proposed applications . additionally , we incur certain costs associated with the protection of our products and inventions through a combination of patents , licenses , applications and disclosures . sales and marketing expenses sales and marketing expenses consist primarily of advertising , marketing and consulting expenses and headcount . currently , our marketing efforts for our pre-clinical business are through distributors in china , the european union , australia , korea and the united kingdom , our website , and attendance of key industry meetings . in connection with the commercialization of our taeus applications , we expect to build a small sales and marketing team to train and support global ultrasound distributors , as well as execute traditional marketing activities such as promotional materials , electronic media and participation in industry conferences . general and administrative expenses general and administrative expenses consist primarily of salaries and related expenses for our management and personnel , and professional fees , such as accounting , consulting and legal . critical accounting policies and estimates use of estimates the preparation of the financial statements in conformity with accounting principles generally accepted in the united states requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities , and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period . actual results could differ from those estimates . management makes estimates that affect certain accounts including deferred income tax assets , accrued expenses , fair value of equity instruments and reserves for any other commitments or contingencies . any adjustments applied to estimates are recognized in the period in which such adjustments are determined . 42 share-based compensation our 2016 omnibus incentive plan permits the grant of share options and shares to our employees , consultants and non-employee members of our board of directors for up to 1,345,074 shares of common stock . we record share-based compensation in accordance with the provisions of the share-based compensation topic of the fasb codification . the guidance requires the use of option-pricing models that require the input of highly subjective assumptions , including the option 's expected life and the price volatility of the underlying stock . the fair value of each option grant is estimated on the date of grant using the black-scholes option valuation model which uses certain assumptions related to risk-free interest rates , expected volatility , expected life of the common stock options , and future dividends , and the resulting charge is expensed using the straight-line attribution method over the vesting period . stock compensation expense recognized during the period is based on the value of share-based awards that were expected to vest during the period adjusted for estimated forfeitures . the estimated fair value of grants of stock options and warrants to non-employees is charged to expense , if applicable , in the financial statements . recent accounting pronouncements see note 2 of the financial statements for a discussion of recently issued accounting standards . story_separator_special_tag style= '' font-family : times new roman ; font-size : 13px '' > to date we have generated only limited revenues from sales of our nexus 128 system . we have funded our operations to date through private and public sales of our securities . as of december 31 , 2017 , we had approximately $ 5.6 million in cash . in may 2017 , we completed the ipo , raising net proceeds of approximately $ 8.6 million after deducting offering expenses of approximately $ 0.8 million in underwriting discounts , commissions and expenses and approximately $ 0.3 million in offering expenses payable by the company . we believe that cash on hand at december 31 , 2017 and other potential sources of cash , including revenues we generate from sales of our nexus 128 system , will be sufficient to fund our current operations into the third quarter of 2018. if we do not raise additional capital in the next several months we will need to significantly slow or pause our business activities until such time as we are able to raise additional capital .
| results of operations years ended december 31 , 2017 and 2016 revenues we had revenue of $ 351,622 for the year ended december 31 , 2017 , as compared to $ 515,582 for the year ended december 31 , 2016 , a decrease of $ 163,960 , or 32 % . the revenue was a result of the sale of one of our nexus 128 laboratory imaging systems and product service fees generated from our installed base of nexus 128 laboratory imaging systems . the decrease in 2017 over 2016 was due to our limited resources during the first half of 2017 and our decision to focus those resources on developing our taeus applications . cost of goods sold cost of goods sold was $ 172,782 and $ 235,878 for the years ended december 31 , 2017 and 2016 , respectively , a decrease of $ 63,096 , or 27 % . cost of goods sold was a result of direct costs associated with the sale of one of our nexus 128 laboratory imaging systems , and product service materials required for the service of our installed base of nexus 128 laboratory imaging systems . gross margin was approximately 51 % and 54 % for the years ended december 31 , 2017 and 2016 , respectively . cost of goods sold decreased as a result of a decrease in units sold . the decrease in gross margin resulted from an increase in the cost of certain parts used to assemble the systems sold . research and development research and development expenses were $ 1,931,075 for the year ended december 31 , 2017 , as compared to $ 495,377 for the year ended december 31 , 2016 , an increase of $ 1,435,698 , or 290 % . the costs include primarily wages , fees and equipment for the development of our taeus product line .
| 7,244 |
115 future minimum payments under the amended lease as of december 31 , 2019 are as follows ( in thousands ) : replace_table_token_30_th rent expense for the years ended december 31 , 2019 , 2018 and 2017 was approximately $ 1.1 million , $ 0.5 million and million and $ 0.4 million , respectively . the company made cash payments r elated to its operating lease agreement of $ 1.2 million , $ 0.5 million and $ 0.4 million for the years ended december 31 , 2019 , 2018 and 2017 , respectively . 8. stockholders ' equity stock option plan t he company 's 2019 equity incentive plan as amended ( the plan ) , provides for the grant of stock options , restricted stock and other equity awards of the company 's common stock to employees , officers , consultants , and directors . as of december 31 , 2019 , the plan had a maximum of 2,633,874 total shares available for issuance . options expire within a period of not more than ten years from the date of grant . initial option grants to employees typically vest 25 % after one year and monthly thereafter over a three-year period and expire between one and three months after employee termination . subsequent option grants to employees and grants to non-employees typically vest monthly over a four-year period . the majority of options outstanding at december 31 , 2019 , had vesting periods of four years . the weighted-average grant-date fair value of options granted to employees was $ 21.66 , $ 6.23 and $ 2.08 for the years ended december 31 , 2019 , 2018 and 2017 , respectively . as of december 31 , 2019 , unrecognized compensation expense related to unvested options was $ 54.4 million and is expected to be recognized over a weighted average term of 2.92 years . the following summarizes option activity for the year ended december 31 , 2019 : replace_table_token_31_th 116 the fair values of the employee stock options granted during 2019 , 2018 and 2017 was estimated at the date of grant using the black-scholes option-pricing model with the following assumptions : replace_table_token_32_th 2019 employee stock purchase plan in april 2019 , the company 's board of directors and stockholders approved and adopted the 2019 employee stock purchase plan ( the “ espp ” ) . the espp became effective immediately prior to the date of the underwriting agreement related to the ipo . the espp permits eligible employees who elect to participate in an offering under the espp to have up to 15 % of their eligible earnings withheld , subject to certain limitations , to purchase shares of common stock pursuant to the espp . the price of common stock purchased under the espp is story_separator_special_tag story_separator_special_tag and clinical sites as we navigate and assess the impact of covid-19 on our studies and current timelines . our fourth drug candidate , tpx-0131 is a next-generation preclinical alk inhibitor . tpx-0131 has been designed with a compact macrocyclic structure and in preclinical studies has been shown to potently inhibit wildtype alk and numerous alk mutations , in particular the clinically observed g1202r solvent front mutation and g1202r/l1196m compound mutation . pending successful completion of ind-enabling studies , we anticipate submitting an ind for tpx-0131 in early 2021. since our inception , we have incurred significant operating losses . our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our drug candidates . as of december 31 , 2019 , we had an accumulated deficit of $ 122.9 million and we incurred net losses of approximately $ 72.1 million for the year ended december 31 , 2019. we expect to continue to incur significant expenses and increasing operating losses for at least the next several years . we will not generate revenue from product sales unless we successfully complete clinical development and obtain regulatory approval for our drug candidates . if we obtain regulatory approval for any of our drug candidates and do not enter into a commercialization partnership , we expect to incur significant expenses related to developing our internal commercialization capability to support product sales , marketing and distribution . we also expect to incur additional costs associated with operating as a public company . as a result , we will need substantial additional funding to support our continuing operations and pursue our growth strategy . until such time as we can generate significant revenue from product sales , if ever , we expect to finance our operations through a combination of equity offerings , debt financings , collaborations , strategic alliances and marketing , distribution or licensing arrangements . we may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms , or at all . if we fail to raise capital or enter into such agreements we may have to significantly delay , scale back or discontinue the development and commercialization of one or more of our drug candidates . on april 22 , 2019 , we completed an initial public offering whereby we sold an aggregate of 10,637,500 shares of our common stock at a price of $ 18.00 per share , resulting in net proceeds of $ 175.2 million after deducting underwriting discounts , commissions and other offering costs . on september 10 , 2019 , we completed an additional public offering of our common stock which resulted in the issuance and sale of 4,500,000 shares of common stock at a price of $ 45.00 per share , resulting in net proceeds of $ 189.5 million after deducting underwriting discounts and commissions and other offering costs . story_separator_special_tag as of december 31 , 2019 , we had federal and state net operating loss carryforwards of approximately $ 105.8 million and $ 111.6 million , respectively . portions of the federal and state net operating loss carryforwards will begin to expire in 2033 if not utilized . the $ 86.1 million of the federal net operating loss carryforwards generated post 2017 is limited to 80 % of taxable income generated in any given year and can be carried forward indefinitely . as of december 31 , 2019 , we had federal and state research and development tax credits of approximately $ 1.0 million and $ 1.7 million , respectively . as of december 31 , 2019 , we had federal orphan drug tax credits of approximately $ 12.9 million . if not utilized , the federal research tax credit will begin to expire in 2035 and the orphan drug credit will begin to expire in 2037. the california research tax credit can be carried forward indefinitely . utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to the ownership change limitations provided by section 382 of the code and similar provisions of state law . the annual limitations in sections 382 and 383 of the code may result in the expiration of our net operating loss and tax credit carryforwards before utilization . we have not performed an analysis to determine whether our net operating loss and credit carryforwards are subject to an annual limitation under sections 382 or 383 of the code . critical accounting policies and significant judgments and estimates our management 's discussion and analysis of our financial condition and results of operations are based on our financial statements , which have been prepared in accordance with u.s. generally accepted accounting principles . the preparation of our financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets and liabilities , related disclosure of contingent liabilities at the date of the financial statements , and the reported amounts of expenses and other income during the reporting period . we continually evaluate our estimates and judgments , the most critical of which are those related to preclinical and clinical study accruals and stock-based compensation costs . we base our estimates and judgments on historical experience and other factors that we believe to be reasonable under the circumstances . materially different results can occur as circumstances change and additional information becomes known . while our significant accounting policies are described in more detail in note 2 to our financial statements appearing in this annual report , we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements . research and development expenses research and development expenses consist primarily of costs incurred for our research activities , including our drug discovery efforts , and the development of our drug candidates , which include : employee-related expenses , including salaries , related benefits , travel and stock-based compensation expense for employees engaged in research and development functions ; expenses incurred in connection with the preclinical and clinical development of our drug candidates , including expenses incurred under agreements with contract research organizations ( cros ) ; 92 the cost of consultants and contract manufacturing organizations ( cmos ) that manufacture drug products for use in our preclinical studies and clinical trials ; and facilities , depreciation and other expenses , which include allocated expenses for rent and maintenance of facilities , insurance and supplies . we expense research and development costs to operations as incurred . nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid assets . our prepaid assets are expensed as the related goods are delivered or the services are performed . our direct research and development expenses are tracked on a program-by-program basis and consist primarily of external costs , such as fees paid to consultants , central laboratories , contractors , cmos and cros in connection with our preclinical and clinical development activities . we allocate indirect expenses , such as employee salaries , fringe benefits , facilities , travel and other miscellaneous expenses , based on an estimated percentage of time worked on programs . stock-based compensation expense for purposes of calculating stock-based compensation , we estimate the fair value of stock options issued using a black-scholes option-pricing model . the determination of the fair value of stock-based payment awards utilizing the black-scholes model is affected by the company 's stock price and a number of assumptions , including expected volatility , expected life , risk-free interest rate and expected dividends . expected term —we have opted to use the “ simplified method ” for estimating the expected term of employee options , whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the option ( generally 10 years ) . expected volatility —due to our limited operating history and a lack of company specific historical and implied volatility data , we have based our estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded . the historical volatility data was computed using the daily closing prices for the selected companies ' shares during the equivalent period of the calculated expected term of the stock-based awards . risk-free interest rate —the risk-free rate assumption is based on the u.s. treasury instruments with maturities similar to the expected term of our stock options . expected dividend —we have not issued any dividends and do not expect to issue dividends over the life of the options . as a result , we have estimated the dividend yield to be zero .
| financial condition and results of operations . you should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes thereto included elsewhere in this annual report . some of the information contained in this discussion and analysis or set forth elsewhere in this annual report , including information with respect to our plans and strategy for our business and related financing , includes forward-looking statements that involve risks and uncertainties . as a result of many factors , including those fac tors set forth in the `` risk factors '' section of this annual report our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis . for the comparison of the financial results for the fiscal years ended december 31 , 2018 and 2017 , see management 's discussion and analysis of financial condition and results of operations , in our registration statement on form s-1 , as amended , originally filed with the sec on march 21 , 2019. references in the following discussion to `` we , '' `` our , '' `` us , '' `` turning point '' or `` the company '' refer to turning point therapeutics , inc. overview we are a clinical-stage biopharmaceutical company designing and developing novel small molecule , targeted oncology therapies to address key limitations of existing therapies and improve the lives of patients . our internally developed and wholly owned pipeline of next-generation tyrosine kinase inhibitors ( tkis ) targets numerous genetic drivers of cancer in both tki-naïve and tki-pretreated patients . the pervasive challenges of intrinsic and acquired treatment resistance often limit the response rate and durability of existing therapies . one of these challenges is the emergence of solvent front mutations , which are a common cause of acquired resistance to currently approved therapies for ros1 , trk and alk kinases .
| 7,245 |
acquisitions 2011 on december 22 , 2011 , our flow technology reportable segment completed story_separator_special_tag story_separator_special_tag size= '' 2 '' > we repurchased a total of 3.493 shares of our common stock for $ 260.2 during 2013 , including : 1.514 shares under a rule 10b5-1 trading plan entered into in 2012 ( and completed in 2013 ) for $ 104.4 ; 1.864 shares on the open market for $ 144.6 ; and 0.115 shares under a rule 10b5-1 trading plan entered into on december 18 , 2013 for $ 11.2. see note 15 to our consolidated financial statements for further details . discontinued operations crystal growing business ( `` kayex '' ) we closed the business during the first quarter of 2013 and then sold a perpetual license related to certain of the business 's intangible assets for cash consideration of $ 6.9. broadcast antenna system business ( `` dielectric '' ) we sold assets of the business during the second quarter of 2013 for cash consideration of $ 4.7. during the third quarter of 2013 , we committed to a plan to divest certain non-strategic businesses that were previously reported within industrial products and services and other . we expect to complete the sale of these businesses during 2014. see note 4 to our consolidated financial statements for further details . debt actions on december 23 , 2013 , we amended our then-existing senior credit facilities to , among other items : extend the final maturity of the facilities to december 23 , 2018 ; increase the borrowing capacity under our term loan facility from $ 475.0 to $ 575.0 , with annual aggregate repayments of 5.0 % of the initial principal balance ( $ 475.0 , together with any additional borrowings of up to $ 100.0 22 available to be drawn under the facility on a delayed draw basis through june 20 , 2014 ) beginning with the first fiscal quarter of 2015 , with the remaining balance repayable in full on december 23 , 2018 ; reduce availability under our global revolving credit facility from $ 300.0 to $ 200.0 ; and reduce availability under our foreign credit instrument facilities from $ 1,200.0 to $ 1,000.0. on february 11 , 2014 , we completed the redemption of all our 7.625 % senior notes due in december 2014 for a total redemption price of $ 530.6 , plus approximately $ 2.0 in transaction costs . see note 12 to our consolidated financial statements for further details . income taxes during 2013 , we recorded discrete income tax benefits of $ 20.1 , with $ 9.5 related to net reductions in valuation allowances recorded against certain foreign deferred income tax assets , $ 6.5 related to various audit settlements and statute expirations , and $ 4.1 associated with the research and experimentation credit generated in 2012. as discussed in note 1 to our consolidated financial statements , in december 2013 we identified certain misstatements associated with previously reported income tax amounts . we have evaluated the effects of these misstatements on the 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 no . 108 , we have restated the prior year consolidated financial statements included herein . increase in annual dividend on february 12 , 2014 , we implemented a dividend increase effective with our next quarterly dividend payment . our annual dividend is now $ 1.50 per share ( previously $ 1.00 per share ) , payable quarterly . results of continuing operations seasonality and competition many of our businesses closely follow changes in the industries and end markets they serve . in addition , certain businesses have seasonal fluctuations . our heating and ventilation products businesses tend to be stronger during the third and fourth quarters , as customer buying habits are driven largely by seasonal weather patterns . demand for cooling towers , food and beverage systems and related services is highly correlated to timing on large construction contracts , which may cause significant fluctuations from period to period . in aggregate , our businesses generally tend to be stronger in the second half of the year . although our businesses operate in highly competitive markets , our competitive position can not be determined accurately in the aggregate or by segment since our competitors do not offer all the same product lines or serve all the same markets . in addition , specific reliable comparative figures are not available for many of our competitors . in most product groups , competition comes from numerous concerns , both large and small . the principal methods of competition are service , product performance , technical innovation and price . these methods vary with the type of product sold . we believe we compete effectively on the basis of each of these factors . see `` business reportable segments and other operating segments '' for a discussion of our competitors . non-gaap measures organic revenue growth ( decline ) presented herein is defined as revenue growth ( decline ) excluding the effects of foreign currency fluctuations and acquisitions . we believe this metric is a useful financial measure for investors in evaluating our operating performance for the periods presented , as , when read in conjunction with our revenues , it presents a useful tool to evaluate our ongoing operations and provides investors with a tool they can use to evaluate our management of assets held from period to period . in addition , organic revenue growth ( decline ) is one of the factors we use in internal evaluations of the overall performance of our business . story_separator_special_tag in 2011 of $ 36.5 ) . these increases in sg & a were offset partially by a decrease in sg & a of $ 19.7 associated with a stronger u.s. dollar in 2012 , when compared to 2011. intangible amortization for 2013 , the decrease in intangible amortization , compared to 2012 , was due primarily to certain intangible assets becoming fully amortized during 2012. for 2012 , the increase in intangible amortization , compared to 2011 , was due primarily to incremental amortization of $ 10.0 associated with intangible assets purchased in the clyde union acquisition . impairment of goodwill and other long-term assets during 2013 , we recorded impairment charges of $ 6.7 related to the trademarks of certain businesses within our flow technology reportable segment . during 2012 , we recorded impairment charges of $ 281.4 associated with the goodwill ( $ 270.4 ) and other long-term assets ( $ 11.0 ) of our cooling reporting unit . in addition , we recorded impairment charges of $ 4.5 related to trademarks for two other businesses within our thermal equipment and services reportable segment . during 2011 , we recorded impairment charges of $ 28.3 associated with the goodwill and indefinite-lived intangible assets of our spx heat transfer reporting unit , with $ 20.8 of the charge related to goodwill and $ 7.5 to trademarks . 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 2013 , 2012 and 2011. the components of special charges , net , were as follows : replace_table_token_7_th 25 other income ( expense ) , net other expense , net , for 2013 was composed primarily of foreign currency transaction losses of $ 16.1 and losses on fx forward contracts of $ 0.1 , partially offset by gains on fx embedded derivatives of $ 0.6 and investment-related earnings of $ 4.2. other income , net , for 2012 was composed primarily of a gain of $ 20.5 associated with the deconsolidation of our dry cooling products business in china , investment earnings of $ 9.9 , and gains on fx forward contracts of $ 0.2 , partially offset by foreign currency transaction losses of $ 12.2 and losses on fx embedded derivatives of $ 0.4. other expense , net , for 2011 was composed primarily of charges associated with our fx forward contracts of $ 38.5 and foreign currency transaction losses of $ 4.4 , partially offset by gains on fx embedded derivatives of $ 1.5 and insurance proceeds received of $ 3.2 related to death benefit and property insurance claims . the expense associated with the fx forward contracts included a charge of $ 34.6 related to our hedging a significant portion of the purchase price of the clyde union acquisition . in addition , and as discussed in note 14 to our consolidated financial statements , we maintain insurance for certain risk management matters . during 2011 , we recorded a charge of $ 18.2 to `` other income ( expense ) , net '' associated with amounts that are deemed uncollectible from an insolvent insurer for certain risk management matters . interest expense , net the decrease in interest expense , net , during 2013 , compared to 2012 , was primarily the result of a decrease in the average outstanding borrowings on our revolving credit facilities and trade receivables financing arrangement from $ 162.0 during 2012 to $ 8.8 during 2013. interest expense in 2013 included a charge of $ 1.0 associated with the write-off of deferred financing costs as a result of the amendment of our senior credit facilities . ( see `` md & a liquidity and financial condition '' and note 12 to our consolidated financial statements for further details pertaining to our 2013 debt activity . ) the increase in interest expense , net , during 2012 , compared to 2011 , was primarily the result of interest incurred during 2012 on the $ 800.0 of term loans that were drawn down in december 2011 in order to fund the acquisition of clyde union . in connection with the closing of the sale of our service solutions business in december 2012 , we repaid $ 325.0 of these term loans . interest expense associated with the repaid term loans of approximately $ 8.0 was allocated to discontinued operations during 2012. equity earnings in joint ventures our equity earnings in joint ventures were attributable primarily to our investment in egs , as earnings from this investment totaled $ 41.9 , $ 39.0 and $ 28.7 in 2013 , 2012 and 2011 , respectively . see note 9 to our consolidated financial statements for additional information regarding our investment in egs . income taxes during 2013 , we recorded an income tax provision of $ 54.8 on $ 256.1 of pre-tax income from continuing operations , resulting in an effective tax rate of 21.4 % . the effective tax rate for 2013 was impacted favorably by income tax benefits of ( i ) $ 9.5 associated with net reductions in valuation allowances recorded against certain foreign deferred income tax assets , ( ii ) $ 6.5 recorded in connection with various audit settlements and statute expirations during the period , and ( iii ) $ 4.1 related to the research and experimentation credit generated in 2012. during 2012 , we recorded an income tax benefit of $ 21.3 on a pre-tax loss from continuing operations of $ 197.9 , resulting in an effective tax rate of 10.8 % .
| 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 . unless otherwise indicated , amounts provided in item 7 pertain to continuing operations only ( see note 4 to our consolidated financial statements for information on discontinued operations ) . executive overview at spx , we are committed to innovation , operational excellence , continuous improvement and , above all , executing each day with the highest level of ethics and integrity . our primary goal is to drive increased value for our shareholders , customers and employees . last year , we committed to improving operational performance , returning capital to shareholders and narrowing our strategic focus around our flow end markets . summarized below is the progress we made in each of these areas during 2013. operational improvement during the second half of 2013 , we transitioned to a new operational alignment designed to improve our operating efficiency and enhance our customer focus by more closely aligning our organizational resources with our customers ' needs . the new alignment positions us to better leverage operational excellence , cost reduction initiatives and commercial synergies across our operations , particularly in our flow technology reportable segment . in addition , we also executed a number of restructuring actions aimed at reducing our cost structure and improving our ability to serve our customers . these actions , along with ongoing lean and supply chain initiatives , contributed to improved operating performance at many of our businesses . consolidated profit margins for our operating segments increased 70 basis points to 10.5 % , and we significantly increased operating cash flows from continuing operations in 2013 despite a $ 250.0 discretionary pension contribution .
| 7,246 |
we partner with our clients to meet their business objectives and improve customer retention , increase revenues and reduce costs through an improved customer experience . our solutions leverage industry knowledge , best business practices , skilled agents , proven operational excellence and flexible technology . the startek comprehensive service suite includes customer care , sales support , complex order processing , accounts receivable management , technical and product support and other industry-specific processes . we seek to become a market leader in providing high-value bpo services to our clients . our approach is to develop relationships with our clients that are partnering and collaborative in nature where we are focused , flexible and really listen to their business needs . in addition we need to deliver creative industry-based solutions to meet our clients ' ever changing business needs . the end result is the delivery a quality customer experience to our client 's customers . to become a leader in the market , our strategy is to : · grow our existing client base by deepening and broadening our relationships , · add new clients and continue to diversify our client base by entering new vertical markets · improve the profitability of our business through an increased percentage of revenues from our offshore operation , operational improvements , increased utilization and right-sizing our north american operation , · expand our global delivery platform to meet our client needs , · broaden our service offerings by providing more innovative and technology enabled solutions , · identify prudent acquisitions to expand our business scale and service offerings . during 2010 , we expanded our near-shore and offshore delivery platforms by opening a facility in costa rica during the first quarter of 2010 and our second facility in the philippines during the second quarter of 2010. we believe that diversifying our geographic platform will result in improved margins and position us for future growth . in addition , in 2010 we continued to execute on our site optimization plan whereby we closed two unprofitable canadian facilities and closed four u.s. facilities in order to drive efficiencies and improve margins . some of these closures were in response to lower client demand , which is discussed further within clients of item 1 of this form 10-k. we will continue to evaluate the profitability of our north american locations as leases expire , and we will close sites if necessary . in 2010 , we expanded our sales team , signed five new clients ( many outside our traditional wireless and wireline vertical markets ) and launched a number of new programs with existing clients . we continued to invest in technologies to drive efficiencies in our operation and broaden our service offering . finally , we actively explored business acquisitions that would allow us to accelerate our growth , reduce our client concentration and diversify into new vertical markets . we operate within three business segments : u.s. , canada and offshore . the business segments align with the regions in which our services are rendered . as of december 31 , 2010 , our u.s. segment included the operations of ten facilities in the u.s. ; our canada segment included the operations of three facilities in canada ; and our offshore segment included the operations of two facilities in the philippines and one in costa rica . as of december 31 , 2009 , there were thirteen , five and one facilities in the u.s. , canada and offshore segments , respectively . as of december 31 , 2008 , there were thirteen , six and one facilities in the u.s. , canada and offshore segments , respectively . we use gross profit as our measure of profit and loss for each business segment and do not allocate selling , general and administrative expenses to our business segments . overall economic conditions have impacted the telecommunications industry and our clients . we have continued to notice a downturn in this sector which adversely affected our results in 2010. the growth in wireless subscribers appears to be slowing , and our clients serving traditional wireline , or landline telephone services , are experiencing decreased demand . we observed lower call volumes in our north american facilities in 2010 from our two largest customers compared to 2009 , which adversely affected our results . however , in 2010 , we have seen strong demand for our offshore call center services , primarily in the philippines , which we expect to continue . in response to overall economic conditions and the industry slowdown , we have observed a greater focus on cutting costs by our customers . the cost cutting by our customers impacted us during the second quarter of 2010 when at & t decided to ramp down a majority of its wireline business with us . approximately 260 full-time equivalent agent positions will be eliminated through the 20 first half of 2011 as the business declines . we closed two sites , one in greeley , colorado and one in grand junction , colorado . agents that serviced other customers or lines of business were relocated to our other facilities in greeley and grand junction . we have observed that in order to reduce their costs , customers are concentrated on 1 ) shifting a larger portion of their customer care offshore , 2 ) increasing their use of outsourced providers and 3 ) decreasing the number of agents handling calls . in addition , the telecommunications space continues to shift away from wireline services , to wireless services as many consumers disconnect their home telephone lines in favor of using wireless devices , leading to lower call volumes among wireline clients . these telecommunications industry trends could adversely impact our financial results in 2011 ; however , the shift toward outsourced and offshore providers could positively impact our business because of our increased presence in costa rica and the philippines . story_separator_special_tag million in impairment losses and restructuring charges during the year ended december 31 , 2010. we own our facility in greeley and have committed to a plan to sell the building in this location . therefore , we reclassified these long-lived assets as current assets held for sale on our consolidated balance sheet . · grand junction , colorado : in december 2010 , we ramped down one of our grand junction , colorado locations . the closure was driven by the loss of a majority of our wireline business with at & t , described above . agents in this site that serviced other customers or lines of business were relocated to our other facility in grand junction , colorado . the ramp-down of this site during 2010 resulted in approximately $ 1.8 million less revenue during 2010 compared to 2009 , and decreased gross profit by $ 0.9 million , compared to 2009. we recorded approximately $ 0.7 million in impairment losses and restructuring charges during the year ended december 31 , 2010 . · other : during 2010 , we recorded a reduction of restructuring charges in the condensed consolidated statements of operations of $ 1.8 million to adjust the estimated restructuring liability for our regina , saskatchewan facility , which closed in february 2009 , due to a sublease proposal . we had previously assumed that we would not be able to sublease the facility . we also recorded approximately $ 0.8 million in impairment losses for assets at other locations in which the future cash flows were less than the carrying value of the assets . we may make the decision to close certain of these locations , in which case , we may incur restructuring charges in future periods . other events income tax valuation allowance during 2010 we did not record $ 9.2 million , or $ 0.62 per share , in income tax benefits related to a valuation allowance against u.s. net deferred tax assets . u.s. gaap requires that we assess whether a valuation allowance should be established against our deferred tax assets based on the consideration of all available evidence using a more likely than not standard . in making such judgments , significant weight is given to evidence that can be objectively verified . based on all available evidence , in particular our three-year historical cumulative losses , recent operating losses and a 2010 u.s. pre-tax loss , we recorded a valuation allowance against our net deferred tax asset . the recording of a valuation allowance has no impact on cash and does not preclude us from utilizing the full amount of the deferred tax asset in future profitable periods . subsequent events in february 2011 , we closed our facility in alexandria , louisiana due to lower call volumes from our second largest client . the lease expired in february 2011 . 22 on march 1 , 2011 , we reached an agreement with umb bank to amend our line of credit agreement , whereby , the secured line of credit will be reduced from $ 15 million to $ 10 million . under the agreement , our financial covenant to maintain a minimum tangible net worth will be decreased from at least $ 100 million to at least $ 90 million . in addition , borrowings will bear interest at the thirty day libor index plus 2.50 % and shall never be less than 4.00 % per annum . this is an increase from the previous terms which were that borrowings bore interest , at the option at the time of borrowing , of the thirty , sixty or ninety day libor index , plus 1.75 % and that the interest rate would n't be less than 3.25 % per annum . we expect to finalize this amendment in march 2011 and it will be effective through august 1 , 2011. results of operations years ended december 31 , 2010 and december 31 , 2009 due to the february 2009 , sale of our subsidiary , domain.com , the results of operations related to this line of business have been reported as discontinued operations for all periods presented below . the following table presents selected items from our consolidated statements of operations in thousands of dollars and as a percentage of revenue for the periods indicated : replace_table_token_5_th the following table summarizes our revenues and gross profit for the periods indicated , by reporting segment : replace_table_token_6_th 23 revenue revenue decreased by $ 23.6 million , or 8.2 % , from $ 289.0 million in 2009 to $ 265.4 million in 2010. the decrease was driven by the u.s. and canadian segments . revenue in the u.s. segment decreased by 16.5 % , or $ 33.1 million , due in part to three site closures during the year . our closures in the first quarter 2010 in laramie , wyoming and victoria , texas resulted in a decline in revenue of $ 12.2 million . in addition , we ramped down two sites in 2010 due to the loss of certain wireline business with our largest client . the ramp-down of these programs resulted in $ 5.4 million less revenue in these sites during 2010 , compared to 2009. we also announced in the fourth quarter that we may close our alexandria , louisiana facility in february 2011 due to lower call volumes from our second largest client , the resulting ramp-down of this site resulted in $ 2.1 million less revenue in 2010 , compared to 2009. the remaining decrease of $ 13.4 million was driven by lower call volumes from our two largest wireless clients and wireline clients . revenue from canada decreased by $ 12.3 million , or 16.1 % .
| variability of operating results our business has been seasonal only to the extent that our clients ' marketing programs and product launches are geared toward the winter holiday buying season . we have experienced and expect to continue to experience some quarterly variations in revenue and operating results due to a variety of factors , many of which are outside our control , including : ( i ) timing and amount of costs incurred to expand capacity in order to provide for volume growth from existing and future clients ; ( ii ) changes in the volume of services provided to principal clients ; ( iii ) expiration or termination of client projects or contracts ; ( iv ) timing of existing and future client product launches or service offerings ; ( v ) seasonal nature of certain clients ' businesses ; and ( vi ) variability in demand for our services by our clients depending on demand for their products or services and or depending on our performance . critical accounting policies and estimates our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements , which have been prepared in accordance with u.s. generally accepted accounting principles . the preparation of our financial statements requires us to make estimates that affect the reported amounts of assets , liabilities , revenues and expenses , and related disclosures of contingent assets and liabilities . we base our accounting estimates on historical experience and other factors that we believe to be reasonable under the circumstances . however , actual results may vary from these estimates due to 31 factors beyond our control or due to changes in these assumptions or conditions . we have discussed the development and selection of critical accounting policies and estimates with our audit committee . the following is a summary of our critical accounting policies and estimates we make in preparing our consolidated financial statements .
| 7,247 |
we did not have any interest and penalties associated with tax positions for the years ended december 31 , 2017 and 2016 and did not have any significant unrecognized uncertain tax positions as of december 31 , 2017 and 2016. the entities within our company file separate tax returns in the respective tax jurisdictions in which they operate . i ) . a. on december 22 , 2017 , the u.s. enacted the tax cuts and jobs act ( “ tcja ” or the “ act ” ) ( which is commonly referred to as “ u.s . tax reform ” ) . the act significantly changes u.s. corporate income tax laws including but not limited to reducing the u.s. corporate income tax rate from 35 % to 21 % beginning in 2018 and imposing a one-time mandatory tax on previously deferred foreign earnings . i ) . b. we were incorporated in the state of nevada . under the current laws of nevada , we are not subject to state corporate income tax . we became a holding company and do not conduct any substantial operations of our own after the share exchange . no provision for federal corporate income tax has been made in our financial statements as no assessable profits for the year ended december 31 , 2017 , or any prior periods . before enactment of the act , we did not provide for u.s. taxes or foreign withholding taxes on undistributed earnings from non-u.s. subsidiaries and vies because such earnings are intended to be reinvested indefinitely . if undistributed earnings were distributed , foreign tax credits could become available under current law to reduce the resulting u.s. income tax liability . please see additional discussion regarding the assessment of the income tax effect of the act in item i ) . d. below . i ) . c. on december 22 , 2017 , the securities and exchange commission staff issued staff accounting bulletin no . 118 ( “ sab 118 ” ) , which provides guidance on accounting for the tax effects of the act . sab 118 provides a measurement period that should not extend beyond one year from the act enactment date for companies to complete the accounting under asc 740 , income taxes . in accordance with sab 118 , a company must reflect the income tax effects of those aspects of the act for which the accounting under asc 740 is complete . to the extent that a company 's accounting for certain income tax effects of the act is incomplete but it is able to determine a reasonable estimate , it must record a provisional estimate in the financial statements . i ) . d. as of december 31 , 2017 , we have conducted a preliminary assessment of our income tax effects of the act , based on which , we concluded that no incremental income tax expense of the one-time mandatory tax on our previously deferred foreign earnings would be charged for the year ended december 31 , 2017 , as we had sufficient u.s. net operating losses carryforwards and foreign tax credits available to offset the resulting incremental taxable income related to the deferred foreign earnings . based upon the preliminary assessment of its one-time transition income tax effects of the act and other information currently available , we remeasured our u.s. deferred tax assets accordingly . however , we did not have sufficient information currently to perform a comprehensive analysis on the historical operating results of each of our prc subsidiaries to complete our assessment of the u.s. deferred tax assets that would have been utilized and or are expected to be utilizable under the act . in summary , we have not completed our accounting for the tax effects of enactment of the act and is still analyzing certain aspects of the act and is refining its calculations , which could potentially affect the measurement of the balances or potentially give rise to new deferred tax amounts . the estimates may be impacted by the need for further analysis and future clarification and guidance regarding available tax accounting methods and elections , earnings and profits computations , and state tax conformity to federal tax changes . in addition , further regulatory guidance related to the act is expected to be issued in 2018 which may result in changes to our estimates . additional analysis of the law and the impact to us will be performed and any impact will be finalized no later than the fourth quarter of 2018. ii ) . china net bvi was incorporated in the british virgin islands ( “ bvi ” ) . under the current laws of the bvi , we are not subject to tax on income or capital gains . additionally , upon payments of dividends by china net bvi to us , no bvi withholding tax will be imposed . iii ) . china net hk was incorporated in hong kong and does not conduct any substantial operations of its own . no provision for hong kong profits tax have been made in our financial statements as no assessable profits for the year ended december 31 , 2017 , or any prior periods . additionally , upon payments of dividends by china net hk to its sole shareholder , china net bvi , no hong kong withholding tax will be imposed . 43 iv ) . our prc operating subsidiaries and vies , being incorporated in the prc , are governed by the income tax law of the prc and are subject to prc enterprise income tax ( “ eit ” ) . story_separator_special_tag the eit rate of prc is 25 % , which applies to both domestic and foreign invested enterprises . · in november 2015 , business opportunity online was re-approved by the related prc governmental authorities as a high and new technology enterprise , which enabled the entity , as approved by the local tax authorities of beijing , the prc , to continue enjoying the preferential income tax rate of 15 % until november 2018. therefore , for the years ended december 31 , 2017 and 2016 , the applicable income tax rate of business opportunity online was 15 % . · the applicable income tax rate for the rest of our prc operating entities was 25 % for the years ended december 31 , 2017 and 2016 . · the current eit law also imposed a 10 % withholding income tax for dividends distributed by a foreign invested enterprise to its immediate holding company outside china . a lower withholding tax rate will be applied if there is a tax treaty arrangement between mainland china and the jurisdiction of the foreign holding company . holding companies in hong kong , for example , will be subject to a 5 % withholding tax rate . for the years ended december 31 , 2017 and 2016 , the preferential income tax treatment enjoyed by the company 's prc vie , business opportunity online was based on the current applicable laws and regulations of the prc and approved by the related government regulatory authorities and local tax authorities where business opportunity online operates in . the preferential income tax treatment is subject to change in accordance with the prc government economic development policies and regulations . the preferential income tax treatment is primarily determined by the regulation and policies of the prc government in the context of the overall economic policy and strategy . as a result , the uncertainty of the preferential income tax treatment is subject to , but not limited to , the prc government policy on supporting any specific industry 's development under the outlook and strategy of overall macroeconomic development . 2. turnover taxes and the relevant surcharges service revenues provided by our prc operating subsidiaries and vies were subject to value added tax ( “ vat ” ) . vat rate for provision of modern services ( other than lease of corporeal movables ) is 6 % and for small scale taxpayer , 3 % . therefore , for the years ended december 31 , 2017 and 2016 , our service revenues are subject to vat at a rate of 6 % , after deducting the vat paid for the services purchased from suppliers , or at a rate of 3 % without any deduction of vat paid for the services purchased from suppliers . the surcharges of the vat is 12 % -14 % of the vat , depending on which tax jurisdiction our prc operating subsidiaries and vie operate in . recent accounting standards in may 2014 , the financial accounting standard board ( “ fasb ” ) issued accounting standards update ( “ asu ” ) no . 2014-09 , “ revenue from contracts with customers ( topic 606 ) ” ( as further amended or clarified by other related asus issued subsequently in 2015 , 2016 and 2017 ) . asu no . 2014-09 clarifies the principles for recognizing revenue and develops a common revenue standard for u.s. gaap and ifrs . simultaneously , this asu supersedes the revenue recognition requirements in asc topic 605-revenue recognition and most industry-specific guidance throughout the industry topics of the codification . the core principle of this asu requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services . to achieve that core principle , an entity should apply the five steps : ( 1 ) identify the contract ( s ) with a customer ; ( 2 ) identify the performance obligations in the contract ; ( 3 ) determine the transaction price ; ( 4 ) allocate the transaction price to the performance obligations in the contract ; ( 5 ) recognize revenue when ( or as ) the entity satisfies a performance obligation . for public business entities , certain not-for-profit entities , and certain employee benefit plans , the amendments in asu no . 2014-09 and the amendments in other related asus that affected the guidance in asu 2014-09 should be applied to annual reporting periods beginning after december 15 , 2017 , including interim reporting periods within that reporting period . earlier application is permitted only as of annual reporting periods beginning after december 15 , 2016 , including interim reporting periods within that reporting period . we have adopted this standard on january 1 , 2018 using the modified retrospective approach , in which case the cumulative effect of applying the standard , if any , would be recognized at the date of initial application . we also estimate there will not be a material impact to the beginning balance of our retained earnings . 44 in february 2016 , the fasb issued asu no . 2016-02 , “ leases ( topic 842 ) ” . the amendments in this asu requires that a lessee recognize the assets and liabilities that arise from operating leases . a lessee should recognize in the statement of financial position a liability to make lease payments ( the lease liability ) and a right-of-use asset representing its right to use the underlying asset for the lease term . for leases with a term of 12 months or less , a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities . in transition , lessees and lessors are required to recognize and measure
| overview our company was incorporated in the state of texas in april 2006 and re-domiciled to become a nevada corporation in october 2006. from the date of our company 's incorporation until june 26 , 2009 , when our company consummated the share exchange ( as defined below ) , our company 's activities were primarily concentrated in web server access and company branding in hosting web based e-games . on june 26 , 2009 , our company entered into a share exchange agreement ( the “ exchange agreement ” ) , with ( i ) china net online media group limited , a company organized under the laws of british virgin islands ( “ china net bvi ” ) , ( ii ) china net bvi 's shareholders , who together owned shares constituting 100 % of the issued and outstanding ordinary shares of china net bvi ( the “ china net bvi shares ” ) and ( iii ) g. edward hancock , our principal stockholder at such time . pursuant to the terms of the exchange agreement , the china net bvi shareholders transferred to us all of the china net bvi shares in exchange for the issuance of 13,790,800 shares ( the “ exchange shares ” ) in the aggregate of our common stock ( the “ share exchange ” ) . as a result of the share exchange , china net bvi became our wholly owned subsidiary and we are now a holding company which , through certain contractual arrangements with operating companies in the people 's republic of china ( the “ prc ” ) , is engaged in providing advertising , precision marketing , online to offline ( o2o ) sales channel expansion and the related data services to smes and entrepreneurial management and networking services for entrepreneurs in china .
| 7,248 |
amounts received in excess of the cost of the building are allocated to the cost of equipment and , only after the grants are released from escrow , recognized as a reduction of depreciation expense story_separator_special_tag this discussion should be read in conjunction with the accompanying consolidated financial statements and the notes thereto that appear elsewhere in this annual report on form 10-k. the following discussion and analysis compares the year ended december 31 , 2013 ( 2013 ) to the year ended december 31 , 2012 ( 2012 ) , and 2012 to the year ended december 31 , 2011 ( 2011 ) . the following discussion and analysis and other sections of this document contain forward-looking statements that involve risks and uncertainties . words such as may , expects , projects , anticipates , intends , plans , believes , seeks , estimates , variations of such words , and similar expressions are intended to identify such forward-looking statements . similarly , statements that describe our future plans , objectives , or goals also are forward-looking statements . future events and actual results could differ materially from the results reflected in these forward-looking statements , as a result of certain of the factors set forth below and elsewhere in this analysis and in this annual report on form 10-k for the year ended december 31 , 2013 in item 1.a. , risk factors. executive summary we provide comprehensive customer contact management solutions and services to a wide range of clients including fortune 1000 companies , medium-sized businesses and public institutions around the world , primarily in the communications , financial services , technology/consumer , transportation and leisure and healthcare industries . we serve our clients through two geographic operating regions : the americas ( united states , canada , latin america , australia and the asia pacific rim ) and emea ( europe , the middle east and africa ) . our americas and emea groups primarily provide customer contact management services ( with an emphasis on inbound technical support and customer service ) , which include customer assistance , healthcare and roadside assistance , technical support and product sales to our clients ' customers . these services , which represented 98.2 % of consolidated revenues in 2013 , are delivered through multiple communication channels encompassing phone , e-mail , social media , text messaging and chat . we also provide various enterprise support services in the united states ( u.s. ) that include services for our clients ' internal support operations , from technical staffing services to outsourced corporate help desk services . in europe , we also provide fulfillment services including multilingual sales order processing via the internet and phone , payment processing , inventory control , product delivery , and product returns handling . our complete service offering helps our clients acquire , retain and increase the lifetime value of their customer relationships . we have developed an extensive global reach with customer contact management centers throughout the united states , canada , europe , latin america , australia , the asia pacific rim and africa . revenues from these services is recognized as the services are performed , which is based on either a per minute , per hour , per call , per transaction or per time and material basis , under a fully executed contractual agreement , and we record reductions to revenues for contractual penalties and holdbacks for a failure to meet specified minimum service levels and other performance based contingencies . revenue recognition is limited to the amount that is not contingent upon delivery of any future product or service or meeting other specified performance conditions . product sales , accounted for within our fulfillment services , are recognized upon shipment to the customer and satisfaction of all obligations . direct salaries and related costs include direct personnel compensation , severance , statutory and other benefits associated with such personnel and other direct costs associated with providing services to customers . general and administrative costs include administrative , sales and marketing , occupancy and other costs . depreciation , net represents depreciation on property and equipment , net of the amortization of deferred property grants . amortization of intangibles represents amortization of finite-lived intangible assets . the net gain ( loss ) on disposal of property and equipment represents the difference between the amount of proceeds received , if any , and the carrying value of the asset . the impairment of long-lived assets represents the amount by which the carrying value of the asset exceeds the estimated fair value . 25 interest income primarily relates to interest earned on cash and cash equivalents . interest ( expense ) includes interest on outstanding borrowings and commitment fees charged on the unused portion of our revolving credit facility , as more fully described in this item 7 , under liquidity and capital resources. other ( expense ) includes gains and losses on foreign currency derivative instruments not designated as hedges , foreign currency transaction gains and losses , gains and losses on the liquidation of foreign subsidiaries and other miscellaneous income ( expense ) . our effective tax rate for the periods presented includes the effects of state income taxes , net of federal tax benefit , tax holidays , valuation allowance changes , foreign rate differentials , foreign withholding and other taxes , and permanent differences . acquisition of alpine access , inc. on august 20 , 2012 , we completed the acquisition of alpine access , inc. ( alpine ) , a delaware corporation and an industry leader in the at-home agent space recruiting , training , managing and delivering award-winning customer contact management services through a secured and proprietary virtual call center environment with its operations located in the united states and canada . story_separator_special_tag 28 the increase in americas ' direct salaries and related costs , as a percentage of revenues , was primarily attributable to higher compensation costs of 1.9 % driven by the ramp up for new and existing client programs principally in the communications vertical , partially offset by lower demand within the financial services and healthcare verticals without a commensurate reduction in labor costs , higher auto tow claim costs of 0.1 % due to an increase in the average length of tows without a commensurate increase in fees at our canadian roadside assistance operations and higher other costs of 0.2 % . the increase in emea 's direct salaries and related costs , as a percentage of revenues , was primarily attributable to higher compensation costs of 4.4 % driven by the ramp up for new and existing client programs principally in the communications vertical , partially offset by lower fulfillment materials costs of 0.7 % , lower billable supply costs of 0.5 % , lower severance-related costs of 0.4 % due to the closure of certain sites in connection with the fourth quarter 2011 exit plan , lower recruiting costs of 0.2 % , lower communications costs of 0.2 % , lower travel costs of 0.2 % and lower other costs of 0.1 % . general and administrative replace_table_token_11_th the increase of $ 7.1 million in general and administrative expenses included a positive foreign currency impact of $ 1.5 million in the americas and a negative foreign currency impact of $ 0.8 million in emea . the decrease in americas ' general and administrative expenses , as a percentage of revenues , was primarily attributable to lower compensation costs of 0.6 % , lower facility-related costs of 0.4 % due to rationalization of facilities , lower equipment and maintenance costs of 0.2 % and lower other costs of 0.1 % . the decrease in emea 's general and administrative expenses , as a percentage of revenues , was primarily attributable to lower compensation costs of 0.9 % , lower facility-related costs of 0.3 % , lower communications costs of 0.3 % , lower severance-related costs of 0.2 % principally all due to the closure of certain sites in connection with the fourth quarter 2011 exit plan and lower other costs of 0.2 % . the decrease of $ 4.8 million in corporate 's general and administrative expenses was primarily attributable to lower merger and integration costs of $ 3.5 million , lower consulting costs of $ 1.7 million , lower legal and professional fees of $ 1.0 million , lower travel costs of $ 0.3 million , lower equipment and maintenance costs of $ 0.3 million , lower communications costs of $ 0.2 million , lower training costs of $ 0.2 million and lower other costs of $ 0.3 million , partially offset by higher compensation costs of $ 2.1 million and higher facility-related costs of $ 0.6 million . depreciation and amortization replace_table_token_12_th 29 the increase in depreciation was primarily due to capital expenditures for new seat additions , maintenance and systems infrastructure . the increase in amortization was primarily due to the august 2012 alpine acquisition . net ( gain ) loss on disposal of property and equipment and impairment of long-lived assets replace_table_token_13_th see note 5 , fair value , of the notes to consolidated financial statements for further information regarding the impairment of long-lived assets . other income ( expense ) replace_table_token_14_th the decrease in interest income reflects lower average invested balances of interest bearing investments in cash and cash equivalents in 2013 compared to 2012. the increase in interest ( expense ) reflects higher average outstanding borrowings primarily related to the august 2012 alpine acquisition . other ( expense ) excludes the cumulative translation effects and unrealized gains ( losses ) on financial derivatives that are included in accumulated other comprehensive income in shareholders ' equity in the accompanying consolidated balance sheets . income taxes replace_table_token_15_th the increase in the effective tax rate in 2013 compared to 2012 is primarily due to withholding taxes on offshore cash movements , u.s. taxation of offshore gains on derivatives and foreign exchange , tax benefits recognized in 2012 as a result of the alpine acquisition and the fluctuations in earnings among the various jurisdictions in which we operate . 30 in 2013 , we executed offshore cash movements to take advantage of the american taxpayer relief act of 2012 ( the act ) enacted on january 2 , 2013 , with retroactive application to january 1 , 2012. this act , which extended the tax provisions of the internal revenue code section 954 ( c ) ( 6 ) through the end of 2013 , permits continued tax deferral on such movements that would otherwise be taxable immediately in the u.s. while these cash movements are not taxable in the u.s. , related foreign withholding taxes of $ 3.5 million were included in the provision for income taxes in the accompanying consolidated statement of operations for the year ended december 31 , 2013. prior to the passage of the tax relief , unemployment insurance reauthorization and job creation act of 2010 , we determined that we intended to distribute all of the current year and future years ' earnings of a non-u.s. subsidiary to its foreign parent . withholding taxes of $ 0.6 million and $ 0.8 million related to this distribution are included in the provision for income taxes in the accompanying consolidated statements of operations for the years ended december 31 , 2013 and 2012 , respectively . gain ( loss ) from discontinued operations replace_table_token_16_th in 2012 , ( loss ) from discontinued operations and the ( loss ) on sale of discontinued operations related to the sale of our operations in spain in march 2012. there was no tax impact on either the ( loss ) from discontinued operations or the ( loss ) on sale of discontinued operations .
| quarterly results the following information presents our unaudited quarterly operating results from continuing operations for 2013 and 2012. during 2012 , we sold our operations in spain . accordingly , we have reclassified the selected financial data for all periods presented to reflect these results as discontinued operations in accordance with accounting standards codification 205-20 discontinued operations . the data has been prepared on a basis consistent with the accompanying consolidated financial statements included elsewhere in this annual report on form 10-k , and includes all adjustments , consisting of normal recurring accruals , that we consider necessary for a fair presentation thereof . replace_table_token_25_th ( 1 ) each of the quarters for 2013 and the quarters ended december 31 , 2012 and september 30 , 2012 include the results of alpine , as a result of the acquisition completed on august 20 , 2012 . ( 2 ) the quarter ended march 31 , 2012 includes $ 0.7 million related to the fourth quarter 2011 exit plan . ( 3 ) the quarter ended june 30 , 2013 includes $ 0.5 million , respectively , in alpine acquisition-related costs . ( 4 ) the quarters ended december 31 , 2013 and september 30 , 2013 include $ 0.3 million and $ ( 0.1 ) million , respectively , related to the exit plans . the quarters ended december 31 , 2012 , september 30 , 2012 , june 30 , 2012 and march 31 , 2012 include $ ( 0.4 ) million , $ 0.6 million , $ 0.7 million and $ 0.3 million , respectively , related to the exit plans . see note 4 , costs associated with exit or disposal activities , for further information .
| 7,249 |
our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors , including those discussed under “ risk factors ” and elsewhere herein . see “ special note regarding forward-looking statements. ” overview truecar is a leading automotive digital marketplace that enables car buyers to connect to our network of over 16,500 certified dealers . we are building the industry 's most personalized and efficient car buying experience as we seek to bring more of the purchasing process online . we have established a diverse software ecosystem on a common technology infrastructure , powered by proprietary data and analytics . our company-branded platform is available on our truecar website and mobile applications . in addition , we customize and operate our platform on a co-branded basis for our many affinity group marketing partners , including financial institutions like usaa and american express ; membership-based organizations like consumer reports , aarp , sam 's club , and aaa ; and employee buying programs for large enterprises such as ibm and walmart . we enable users to obtain market-based pricing data on new and used cars , and to connect with our network of truecar certified dealers . we also allow automobile manufacturers , known in the industry as oems , to connect with truecar users during the purchase process and efficiently deliver targeted incentives to consumers . we benefit consumers by providing information related to what others have paid for a make , model and trim of car in their area and price offers on actual vehicle inventory , which we refer to as vin-based offers , from our network of truecar certified dealers . vin-based offers provide consumers with price offers for specific vehicles from specific dealers . we benefit our network of truecar certified dealers by enabling them to attract these informed , in-market consumers in a cost-effective , accountable manner , which we believe helps them to sell more cars profitably . we benefit oems by allowing them to more effectively target their incentive spending at deep-in-market consumers during their purchase process . our network of over 16,500 truecar certified dealers consists primarily of new car franchises , representing all major makes of cars , as well as independent dealers selling used vehicles . truecar certified dealers operate in all 50 states and the district of columbia . our subsidiary , alg , provides forecasts and consulting services regarding determination of the residual value of an automobile at given future points in time . these residual values are used to underwrite automotive loans and leases to determine payments by consumers . in addition , financial institutions use this information to measure exposure and risk across loan , lease , and fleet portfolios . further , our subsidiary , tcds , provides our truecar trade product , which gives consumers information on the value of their trade-in vehicles and enables them to obtain a guaranteed trade-in price before setting foot in the dealership . this valuation is , in turn , backed by a third-party guarantee to dealers that the vehicles will be repurchased at the indicated price if the dealer does not want to keep them . additionally , in december 2018 , we acquired dealerscience , which , through tcds , provides dealers with advanced digital retailing software tools that allow them to calculate accurate monthly payments , expedite vehicle desking , which is the process of presenting and agreeing upon financial terms and financing options , and streamline the consumer 's experience from shopping to showroom . during the year ended december 31 , 2019 , we generated revenues of $ 353.9 million and recorded a net loss of $ 54.9 million . 51 key metrics we regularly review a number of key metrics to evaluate our business , measure our performance , identify trends affecting our business , formulate financial projections and make operating and strategic decisions . replace_table_token_6_th ( 1 ) we issued full credits of the amount originally invoiced with respect to 21,201 , 23,885 , and 21,835 units during the years ended december 31 , 2019 , 2018 , and 2017 , respectively . as discussed in the description of the units metric below , we have not adjusted the number of units downward to reflect these credited units . average monthly unique visitors we define a monthly unique visitor as an individual who has visited our website , our landing page on our affinity group marketing partner sites , or our mobile applications within a calendar month . we identify unique visitors through cookies for browser-based visits on either a desktop computer or mobile device and through device ids for mobile application visits . in addition , if a truecar.com user logs in , we supplement their identification with their log-in credentials to attempt to avoid double counting on truecar.com across devices , browsers and mobile applications . if an individual accesses our service using different devices or different browsers on the same device within a given month , the first access through each such device or browser is counted as a separate monthly unique visitor , except where adjusted based upon truecar.com log-in information . we calculate average monthly unique visitors as the sum of the monthly unique visitors in a given period , divided by the number of months in that period . we view our average monthly unique visitors as a key indicator of the growth in our business and audience reach , the strength of our brand , and the visibility of car-buying services to the member base of our affinity group marketing partners . 52 the number of average monthly unique visitors decreased 1.1 % to approximately 7.4 million for the year ended december 31 , 2019 from approximately 7.5 million for the year ended december 31 , 2018 . story_separator_special_tag our chief operating decision maker regularly reviews revenue for each of our dealer , oem incentives and forecasts , consulting and other offerings in order to gain more depth and understanding of the factors driving our business . components of operating results revenues our revenues are comprised of dealer revenue , oem incentives revenue , and forecasts , consulting and other revenue . we recognize transaction revenue for certain of our auto buying program and oem incentives arrangements at the time introductions and incentives are delivered based upon expected subsequent vehicle sales between the auto buying program user and the dealer . dealer . dealer revenue is comprised of auto buying program revenue as well as revenue from truecar trade and dealerscience . auto buying program revenue consists of fees paid by dealers participating in our network of truecar certified dealers . dealers pay us these fees either on a per-vehicle basis for sales to our users or in the form of a subscription arrangement . subscription arrangements fall into several types : flat-rate subscriptions , subscriptions subject to downward adjustment based on a minimum number of vehicle sales , which we refer to as guaranteed-sales subscriptions , and subscriptions based on introduction volume , including those subject to downward adjustment based on a minimum number of introductions , which we refer to as guaranteed-introductions subscriptions . under flat-rate subscription arrangements , fees are charged at a monthly flat rate regardless of the number of introductions made to users of our platform by the dealer . under guaranteed-sales subscription arrangements , fees are charged based on the number of guaranteed sales multiplied by a fixed amount per vehicle . to the extent that the actual number of vehicles sold by the dealers to users of our platform is less than the number of guaranteed sales , we provide a credit to the dealer . if the actual number of vehicles sold exceeds the number of guaranteed sales , we are not entitled to any additional fees . as of january 1 , 2019 , we no longer offer guaranteed sales subscription arrangements in california , and we transferred all california dealers from this billing method to flat-rate subscription arrangements before that date . certain of our subscription arrangements are charged based on volume of introductions provided while other introduction-based subscription arrangements operate under a guaranteed-introductions model . under guaranteed-introductions subscription arrangements , fees are charged based on a periodically-updated formula that considers , among other things , the introductions anticipated to be provided to the dealer . to the extent that the number of actual introductions is less than the number of guaranteed introductions , we provide a credit to the dealer . if the actual number of introductions provided exceeds the number guaranteed , we are not entitled to any additional fees . for guaranteed-sales and guaranteed-introductions subscription arrangements , fees are charged based on the lesser of ( i ) the actual number of sales generated or introductions delivered through our platform during the subscription period multiplied by the contracted price per sale/introduction or ( ii ) the guaranteed number of sales or introductions multiplied by the contracted price per sale/introduction . truecar trade revenue consists of dealers who pay monthly subscription fees that vary depending on the level of trade service selected . depending on their subscription terms , some dealers pay additional transaction fees for each vehicle purchased from a consumer that was introduced via truecar trade . dealerscience revenue consists of monthly subscription fees paid by dealers for access to the dealerscience products and services . dealerscience provides dealers with advanced digital retailing software tools that allow them to calculate accurate monthly 54 payments , expedite vehicle desking , which is the process of presenting and agreeing upon financial terms and financing options , and streamline the consumers ' experience from shopping to showroom . oem incentives . oem incentives revenue consists of fees paid by automobile manufacturers , or oems , to promote the sale of their vehicles through the offering of additional consumer incentives to members of our affinity group marketing partners . these oems pay us a subscription or per-vehicle fee for promotion of the incentive . forecasts , consulting and other revenue . we derive this type of revenue primarily from the provision of forecasts and consulting services to the automotive and financial services industries through our alg subsidiary . the forecasts and consulting services that alg provides typically relate to the determination of the residual value of an automobile at given future points in time . these residual values are used to underwrite automotive loans and leases to determine payments by consumers . in addition , financial institutions use this information to measure exposure and risk across loan , lease and fleet portfolios . our customers generally pay us for these services as information is delivered to them . for a description of our revenue accounting policies , see “ critical accounting policies and estimates ” below . costs and operating expenses cost of revenue ( exclusive of depreciation and amortization ) . cost of revenue includes expenses related to the fulfillment of our services , consisting primarily of data costs and licensing fees paid to third-party service providers and expenses related to operating our website and mobile applications , including data center costs ; hosting fees ; data processing costs required to deliver introductions to our network of truecar certified dealers ; employee costs related to certain dealer operations and sales matching ; employee and consulting costs related to delivering data and consulting services to our customers ; and facilities costs . cost of revenue excludes depreciation and amortization of software costs and other hosting and data infrastructure equipment used to operate our platforms , which are included in the depreciation and amortization line item on our statements of comprehensive loss . sales and marketing .
| results of operations the following table sets forth our selected consolidated statements of operations data for each of the periods indicated . replace_table_token_7_th 56 the following table sets forth our selected consolidated statements of operations data as a percentage of revenues for each of the periods indicated . replace_table_token_8_th * less than 0.5 % of revenues comparison of years ended december 31 , 2019 , 2018 and 2017 revenues replace_table_token_9_th year ended december 31 , 2019 compared to year ended december 31 , 2018 . the increase in our revenues of $ 0.3 million , or 0.1 % , for 2019 as compared to 2018 primarily reflected the increase in our dealer revenue and forecast , consulting and other revenue . dealer revenue , oem incentives revenue , and forecasts , consulting and other revenue comprised 89.9 % , 4.7 % , and 5.5 % , respectively , of revenues for 2019 as compared to 86.1 % , 8.5 % , and 5.4 % , respectively , of revenues for 2018 . the increase of $ 13.4 million in dealer revenue for the year ended december 31 , 2019 reflected a 0.6 % increase in monetization , along with increases within newer revenue streams of $ 9.2 million primarily due to our trade and dealerscience products as well as an increase of $ 4.2 million due to growth in used car sales in 2019 . the decrease of $ 13.4 million in oem incentive revenue was primarily due to the lack of recurring revenue from a large oem client and softness in our existing clients in 2019 . forecasts , consulting and other revenue for 2019 remained materially consistent as compared to 2018 . year ended december 31 , 2018 compared to year ended december 31 , 2017 . the increase in our revenues of $ 30.4 million , or 9.4 % , for 2018 as compared to 2017 primarily reflected the increase in our dealer revenue and oem incentives revenue .
| 7,250 |
2019 transactions : during the year ended december 31 , 2019 , the company issued shares of common stock as follows : · 245,800 shares of common stock were issued related to the exercise of vested stock options and received cash proceeds totaling $ 430,919 . · 1,891,147 shares of common stock were issued for vested stock awards to employees . f- 15 stock options a summary of stock options activity for the years ended december 31 , 2020 and 2019 is presented as follows : replace_table_token_14_th a summary of unvested options activity for the years ended december 31 , 2020 and 2019 was as follows story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this form 10-k. this discussion contains forward-looking statements that involve risks and uncertainties . our actual results could differ materially from those discussed below . factors that could cause or contribute to such differences include , but are not limited to , those identified below and those discussed in “ risk factors ” included elsewhere in this form 10-k. 21 disclosure regarding forward looking statements this annual report on form 10-k includes 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 ( “ forward looking statements ” ) . all statements other than statements of historical fact included in this report are forward looking statements . in the normal course of our business , we , in an effort to help keep our shareholders and the public informed about our operations , may from time-to-time issue certain statements , either in writing or orally , that contains or may contain forward-looking statements . although we believe that the expectations reflected in such forward looking statements are reasonable , we can give no assurance that such expectations will prove to have been correct . generally , these statements relate to business plans or strategies , projected or anticipated benefits or other consequences of such plans or strategies , past and possible future , of acquisitions and projected or anticipated benefits from acquisitions made by or to be made by us , or projections involving anticipated revenues , earnings , levels of capital expenditures or other aspects of operating results . all phases of our operations are subject to a number of uncertainties , risks and other influences , many of which are outside of our control and any one of which , or a combination of which , could materially affect the results of our proposed operations and whether forward looking statements made by us ultimately prove to be accurate . such important factors ( “ important factors ” ) and other factors could cause actual results to differ materially from our expectations are disclosed in this report , including those factors discussed in “ item 1a . risk factors. ” all prior and subsequent written and oral forward looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the important factors described below that could cause actual results to differ materially from our expectations as set forth in any forward looking statement made by or on behalf of us . overview paysign , inc. is a vertically integrated provider of prepaid card products and processing services for corporate , consumer and government applications . our payment solutions are utilized by our corporate customers as a means to increase customer loyalty , increase patient adherence rates , reduce administration costs , and streamline operations . public sector organizations can utilize our payment solutions to disburse public benefits or for internal payments . we market our prepaid card solutions under our paysign brand . as we are a payment processor and prepaid card program manager , we derive our revenue from all stages of the prepaid card lifecycle . we provide a card processing platform consisting of proprietary systems and software applications based on the unique needs of our clients . we have extended our processing business capabilities through our proprietary paysign platform . through the paysign platform , we provide a variety of services including transaction processing , cardholder enrollment , value loading , cardholder account management , reporting , and customer service . the paysign platform was built on modern cross-platform architecture and designed to be highly flexible , scalable and customizable . the platform has allowed the company to significantly expand its operational capabilities by facilitating our entry into new markets within the payments space through its flexibility and ease of customization . the paysign platform delivers cost benefits and revenue building opportunities to our partners . we have developed prepaid card programs for corporate incentive and rewards including , but not limited to , consumer rebates and rewards , donor compensation , clinical trials , healthcare reimbursement payments and pharmaceutical payment assistance . we have expanded our product offerings to include additional corporate incentive products and demand deposit accounts accessible with a debit card . in the future , we expect to further expand our product offerings into other prepaid card offerings such as payroll cards , travel cards , and expense reimbursement cards . our cards are sponsored by our issuing bank partners . our revenues include fees generated from cardholder fees , interchange , card program management fees , and settlement income . revenue from cardholder fees , interchange and card program management fees is recorded when the performance obligation is fulfilled . settlement income is recorded at the expiration of the card program . we have two categories for our prepaid cards : ( 1 ) corporate and consumer reloadable , and ( 2 ) non-reloadable cards . reloadable cards : these types of cards are generally classified as payroll or considered general purpose reloadable ( “ gpr ” ) cards . story_separator_special_tag the decline in conversion rates was primarily attributable to a change in accounting estimate for pharma settlement income . management also reviews key performance indicators , such as revenues , gross profits , operational expenses as a percent of revenues , and cardholder participation . in addition , we consider certain non-gaap ( or `` adjusted '' ) measures to be useful to management and investors evaluating our operating performance for the periods presented , and provide a tool for evaluating our ongoing operations , liquidity , and management of assets . this information can assist investors in assessing our financial performance and measures our ability to generate capital for deployment and investment in new card programs . these adjusted metrics are consistent with how management views our business and are used to make financial , operating and planning decisions . these metrics , however , are not measures of financial performance under gaap and should not be considered a substitute for revenues , operating income , net income ( loss ) , earnings ( loss ) per share ( basic and diluted ) or net cash from operating activities as determined in accordance with gaap . we consider the following non-gaap measures , which may not be comparable to similarly titled measures reported by other companies , to be key performance indicators : “ ebitda ” is defined as earnings before interest , income taxes , depreciation and amortization expense and `` adjusted ebitda '' reflects the adjustment to ebitda to exclude stock-based compensation expense , impairment of intangible asset and loss on abandonment of assets . a reconciliation of net income ( loss ) attributable to paysign inc. to adjusted ebitda is provided in the table below . replace_table_token_2_th liquidity and capital resources the following table sets forth the major sources and uses of cash for our last two fiscal years ended december 31 , 2020 and 2019 : replace_table_token_3_th 26 comparison of fiscal 2020 and 2019 in fiscal 2020 and 2019 , we financed our operations through internally generated funds . operating activities provided $ 13,775,819 of cash in 2020 , a decrease of $ 2,936,960 in cash generated compared to 2019. the decrease is primarily due to the increase in the customer card funding liability offset by the decrease in net income ( loss ) and deferred income taxes . the increase in the card funding liability is partially related to the change in estimate and reversal of previously recognized settlement income on pharma programs . investing activities used $ 3,344,855 of cash in 2020 , as compared to $ 3,237,134 of cash in 2019. the increase is primarily attributable to an increase in fixed assets purchased during the current year and ongoing enhancements to our processing platform and infrastructure . the purchase of intangible assets decreased $ 1.2 million due to the acquisition of customer lists and contracts in 2019. financing activities used $ 72,865 of cash in 2020 as compared to $ 430,919 of cash provided in 2019. our cash used in financing activities for 2020 related to cash received from the exercise of stock warrants totaling $ 172,560 offset by $ 245,425 for the repurchase of stock for taxes withheld . our cash provided in financing activities in 2019 consisted of cash received from the exercise of employee stock options totaling $ 430,919. liquidity and sources of financing we believe that our available cash on hand , excluding restricted cash , at december 31 , 2020 of $ 7,829,453 , along with anticipated revenues and operating profits anticipated for 2021 , will be sufficient to sustain our operations for the next twelve months . off-balance sheet arrangements we do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition , changes in financial condition , revenues or expenses , results of operations , liquidity , capital expenditures or capital resources that are material to investors . critical accounting policies and estimates the preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period . actual results could differ from those estimates . our estimates will be based on our experience and our interpretation of economic , political , regulatory , and other factors that affect our business prospects . fixed assets – fixed assets are stated at cost less accumulated depreciation . depreciation is principally recorded on the straight-line method over the estimated useful lives of the assets , which are generally 3 to 10 years . the cost of repairs and maintenance is charged to expense as incurred . leasehold improvements are capitalized and depreciated over the shorter of the remaining lease term or the estimated useful life of the improvements . expenditures for property betterments and renewals are capitalized . upon sale or other disposition of a depreciable asset , cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income ( expense ) . the company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful life of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment . the company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability . 27 intangible assets – for intangible assets , we recognize an impairment loss if the carrying amount of the intangible asset is not recoverable and exceeds fair value . the carrying amount of the intangible asset is considered not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of the asset .
| results of operations fiscal years ended december 31 , 2020 and 2019 the following table summarizes our consolidated financial results : replace_table_token_1_th the decrease in total revenues of $ 10,546,219 for the year ended december 31 , 2020 compared to the same period in the prior year consisted of a $ 3,593,861 reduction in plasma revenue and a $ 7,046,291 reduction in pharma revenue . the decrease in plasma revenue was primarily due to a decrease in plasma donations and dollars loaded to card , significantly impacted by covid-19 related donation center closures and mobility restrictions , which also resulted in a reduction in card load fees . the pharma revenue decrease included a $ 6,293,203 adjustment for a change in accounting estimate in recognizing settlement income for pharma programs based on substantially different performance indicators observed , current trends in the industry regarding program management by third parties , and new information available in dollar loads and spending patterns compared to historical experiences . this change resulted in the company constraining revenue on all pharma programs in accordance with applicable accounting guidance . based on the recently observed change in facts and circumstances , the company utilizes the remote method of revenue recognition for settlement income whereby the unspent balances will be recognized as revenue at the expiration of the cards and the respective program . this has resulted in the reversal of all previously recognized settlement income for all current pharma programs . pharma programs were also negatively impacted by covid-19 as new pharmaceutical medicines were delayed and individuals limited their exposure to pharmacies and doctor offices . 24 cost of revenues for the year ended december 31 , 2020 decreased $ 608,150 compared to the same period in the prior year .
| 7,251 |
14 deferred income taxes are accounted for under the asset and liability method whereby deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases . deferred income tax assets and liabilities are measured using statutory tax rates . deferred income tax provisions are based on changes in the deferred tax assets and liabilities from period to period . additionally , we analyze our ability to recognize the net deferred income tax assets created in each jurisdiction in which we operate to determine if valuation allowances are necessary based on the “ more likely than not ” criteria . new accounting pronouncements applicable new accounting pronouncements are set forth under item 15 of this annual report and are incorporated herein by reference . item 8. financial statements and supplementary data . see the consolidated financial statements attached hereto . item 9. changes in and disagreements with accountants on accounting and financial disclosure none . item 9a . controls and procedures . disclosure controls and procedures . disclosure controls and procedures ( as defined in rules 13a-15 ( e ) and 15d-15 ( e ) ) of the securities exchange act of 1934 , as amended ( the “ exchange act ” ) are designed to ensure that ( 1 ) information required to be disclosed in reports filed or submitted under the exchange act is recorded , processed , summarized and reported within the time periods specified in sec rules and forms ; and ( 2 ) that such information is accumulated and communicated to management , including the principal executive officer and principal financial officer , to allow timely decisions regarding required disclosures . there are inherent limitations to the effectiveness of any system of disclosure controls and procedures , including the possibility of human error and the circumvention or overriding of controls and procedures . accordingly , even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives . the company 's management , including the company 's chief executive officer and chief financial officer , evaluated the effectiveness of the design and operation of the company 's disclosure controls and procedures as of june 30 , 2013 . the company 's management has concluded that the company 's disclosure controls and procedures as of june 30 , 2013 were effective . management 's annual report on internal controls over financial reporting . the company 's management , including its chief executive officer and chief financial officer , is responsible for establishing and maintaining adequate internal control over financial reporting ( as defined in exchange act rules 13a-15 ( f ) and 15d-15 ( f ) ) and designing such internal controls to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the united states of america . there are inherent limitations to the effectiveness of any system of internal control over financial reporting , including the possibility of human error or the circumvention or overriding of controls and procedures . accordingly , even effective internal control over financial reporting can only provide reasonable assurance of achieving its control objectives . management conducted its evaluation of the effectiveness of its internal control over financial reporting based on the framework in “ internal control-integrated framework ” issued by the committee of sponsoring organizations of the treadway commission ( “ coso ” ) . in connection with this evaluation , there were no changes in the company 's internal control over financial reporting ( as such term is defined in rule 13a-15 ( e ) and 15d-15 ( e ) of the exchange act ) during the quarter ended june 30 , 2013 that have materially affected , or are reasonably likely to materially affect , the company 's internal control over financial reporting . based on this evaluation , management has concluded that the company 's internal control over financial reporting as of june 30 , 2013 was effective . 15 part iii item 10. directors , executive officers and corporate governance . this information is incorporated by reference to the sections entitled `` information as to the nominees , '' `` executive officers , '' `` section 16 ( a ) beneficial reporting compliance , '' `` code of ethics '' and `` board committees - audit committee '' from koss corporation 's proxy statement for its 2013 annual meeting of stockholders filed with the commission under regulation 14a within 120 days of the end of the fiscal year covered by this form 10-k. the company adopted a code of ethics , which is a `` code of ethics '' as defined by applicable rules of the sec , which is applicable to its directors , officers and employees . the code is publicly available on the company 's website at www.koss.com/en/about/history . if the company makes any substantive amendments to the code of ethics or grants any waiver , including any implicit waiver , from a provision of the code to its principal executive officer , principal financial officer , principal accounting officer or controller or persons performing similar functions , the company will disclose the nature of the amendment or waiver on that website or in a report on form 8-k. item 11. executive compensation . this information is incorporated by reference to the sections entitled `` summary compensation table , '' `` outstanding equity awards at fiscal year end , '' `` director compensation , '' and `` board committees - compensation committee '' from koss corporation 's proxy statement for its 2013 annual meeting of stockholders filed with the commission under regulation 14a within 120 days of the end of the fiscal year covered by this form 10-k. item 12. security ownership of certain beneficial owners and management and related stockholder story_separator_special_tag 14 deferred income taxes are accounted for under the asset and liability method whereby deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases . deferred income tax assets and liabilities are measured using statutory tax rates . deferred income tax provisions are based on changes in the deferred tax assets and liabilities from period to period . additionally , we analyze our ability to recognize the net deferred income tax assets created in each jurisdiction in which we operate to determine if valuation allowances are necessary based on the “ more likely than not ” criteria . new accounting pronouncements applicable new accounting pronouncements are set forth under item 15 of this annual report and are incorporated herein by reference . item 8. financial statements and supplementary data . see the consolidated financial statements attached hereto . item 9. changes in and disagreements with accountants on accounting and financial disclosure none . item 9a . controls and procedures . disclosure controls and procedures . disclosure controls and procedures ( as defined in rules 13a-15 ( e ) and 15d-15 ( e ) ) of the securities exchange act of 1934 , as amended ( the “ exchange act ” ) are designed to ensure that ( 1 ) information required to be disclosed in reports filed or submitted under the exchange act is recorded , processed , summarized and reported within the time periods specified in sec rules and forms ; and ( 2 ) that such information is accumulated and communicated to management , including the principal executive officer and principal financial officer , to allow timely decisions regarding required disclosures . there are inherent limitations to the effectiveness of any system of disclosure controls and procedures , including the possibility of human error and the circumvention or overriding of controls and procedures . accordingly , even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives . the company 's management , including the company 's chief executive officer and chief financial officer , evaluated the effectiveness of the design and operation of the company 's disclosure controls and procedures as of june 30 , 2013 . the company 's management has concluded that the company 's disclosure controls and procedures as of june 30 , 2013 were effective . management 's annual report on internal controls over financial reporting . the company 's management , including its chief executive officer and chief financial officer , is responsible for establishing and maintaining adequate internal control over financial reporting ( as defined in exchange act rules 13a-15 ( f ) and 15d-15 ( f ) ) and designing such internal controls to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the united states of america . there are inherent limitations to the effectiveness of any system of internal control over financial reporting , including the possibility of human error or the circumvention or overriding of controls and procedures . accordingly , even effective internal control over financial reporting can only provide reasonable assurance of achieving its control objectives . management conducted its evaluation of the effectiveness of its internal control over financial reporting based on the framework in “ internal control-integrated framework ” issued by the committee of sponsoring organizations of the treadway commission ( “ coso ” ) . in connection with this evaluation , there were no changes in the company 's internal control over financial reporting ( as such term is defined in rule 13a-15 ( e ) and 15d-15 ( e ) of the exchange act ) during the quarter ended june 30 , 2013 that have materially affected , or are reasonably likely to materially affect , the company 's internal control over financial reporting . based on this evaluation , management has concluded that the company 's internal control over financial reporting as of june 30 , 2013 was effective . 15 part iii item 10. directors , executive officers and corporate governance . this information is incorporated by reference to the sections entitled `` information as to the nominees , '' `` executive officers , '' `` section 16 ( a ) beneficial reporting compliance , '' `` code of ethics '' and `` board committees - audit committee '' from koss corporation 's proxy statement for its 2013 annual meeting of stockholders filed with the commission under regulation 14a within 120 days of the end of the fiscal year covered by this form 10-k. the company adopted a code of ethics , which is a `` code of ethics '' as defined by applicable rules of the sec , which is applicable to its directors , officers and employees . the code is publicly available on the company 's website at www.koss.com/en/about/history . if the company makes any substantive amendments to the code of ethics or grants any waiver , including any implicit waiver , from a provision of the code to its principal executive officer , principal financial officer , principal accounting officer or controller or persons performing similar functions , the company will disclose the nature of the amendment or waiver on that website or in a report on form 8-k. item 11. executive compensation . this information is incorporated by reference to the sections entitled `` summary compensation table , '' `` outstanding equity awards at fiscal year end , '' `` director compensation , '' and `` board committees - compensation committee '' from koss corporation 's proxy statement for its 2013 annual meeting of stockholders filed with the commission under regulation 14a within 120 days of the end of the fiscal year covered by this form 10-k. item 12. security ownership of certain beneficial owners and management and related stockholder
| consolidated results the following table presents selected consolidated financial data for each of the past two fiscal years : replace_table_token_4_th 2013 results of operations compared with 2012 net sales for 2013 declined due primarily to decreases in sales volume to a large distributor in europe and to two large retailers in the united sates . the decline in sales to the european distributor reflected the loss of a customer for most of fiscal year 2013 . this customer was regained late in the fiscal year . the decrease in the u.s. retail market reflects the increased number of competitors in this space and product placement at key retailers . increased sales at two export customers in asia helped to offset some of the decline at the european distributor and us retailers . in addition , new customers and introduction of new products throughout the year helped to reduce the sales declines . gross profit as a percent of sales in 2013 was 36.4 % which was 2.0 % lower than 2012 . the decline in gross profit percentage was almost entirely the result of a full year of amortization of software development costs , which began at the end of fiscal year 2012 . software amortization was $ 1,558,318 in fiscal year 2013 compared to $ 142,867 in fiscal year 2012 . when adjusted for software amortization , gross profit increased by approximately 2 % in fiscal year 2013 . selling , general and administrative expenses for 2013 were approximately $ 838,000 higher than 2012 . the majority of this increase was driven by profit-based compensation and spending for marketing , which increased by $ 461,643 and $ 274,179 , respectively . the profit-based compensation increased as a result of the lawsuit settlement against the third party , which added approximately $ 702,000 to bonuses and profit sharing .
| 7,252 |
for a more detailed discussion of the company 's stock-based compensation , see note 13 , stock-related benefit plans. 87 retirement plans the company 's pension benefit obligations and post-retirement health and welfare benefit obligations , and the related costs , are calculated using actuarial concepts in accordance with gaap . the measurement of such obligations and expenses requires that certain assumptions be made regarding several factors , most notably including the discount rate and the expected rate of return on plan assets . the company evaluates these assumptions on an annual basis . other factors considered by the company in its evaluation include retirement patterns , mortality rates , turnover , and the rate of compensation increase . under gaap , actuarial gains and losses , prior service costs or credits , and any remaining transition assets or obligations that have not been recognized under previous accounting standards must be recognized in aocl until they are amortized as a component of net periodic benefit cost . earnings per common share ( basic and diluted ) basic earnings per common share ( eps ) is computed by dividing the net income available to common shareholders by the weighted average number of common shares outstanding during the period . diluted eps is computed using the same method as basic eps , however , the computation reflects the potential dilution that would occur if outstanding in-the-money stock options were exercised and converted into common stock . unvested stock-based compensation awards containing non-forfeitable rights to dividends paid on the company 's common stock are considered participating securities , and therefore are included in the two-class method for calculating eps . under the two-class method , all earnings ( story_separator_special_tag for the purpose of this discussion and analysis , the words we , us , our , and the company are used to refer to new york community bancorp , inc. and our consolidated subsidiaries , including new york community bank ( the bank ) . story_separator_special_tag style= '' margin-top:0pt ; margin-bottom:0pt ; font-size:8pt '' > 36 the cpi measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services . the following table indicates the change in the cpi for the twelve months ended at each of the indicated dates : replace_table_token_6_th economic activity also is indicated by the consumer confidence index ® , which moved up to 126.6 in december 2018 from 122.1 in december 2017. an index level of 90 or more is considered indicative of a strong economy . the following chart illustrates the relative stability of the rental vacancy rate in new york city for all rental units and for rent stabilized units , from 1991 through 2017 , as compared to the changes in average unemployment rates in new york city during those years . as the new york city rental vacancy rate is only reported every three years , the annual average unemployment rate in new york city is provided for those years only . as you can see the vacancy rates for rent stabilized units are lower , in some years , meaningfully lower , then the vacancy rates for all rental units . new york city rental vacancy rates to unemployment rates replace_table_token_7_th ( 1 ) source : selected initial findings of the new york city housing and vacancy survey ( 2 ) source : http : //www.labor.ny.gov/stats/laus.asp recent events dividend declaration on january 29 , 2019 , the board of directors declared a quarterly cash dividend on the company 's common stock of $ 0.17 per share , payable on february 26 , 2019 to common shareholders of record at the close of business on february 12 , 2019. critical accounting policies we consider certain accounting policies to be critically important to the portrayal of our financial condition and results of operations , since they require management to make complex or subjective judgments , some of which may relate to matters that are inherently uncertain . the inherent sensitivity of our consolidated financial statements to these critical accounting policies , and the judgments , estimates , and assumptions used therein , could have a material impact on our financial condition or results of operations . we have identified the following to be critical accounting policies : the determination of the allowance for loan losses ; the determination of the amount , if any , of goodwill impairment ; and the determination of the valuation allowance , if any , for deferred tax assets . the judgments used by management in applying these critical accounting policies may be influenced by adverse changes in the economic environment , which may result in changes to future financial results . 37 allowance for loan losses the allowance for loan losses represents our estimate of probable and estimable losses inherent in the loan portfolio as of the date of the balance sheet . losses on loans are charged against , and recoveries of losses on loans are credited back to , the allowance for loan losses . the methodology used for the allocation of the allowance for loan losses at december 31 , 2018 and december 31 , 2017 was generally comparable , whereby the bank segregated their loss factors ( used for both criticized and non-criticized loans ) into a component that was primarily based on historical loss rates and a component that was primarily based on other qualitative factors that are probable to affect loan collectability . in determining the allowance for loan losses , management considers the bank 's current business strategies and credit processes , including compliance with applicable regulatory guidelines and with guidelines approved by the boards of directors with regard to credit limitations , loan approvals , underwriting criteria , and loan workout procedures . the allowance for loan losses is established based on management 's evaluation of incurred losses in the portfolio in accordance with gaap , and is comprised of both specific valuation allowances and a general valuation allowance . story_separator_special_tag for non-real estate-related consumer credits , the following past-due time periods determine when charge-offs are typically recorded : ( 1 ) closed-end credits are charged off in the quarter that the loan becomes 120 days past due ; ( 2 ) open-end credits are charged off in the quarter that the loan becomes 180 days past due ; and ( 3 ) both closed-end and open-end credits are typically charged off in the quarter that the credit is 60 days past the date we received notification that the borrower has filed for bankruptcy . the level of future additions to the respective loan loss allowance is based on many factors , including certain factors that are beyond management 's control , such as changes in economic and local market conditions , including declines in real estate values , and increases in vacancy rates and unemployment . management uses the best available information to recognize losses on loans or to make additions to the loan loss allowance ; however , the bank may be required to take certain charge-offs and or recognize further additions to the loan loss allowance , based on the judgment of regulatory agencies with regard to information provided during their examinations of the bank . an allowance for unfunded commitments is maintained separate from the allowance for loan losses and is included in other liabilities in the consolidated statements of condition . see note 6 , allowance for loan losses for a further discussion of our allowance for loan losses . goodwill impairment we have significant intangible assets related to goodwill . in connection with our acquisitions , assets acquired and liabilities assumed are recorded at their estimated fair values . goodwill represents the excess of the purchase price of our acquisitions over the fair value of identifiable net assets acquired , including other identified intangible assets . our goodwill is evaluated for impairment annually as of year-end or more frequently if conditions exist that indicate that the value may be impaired . we test our goodwill for impairment at the reporting unit level . these impairment evaluations are performed by comparing the carrying value of the goodwill of a reporting unit to its estimated fair value . we allocate goodwill to reporting units based on the reporting unit expected to benefit from the business combination . we had previously identified two reporting units : our banking operations reporting unit and our residential mortgage banking reporting unit . on september 29 , 2017 , the company sold the residential mortgage banking reporting unit . our reporting unit is the same as our operating segment and reportable segment . if we change our strategy or if market conditions shift , our judgments may change , which may result in adjustments to the recorded goodwill balance . 39 for annual goodwill impairment testing , we have the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount , including goodwill and other intangible assets . if we conclude that this is the case , we must perform the two-step test described below . if we conclude based on the qualitative assessment that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount , we have completed our goodwill impairment test and do not need to perform the two-step test . step one requires the fair value of each reporting unit is compared to its carrying value in order to identify potential impairment . if the fair value of a reporting unit exceeds the carrying value of its net assets , goodwill is not considered impaired and no further testing is required . if the carrying value of the net assets exceeds the fair value of a reporting unit , potential impairment is indicated at the reporting unit level and step two of the impairment test is performed . step two requires that when potential impairment is indicated in step one , we compare the implied fair value of goodwill with the carrying amount of that goodwill . determining the implied fair value of goodwill requires a valuation of the reporting unit 's tangible and ( non-goodwill ) intangible assets and liabilities in a manner similar to the allocation of the purchase price in a business combination . any excess in the value of a reporting unit over the amounts assigned to its assets and liabilities is referred to as the implied fair value of goodwill . 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 . as of december 31 , 2018 , we had goodwill of $ 2.4 billion . during the year ended december 31 , 2018 , no triggering events were identified that indicated that the value of goodwill may be impaired . the company performed its annual goodwill impairment assessment as of december 31 , 2018 using step one of the quantitative test and found no indication of goodwill impairment at that date . income taxes in estimating income taxes , management assesses the relative merits and risks of the tax treatment of transactions , taking into account statutory , judicial , and regulatory guidance in the context of our tax position . in this process , management also relies on tax opinions , recent audits , and historical experience . although we use the best available information to record income taxes , underlying estimates and assumptions can change over time as a result of unanticipated events or circumstances such as changes in tax laws and judicial guidance influencing our overall or transaction-specific tax position . we recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases , and the carryforward of certain tax attributes such as net operating losses .
| executive summary new york community bancorp , inc. is the holding company for new york community bank , with 252 branches in metro new york , new jersey , ohio , florida , and arizona . at december 31 , 2018 , we had total assets of $ 51.9 billion , including total loans of $ 40.2 billion , total deposits of $ 30.8 billion , and total stockholders ' equity of $ 6.7 billion . chartered in the state of new york , the bank is subject to regulation by the fdic , the cfpb , and the nysdfs . in addition , the holding company is subject to regulation by the frb , the sec , and to the requirements of the nyse , where shares of our common stock are traded under the symbol nycb. as a publicly traded company , our mission is to provide our shareholders with a solid return on their investment by producing a strong financial performance , maintaining a solid capital position , and engaging in corporate strategies that enhance the value of their shares . for the twelve months ended december 31 , 2018 , the company reported net income of $ 422.4 million , compared to the $ 466.2 million reported for the twelve months ended december 31 , 2017. net income available to common shareholders in the comparable period was $ 389.6 million , versus $ 441.6 million for the twelve months ended december 31 , 2017. diluted earnings per common share were $ 0.79 for the twelve months ended december 31 , 2018 , as compared to $ 0.90 per diluted common share for the twelve months ended december 31 , 2017. additionally , we maintained our status as a well-capitalized institution with regulatory capital ratios that rose year-over-year .
| 7,253 |
if astrazeneca terminates the u.s./row agreement at will , in addition to any unpaid non-contingent payments , it will be responsible for paying for a substantial portion of the post-termination development costs under the agreed development plan until regulatory approval . astrazeneca may terminate the china agreement upon specified events , including our bankruptcy or insolvency , our uncured material breach , technical product failure , or upon advance prior written notice at will . if astrazeneca terminates our china agreement at will , it will be responsible for paying for transition costs as well as make a specified payment to fibrogen china . 130 in the event of any termination of the agreements , but subject to modification upon termination for technical product failure , astrazeneca will transfer and assign to us any regulatory filings and approvals for roxadustat in the affected territories that they may hold under our agreements , grant us licenses and conduct certain transition activities . additional information related to collaboration agreements of the $ 1,113.5 million in development and regulatory milestones payable in the aggregate under our astellas and astrazeneca collaboration agreements , $ 425.0 million is payable upon achievement of milestones relating to the submission and approval of roxadustat in dd-ckd and ndd-ckd in the u.s. and europe . for more detailed discussions on the accounting for these agreements , refer to note 3 to the consolidated financial statements . in addition , refer to “ business — collaborations ” for a more detailed description of our collaboration agreements . total cash consideration received through december 31 , 2017 and potential cash consideration , other than development cost reimbursement , transfer price payments , royalties and profit share , pursuant to our existing collaboration agreements are as follows : replace_table_token_11_th these collaboration agreements also provide for reimbursement of certain fully burdened research and development costs as well as direct out of pocket expenses . story_separator_special_tag fourth quarter of 2015 on our initial funding obligations as discussed above . therefore during 2016 , we billed and were reimbursed for 100 % of the our development costs , as compared to only 50 % during the majority of the prior year , for roxadustat for the treatment of anemia in ckd in the u.s. , europe , japan and all other markets outside of china . license and milestone revenue recognized under our collaboration agreements with astellas increased for the year ended december 31 , 2016 primarily due to a $ 10.0 million of development milestone revenue recorded during the second quarter of 2016 , partially offset by a decrease in reimbursable co-development costs allocated to license and milestone revenues . collaboration services and other revenue replace_table_token_14_th comparison of the years ended december 31 , 2017 and 2016 collaboration services and other revenue decreased $ 12.6 million , or 30 % , for the year ended december 31 , 2017 compared to the year ended december 31 , 2016 , primarily due to a decrease in the collaboration services revenue recognized under our collaboration agreements with astrazeneca from the impact of the extension of the estimated joint development service period for the astrazeneca agreements , for revenue recognition purposes , from the end of 2018 to the end of 2020. we made this extension in the third quarter of 2016 due to the approval of the development budget for the treatment of anemia in patients with mds . collaboration services and other revenue for the year ended december 31 , 2017 was also impacted by the allocation of the upfront payment of $ 62.0 million during the second quarter of 2016 , with no corresponding milestones in the current year . comparison of the years ended december 31 , 2016 and 2015 collaboration services and other revenue increased $ 9.5 million , or 29 % , for the year ended december 31 , 2016 compared to the year ended december 31 , 2015 , due to an increase in the collaboration services revenue recognized under our collaboration agreements with astrazeneca , partially offset by a decrease in the collaboration services revenue recognized under our collaboration agreements with astellas . collaboration services revenue recognized under our collaboration agreements with astrazeneca increased primarily due to the fact that we had reached the cap during fourth quarter of 2015 on our initial funding obligations . therefore during 2016 , we billed 100 % of our development costs , as compared to only 50 % during the majority of the prior year , for roxadustat for the treatment of anemia in ckd in the u.s. , europe , japan and all other markets outside of china . this increase was partially offset by a decrease in reimbursable co-development costs , as well as the decrease in allocated collaboration services revenue recognized under our collaboration agreements with astrazeneca from the upfront payment of $ 62.0 million received during 2016 , as compared to the upfront payment of $ 120.0 million during 2015. collaboration services revenue recognized under our collaboration agreements with astellas decreased due to a decrease in reimbursable co-development costs allocated to collaboration services . 133 operating expenses replace_table_token_15_th total operating expenses increased by $ 15.0 million , or 6 % , for the year ended december 31 , 2017 compared to december 31 , 2016 , and decreased by $ 25.2 million , or 10 % , for the year ended december 31 , 2016 compared to the year ended december 31 , 2015 , for the reasons discussed in the sections below . research and development expenses research and development expenses consist of third party research and development costs and the fully-burdened amount of costs associated with work performed under collaboration agreements . research and development costs include employee-related expenses for research and development functions , expenses incurred under agreements with clinical research organizations , other clinical and preclinical costs and allocated direct and indirect overhead costs , such as facilities costs , information technology costs and story_separator_special_tag if astrazeneca terminates the u.s./row agreement at will , in addition to any unpaid non-contingent payments , it will be responsible for paying for a substantial portion of the post-termination development costs under the agreed development plan until regulatory approval . astrazeneca may terminate the china agreement upon specified events , including our bankruptcy or insolvency , our uncured material breach , technical product failure , or upon advance prior written notice at will . if astrazeneca terminates our china agreement at will , it will be responsible for paying for transition costs as well as make a specified payment to fibrogen china . 130 in the event of any termination of the agreements , but subject to modification upon termination for technical product failure , astrazeneca will transfer and assign to us any regulatory filings and approvals for roxadustat in the affected territories that they may hold under our agreements , grant us licenses and conduct certain transition activities . additional information related to collaboration agreements of the $ 1,113.5 million in development and regulatory milestones payable in the aggregate under our astellas and astrazeneca collaboration agreements , $ 425.0 million is payable upon achievement of milestones relating to the submission and approval of roxadustat in dd-ckd and ndd-ckd in the u.s. and europe . for more detailed discussions on the accounting for these agreements , refer to note 3 to the consolidated financial statements . in addition , refer to “ business — collaborations ” for a more detailed description of our collaboration agreements . total cash consideration received through december 31 , 2017 and potential cash consideration , other than development cost reimbursement , transfer price payments , royalties and profit share , pursuant to our existing collaboration agreements are as follows : replace_table_token_11_th these collaboration agreements also provide for reimbursement of certain fully burdened research and development costs as well as direct out of pocket expenses . story_separator_special_tag fourth quarter of 2015 on our initial funding obligations as discussed above . therefore during 2016 , we billed and were reimbursed for 100 % of the our development costs , as compared to only 50 % during the majority of the prior year , for roxadustat for the treatment of anemia in ckd in the u.s. , europe , japan and all other markets outside of china . license and milestone revenue recognized under our collaboration agreements with astellas increased for the year ended december 31 , 2016 primarily due to a $ 10.0 million of development milestone revenue recorded during the second quarter of 2016 , partially offset by a decrease in reimbursable co-development costs allocated to license and milestone revenues . collaboration services and other revenue replace_table_token_14_th comparison of the years ended december 31 , 2017 and 2016 collaboration services and other revenue decreased $ 12.6 million , or 30 % , for the year ended december 31 , 2017 compared to the year ended december 31 , 2016 , primarily due to a decrease in the collaboration services revenue recognized under our collaboration agreements with astrazeneca from the impact of the extension of the estimated joint development service period for the astrazeneca agreements , for revenue recognition purposes , from the end of 2018 to the end of 2020. we made this extension in the third quarter of 2016 due to the approval of the development budget for the treatment of anemia in patients with mds . collaboration services and other revenue for the year ended december 31 , 2017 was also impacted by the allocation of the upfront payment of $ 62.0 million during the second quarter of 2016 , with no corresponding milestones in the current year . comparison of the years ended december 31 , 2016 and 2015 collaboration services and other revenue increased $ 9.5 million , or 29 % , for the year ended december 31 , 2016 compared to the year ended december 31 , 2015 , due to an increase in the collaboration services revenue recognized under our collaboration agreements with astrazeneca , partially offset by a decrease in the collaboration services revenue recognized under our collaboration agreements with astellas . collaboration services revenue recognized under our collaboration agreements with astrazeneca increased primarily due to the fact that we had reached the cap during fourth quarter of 2015 on our initial funding obligations . therefore during 2016 , we billed 100 % of our development costs , as compared to only 50 % during the majority of the prior year , for roxadustat for the treatment of anemia in ckd in the u.s. , europe , japan and all other markets outside of china . this increase was partially offset by a decrease in reimbursable co-development costs , as well as the decrease in allocated collaboration services revenue recognized under our collaboration agreements with astrazeneca from the upfront payment of $ 62.0 million received during 2016 , as compared to the upfront payment of $ 120.0 million during 2015. collaboration services revenue recognized under our collaboration agreements with astellas decreased due to a decrease in reimbursable co-development costs allocated to collaboration services . 133 operating expenses replace_table_token_15_th total operating expenses increased by $ 15.0 million , or 6 % , for the year ended december 31 , 2017 compared to december 31 , 2016 , and decreased by $ 25.2 million , or 10 % , for the year ended december 31 , 2016 compared to the year ended december 31 , 2015 , for the reasons discussed in the sections below . research and development expenses research and development expenses consist of third party research and development costs and the fully-burdened amount of costs associated with work performed under collaboration agreements . research and development costs include employee-related expenses for research and development functions , expenses incurred under agreements with clinical research organizations , other clinical and preclinical costs and allocated direct and indirect overhead costs , such as facilities costs , information technology costs and
| results of operations revenue replace_table_token_12_th our revenue to date has been generated substantially from our collaboration agreements with astellas and astrazeneca . under our revenue recognition policy , license revenue includes amounts from upfront , non-refundable license payments and amounts allocated pursuant to the relative selling price method from other consideration received ( other than substantive milestone payments ) during the periods . this revenue is generally recognized as deliverables are met and services are performed . milestone revenue includes payments from milestones which are deemed to be substantive in nature and is recognized in its entirety in the period in which the milestone is achieved . license and milestone revenues represented 76 % , 76 % and 82 % of total revenues for the years ended december 31 , 2017 , 2016 and 2015 , respectively . 131 collaboration services include co-development services , manufacturing of clinical supplies , committee services and information sharing . collaboration services revenues are recognized over the non-contingent performance period , ranging from 36 to 89 months . other revenues consist primarily of collagen material sold for research purposes , and have been included with collaboration services and other revenue in the consolidated statements of operations , as they have not been material for any of the years presented . collaboration services and other revenues represented 24 % , 24 % and 18 % of total revenues for the years ended december 31 , 2017 , 2016 and 2015 , respectively . during the fourth quarter of 2015 , the $ 116.5 million cap on our share of development costs for roxadustat was reached . as such , all development and commercialization costs for roxadustat for the treatment of anemia in ckd in the u.s. , europe , japan and all other markets outside of china have been paid by astellas and astrazeneca since reaching the cap .
| 7,254 |
: united kingdom del monte® perpetual , royalty-free brand name license 2.0 — 2.0 total asset impairment and other charges ( credits ) , net $ 15.3 $ ( 7.3 ) $ 8.0 64 fresh del monte produce inc. and subsidiaries notes to consolidated financial statements ( continued ) 3 . asset impairment and other charges , net ( continued ) the following represents the roll forward of exit activity and other reserves for the year ended december 30 , 2011 ( u.s. dollars in millions ) : replace_table_token_19_th included in the exit story_separator_special_tag overview we are one of the world 's leading vertically integrated producers , marketers and distributors of high-quality fresh and fresh-cut fruit and vegetables , as well as a leading producer and marketer of prepared fruit and vegetables , juices , beverages and snacks in europe , africa and the middle east . we market our products worldwide under the del monte® brand , a symbol of product innovation , quality , freshness and reliability since 1892. our global sourcing and logistics system allows us to provide regular delivery of consistently high-quality produce and value-added services to our customers . our major producing operations are located in north , central and south america , asia and africa . production operations are aggregated on the basis of our products : bananas , other fresh produce and prepared foods . other fresh produce includes pineapples , melons , tomatoes , non-tropical fruit ( including grapes , apples , pears , peaches , plums , nectarines , avocados , citrus and kiwis ) , fresh-cut produce and other fruit and vegetables and a plastic product and box manufacturing business , a grain business ( which we exited in 2010 ) and third-party ocean freight services ( which we significantly curtailed in 2009 ) . prepared foods include prepared fruit and vegetables , juices , beverages , snacks , poultry and meat products . as a result of our decision to exit grain operations in argentina during 2010 and the elimination of third-party ocean freight services from northern europe to the caribbean during 2009 , we have combined the other products and services segment with the other fresh produce segment in 2011 due to the relative size of the remaining operations . prior year amounts have been reclassified to conform to the 2011 presentation . strategy our strategy is focused on a combination of maximizing revenues from our existing infrastructure , entering new markets and strict cost control initiatives . we plan to continue to capitalize on the growing global demand for fresh produce and expand our reach into existing and new markets . we expect sales growth of fresh produce in key markets by increasing sales volume and per unit sales prices as permitted by market conditions . our strategy includes increasing volumes from existing production and distribution facilities in order to improve operating efficiencies and reduce per unit costs . we plan additional investments in production facilities in order to expand our product offering in established markets and continue with our recent expansion in growth markets , such as the middle east , africa and countries formerly part of the soviet union . net sales our net sales are affected by numerous factors , including mainly the balance between the supply of and demand for our produce and competition from other fresh produce companies . our net sales are also dependent on our ability to supply a consistent volume and quality of fresh produce to the markets we serve . for example , seasonal variations in demand for bananas as a result of increased supply and competition from other fruit are reflected in the seasonal fluctuations in banana prices , with the first six months of each year generally exhibiting stronger demand and higher prices , except in those years where an excess supply exists . during the first part of 2011 banana supplies were not as plentiful as in the prior year . in 2011 , our overall banana sales volume decreased by 2 % while our average per unit sales prices increased by 4 % . our net sales of other fresh produce were positively impacted by increased sales volumes of fresh-cut fruit , non-tropical fruit and pineapples . in the processed foods business , we generally realize the largest portion of our net sales and gross profit in the third and fourth quarters of the year . during 2011 , our prepared food net sales decreased slightly principally as a result of lower sales of canned deciduous products that resulted from reduced sourcing from south africa . since our financial reporting currency is the u.s. dollar , our net sales are significantly affected by fluctuations in the value of the currency in which we conduct our sales versus the dollar , with a weak dollar versus such currencies resulting in increased net sales in dollar terms . including the effect of our foreign currency hedges , net sales for 2011 were positively impacted by $ 17.1 million , as compared to 2010 , principally as a result of a stronger korean won , british pound and japanese yen , partially offset by a weaker euro and kenya shilling , versus the u.s. dollar . our net sales growth in recent years has been achieved primarily through increased sales volume in existing markets of other fresh produce , primarily pineapples and non-tropical fruit , and favorable pricing on our del monte gold ® extra sweet pineapple combined with increased sales volume and per unit sales prices of bananas in existing and new markets . during 2011 , our net sales were positively affected by higher sales volume of bananas and gold pineapples that resulted from our production expansion , which were offset principally by lower net sales of melons and other products and services . story_separator_special_tag in 2011 , we recorded asset impairment and other charges totaling $ 16.3 million primarily related to asset impairments and other charges as a result of our central american melon rationalization program , an under-utilized fresh-cut facility and distribution center in the united kingdom , our decision to abandon an isolated area in our banana operations in the philippines and a low-productivity area in costa rica and legal costs in hawaii related to the kunia well site , partially offset by 28 insurance claims proceeds related to damages that occurred in 2010 from flooding in guatemala and an earthquake in chile . in 2010 , we recorded asset impairment and other charges totaling $ 37.3 million related to plant disease affecting an isolated growing area in our banana operations in the philippines that was abandoned during the first quarter of 2011 , exit activities in south africa and brazil , damage caused by floods in our guatemala banana farms and an earthquake in chile , combined with an impairment charge of the del monte ® perpetual , royalty-free brand name license for beverage products in the united kingdom due to lower than expected sales volume and pricing and the relocation of a port facility in north america . in 2009 , we recorded asset impairment and other charges totaling $ 10.9 million as a result of our decision to discontinue pineapple planting in brazil and our decision not to use certain property , plant and equipment as originally intended for other crop production . during 2009 , we also incurred charges of $ 1.2 million for termination benefits and contract termination costs resulting from our decision to discontinue our commercial cargo service in germany , a $ 2.0 million impairment charge of the del monte® perpetual , royalty-free brand name license for beverage products in the united kingdom due to lower than expected sales volume and pricing and a $ 2.8 million asset impairment charge related to an intangible asset for a non-compete agreement as a result of the caribana acquisition . these charges were partially offset by $ 5.5 million of credits due to the reversal of contract termination costs as a result of the closure of an under-utilized distribution center in the united kingdom , and the discontinuance of retiree medical benefits and the reversal of contract termination costs related to the closing of our hawaii pineapple operations . also included in asset impairments and other charges , net , for 2009 was $ 3.4 million of insurance recoveries related to the 2008 floods of our brazil banana operations . interest expense interest expense consists primarily of interest on borrowings under working capital facilities that we maintain and interest on other long-term debt primarily for capital lease obligations . in 2011 , our interest expense declined , reflecting primarily lower interest rates and a decrease in our average outstanding debt , partially offset by by a write-down of debt issuance costs as a result of our voluntary reduction of available borrowing capacity under our credit facility . other income ( expense ) , net other income ( expense ) , net , primarily consists of currency exchange gains or losses , equity gains and losses in unconsolidated companies and other miscellaneous income and expense items . during 2011 , we recorded higher currency exchange losses as compared with the prior year . provision for ( benefit from ) income taxes the provision for ( benefit from ) income taxes in 2011 was $ 5.7 million and includes the establishment of reserves for uncertain tax positions in various foreign jurisdictions combined with increased taxable income , partially offset by a favorable adjustment as a result of a change in the tax treatment of plantation costs in a foreign jurisdiction . income taxes consist of the consolidation of the tax provisions , computed on a separate entity basis , in each country in which we have operations . since we are a non-u.s. company with substantial operations outside the united states , a substantial portion of our results of operations is not subject to u.s. taxation . several of the countries in which we operate have favorable tax rates . we are subject to u.s. taxation on our operations in the united states . from time to time , tax authorities in various jurisdictions in which we operate audit our tax returns and review our tax positions . there are audits presently pending in various countries . there can be no assurance that any tax audits , or changes in existing tax laws or interpretations in countries in which we operate , will not result in an increased effective tax rate for us . 29 story_separator_special_tag inventory caused by floods in our guatemala banana farms , net of related insurance reimbursements , an earthquake in chile and exit activities in brazil related to the discontinuation of melon growing operations . gross profit gross profit was $ 319.5 million in 2011 compared with $ 272.4 million in 2010 , an increase of $ 47.1 million . the increase in gross profit was attributable to higher gross profit on bananas and prepared food , partially offset by lower gross profit in other fresh produce . gross profit in the banana segment increased by $ 56.9 million as a result of higher per unit selling prices in all regions partially offset by higher fuel cost and a 2 % reduction in sales volume . worldwide per unit selling prices increased 4 % and cost per box increased less than 1 % . gross profit in the prepared food segment increased by $ 7.7 million principally as a result of lower costs of canned deciduous products that resulted from operational improvements made during 2010 , combined with increases in per unit sales price of pineapple products that resulted from improved market conditions .
| results of operations the following table presents , for each of the periods indicated , certain income statement data expressed as a percentage of net sales : replace_table_token_7_th the following tables present for each of the periods indicated ( i ) net sales by geographic region , ( ii ) net sales by product category and ( iii ) gross profit by product category and , in each case , the percentage of the total represented thereby : replace_table_token_8_th replace_table_token_9_th 30 2011 compared with 2010 net sales net sales in 2011 were $ 3,589.7 million compared with $ 3,552.9 million in 2010 . the increase in net sales of $ 36.8 million was primarily attributable to higher net sales of bananas and other fresh produce , partially offset by lower net sales of prepared foods . net sales in the banana segment increased by $ 32.8 million principally due to higher per unit sales prices and sales volume in north america and higher per unit sales prices in asia , partially offset by lower sales volume in europe and the middle east . ◦ north america banana net sales increased primarily due to 7 % higher per unit sales prices due to industry shortages . ◦ europe banana net sales decreased principally due to lower sales volume , partially offset by slightly higher per unit sales prices . ◦ middle east banana net sales decreased principally due to lower sales volume . ◦ asia banana net sales decreased slightly due to lower sales volume partially offset by higher per unit sales prices and favorable exchange rates . net sales in the other fresh produce segment increased by $ 8.8 million principally as a result of higher sales of non-tropical fruit , fresh-cut fruit products and pineapple , partially offset by lower net sales of melons , argentine grain , strawberries and tomatoes .
| 7,255 |
the above gain includes $ 11 million in excess story_separator_special_tag the following discussion should be read in conjunction with the consolidated financial statements as of december 30 , 2017 and december 31 , 2016 and for each of the three years in the period ended december 30 , 2017 and related notes , which are included in this annual report on form 10-k as well as with the other sections of this annual report on form 10-k , including “ part i , item 1 : business , ” “ part ii , item 6 : selected financial data ” and “ part ii , item 8 : financial statements and supplementary data. ” introduction we are a global semiconductor company primarily offering : x86 microprocessors , as standalone devices or as incorporated into an accelerated processing unit ( apu ) , chipsets , discrete and integrated graphics processing units ( gpus ) , and professional gpus ; and server and embedded processors , semi-custom system-on-chip ( soc ) products and technology for game consoles . we also license portions of our intellectual property ( ip ) portfolio . in this management 's discussion and analysis ( md & a ) , we will describe the results of operations and the financial condition for us and our consolidated subsidiaries , including a discussion of our results of operations for 2017 compared to 2016 and 2016 compared to 2015 , an analysis of changes in our financial condition and a discussion of our contractual obligations and off balance sheet arrangements . overview 2017 was an important year for amd as we launched a number of new high-performance products that re-shaped our product portfolio and improved our technology competitiveness . we launched more than 40 new high-performance cpus and gpus and experienced strong customer acceptance of our new products . we launched our first-generation amd ryzen desktop cpus based on our entirely new “ zen ” x86 cpu core architecture . we released our amd ryzen 7 desktop processors designed for pc gamers , creators and the enthusiast market . we also launched our high performance amd ryzen 5 desktop processors at a variety of price points with up to 6 cores and 12 threads of cpu processing in april 2017. we released our amd ryzen 3 desktop processors in july 2017 designed to bring “ zen ” processing power to mainstream price points . in august 2017 , we launched the ryzen threadripper family of high-end desktop processors . for the commercial market , we launched amd ryzen pro desktop processors , based on the same “ zen ” x86 core architecture . in october 2017 , we announced amd ryzen 7 2700u and amd ryzen 5 2500u , our first mobile processors with radeon vega graphics , previously codenamed the “ raven ridge ” mobile apus , for premium 2-in-1s , convertibles and ultra-thin notebook computers . amd ryzen 7 2700u and amd ryzen5 2500u processors combine the “ zen ” x86 core architecture with radeon vega graphics in an soc design . we also expanded our consumer and professional graphics offerings with new graphics solutions . we introduced the radeon rx 500 series in april 2017 , a new line of graphics cards based on second-generation “ polaris ” architecture that provides additional performance . we also announced the “ polaris ” architecture-based radeon pro duo card designed for media and entertainment , broadcast , and design and manufacturing workflows . we launched our new “ vega ” gpu architecture for the high-end gaming , professional , and datacenter markets . we introduced our radeon rx vega family of gpus for enthusiast gamers , radeon pro ssg for up to 8k video production , and radeon instinct mi25 for machine intelligence and datacenter markets . we also focused on improving our competitive position in the server and datacenter markets . in june 2017 , we launched the amd epyc 7000 series of high performance processors that have up to 32 high-performance “ zen ” compute cores and are designed to support a full range of integer , floating point , memory bandwidth and i/o workloads . customer engagement with our epyc processors continued to grow during the year . in october 2017 , we announced the amd embedded radeon e9170 series gpu . the new processor is the first “ polaris ” architecture-based amd embedded discrete gpu available in multi-chip module ( mcm ) format with integrated memory for smaller , power-efficient custom designs . our financial results improved in 2017 compared to 2016 primarily as the demand for our computing and graphics segment products increased . net revenue for 2017 was $ 5.3 billion , an increase of 25 % compared to 2016. our operating income for 2017 improved to $ 204 million compared to an operating loss of $ 372 million for 2016. our net income for 2017 improved to $ 43 million compared to a net loss of $ 497 million in the prior year . cash and cash equivalents as of december 30 , 2017 were 37 $ 1.18 billion , down from $ 1.26 billion at the end of 2016. principal amount of total debt as of december 30 , 2017 was $ 1.70 billion , compared to $ 1.77 billion as of december 31 , 2016. we intend the discussion of our financial condition and results of operations that follows to provide information that will assist in understanding our financial statements , the changes in certain key items in those financial statements from period to period , the primary factors that resulted in those changes , and how certain accounting principles , policies and estimates affect our financial statements . critical accounting estimates our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements , which have been prepared in accordance with u.s. generally accepted accounting principles ( u.s. gaap ) . story_separator_special_tag the second step ( if necessary ) measures the amount of impairment by applying fair value-based tests to the individual assets and liabilities within each reporting unit . in the third quarter of 2017 , we adopted asu 2017-04 which eliminated step two from the goodwill impairment test . in assessing impairment of goodwill , if we conclude that it is more likely than not that the carrying amount of a reporting unit exceeds its fair value during our qualitative assessment , a one-step goodwill impairment test will be performed . during the quantitative test , if it is concluded that the carrying amount of a reporting unit exceeds its fair value , an impairment loss shall be recognized in an amount equal to that excess , limited to the total amount of goodwill allocated to that reporting unit . based on the results of our annual qualitative analysis of goodwill in 2017 , we determined that it was more likely than not that the fair value of our reporting units exceeded their carrying amount and , as such , we did not need to perform the quantitative impairment test and there was no goodwill impairment . based on the results of our annual qualitative analysis of goodwill in 2016 , we determined that it was more likely than not that the fair value of our reporting units exceeded their carrying amount and , as such , we did not need to perform the two-step impairment test and there was no goodwill impairment . estimates of fair value for all of our reporting units can be affected by a variety of external and internal factors . potential events or circumstances that could reasonably be expected to negatively affect the key assumptions we used in estimating the fair value of our reporting units include adverse changes in our industry , increased competition , an inability to successfully introduce new products in the marketplace or to achieve internal forecasts , and a decline in our stock price . if the estimated fair value of our reporting units declines due to any of these factors , we may be required to record future goodwill impairment . income taxes . in determining taxable income for financial statement reporting purposes , we must make certain estimates and judgments . these estimates and judgments are applied in the calculation of certain tax liabilities and in the determination of the recoverability of deferred tax assets which arise from temporary differences between the recognition of assets and liabilities for tax and financial statement reporting purposes . we must assess the likelihood that we will be able to recover our deferred tax assets . if recovery is not likely , we must increase our charge to income tax expense in the form of a valuation allowance for the deferred tax assets that we estimate will not ultimately be recoverable . we consider past performance , future expected taxable income and prudent and feasible tax planning strategies in determining the need for a valuation allowance . in addition , the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax rules and the potential for future adjustment of our uncertain tax positions by the internal revenue service or other taxing authorities . if our estimates of these taxes are greater or less than actual results , an additional tax benefit or charge will result . we recognize the interest and penalties related to unrecognized tax benefits as interest expense and income tax expense , respectively . 39 in december 2017 , the u.s. government enacted comprehensive tax legislation commonly referred to as the tax cuts and jobs act of 2017 ( tax reform act ) . the legislation significantly changes u.s. tax law by , among other things , lowering corporate income tax rates , implementing a modified territorial tax system and imposing a transition tax on deemed repatriated earnings of foreign subsidiaries . the tax reform act permanently reduces the u.s. corporate income tax rate from a maximum of 35 % to a flat 21 % rate , effective january 1 , 2018. the sec staff issued staff accounting bulletin no . 118 ( sab 118 ) to address the application of u.s. gaap in situations when a registrant does not have the necessary information available , prepared , or analyzed ( including computations ) in reasonable detail to complete the accounting for certain income tax effects of the tax reform act . we have recognized the provisional tax impacts related to deemed repatriated earnings and the revaluation of deferred tax assets and liabilities and included these amounts in our consolidated financial statements for the year ended december 30 , 2017. the ultimate impact may differ from these provisional amounts due to , among other things , additional analysis , changes in interpretations and assumptions we have made , additional regulatory guidance that may be issued , and actions we may take as a result of the tax reform act . the accounting is expected to be complete within one year of the date of enactment . in january 2018 , the fasb released guidance on the accounting for tax on the global intangible low-taxed income ( gilti ) provisions of the tax reform act . the gilti provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations . because of the complexity of the new provisions , we are continuing to evaluate how the provisions will be accounted for under u.s. gaap wherein companies are allowed to make an accounting policy election of either ( i ) account for gilti as a component of tax expense in the period in which we are subject to the rules ( the period cost method ) , or ( ii ) account for gilti in the company 's measurement of deferred taxes ( the deferred method ) .
| results of operations we intend this discussion of our financial condition and our results of operations that follows to provide information that will assist you in understanding our financial statements , the changes in certain key items in those financial statements from year to year , the primary factors that resulted in those changes and how certain accounting principles , policies and estimates affect our financial statements . we use a 52 or 53 week fiscal year ending on the last saturday in december . the years ended december 30 , 2017 , december 31 , 2016 and december 26 , 2015 included 52 weeks , 53 weeks and 52 weeks , respectively . the extra week in 2016 did not have a material impact on our results of operations . references in this report to 2017 , 2016 and 2015 refer to the fiscal year unless explicitly stated otherwise . management , including the chief operating decision maker who is our chief executive officer , reviews and assesses our operating performance using segment net revenue and operating income ( loss ) before interest , other income ( expense ) , net , income taxes and equity loss in investee . these performance measures include the allocation of expenses to the operating segments based on management 's judgment . we have the following two reportable segments : the computing and graphics segment , which primarily includes desktop and notebook processors and chipsets , graphics processing units ( gpus ) , professional gpus and licensing portions of our intellectual property ( ip ) portfolio ; and the enterprise , embedded and semi-custom segment , which primarily includes server and embedded processors , semi-custom system-on-chip ( soc ) products , development services , technology for game consoles and licensing portions of our ip portfolio . in addition to these reportable segments , we have an all other category which is not a reportable segment .
| 7,256 |
the company generates transactions revenue primarily from revenue-sharing partner contracts and , through october 10 , 2017 , yelp eat24 as a standalone product . the company 's transactions platform provides consumers with the ability to complete food delivery and other transactions through third parties directly on yelp . the company earns a per-transaction commission fee pursuant to partnership contracts for acting as an agent for these transactions , which it recognizes on a net basis and includes in revenue upon completion of a transaction . prior to the disposal of eat24 , the company 's yelp eat24 business generated revenue through arrangements with restaurants , in which restaurants paid a commission percentage fee on orders placed through the yelp eat24 platform . the company recorded revenue associated with yelp eat24 transactions on a net basis as the restaurant is primarily responsible for providing the underlying service and the company does not control the service provided by the restaurant to the consumer . concurrently with the disposal of eat24 on october 10 , 2017 , the company entered into a partnership agreement with grubhub story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this annual report . this discussion contains forward-looking statements that reflect our plans , estimates and beliefs , and involve risks and uncertainties . our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of several factors , including those discussed in the section titled “ risk factors ” included under part i , item 1a and elsewhere in this annual report . see “ special note regarding forward-looking statements ” in this annual report . overview as a trusted local platform , we deliver significant value to both consumers and businesses by helping each discover and interact with the other : our unrivaled content and transaction capabilities help consumers save time and money , while our advertising and other products help business owners gain visibility and engage with our large audience of purchase-oriented consumers . our comprehensive , mobile-first platform offers food-ordering , booking , and reservation and waitlist capabilities , among many other transaction opportunities , in addition to the 164.3 million recommended reviews available as of december 31 , 2018. these features attracted a monthly average audience of nearly 33 million app unique devices in the fourth quarter of 2018 , allowed over 1.7 million diners to make reservations or join a restaurant waitlist in december 2018 , and facilitated consumer submissions of 1.6 million projects to service providers through request-a-quote in the fourth quarter of 2018. business owners , in turn , promoted their businesses to our large audience by spending 12 % more on our advertising products in the fourth quarter of 2018 than the fourth quarter of 2017 , received 27 % more food orders in the fourth quarter of 2018 than the same period in 2017 , managed over 22 million total diners using our yelp reservations and yelp waitlist products in december 2018 , and received 4.4 million leads through request-a-quote . we derive substantially all of our revenue from the sale of advertising products . in the year ended december 31 , 2018 , our net revenue was $ 942.8 million , which represented an increase of 11 % from the year ended december 31 , 2017 , and we recorded net income of $ 55.4 million and adjusted ebitda of $ 183.1 million . in the year ended december 31 , 2017 , our net revenue was $ 850.8 million , which represented an increase of 19 % from the year ended december 31 , 2016 , and we recorded net income of $ 153.0 million and adjusted ebitda of $ 157.8 million . we expect that 2018 will be a transition year for yelp as we continue the repositioning of our business and strategy that we began in 2018 with our transition to selling non-term contracts , significant investments in restaurant-specific products , and implementation of an improved go-to-market strategy for national advertising . we plan to build on these efforts and drive long-term growth by focusing on three broad areas : increasing our focus on advertisers and business owners . while consumers will always be at the heart of our business , and we plan to continue working to enhance their experience on our platform , we plan to increase the amount of attention and resources that we devote to advertisers and business owners . our strategies for driving revenue growth in 2019 reflect 41 this shift . our efforts to win in our key verticals of restaurants and home & local services include building out our restaurant-specific solutions to address business owners ' operational needs , as well as working to make the request-a-quote submission process easier and offering new ways for service providers to drive leads to their businesses . our product development plans are similarly business-focused — we are developing new advertising products and introducing more fixed-price offerings at different price points to provide business owners with a wider range of options for promoting their businesses on yelp . finally , we plan to provide more value to our business customers through lower cpc prices , improved analytics and a significantly increased number of leads delivered to our paying customers , which we aim to double in the home & local services category by the end of 2019. enhancing our go-to-market strategy . we are working to implement a more diversified , modern and efficient go-to-market strategy by integrating product and product marketing with our people-driven sales efforts . although these efforts build on our 2018 transition to selling non-term contracts in our local advertising business , in 2019 they will be most relevant to our other advertising categories as we turn our focus toward capturing the opportunity in national and emphasizing our most efficient sales channels . story_separator_special_tag we also expect the cyclicality and seasonality in our business to become more pronounced as our business matures , including weaker traffic in the fourth quarter of the year . as our traffic growth rate slows , our success will become increasingly dependent on our ability to increase levels of user engagement on our platform , which itself depends on the quality of our content and our ability to introduce new and improved products that effectively address consumer needs , among other things . product innovation . we must deliver innovative , relevant and useful products to consumers and businesses — including products for mobile and other alternative devices — to expand the size and engagement of our user base , attract advertisers and increase our revenue . we plan to continue investing in new product development as we introduce new advertising and e-commerce products , explore new platforms and distribution channels , and develop partner arrangements that provide incremental value to our users and advertisers to encourage them to increase their usage of , and the portion of their advertising budgets allocated to , our platform . as our industry evolves and competition intensifies , our investments may increasingly include products and services outside of our historical core business , such as our continued development of yelp reservations and yelp waitlist in 2019. these investments involve significant risks and uncertainties , such as distracting management , and may ultimately fail to generate sufficient revenue or other value to justify our investments in them . investment in growth . we have invested , and intend to continue to invest , aggressively to support the growth of our platform . we dedicate significant resources to areas such as : marketing ; consumer protection ; maintaining and enhancing the yelp brand ; and upgrading our systems , technology and network infrastructure to accommodate growth . our investment plans for 2019 include developing new advertising and attribution products , expanding our analytics tools for advertisers and refining our request-a-quote product to deliver the best lead opportunities to highly responsive and highly rated advertisers as well as to improve our matching capabilities . while we believe these initiatives will ultimately drive revenue growth , our investments in them will increase our operating expenses , and any increase in revenue resulting from these product innovations will likely trail the increase in expenses . stock repurchases . in july 2017 , our board of directors authorized a stock repurchase program for the repurchase up to $ 200 million of our outstanding common stock . during the years ended december 31 , 2018 and 2017 , we repurchased on the open market and subsequently retired 4,896,003 shares and 302,206 shares , respectively , for aggregate purchase prices of $ 187.4 million and $ 12.6 million , respectively . in november 2018 , our board of directors authorized us to repurchase up to an additional $ 250 million of our outstanding common stock pursuant to the stock repurchase program , of which no shares had been repurchased as of december 31 , 2018. on february 11 , 2019 , our board of directors increased the amount authorized for repurchase by $ 250 million , bringing the total amount subject to our stock repurchase program to $ 500 million . we have funded the repurchases , and expect to fund any future repurchases under the stock repurchase program , with cash available on our balance sheet . as a result , this program could diminish our cash reserves in addition to affecting the trading price and volatility of our stock . corporate development activities . as part of our business strategy , we may decide to expand our product offerings and grow our business through the acquisition of complementary businesses or technologies , as well as through partnerships . in addition to diverting our management 's attention and otherwise disrupting our operations , our corporate development activities will affect our future financial results due to factors such as expenses incurred in identifying , investigating and pursuing transactions , whether or not they are consummated , possible dilutive issuances of equity securities or the incurrence of debt , unidentified liabilities and the amortization of acquired intangible assets . maintaining relationships with partners also requires significant time and resources , as does integrating their data , services and technologies onto our platform . we may not realize the full benefits of synergies , innovation and operational efficiencies that may be possible from a corporate transaction ; similarly , if our relationships with partners deteriorate , we could suffer increased costs and delays in our ability to provide consumers and advertisers with our content or services . key metrics we regularly review a number of metrics , including the key metrics set forth below , to evaluate our business , measure our performance , identify trends in our business , prepare financial projections and make strategic decisions . unless otherwise stated , 43 these metrics do not include metrics for yelp reservations , yelp waitlist , yelp wifi marketing , our business owner products , or yelp eat24 , which we sold on october 10 , 2017. reviews number of reviews represents the cumulative number of reviews submitted to yelp since inception , as of the period end , including reviews that were not recommended or had been removed from our platform . in addition to the text of the review , each review includes a rating of one to five stars . we include reviews that are not recommended and that have been removed because all of them are either currently accessible on our platform or were accessible at some point in time , providing information that may be useful to users to evaluate businesses and individual reviewers . because our automated recommendation software continually reassesses which reviews to recommend based on new information that becomes available , the “ recommended ” or “ not recommended ” status of reviews may change over time .
| results of operations the following tables set forth our results of operations for the periods indicated as a percentage of net revenue for those periods . the period-to-period comparison of financial results is not necessarily indicative of future results . 46 replace_table_token_14_th ( 1 ) amounts for 2017 and 2016 have been recast to reflect the adoption of asc 606. additional information regarding our adoption of asc 606 is set forth in note 2 of the notes to consolidated financial statements . years ended december 31 , 2018 , 2017 and 2016 net revenue we generate revenue from our advertising products , transactions and other services . total net revenue increased $ 91.9 million , or 11 % , in 2018 compared to 2017 , and $ 134.8 million , or 19 % , in 2017 compared to 2016 . advertising . we generate advertising revenue from the sale of our advertising products — including enhanced listing pages and performance- and impression-based advertising in search results and elsewhere on our platform — to businesses of all sizes . advertising revenue also includes revenue generated from the resale of our advertising products by certain partners and monetization of remnant advertising inventory through third-party ad networks . advertising revenue increased $ 131.8 million , or 17 % , in 2018 compared to 2017 , and $ 127.4 million , or 20 % , in 2017 compared to 2016 . the increase in each period was primarily due to a significant increase in the number of paying advertising accounts and , to a lesser extent , an increase in revenue from existing accounts . the growth in paying advertising accounts in 2018 was driven by the sale of non-term contracts and the expansion of our local sales force , while the growth in 2017 was driven primarily by the expansion of our sales force to reach more businesses .
| 7,257 |
our debt to capitalization ratio increased to 42 % at december 31 , 2011 , as compared to 35 % at december 31 , 2010 , primarily due to the 2011 debt issuance . contractual commitments and obligations our contractual commitments for the next five years and thereafter as of december 31 , 2011 are as follows : replace_table_token_16_th ( 1 ) our most significant office lease is in houston , texas and it extends until 2015 . ( 2 ) amounts shown by year are the net present value at december 31 , 2011 . ( 3 ) amounts shown represent fees for the minimum delivery obligations . any amount of transportation utilized in excess of the minimum will reduce future year obligations ( 4 ) the credit facility expires in may 2016 and these amounts exclude $ 0.9 million standby letters of credit outstanding under this facility . as of december 31 , 2011 we had no off-balance sheet arrangements requiring disclosure pursuant to article 303 ( a ) of regulation s-k. proved oil and gas reserves we have added proved reserves over the past three years primarily through our drilling activities , including 58.0 mmboe added in 2011 , 36.7 mmboe added in 2010 , and 8.5 mmboe added in 2009. the 2011 proved reserves additions from drilling activities consisted almost entirely of reserves additions within our south texas area , most of which were proved undeveloped additions based on the results of the horizontal drilling program conducted in this area during the year . we obtained reasonable certainty regarding these reserves additions by applying the same methodologies that have been used historically in this area . at year-end 2011 , 35 % of our total proved reserves were proved developed , compared with 45 % at year-end 2010 and 50 % at year-end 2009 . 38 at year-end 2011 , our proved reserves were 159.6 mmboe with a pv-10 value of $ 1.9 billion ( pv-10 is a non-gaap measure , see the section titled “ oil and natural gas reserves ” in our property section for a reconciliation of this non-gaap measure to the closest gaap measure , the standardized measure ) , an increase in pv-10 of approximately $ 133 million from the prior year-end levels . in 2011 , our proved natural gas reserves increased 193.8 bcf , or 46 % , while our proved oil reserves decreased 8.4 mmbbl , or 21 % , and our ngl reserves increased 2.9 mmbbl , or 13 % , for a total equivalent increase of 26.8 mmboe , or 20 % . we use the preceding 12-months ' average price based on closing prices on the first business day of each month in calculating our average prices used in the pv-10 calculation . our average natural gas price used in the pv-10 calculation for 2011 was $ 3.89 per mcf . this average price during 2011 was a decrease from $ 4.08 per mcf at year-end 2010 , compared to $ 3.78 per mcf at year-end 2009. our average oil price used in the pv-10 calculation for 2011 was $ 103.87 per bbl . this average price during 2011 was an increase from $ 78.31 per bbl at year-end 2010 , compared to $ 59.76 in 2009. critical accounting policies and new accounting pronouncements property and equipment . we follow the “ full-cost ” method of accounting for oil and natural gas property and equipment costs . under this method of accounting , all productive and nonproductive costs incurred in the exploration , development , and acquisition of oil and natural gas reserves are capitalized including internal costs incurred that are directly related to these activities and which are not related to production , general corporate overhead , or similar activities . future development costs are estimated property-by-property based on current economic conditions and are amortized to expense as our capitalized oil and natural gas property costs are amortized . we compute the provision for depreciation , depletion , and amortization ( “ dd & a ” ) of oil and natural gas properties using the unit-of-production method . this calculation is done on a country-by-country basis . the costs of unproved properties not being amortized are assessed quarterly , on a property-by-property basis , to determine whether such properties have been impaired . in determining whether such costs should be impaired , we evaluate current drilling results , lease expiration dates , current oil and gas industry conditions , international economic conditions , capital availability , and available geological and geophysical information . as these factors may change from period to period , our evaluation of these factors will change . any impairment assessed is added to the cost of proved properties being amortized . the calculation of the provision for dd & a requires us to use estimates related to quantities of proved oil and natural gas reserves and estimates of unproved properties . for both reserves estimates ( see discussion below ) and the impairment of unproved properties ( see discussion above ) , these processes are subjective , and results may change over time based on current information and industry conditions . we believe our estimates and assumptions are reasonable ; however , such estimates and assumptions are subject to a number of risks and uncertainties that may cause actual results to differ materially from such estimates . full-cost ceiling test . at the end of each quarterly reporting period , the unamortized cost of oil and natural gas properties ( including natural gas processing facilities , capitalized asset retirement obligations , net of related salvage values and deferred income taxes , and excluding the recognized asset retirement obligation liability ) is limited to the sum of the estimated future net revenues from proved properties ( excluding cash outflows from recognized asset retirement obligations , including future development and abandonment costs of wells to be drilled , using the preceding 12-months story_separator_special_tag our debt to capitalization ratio increased to 42 % at december 31 , 2011 , as compared to 35 % at december 31 , 2010 , primarily due to the 2011 debt issuance . contractual commitments and obligations our contractual commitments for the next five years and thereafter as of december 31 , 2011 are as follows : replace_table_token_16_th ( 1 ) our most significant office lease is in houston , texas and it extends until 2015 . ( 2 ) amounts shown by year are the net present value at december 31 , 2011 . ( 3 ) amounts shown represent fees for the minimum delivery obligations . any amount of transportation utilized in excess of the minimum will reduce future year obligations ( 4 ) the credit facility expires in may 2016 and these amounts exclude $ 0.9 million standby letters of credit outstanding under this facility . as of december 31 , 2011 we had no off-balance sheet arrangements requiring disclosure pursuant to article 303 ( a ) of regulation s-k. proved oil and gas reserves we have added proved reserves over the past three years primarily through our drilling activities , including 58.0 mmboe added in 2011 , 36.7 mmboe added in 2010 , and 8.5 mmboe added in 2009. the 2011 proved reserves additions from drilling activities consisted almost entirely of reserves additions within our south texas area , most of which were proved undeveloped additions based on the results of the horizontal drilling program conducted in this area during the year . we obtained reasonable certainty regarding these reserves additions by applying the same methodologies that have been used historically in this area . at year-end 2011 , 35 % of our total proved reserves were proved developed , compared with 45 % at year-end 2010 and 50 % at year-end 2009 . 38 at year-end 2011 , our proved reserves were 159.6 mmboe with a pv-10 value of $ 1.9 billion ( pv-10 is a non-gaap measure , see the section titled “ oil and natural gas reserves ” in our property section for a reconciliation of this non-gaap measure to the closest gaap measure , the standardized measure ) , an increase in pv-10 of approximately $ 133 million from the prior year-end levels . in 2011 , our proved natural gas reserves increased 193.8 bcf , or 46 % , while our proved oil reserves decreased 8.4 mmbbl , or 21 % , and our ngl reserves increased 2.9 mmbbl , or 13 % , for a total equivalent increase of 26.8 mmboe , or 20 % . we use the preceding 12-months ' average price based on closing prices on the first business day of each month in calculating our average prices used in the pv-10 calculation . our average natural gas price used in the pv-10 calculation for 2011 was $ 3.89 per mcf . this average price during 2011 was a decrease from $ 4.08 per mcf at year-end 2010 , compared to $ 3.78 per mcf at year-end 2009. our average oil price used in the pv-10 calculation for 2011 was $ 103.87 per bbl . this average price during 2011 was an increase from $ 78.31 per bbl at year-end 2010 , compared to $ 59.76 in 2009. critical accounting policies and new accounting pronouncements property and equipment . we follow the “ full-cost ” method of accounting for oil and natural gas property and equipment costs . under this method of accounting , all productive and nonproductive costs incurred in the exploration , development , and acquisition of oil and natural gas reserves are capitalized including internal costs incurred that are directly related to these activities and which are not related to production , general corporate overhead , or similar activities . future development costs are estimated property-by-property based on current economic conditions and are amortized to expense as our capitalized oil and natural gas property costs are amortized . we compute the provision for depreciation , depletion , and amortization ( “ dd & a ” ) of oil and natural gas properties using the unit-of-production method . this calculation is done on a country-by-country basis . the costs of unproved properties not being amortized are assessed quarterly , on a property-by-property basis , to determine whether such properties have been impaired . in determining whether such costs should be impaired , we evaluate current drilling results , lease expiration dates , current oil and gas industry conditions , international economic conditions , capital availability , and available geological and geophysical information . as these factors may change from period to period , our evaluation of these factors will change . any impairment assessed is added to the cost of proved properties being amortized . the calculation of the provision for dd & a requires us to use estimates related to quantities of proved oil and natural gas reserves and estimates of unproved properties . for both reserves estimates ( see discussion below ) and the impairment of unproved properties ( see discussion above ) , these processes are subjective , and results may change over time based on current information and industry conditions . we believe our estimates and assumptions are reasonable ; however , such estimates and assumptions are subject to a number of risks and uncertainties that may cause actual results to differ materially from such estimates . full-cost ceiling test . at the end of each quarterly reporting period , the unamortized cost of oil and natural gas properties ( including natural gas processing facilities , capitalized asset retirement obligations , net of related salvage values and deferred income taxes , and excluding the recognized asset retirement obligation liability ) is limited to the sum of the estimated future net revenues from proved properties ( excluding cash outflows from recognized asset retirement obligations , including future development and abandonment costs of wells to be drilled , using the preceding 12-months
| results of operations revenues 2011.- our revenues in 2011 increased by 37 % compared to revenues in 2010 due to higher oil and ngl prices as well as higher ngl and natural gas production . average oil prices that we received were 35 % higher than those received during 2010 , while natural gas prices were 6 % lower , and ngl prices were 23 % higher . 2010.- our revenues in 2010 increased by 18 % compared to revenues in 2009 due to higher oil and gas prices after taking into account decreased production as a result of intentional reduction of drilling activity in 2009 's low price environment . average oil prices that we received were 32 % higher than those received during 2009 , while natural gas prices were 14 % higher , and ngl prices were 35 % higher . crude oil production was 37 % of our production volumes in 2011 , 47 % in 2010 , and 48 % in 2009. crude oil sales were 69 % of total sales in 2011 , 71 % in 2010 , and 70 % in 2009. natural gas production was 50 % of our production volumes in 2011 , and 39 % in both 2010 and 2009. natural gas sales were 20 % of sales in 2011 , 18 % in 2010 , and 20 % in 2009. the remaining production in each year was from natural gas liquids ( ngls ) .
| 7,258 |
you should review the `` risk factors '' section as well as the section below entitled `` special note regarding forward-looking statements '' 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 . unless the context otherwise requires , in this annual report on form 10-k , `` hc2 '' means hc2 holdings , inc. and the `` company , '' `` we '' and `` our '' mean hc2 together with its consolidated subsidiaries . `` u.s. gaap '' means accounting principles accepted in the united states of america . our business we are a diversified holding company with principal operations conducted through five operating platforms or reportable segments : infrastructure ( `` dbmg '' ) , life sciences ( `` pansend '' ) , spectrum , insurance ( `` cig '' ) , and other , which includes businesses that do not meet the separately reportable segment thresholds . certain previous year amounts have been reclassified to conform with current year presentations , including : the recasting of gmsl 's , ics 's , and beyond6 's results to discontinued operations . further , the reclassification of prior period assets and liabilities have been classified as held for sale ; as a result of the sale of gmsl , ics , and beyond6 , and in accordance with accounting standards codification ( `` asc '' ) 280 , the company no longer includes the results of operations and balance sheets of these entities as separate segments . these entities and our investment in hmn have been reclassified to the other segment . the recasting of earnings per share ( `` eps '' ) in the prior period , as a result of the discontinued operations noted above . this includes presenting eps for net ( loss ) income from continuing operations , net ( loss ) income from discontinuing operations , and net ( loss ) income . our operations refer to note 1. organization and business to our consolidated financial statements for additional information . seasonality and cyclical patterns our segments ' operations can be highly cyclical . our volume of business in our infrastructure segment may be adversely affected by declines or delays in projects , which may vary by geographic region . project schedules , particularly in connection with large , complex , and longer-term projects can also create fluctuations in the services provided , which may adversely affect us in a given period . for example , in connection with larger , more complicated projects , the timing of obtaining permits and other approvals may be delayed , and we may need to maintain a portion of our workforce and equipment in an underutilized capacity to ensure we are strategically positioned to deliver on such projects when they move forward . examples of other items that may cause our results or demand for our services to fluctuate materially from quarter to quarter include : weather or project site conditions , financial condition of our customers and their access to capital ; margins of projects performed during any particular period ; economic , and political and market conditions on a regional , national or global scale . accordingly , our operating results in any particular period may not be indicative of the results that can be expected for any other period . recent developments covid-19 impact on our business on march 11 , 2020 , the world health organization declared the outbreak of the novel coronavirus ( `` covid-19 '' ) pandemic resulting in action from federal , state and local governments that has significantly affected virtually all facets of the u.s. and global economies . the u.s. federal and various state governments , have implemented enhanced screenings , quarantine requirements , and travel restrictions in connection with the covid-19 outbreak . the company 's top priority is to protect its employees and their families , and those of the company 's customers . the company continues to take precautionary measures as directed by health authorities and the local government , including changing operational procedures as necessary , providing additional protective gear and cleaning to protect them , which has resulted and may continue to result in disruptions to and increased costs of the company 's operations . we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees , customers , partners , vendors , and suppliers . work-from-home and other measures introduce additional operational risks , including cybersecurity risks , and have affected the way we conduct our operations . there is no certainty that such measures will be sufficient to mitigate the risks posed by the virus , and illness and workforce disruptions could lead to unavailability of key personnel and harm our ability to perform critical functions . the extent of the impact of covid-19 on our operational and financial performance will depend on future developments , including , but not limited to , the duration and spread of the outbreak , the outbreak of any new strains of the coronavirus , and related travel advisories and restrictions , and its impact to the u.s. and global financial markets , all of which are highly uncertain and can not be predicted . preventing the effects from and responding to this market disruption if any other public health threat , related or otherwise , may further increase costs of our business and may have a material adverse effect on our business , financial condition , and results of operations . we continue to monitor the evolving situation and guidance from authorities , including federal , state and local public health departments , and may take additional actions based on their recommendations . in these circumstances , there may be developments outside our control requiring us to adjust our plans . story_separator_special_tag acquisitions and dispositions other sale of gmsl on january 30 , 2020 , the company announced that , through its indirect subsidiary gmh in which the company holds an approximately 73 % controlling interest , the company entered into a definitive agreement to sell 100 % of the shares of gmsl to trafalgar acquisitionco , ltd. and an affiliate of j.f . lehman & company , llc . the total base consideration was $ 250.0 million , subject to customary purchase price adjustments , working capital adjustments , and a potential earn-out of up to $ 12.5 million at such time , if any , if j.f . lehman & company , llc and its investment affiliates achieve a specified multiple of their invested capital . the purchase price is subject to customary potential downward or upward post-closing adjustments based on net working capital , cash , unpaid transaction expenses , indebtedness and certain of the company 's pre-closing paid capital expenditures . the share purchase agreement contains customary representations , warranties and covenants for a transaction of this nature . in connection with the closing of the transaction , the purchaser deposited ( i ) $ 1.25 million of the base price into an escrow fund for the purpose of securing certain indemnification obligations 55 for losses payable in the first twelve months after closing and ( ii ) $ 1.91 million of the base price into an escrow fund for the purpose of securing a purchase price adjustment , if any , in favor of purchaser . following the closing , the purchaser shall pay an amount equal to $ 2.4 million on the earlier of december 31 , 2020 and the date on which a cash collateralized bonding facility is released . the transaction closed on february 28 , 2020. gmh received approximately $ 144.0 million of net proceeds from the sale , of which $ 36.8 million and $ 5.5 million were paid to noncontrolling interest holders and redeemable noncontrolling interest holders , respectively . hc2 received net proceeds of approximately $ 100.8 million . at the time of the sale , the company recorded a $ 39.3 million loss , inclusive of recognizing a $ 31.3 million loss from the realization of aoci . during the fourth quarter of 2020 , the company recognized a gain on sale of $ 2.4 million c noted above . sale of hmn on october 30 , 2019 , the company announced the sale of its stake in hmn , its 49 % joint venture with huawei technologies co. , ltd. , to hengtong optic-electric co ltd. the sale valued hmn at $ 285.0 million , and gmh 's 49 % stake , through new saxon , at approximately $ 140.0 million . under the terms of the sale and purchase agreement , the sale of new saxon 's 49 % interest in hmn will be affected in two tranches . the sale of the portion of new saxon 's 30 % interest of hmn , closed on may 12 , 2020 ( the `` first hmn close '' ) . the remaining 19 % interest of hmn is retained by new saxon and subject to a put option agreement by new saxon , exercisable starting on the second year anniversary of the closing date of the first hmn close at a price equal to the greater of the share price paid for the 30 % interest or fair market value as of the exercisable date . in conjunction with the first tranche of the sale , the company received $ 85.5 million in cash , of which $ 17.5 million and $ 2.1 million were paid to noncontrolling interest holders and redeemable noncontrolling interest holders , respectively . new saxon recorded a $ 71.1 million gain , included in other income ( loss ) in the condensed consolidated statements of operations . the gain recognized includes $ 11.3 million related to the fair value of the put option . in addition , the company recorded a $ 7.2 million tax expense related to a foreign tax payment when the first tranche closed . sale of ics the sale of ics and its subsidiary , go2 tel , inc. , closed on october 31 , 2020. the company recorded a $ 0.9 million gain on the sale . proceeds were used for general corporate purposes . sale of beyond6 on december 31 , 2020 , the company announced a plan to sell beyond6 to an affiliate of mercuria investments us , inc. , pursuant to an agreement and plan of merger ( the `` merger agreement '' ) among beyond6 , greenfill , inc. , a delaware corporation ( `` parent '' ) , greenfill merger inc. , a newly-formed delaware corporation and wholly-owned subsidiary of the parent , and an affiliate of hc2 as the stockholder representative for the beyond6 stockholders . the sale closed on january 15 , 2021 debt obligations spectrum in february 2020 , spectrum amended its agreement governing its privately placed note funded by msd partners , l.p. , increasing the principal balance to $ 39.3 million . the proceeds were used to repay principal and interest on existing debt . in august 2020 , spectrum modified its agreement with msd partners , l.p. and great american life insurance company to extend the maturity on its privately placed notes to october 2021. in september 2020 , spectrum amended its agreement governing its privately placed note funded by msd partners , l.p. , increasing the principal balance by $ 4.0 million to $ 43.3 million . the proceeds were used to repay principal and interest on existing debt and for general business purposes . in november 2020 , spectrum paid down $ 2.9 million of its 8.50 % note due 2021 and $ 3.0 million on other various notes . in december 2020 , spectrum paid down $ 21.0 million and $ 9.6 million of its 8.5 % note due 2021 and 10.5 % note due 2021 , respectively .
| segment results of operations in the company 's consolidated financial statements , other operating ( income ) expense includes ( i ) ( gain ) loss on sale or disposal of assets , ( ii ) lease termination costs , ( iii ) asset impairment expense , ( iv ) accretion of asset retirement obligations , and ( v ) fcc reimbursements . each table summarizes the results of operations of our operating segments and compares the amount of the change between the periods presented ( in millions ) . infrastructure segment replace_table_token_4_th net revenue : net revenue from our infrastructure segment for the year ended december 31 , 2020 decreased $ 36.7 million to $ 676.6 million from $ 713.3 million for the year ended december 31 , 2019. the decrease was primarily driven by lower revenues from our structural steel fabrication and erection business , which had increased activity in the comparable period on certain large commercial construction projects that are now at or near completion , as well as a decrease in power and industrial maintenance and repair work performed . cost of revenue : cost of revenue from our infrastructure segment for the year ended december 31 , 2020 decreased $ 6.1 million to $ 566.2 million from $ 572.3 million for the year ended december 31 , 2019. the decrease was primarily driven by the timing of project work under execution and change in backlog mix , including a reduction in large commercial construction projects in the current period . the decrease was partially offset by higher costs incurred in response to the covid-19 pandemic .
| 7,259 |
46 changes in the company 's gross liability for unrecognized tax benefits , excluding interest and penalties , were as follows ( in thousands ) : replace_table_token_21_th we recognize interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes . during the years ended december 31 , 2019 , 2018 and 2017 , we recorded $ 0.2 million , $ 0.1 million and $ 0.1 million , respectively , for interest and penalties , net of tax benefits . during each of the years 2019 , 2018 and 2017 story_separator_special_tag the following discussion should be read in conjunction with our financial statements , which present our results of operations for t he years ended december 31 , 2019 , 2018 and 2017 , as well as our financial positions at december 31 , 2019 and 2018 , contained elsewhere in this form 10-k. some of the information contained in this discussion and analysis or set forth elsewhere in this 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 “ special note regarding forward looking statements ” and “ risk factors ” sections of this 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 . the discussion that follows includes a comparison of the company 's results of operations and liquidity and capital resources for the years ended december 31 , 2019 and 2018 . for the discussion of changes from the year ended december 31 , 2017 to the year ended december 31 , 2018 and other financial information related to the year ended december 31 , 2017 , refer to item 7. management 's discussion and analysis of financial condition and results of operations , of the company 's form 10-k for the year ended december 31 , 2018. this document was filed with the united states securities and exchange commission on february 21 , 2019. recent acquisitions on may 2 , 2018 , the company acquired cid , which manufactures uniforms , lab coats , and layers , and sells its products to specialty uniform retailers , ecommerce medical uniform retailers , and other retailers . the purchase price in the acquisition consisted of the following : ( a ) approximately $ 84.4 million in cash at closing , ( b ) the issuance of 150,094 shares of the company 's common stock to an equity holder of cid , and ( c ) $ 2.5 million in cash as a result of the cash and working capital adjustment . business outlook superior is comprised of three reportable business segments : ( 1 ) uniforms and related products , ( 2 ) remote staffing solutions , and ( 3 ) promotional products . uniforms and related products historically , we have manufactured and sold a wide range of uniforms , career apparel and accessories , which comprises our uniforms and related products segment . our primary products are provided to workers employed by our customers and , as a result , our business prospects are dependent upon levels of employment and overall economic conditions , among other factors . our revenues are impacted by our customers ' opening and closing of locations and reductions , increases , and turnover of employees . the current economic environment in the united states is continuing to see improvement in the employment environment . we also continue to see an increase in the demand for employees in the healthcare sector and our acquisition of cid provides us with opportunities to expand the markets that we serve within this sector , including the sale of our products to retail markets . these factors are expected to have positive impacts on future net sales growth . remote staffing solutions this business segment , which operates in el salvador , belize , jamaica , and the united states , was initially started to provide remote staffing services for the company at a lower cost structure in order to improve our own operating results . it has in fact enabled us to reduce our operating expenses in our uniforms and related products segment and to more effectively service our customers ' needs in that segment . we began selling remote staffing services to other companies at the end of 2009. we have grown this business from approximately $ 1.0 million in net sales to outside customers in 2010 to $ 31.6 million in net sales to outside customers in 2019 . we have spent significant effort over the last several years improving the depth of our management infrastructure and expanding our facilities in this segment to support significant growth . net sales to outside customers increased by approximately 16 % and 42 % in 2019 and 2018 , respectively . 18 promotional products we have been involved in the sale of promotional products , on a limited basis , to our uniforms and related products customers for over a decade . however , we lacked the scale and expertise needed to be a recognized name in this market prior to our acquisition of substantially all of the assets of bamko effective on march 1 , 2016. bamko has been operating in the promotional products industry for approximately 18 years and we believe that bamko 's strong back office and support systems located in india , china and hong kong , as well as their “ direct to factory ” sourcing operations provide us with a competitive advantage . we believe that bamko has well developed systems and processes that can serve as a platform for additional acquisitions that we may complete in this highly fragmented market . we completed two additional acquisitions in this segment in late 2017. we have seen an uptick in customer orders for this segment in the current year , and we expect to see continuing growth opportunities within the industry next year . story_separator_special_tag as a percentage of net sales , selling and administrative expenses for our promotional products segment was 22.1 % for the year ended december 31 , 2019 and 23.9 % for the year ended december 31 , 2018 . the percentage decrease was primarily related to the net sales increase explained above . selling and administrative expenses included fair market value adjustments on acquisition related contingent liabilities that reduced selling and administrative expenses by $ 0.4 million and $ 1.7 million during the years ended december 31 , 2019 and 2018 , respectively . other periodic pension costs during the year ended december 31 , 2019 , the company recorded $ 1.1 million in pension settlement losses that resulted from lump sum pension payments made to various employees upon their retirement or termination during the periods specified . the pension settlement losses did not require a cash outlay by the company and did not increase the company 's total pension expense over time , as the charge was an acceleration of costs that otherwise would be recognized as pension expense in future periods . interest expense interest expense increased to $ 4.4 million for the year ended december 31 , 2019 from $ 3.2 million for the year ended december 31 , 2018 . this increase was primarily the result of the company entering into the amended and restated credit agreement on may 2 , 2018 as a part of the acquisition of cid . during the year ended december 31 , 2019 and 2018 , the average outstanding borrowings under our credit facilities were $ 123.6 million and $ 105.7 million , respectively . see note 6 to the financial statements . 20 income taxes the effective income tax rate was 21.1 % and 20.7 % in the years ended december 31 , 2019 and 2018 , respectively . during the year ended december 31 , 2019 compared to the year ended december 31 , 2018 , the effective tax rate remained relatively flat primarily due to an increase in state and local taxes ( contributing 2.8 % ) and an increase in the changes in uncertain tax positions ( contributing 1.3 % ) , partially offset by compensation related items ( contributing ( 1.6 ) % ) and rate impacts due to foreign operations ( contributing ( 1.2 ) % ) . the effective tax rate may vary from quarter to quarter due to unusual or infrequently occurring items , the resolution of income tax audits , changes in tax laws , the tax impact from employee share-based payments , taxes incurred in connection to the territorial style tax system , or other items . for further discussion of changes in the effective tax rate , refer to the note 7 to the financial statements . liquidity and capital resources story_separator_special_tag credit agreement ” ) , consisting of $ 37.8 million outstanding under the revolving credit facility expiring in may 2023 , $ 25.5 million outstanding under a term loan maturing in february 2024 ( “ 2017 term loan ” ) , and $ 56.5 million outstanding under a term loan maturing in january 2026 ( “ 2018 term loan ” ) . the revolving credit facility , 2017 term loan and 2018 term loan are collectively referred to as the “ credit facilities. ” on september 27 , 2019 , the company entered into a second amendment to the amended and restated credit agreement , which ( i ) increased the company 's maximum permitted funded debt to ebitda ratio under the amended and restated credit agreement from 4.0:1 to 5.0:1 and ( ii ) applied a tiered interest rate structure to the company 's existing loans in the event that its funded debt to ebitda ratio exceeds 4.0:1. the interest rate on such loans will equal libor plus a margin that adjusts quarterly and is based on the company 's funded debt to ebitda ratio . contractual principal payments for the 2017 term loan are as follows : 2020 through 2023 - $ 6.0 million per year ; and 2024 - $ 1.5 million . contractual principal payments for the 2018 term loan are as follows : 2020 through 2025 - $ 9.3 million per year ; and 2026 - $ 0.8 million . the term loans do not contain pre-payment penalties . obligations outstanding under the 2018 term loan have a variable interest rate of libor plus a margin of between 0.85 % and 1.65 % ( based on the company 's funded debt to ebitda ratio ) ( 2.60 % at december 31 , 2019 ) . obligations outstanding under the revolving credit facility and the 2017 term loan generally have a variable interest rate of one-month libor plus a margin of between 0.68 % and 1.50 % ( based on the company 's funded debt to ebitda ratio ) ( 2.43 % at december 31 , 2019 ) . the available balance under the revolving credit facility is reduced by outstanding letters of credit . as of december 31 , 2019 , there were no outstanding letters of credit . the amended and restated credit agreement contains customary events of default and negative covenants , including but not limited to those governing indebtedness , liens , fundamental changes , investments , restricted payments , and sales of assets . the amended and restated credit agreement also requires the company to maintain a fixed charge coverage ratio ( as defined in the amended and restated credit agreement ) of at least 1.25:1 and a funded debt to ebitda ratio ( as defined in the amended and restated credit agreement ) not to exceed 5.0:1. as of december 31 , 2019 , the company was in compliance with these ratios . the credit facilities are secured by substantially all of the operating assets of the company as collateral , and the company 's obligations under the credit facilities are guaranteed by all of its domestic subsidiaries .
| overview management uses a number of standards in measuring the company 's liquidity , such as : working capital , profitability ratios , cash flows from operating activities , and activity ratios . the strength of the company 's balance sheet provides the ability to pursue acquisitions , invest in new product lines and technologies and invest in additional working capital as necessary . as of december 31 , 2019 , approximately $ 7.2 million of our cash is held in our foreign subsidiaries . as a result of the tax cuts and jobs act ( “ tax act ” ) , the company no longer intends to permanently reinvest its historical foreign earnings and plans to repatriate the funds as needed for liquidity . the company 's primary source of liquidity has been its net income and the use of credit facilities and term loans as described further below . in the future , the company may continue to use credit facilities and other secured and unsecured borrowings as a source of liquidity . the company may also begin relying on the issuance of equity or debt securities . there can be no assurance that any such financings would be available to us on reasonable terms . any future issuances of equity securities or debt securities with equity features may be dilutive to our shareholders . additionally , the cost of the company 's future sources of liquidity may differ from the costs of the company 's sources of liquidity to date . working capital cash and cash equivalents increased by $ 3.6 million to $ 9.0 million as of december 31 , 2019 from $ 5.4 million on december 31 , 2018 . working capital decreased to $ 142.4 million at december 31 , 2019 from $ 150.8 million at december 31 , 2018 .
| 7,260 |
our offerings enable users to collect , index , search , explore , monitor and analyze data regardless of format or source . our offerings address large and diverse data sets , commonly referred to as big data , and are specifically tailored for machine data . machine data is produced by nearly every software application and electronic device and contains a definitive , time-stamped record of various activities , such as transactions , customer and user activities , and security threats . beyond an organization 's traditional information technology ( “ it ” ) and security infrastructure , every processor-based system , including hvac controllers , many manufacturing systems , smart electrical meters , gps devices and radio-frequency identification tags , and many consumer-oriented systems , such as electronic wearables , mobile devices , automobiles and medical devices that contain embedded processor chips , are also continuously generating machine data . our offerings help organizations gain value from all of these different sources and forms of machine data . we believe the market for products that provide operational intelligence presents a substantial opportunity as data grows in volume and diversity , creating new risks , opportunities and challenges for organizations . since our inception , we have invested a substantial amount of resources developing our offerings to address this market , specifically with respect to machine data . our offerings are designed to deliver rapid return-on-investment for our customers . they generally do not require customization , long deployment cycles or extensive professional services commonly associated with traditional enterprise software applications . for splunk enterprise , users can simply download and install the software , typically in a matter of hours , to connect to their relevant machine data sources . alternatively , they can sign up for our splunk cloud service and avoid the 40 need to provision , deploy and manage internal infrastructure . they can also provision a compute instance on amazon web services via a pre-built amazon machine image , which delivers a pre-configured virtual machine instance with our splunk enterprise software . we also offer support , training and professional services to our customers to assist in the deployment of our software . for splunk enterprise , we base our license fees on the estimated daily data indexing capacity our customers require . prospective customers can download a free 60-day trial of splunk enterprise , which converts into a limited free perpetual license of up to 500 megabytes of data per day . a majority of our license revenues consist of revenues from perpetual licenses , whereby we generally recognize the license fee portion of these arrangements upfront . as a result , the timing of when we enter into large perpetual licenses may lead to fluctuations in our revenues and operating results because our expenses are largely fixed in the short-term . additionally , we license our software under term licenses , which are generally recognized ratably over the contract term . from time to time , we also enter into transactions that are designed to enable broad adoption of our software within an enterprise , referred to as enterprise adoption agreements . these agreements often include provisions that require revenue deferral and recognition over time . our splunk cloud service delivers the core functionalities of splunk enterprise as a scalable , reliable cloud service . splunk cloud customers pay an annual subscription fee based on the combination of the volume of data indexed per day and the length of the data retention period . our product , hunk : splunk analytics for hadoop , is a software product that enables exploration , analysis and visualization of data in hadoop . splunk light provides log search and analysis that is designed and priced and packaged for small it environments . splunk enterprise security addresses emerging security threats and siem use cases through monitoring , alerts and analytics . splunk user behavior analytics detects cyber-attacks and insider threats using data science , machine learning and advanced correlation . splunk it service intelligence monitors the health and key performance indicators of critical it services . we intend to continue investing for long-term growth . we have invested and expect to continue to invest heavily in our product development efforts to deliver additional compelling features , address customer needs and enable solutions that can address new end markets . for example , we released new versions of existing products such as splunk enterprise and introduced new products for the security and it markets during fiscal 2016. in addition , we expect to continue to aggressively expand our sales and marketing organizations to market and sell our software both in the united states and internationally . we have utilized and expect to continue to utilize acquisitions to contribute to our long-term growth objectives . in june 2015 , we acquired metafor software , a privately-held british columbia corporation , which developed technology that provides anomaly detection and behavioral analytics for it operations . in july 2015 , we acquired caspida , a privately-held delaware corporation , which developed technology that provides behavioral analytics to help detect , respond to and mitigate advanced security and insider security threats . our goal is to make our software the platform for delivering operational intelligence and real-time business insights from machine data . the key elements of our growth strategy are to : extend our technological capabilities . continue to expand our direct and indirect sales organization , including our channel relationships , to increase our sales capacity and enable greater market presence . further penetrate our existing customer base and drive enterprise-wide adoption . enhance our value proposition through a focus on solutions which address core and expanded use cases . grow our user communities and partner ecosystem to increase awareness of our brand , target new use cases , drive operational leverage and deliver more targeted , higher value solutions . continue to deliver a rich developer environment to enable rapid development of enterprise applications that leverage machine data and the splunk platform . story_separator_special_tag we also exclude the non-cash charge for previously capitalized research and development expense for our splunk storm product ( reflected as an impairment of a long-lived asset ) as a result of our strategic decision to start making splunk storm available at no cost to customers , a decision that we expect to be infrequent in nature . we also exclude amortization of acquired intangible assets , acquisition-related costs , ground lease expense related to a build-to-suit lease obligation and the partial release of the valuation allowance due to acquisitions from our non-gaap financial measures because these are considered by management to be outside of our core operating results . 42 accordingly , we believe that excluding these expenses provides investors and management with greater visibility to the underlying performance of our business operations , facilitates comparison of our results with other periods and may also facilitate comparison with the results of other companies in our industry . we consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can be used for strategic opportunities , including investing in our business , making strategic acquisitions and strengthening our balance sheet . there are limitations in using non-gaap financial measures because the non-gaap financial measures are not prepared in accordance with gaap , may be different from non-gaap financial measures used by our competitors and exclude expenses that may have a material impact upon our reported financial results . further , stock-based compensation expense has been and will continue to be for the foreseeable future a significant recurring expense in our business and an important part of the compensation provided to our employees . the non-gaap financial measures are meant to supplement and be viewed in conjunction with gaap financial measures . the following table reconciles our net cash provided by operating activities to free cash flow for the fiscal years ended january 31 , 2016 , 2015 and 2014 ( in thousands ) : replace_table_token_7_th the following table reconciles gaap gross margin to non-gaap gross margin for the fiscal years ended january 31 , 2016 , 2015 and 2014 : replace_table_token_8_th the following table reconciles gaap operating loss to non-gaap operating income ( loss ) for the fiscal years ended january 31 , 2016 , 2015 and 2014 ( in thousands ) : replace_table_token_9_th the following table reconciles gaap operating margin to non-gaap operating margin for the fiscal years ended january 31 , 2016 , 2015 and 2014 : 43 replace_table_token_10_th the following table reconciles gaap net loss to non-gaap net income ( loss ) for the fiscal years ended january 31 , 2016 , 2015 and 2014 ( in thousands ) : replace_table_token_11_th the following table reconciles the shares used in computing basic and diluted gaap and non-gaap net income ( loss ) per share for the fiscal years ended january 31 , 2016 , 2015 and 2014 ( in thousands , except per share amounts ) : replace_table_token_12_th components of operating results revenues license revenues . license revenues reflect the revenues recognized from sales of licenses to new customers and additional licenses to existing customers . we are focused on acquiring new customers and increasing revenues from our existing customers as they realize the value of our software by indexing higher volumes of machine data and expanding the use of our software through additional use cases and broader deployment within their organizations . a majority of our license revenues consists of revenues from perpetual licenses , under which we generally recognize the license fee portion of the arrangement upfront , assuming all revenue recognition criteria are satisfied . customers can also purchase term license agreements , under which we recognize the license fee ratably , on a straight-line basis , over the term of the license . due to the differing revenue recognition policies applicable to perpetual and term licenses , shifts in the mix between perpetual and term licenses from quarter to quarter could produce substantial variation in revenues recognized even if our sales remain consistent . in addition , seasonal trends that contribute to increased sales activity in the fourth fiscal quarter often result in lower sequential revenues in the first fiscal quarter , and we expect this trend to continue . comparing our revenues on a period-to-period basis may not be meaningful , and you should not rely on our past results as an indication of our future performance . 44 maintenance and services revenues . maintenance and services revenues consist of revenues from maintenance agreements and , to a lesser extent , professional services and training , as well as revenues from our cloud services . typically , when purchasing a perpetual license , a customer also purchases one year of maintenance service for which we charge a percentage of the license fee . when a term license is purchased , maintenance service is typically bundled with the license for the term of the license period . customers with maintenance agreements are entitled to receive support and unspecified upgrades and enhancements when and if they become available during the maintenance period . we recognize the revenues associated with maintenance agreements ratably , on a straight-line basis , over the associated maintenance period . in arrangements involving a term license , we recognize both the license and maintenance revenues over the contract period . we have a professional services organization focused on helping some of our largest customers deploy our software in highly complex operational environments and train their personnel . we recognize the revenues associated with these professional services on a time and materials basis as we deliver the services or provide the training . we expect maintenance and services revenues to become a larger percentage of our total revenues as our installed customer base grows . we generally recognize the revenues associated with our cloud services ratably , on a straight-line basis , over the associated subscription term .
| results of operations the following tables set forth our results of operations for the periods presented and as a percentage of our total revenues for those periods . the period-to-period comparison of financial results is not necessarily indicative of financial results to be achieved in future periods . 46 replace_table_token_13_th ( 1 ) calculated as a percentage of the associated revenues . 47 fiscal 2016 , 2015 and 2014 revenues replace_table_token_14_th fiscal 2016 compared to fiscal 2015. the increase in license revenues of $ 122.2 million was primarily driven by increases in our total number of customers , sales to existing customers and an increase in the number of larger orders . for example , we had 1,447 and 1,112 orders greater than $ 100,000 for the fiscal years ended january 31 , 2016 and 2015 , respectively . our total number of splunk customers increased from approximately 9,000 at january 31 , 2015 to approximately 11,000 at january 31 , 2016. the increase in maintenance and services revenues of $ 95.4 million was due to increases in sales of maintenance agreements resulting from the growth of our installed customer base as well as sales of our professional services . fiscal 2015 compared to fiscal 2014. the increase in license revenues of $ 84.2 million was primarily driven by increases in our total number of customers , sales to existing customers and an increase in the number of larger orders . for example , we had 1,112 and 791 orders greater than $ 100,000 for the fiscal years ended january 31 , 2015 and 2014 , respectively .
| 7,261 |
we assess the potential impairment of identifiable intangible assets and fixed assets whenever events or changes in circumstances indicate that the carrying values may not be recoverable and at least annually . factors we consider important , which could trigger an impairment of such assets , include the following : · significant underperformance relative to historical or projected future operating results ; · significant changes in the manner or use of the assets or the strategy for our overall business ; · significant negative industry or economic trends ; · a significant decline in our stock price for a sustained period ; and · a decline in our market capitalization below net book value . future adverse changes in these or other unforeseeable factors could result in an impairment charge that could materially impact future results of operations and financial position in the reporting period identified . no impairment charges were recorded for continuing operations in fiscal 2015 , 2014 , or 2013 based on the review of long-lived assets . 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 , are being presented as discontinued operations in the consolidated statements of income for all periods presented . see note 4 — discontinued operations in the notes to consolidated financial statements 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 . on may 5 , 2014 , we completed the drp acquisition , which expanded our capabilities to include custom injection molding services , rapid prototyping , and tooling . on december 11 , 2014 , we completed the bti acquisition . bti , based in columbia , missouri , is a leading provider of hunting and shooting accessories and offers innovative , high-quality products under several brands . results of operations for the fiscal year ended april 30 , 2015 include activity for the period subsequent to the respective drp and bti acquisitions . subsequent to the bti acquisition , we began reporting our results of operations in two segments : ( 1 ) accessories , representing bti , and ( 2 ) firearms , representing all other operations . 2015 highlights our fiscal 2015 net sales of $ 551.9 million represented a decrease of 11.9 % from our fiscal 2014 net sales . net sales for our firearm division decreased by 15.2 % to $ 531.2 million from the prior fiscal year . our accessories division generated $ 20.6 million of net sales , or 3.7 % of total net sales , following the bti acquisition on december 11 , 2014. income from continuing operations for fiscal 2015 was $ 49.8 million , or $ 0.90 per fully diluted share , compared with income from continuing operations of $ 88.6 million , or $ 1.47 per fully diluted share , for fiscal 2014. our operating results for fiscal 2015 were affected by numerous factors , including the following : · the 15.2 % decrease in firearm net sales was primarily driven by lower consumer demand and excess distributor and retailer inventories in the firearm industry following the surge in demand in the prior fiscal year . the lower demand and excess channel inventories primarily impacted sales of our long guns , specifically our modern sporting rifles , which was partially offset by increased bolt action and single shot hunting rifle sales . in fiscal 2015 , consumer demand for handguns , as reflected in nics background checks , increased over fiscal 2014 , which led to increased sales of our small concealed carry polymer pistols and revolvers . however , those increased sales were more than offset by a decrease in sales of our larger frame m & p branded polymer pistols because a portion of the increased consumer demand for our handguns was satisfied by excess channel inventory . the drp and bti acquisitions resulted in a 5.7 % increase in total net sales for fiscal 2015. a reduction in units produced as a result of the lower demand and excess channel inventories negatively impacted our firearm net sales by 16.6 % . · our gross margin decreased 6.0 percentage points from the prior fiscal year primarily as a result of a combination of the reduced sales volumes for our higher-margin products , higher manufacturing-related spending relative to sales volumes , additional promotional product discounts , and unfavorable manufacturing fixed-cost absorption for fiscal 2015. as a result of the bti acquisition , w e recorded $ 4.2 million of increased cost of goods sold related to a step-up of inventory , which negatively impacted gross margin for our accessories division by 20.1 percentage points and the total company by 0.8 percentage points . the entire step-up of inventory was expensed during fiscal 2015 . · income from continuing operations was negatively impacted by increased depreciation expense as a result of increased capital spending , including the transition of our erp system to sap in fiscal 2014 and acquisition-related costs incurred in fiscal 2015 . · during fiscal 2015 , we completed our most recent stock repurchase program by repurchasing 2.1 million shares of our common stock for $ 30.0 million utilizing cash on hand , which had a positive impact on our diluted earnings per share from continuing operations . our business we are one of the world 's leading manufacturers of firearms . story_separator_special_tag fiscal 2014 cost of sales and gross profit compared with fiscal 2013 gross profit for fiscal 2014 increased over fiscal 2013 , primarily because of an increase in sales volume , a strategic change in production mix to higher margin polymer pistol products , and capacity increases that more than offset spending increases during fiscal 2014. overall gross margin increased 4.2 percentage points over fiscal 2013 with improved mix contributing 0.7 percentage points , or $ 3.7 million , to gross margin because of an increase in the volume of polymer pistols produced , offset by lower margin products , such as walther products . improved manufacturing efficiency and absorption because of increased production benefitted gross margin by 3.1 percentage points , or $ 31.7 million , while reduced spending on promotions improved gross margin by 0.7 percentage points , or $ 4.6 million . the 2013 change to our pricing and discount structure , combined with the january 2014 price increase on selected products , increased gross margin by 0.6 percentage points , or $ 6.9 million . increased manufacturing and volume-related spending negatively impacted gross margin by 1.8 percentage point , or $ 11.6 million . during fiscal 2013 , we incurred $ 3.0 million of warranty costs associated with the thompson/center arms bolt action rifle recall , which negatively impacted gross margin by 0.5 % in that year . 32 operating expenses the following table sets forth certain information regarding operating expenses for the fiscal years ended april 30 , 2015 , 2014 , and 2013 ( dollars in thousands ) : replace_table_token_7_th replace_table_token_8_th replace_table_token_9_th fiscal 2015 operating expenses compared with fiscal 2014 in our firearm division , research and development expenses increased $ 753,000 from the prior fiscal year , primarily because of increased expenses related to new product development testing materials . selling and marketing expenses were relatively flat from the prior fiscal year with decreases in salary and benefit costs offset by additional co-op advertising and other advertising and promotional expenses . general and administrative costs decreased $ 13.0 million from the prior fiscal year and reflected a $ 7.5 million reduction from eliminating management incentive compensation expense , a $ 4.8 million reduction in profit sharing expense , a $ 3.7 million reduction in stock-based compensation expense , and a $ 3.2 million reduction in professional fees , primarily relating to consulting services for training and post-implementation support of our erp system , all of which were partially offset by $ 2.1 million of acquisition-related costs and $ 1.7 million of additional depreciation expense . general and administrative expenses for our accessories division of $ 6.3 million included $ 3.6 million of intangible amortization expense as a result of the bti acquisition . fiscal 2014 operating expenses compared with fiscal 2013 research and development expenses for fiscal 2014 increased $ 858,000 compared with fiscal 2013 , primarily because of $ 466,000 additional salary and benefit costs and $ 209,000 of additional depreciation expense . selling and marketing expenses increased $ 3.4 million for fiscal 2014 , which was primarily as a result of $ 2.5 million of additional advertising expense on marketing programs for dealers and $ 599,000 of additional trade show expenses due to timing . general and administrative costs for fiscal 2014 increased $ 18.6 million over fiscal 2013 , primarily because of $ 4.2 million of increased salary and benefits expense from additional headcount to support our business growth and management incentive accruals ; $ 4.1 million of additional stock-based compensation expense primarily related to options , rsus , and psus granted to our employees late in fiscal 2013 and early fiscal 2014 ; $ 1.5 million of additional profit sharing expense as a result of increased eligible compensation ; $ 1.3 million of additional depreciation expense ; and $ 7.2 million of additional consulting fees primarily associated with the support and employee training for our erp system . operating expenses as a percentage of net sales increased by 2.8 % , predominately because of the increased spending for our new dealer incentive program , servicing our erp system , and additional stock-based compensation expense mentioned above . 33 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 , 2015 , 2014 , and 2013 ( dollars in thousands ) : replace_table_token_10_th replace_table_token_11_th accessories division 2015 2014 $ change % change 2013 loss from operations $ ( 2,903 ) $ — $ ( 2,903 ) n/a $ — % of net sales -14.1 % — — fiscal 2015 operating income from continuing operations compared with fiscal 2014 for fiscal 2015 , operating income from continuing operations declined $ 61.4 million compared with the prior fiscal year , primarily because of lower sales of our modern sporting rifles and large frame m & p branded polymer pistols and the related operating profit impacts from higher spending , unfavorable manufacturing fixed-cost absorption from reduced net sales , increased advertising and promotional spending , additional depreciation expense from increased capital expenditures , and acquisition-related costs . the loss from operations related to our accessories division was primarily due to the fair value inventory step-up that was expensed during fiscal 2015 as well as the amortization of intangibles recorded as a result of the bti acquisition . fiscal 2014 operating income from continuing operations compared with fiscal 2013 for fiscal 2014 , operating income from continuing operations increased by $ 18.2 million over fiscal 2013 , primarily because of increased sales volume as a result 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 , partially offset by a 26.8 % increase in operating expenses primarily because of expenses associated with our marketing programs for dealers and trade show expenses , administrative costs relating to the support and employee training for our erp system , additional stock-based compensation expense primarily from rsus and psus granted to our employees late in fiscal
| results of operations net sales the following table sets forth certain information regarding net sales for the fiscal years ended april 30 , 2015 , 2014 , and 2013 ( dollars in thousands ) : replace_table_token_3_th fiscal 2015 net sales compared with fiscal 2014 net sales in our firearm division for fiscal 2015 decreased 15.2 % from the prior fiscal year . although consumer demand for handguns , as reflected in nics background checks , increased over fiscal 2014 , we believe that a portion of the consumer demand was satisfied with excess channel inventory . thus , our handgun sales decreased $ 27.5 million , or 6.5 % , from the prior fiscal year because 30 of the decrease in sales of our larger frame m & p branded polymer pistol products , partially offset by increased sales of our small concealed carry polymer pistols and revolvers . net sales for our long guns decreased $ 65.1 million , or 41.9 % , from the prior fiscal year , primarily because of reduced sales of our modern sporting rifles as a result of lower demand , partially offset by increased lower price point sport rifle sales as well as bolt action and single-shot hunting rifle sales . other products and services net sales increased by 5.6 % from the prior fiscal year , primarily as a result of sales of our injection molding products following the drp acquisition in early fiscal 2015 , which represented 2.0 % of firearm net sales , as well as increased handcuff sales . firearm net sales were positively impacted by a price increase in january 2014 on a selected number of our products . in total , price increases favorably impacted firearm net sales for fiscal 2015 compared with the prior fiscal year by 0.3 % while decreases in the number of units sold impacted firearm net sales by 16.6 % .
| 7,262 |
you should review the section titled “ risk factors ” in part i , item 1a 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 an innovative biopharmaceutical company dedicated to developing best-in-class medicines for patients with difficult-to-treat diseases . we combine proven scientific expertise with a passion for developing novel small molecule drugs that target disease pathways for potential applications in oncology . we are focusing our efforts on our lead product candidate , ipi-549 , an orally administered , clinical-stage , immuno-oncology product candidate that selectively inhibits the enzyme phosphoinositide-3-kinase-gamma , or pi3k-gamma . ipi-549 is currently being studied in a phase 1 , first-in-human clinical trial that is expected to enroll approximately 175 patients with advanced solid tumors . the study includes a dose-escalation phase to evaluate the safety , tolerability , pharmacokinetics , and pharmacodynamics of ipi-549 as a monotherapy , as well as a dose-escalation phase evaluating ipi-549 in combination with nivolumab , also known as opdivo . nivolumab is a checkpoint inhibitor therapy being commercialized by bristol-myers squibb , or bms , that targets a receptor in the human body called programmed death receptor 1 , or pd-1 . if supported by data from the initial portion of the study , a phase 1b portion would investigate ipi-549 in patients with selected solid tumors , including non-small cell lung cancer , melanoma and squamous cell carcinoma of the head and neck , whose tumors have shown initial resistance or subsequently have developed resistance to immune checkpoint therapy . we have primarily incurred operating losses since inception . our net loss was $ 30.1 million , $ 128.4 million and $ 17.4 million for the years ended december 31 , 2016 , 2015 and 2014 , respectively . as of december 31 , 2016 , we had an accumulated deficit of $ 625.7 million . as we have no approved products , we have not generated any revenue from product sales and , to date , all our revenue has been generated under research collaboration agreements . as of december 31 , 2016 , we had approximately $ 92.1 million in cash , cash equivalents and available-for-sale securities . we will need substantial additional funds to support our planned operations . in the absence of additional funding or business development activities , we believe that our existing cash , cash equivalents and available-for-sale securities at december 31 , 2016 will be adequate to satisfy our capital needs into the first quarter of 2019 based on planned levels of spending . we have not included any of the $ 28 million of potential future verastem , inc. , or verastem , milestone payments in this forecast . we expect to continue to spend significant resources to fund the development and potential commercialization of ipi-549 , and we expect to incur significant operating losses for the foreseeable future . we expect to incur substantial operating losses over the next several years as our clinical trial and drug manufacturing activities increase . in addition , in connection with seeking and possibly obtaining regulatory approval of any of our product candidates , we expect to incur significant commercialization expenses for product sales , marketing , manufacturing and distribution . as a result , we expect that our accumulated deficit will also increase significantly . financial overview revenue 58 to date , all of our revenue has been generated under research collaboration agreements . the terms of these research collaboration agreements may include payment to us of non-refundable , upfront license fees , funding or reimbursement of research and development efforts , milestone payments if specified objectives are achieved , and or royalties on product sales . in the future , we may generate revenue from a combination of product sales , research and development support services and milestone payments in connection with strategic relationships , as well as royalties resulting from the sales of products developed under licenses of our intellectual property . we expect that any potential future revenue we generate will fluctuate from year to year as a result of the timing and amount of license fees , research and development reimbursement , milestone and other payments earned under our collaborative or strategic relationships and the amount and timing of payments that we earn upon the sale of our products , to the extent any are successfully commercialized . research and development expense we are a drug development company . our research and development expense has historically consisted primarily of the following : compensation of personnel associated with research and development activities ; clinical testing costs , including payments made to contract research organizations ; costs of comparator drugs used in clinical studies ; costs of purchasing laboratory supplies and materials ; costs of manufacturing product candidates for preclinical testing and clinical studies ; costs associated with the licensing of research and development programs ; preclinical testing costs , including costs of toxicology studies ; fees paid to external consultants ; fees paid to professional service providers for independent monitoring and analysis of our clinical trials ; costs for collaboration partners to perform research activities , including development milestones for which a payment is due when achieved ; depreciation of equipment ; and allocated costs of facilities . general and administrative expense general and administrative expense primarily consists of compensation of personnel in executive , finance , accounting , legal , information technology infrastructure , corporate communications , corporate development , human resources and commercial functions . other costs include facilities costs not otherwise included in research and development expense , early commercial efforts and professional fees for legal and accounting services . general and administrative expense also consists of the costs of maintaining our intellectual property portfolio . story_separator_special_tag we often rely on subjective judgments to determine the date on which certain services commence , the level of services performed on or before a given date and the cost of such services . we make these judgments based upon the facts and circumstances known to us . our estimates of expenses in future periods may be under- or over-accrued . stock-based compensation we expense the fair value of employee stock options and other equity compensation . we use our judgment in determining the fair value of our equity instruments , including in selecting the inputs we use for the black-scholes valuation model . equity instrument valuation models are by their nature highly subjective . any significant changes in any of our judgments , including those used to select the inputs for the black-scholes valuation model , could have a significant impact on the fair value of the equity instruments granted and the associated compensation charge we record in our financial statements . story_separator_special_tag timing and estimated costs of the efforts necessary to complete the development of our programs ; the completion dates of these programs ; or the period in which material net cash inflows are expected to commence , if at all , from the programs described above and any potential future product candidates . there is significant uncertainty regarding our ability to successfully develop any product candidates . these risks include the uncertainty of : the scope , rate of progress and cost of our clinical trials that we are currently running or may commence in the future ; the scope and rate of progress of our preclinical studies and other research and development activities ; clinical trial results ; the cost of establishing clinical supplies of any product candidates ; the cost and availability of comparator drugs ; the cost of filing , prosecuting , defending and enforcing any patent claims and other intellectual property rights relating to our programs under development ; 62 the terms and timing of any strategic alliance , licensing and other arrangements that we have or may establish in the future relating to our programs under development ; the cost and timing of regulatory approvals ; and the effect of competing technological and market developments . general and administrative expense the increase in general and administrative expense for the year ended december 31 , 2016 as compared to the year ended december 31 , 2015 was primarily attributable to an increase of $ 7.6 million due to restructuring related costs , partially offset by a decrease in organizational support of $ 0.8 million due to the reduction in employee headcount during the year . see note 13 of the consolidated financial statements for additional information on the restructurings . the increase in general and administrative expense for the year ended december 31 , 2015 as compared to the year ended december 31 , 2014 was primarily attributable to an increase of $ 3.8 million in compensation expense , primarily due to hiring of additional personnel as well as an increase of $ 1.7 million in consulting expense and $ 1.1 million in market research expense . interest expense interest expense for the year ended december 31 , 2016 is due to the financing obligation related to our 784 memorial drive lease . interest expense for the year ended december 31 , 2015 is due to the financing obligation related to our 784 memorial drive lease and the amortization of the loan commitment asset recognized under our facility agreement with affiliates of deerfield management company , l.p. , or deerfield , which terminated in february 2015. investment and other income investment and other income increased in the year ended december 31 , 2016 as compared to the year ended december 31 , 2015 primarily as a result of a net gain on the sale of fixed assets of $ 0.9 million and due to additional income from subleases at 784 memorial drive . investment and other income increased in the year ended december 31 , 2015 as compared to the year ended december 31 , 2014 primarily as a result of income from subleases at 784 memorial drive . income taxes we did not incur any income tax expense during the year ended december 31 , 2016. our income tax expense increased for the year ended december 31 , 2015 as compared to the year ended december 31 , 2014 due to the alternative minimum tax effect of the upfront payment and the milestone payment received in connection with the collaboration agreement with abbvie that we entered into on september 2 , 2014. liquidity and capital resources we have not generated any revenue from product sales to date , and we do not expect to generate any such revenue for the foreseeable future , if at all . we have instead relied on the proceeds from sales of equity securities , debt , interest on investments , up-front license fees , expense reimbursement , and milestones and cost sharing under our collaborations to fund our operations . our available-for-sale debt securities primarily trade in liquid markets , and the average days to maturity of our portfolio , as of december 31 , 2016 , is less than six months . because our product candidate is in an early stage of clinical development and the outcome of our effort is uncertain , we can not estimate the actual amounts necessary to successfully complete the development and commercialization of our product candidate or whether , or when , we may achieve profitability . our significant capital resources are as follows : december 31 , 2016 december 31 , 2015 ( in thousands ) cash , cash equivalents and available-for-sale securities $ 92,064 $ 245,231 working capital 77,797 184,641 63 replace_table_token_5_th cash flows the principal use of cash in operating activities in all periods presented was related to our research and development programs .
| results of operations the following table summarizes our results of operations for the years ended december 31 , 2016 , 2015 and 2014 , in thousands , together with the change in each item as a percentage . 60 replace_table_token_3_th revenue our revenue during the year ended december 31 , 2016 consisted of approximately : $ 18.7 million of revenue related to development and committee services we performed under our collaboration agreement with abbvie . our revenue during the year ended december 31 , 2015 consisted of approximately : $ 75.2 million related to license revenue recognized as part of the $ 130 million enrollment milestone payment received from our collaboration agreement with abbvie ; and $ 33.9 million of revenue related to development and committee services we performed under our collaboration agreement with abbvie . our revenue during the year ended december 31 , 2014 consisted of approximately : $ 159.1 million related to license revenue recognized as part of the $ 275 million upfront payment received from our collaboration agreement with abbvie ; and $ 5.9 million of revenue related to development and committee services we performed under our collaboration agreement with abbvie . we recognized license revenue upon execution of the arrangement . revenue related to development services and committee services was recognized using the proportionate performance method as services were provided over the estimated service period of approximately five years . we recorded the remaining amount related to development and committee services of $ 35.4 million and $ 95.5 million as short-term and long-term deferred revenue , respectively , as of december 31 , 2015. following the notification of the termination of the abbvie agreement , the remaining deferred revenue of $ 112.2 million as of june 24 , 2016 was recorded as the gain on abbvie opt-out . see note 12 of our consolidated financial statements for details on the abbvie agreement and the abbvie opt-out .
| 7,263 |
overview our business , industry and target market nature 's sunshine products , inc. together with its subsidiaries , is a natural health and wellness company primarily engaged in the manufacturing and direct selling of nutritional and personal care products . nature 's sunshine products , inc. is a utah corporation with its principal place of business in provo , utah . we sell our products to a sales force of independent distributors and managers who use the products themselves or resell them to other distributors or customers . the formulation , manufacturing , packaging , labeling , advertising , distribution and sale of each of our major product groups are subject to regulation by one or more governmental agencies . the company has two reportable business segments that operate under the nature 's sunshine products brand and are divided based on their geographic operations in the united states ( nsp united states ) and in countries outside the united states ( nsp international ) . we 18 also sell our products through a separate division and operating business segment , synergy worldwide . synergy worldwide offers marketing plans , distributor compensation plans and product formulations that are sufficiently different from those of nsp united states and nsp international to warrant its treatment as a separately reportable business segment . we market our products in australia , austria , belarus , canada , the czech republic , colombia , costa rica , denmark , the dominican republic , ecuador , el salvador , finland , germany , guatemala , honduras , hong kong , indonesia , ireland , japan , kazakhstan , latvia , lithuania , malaysia , mexico , mongolia , the netherlands , nicaragua , norway , panama , peru , the philippines , poland , russia , singapore , south korea , spain , sweden , taiwan , thailand , ukraine , the united kingdom , the united states , venezuela and vietnam . we export our products to several other countries , including argentina , australia , chile , israel , new zealand and norway . in 2011 , we experienced an increase in our consolidated net sales of 5.1 percent . synergy worldwide experienced an increase in net sales revenue of approximately 37.0 percent ( or 31.5 percent in local currencies excluding the positive impact of foreign currency fluctuations ) . nsp international experienced a decrease in net sales of approximately 3.0 percent compared to the same period in 2010 , and a decrease in local currency net sales of 3.6 percent ( excluding the positive impact of foreign currency fluctuations ) , while nsp united states net sales decreased approximately 2.3 percent . the significant sales revenue growth was from our synergy businesses in europe , korea , and the united states and our nsp russian markets ( excluding belarus ) during 2011. gains in these markets were partially offset by decreases in our nsp belarus , nsp dominican republic , nsp and synergy japan , and nsp mexico markets . on july 8 , 2011 , we entered into a settlement agreement with nutriplus llc ( nutriplus ) , from which we acquired certain assets in 1999 in order to establish our russian business and to which we agreed to make royalty payments as a percentage of sales from our russian business . as a result of the settlement , wherein both parties settled all claims in the arbitration and bore their own costs associated with the arbitration , the company agreed to pay nutriplus $ 21.7 million for the release of all past and future royalty obligations . of the $ 21.7 million , the company applied $ 7.0 million toward previously accrued and expensed but unpaid royalties , and $ 14.7 million in exchange for the contract termination and extinguishment of future royalty obligations . for the year ended december 31 , 2010 , the company recorded and expensed royalty payments to nutriplus of approximately $ 5.6 million ( included in selling , general and administrative expenses ) , which was approximately 4.0 percent of nsp international 's revenue and 1.6 percent of the company 's consolidated revenue . for the year ended december 31 , 2011 , the company recorded and expensed royalty payments to nutriplus of approximately $ 2.9 million , which was approximately 2.1 percent of nsp international 's revenue and 0.8 percent of the company 's consolidated revenue . as a result of the settlement , our operating costs for the year ended december 31 , 2011 , were reduced by $ 2.7 million compared to what they would have been , which resulted in a corresponding increase to operating income of $ 2.7 million . similarly , based on current sales from our russian business , we expect the settlement will result in an annual reduction of $ 5.6 to $ 6.0 million in operating costs and a corresponding increase in operating income above the level the company would otherwise achieve if the nutriplus royalty obligation remained in effect . this positive impact on operating costs and operating income will fluctuate with sales volumes in our russian business . selling , general and administrative costs as a percentage of net sales revenue for the year decreased from 39.8 percent in the prior year to 35.2 percent in the current year as a result of revenue growth ( primarily in synergy worldwide ) , the reduction of our royalty costs related to our russian business as noted above , and our successful efforts to reduce operating costs in all of our operating segments . as a result of our overall growth in net sales revenue and reductions in operating expenses , our consolidated operating income for the year increased from 3.2 percent of net sales revenue in the prior year to 5.5 percent of net sales revenue in the current year . story_separator_special_tag for all other debt securities that experience a decline in fair value that is determined to be other-than-temporary and not related to credit loss , we record a loss , net of any tax , in accumulated other comprehensive income ( loss ) . the credit loss is recorded within earnings as an impairment loss when sold . management judgment is involved in evaluating whether a decline in an investment 's fair value is other-than-temporary . regardless of our intent to sell a security , we perform additional analysis on all securities with unrealized losses to evaluate losses associated with the creditworthiness of the security . credit losses are identified where we do not expect to receive cash flows sufficient to recover the amortized cost basis of a security . for equity securities , when assessing whether a decline in fair value below our cost basis is other-than-temporary , we consider the fair market value of the security , the length of time and extent to which market value has been less than cost , the financial condition and near-term prospects of the issuer as well as specific events or circumstances that may influence the operations of the issuer , and our intent and ability to hold the investment for a sufficient time in order to enable recovery of our 20 cost . new information and the passage of time can change these judgments . where we have determined that we lack the intent and ability to hold an equity security to its expected recovery , the security 's decline in fair value is deemed to be other-than-temporary and is recorded within earnings as an impairment loss . inventories inventories are stated at the lower-of-cost-or-market , using the first-in , first-out method . the components of inventory cost include raw materials , labor and overhead . to estimate any necessary lower-of-cost-or-market adjustments , various assumptions are made in regard to excess or slow-moving inventories , non-conforming inventories , expiration dates , current and future product demand , production planning and market conditions . self-insurance liabilities similar to other manufacturers and distributors of products that are ingested , we face an inherent risk of exposure to product liability claims in the event that , among other things , the use of our products results in injury to consumers due to tampering by unauthorized third parties or product contamination . we have historically had a very limited number of product claims or reports from individuals who have asserted that they have suffered adverse consequences as a result of using our products . these matters have historically been settled to our satisfaction and have not resulted in material payments . we have established a wholly owned captive insurance company to provide us with product liability insurance coverage , and have accrued a reserve that we believe is sufficient to cover probable and reasonable estimable liabilities related to product liability claims based upon our history . however , there can be no assurance that these estimates will prove to be sufficient , nor can there be any assurance that the ultimate outcome of any litigation for product liability will not have a material negative impact on our business prospects , financial position , results of operations or cash flows . we self-insure for certain employee medical benefits . the recorded liabilities for self-insured risks are calculated using actuarial methods , and are not discounted . the liabilities include amounts for actual claims and claims incurred but not reported . actual experience , including claim frequency and severity as well as health care inflation , could result in actual liabilities being more or less than the amounts currently recorded . impairment of long-lived assets we review our long-lived assets , such as property , plant and equipment and intangible assets for impairment when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable . we use an estimate of future undiscounted net cash flows of the related assets or groups of assets over their remaining lives in measuring whether the assets are recoverable . an impairment loss is calculated by determining the difference between the carrying values and the fair values of these assets . we did not consider any of our long-lived assets to be impaired during the years ended december 31 , 2011 , 2010 or 2009. incentive trip accrual we accrue for expenses for incentive trips associated with our direct sales marketing program , which rewards independent distributors and managers with paid attendance at our conventions and meetings . expenses associated with incentive trips are accrued over qualification periods as they are earned . we specifically analyze incentive trip accruals based on historical and current sales trends as well as contractual obligations when evaluating the adequacy of the incentive trip accrual . actual results could generate liabilities more or less than the amounts recorded . we have accrued convention and meeting costs of approximately $ 5.0 million and $ 4.0 million at december 31 , 2011 and 2010 , respectively , which are included in accrued liabilities in the consolidated balance sheets . contingencies we are involved in certain legal proceedings . when a loss is considered probable in connection with litigation or non-income tax contingencies and when such loss can be reasonably estimated with a range , we record our best estimate within the range related to the contingency . if there is no best estimate , we record the minimum of the range . as additional information becomes available , we assess the potential liability related to the contingency and revise the estimates . revision in estimates of the potential liabilities could materially affect our results of operations in the period of adjustment . our contingencies are discussed in further detail in note 13 , commitment and contingencies , to the notes of our consolidated financial statements , in item 8 , part 2 of this report .
| results of operations the following table summarizes our consolidated operating results as a percentage of net sales revenue for the periods indicated : replace_table_token_11_th 22 year ended december 31 , 2011 , as compared to the year ended december 31 , 2010 net sales revenue consolidated net sales revenue for the year ended december 31 , 2011 was $ 367.8 million compared to $ 349.9 million in 2010 , an increase of approximately 5.1 percent . the increase in net sales revenue for the year ended december 31 , 2011 compared to the same period in 2010 , is primarily due to improvements in our synergy worldwide segment , and was partially offset by a decline in our nsp united states and nsp international segments . nsp united states net sales revenue related to nsp united states for the year ended december 31 , 2011 was $ 138.2 million compared to $ 141.5 million for the same period in 2010 , or a decrease of 2.3 percent in 2011 compared to 2010. nsp united states managers and distributors are predominantly practitioners of nutritional supplement therapies , as well as retailers and consumers of our products , a segment that continued to be adversely affected by the economic downturn in the united states . net sales revenue also decreased compared to the same period in the prior year due to the cancellation of some less profitable promotional programs . the nsp united states segment includes both english and spanish language sales divisions , of which the english language division is approximately 80 percent of segment net sales revenue .
| 7,264 |
the corporation and its subsidiaries offer a full range of personal and business banking services , consumer and commercial loans , equipment leasing , mortgages , insurance and wealth management services , including investment management , trust and estate administration , retirement planning , custody services , and tax planning and preparation from 25 full-service branches , eight limited-hour retirement community offices , one limited-service branch , five wealth management offices and a full-service insurance agency located throughout montgomery , delaware , chester , dauphin and philadelphia counties in pennsylvania and new castle county in delaware . the common stock of the corporation trades on the nasdaq stock market ( “ nasdaq ” ) under the symbol bmtc . the corporation operates in a highly competitive market area that includes local , national and regional banks as competitors along with savings banks , credit unions , insurance companies , trust companies , registered investment advisors and mutual fund families . the corporation and its subsidiaries are regulated by many agencies including the securities and exchange commission ( “ sec ” ) , nasdaq , federal deposit insurance corporation ( “ fdic ” ) , the federal reserve and the pennsylvania department of banking and securities . the goal of the corporation is to become the preeminent community bank and wealth management organization in the philadelphia area . since january 1 , 2010 , the corporation and bank completed the following seven acquisitions : ● robert j. mcallister agency , inc. ( “ rjm ” ) – april 1 , 2015 ● continental bank holdings , inc. ( “ cbh ” ) – january 1 , 2015 ( the “ cbh merger ” ) ● powers craft parker and beard , inc. ( “ pcpb ” ) – october 1 , 2014 ● first bank of delaware ( “ fbd ” ) – november 17 , 2012 ● davidson trust company ( “ dtc ” ) – may 15 , 2012 ● the private wealth management group of the hershey trust company ( “ pwmg ” ) – may 11 , 2011 ● first keystone financial , inc. ( “ fkb ” ) – july 1 , 2010 in addition , on january 30 , 2017 , the corporation entered into a definitive agreement and plan of merger to acquire royal bancshares of pennsylvania , inc. ( “ rbpi ” ) , parent company of royal bank america ( “ rba ” ) , in a transaction with an aggregate value of $ 127.7 million ( the “ acquisition ” ) . in connection with the acquisition , rbpi will merge with and into the corporation and rba will merge with and into the bank . the acquisition , which is expected to add approximately $ 602 million in loans and $ 630 million in deposits ( based on unaudited december 31 , 2016 financial information ) , strengthens the corporation 's position as the largest community bank in philadelphia 's western suburbs and , based on deposits , ranks it as the eighth largest community bank headquartered in pennsylvania . the acquisition , which will expand the corporation 's distribution network by providing entry into the new markets of new jersey and berks county , pennsylvania , and a new physical presence in philadelphia county , pennsylvania is expected to close during the third quarter of 2017. for a more complete discussion regarding these acquisitions , see item 1 – business at page 1 in this form 10-k. results of operations the following is management 's discussion and analysis of the significant changes in the results of operations , capital resources and liquidity presented in the accompanying consolidated financial statements . the corporation 's consolidated financial condition and results of operations are comprised primarily of the bank 's financial condition and results of operations . current performance does not guarantee , and may not be indicative of , similar performance in the future . for more information on the factors that could affect performance , see “ special cautionary notice regarding forward looking statements ” immediately following the index at the beginning of this document . 25 critical accounting policies , judgments and estimates the accounting and reporting policies of the corporation and its subsidiaries conform to u.s. generally accepted accounting principles ( “ gaap ” ) . all inter-company transactions are eliminated in consolidation and certain reclassifications are made when necessary in order to conform the previous years ' financial statements to the current year 's presentation . in preparing the consolidated financial statements , management is required to make estimates and assumptions that affect the reported amount of assets and liabilities as of the dates of the balance sheets and revenues and expenditures for the periods presented . therefore , actual results could differ from these estimates . the a llowance for l oan and l ease l osses ( the “ allowance ” ) the allowance involves a higher degree of judgment and complexity than other significant accounting policies . the allowance is estimated with the objective of maintaining a reserve level believed by the corporation to be sufficient to absorb estimated credit losses present in the loan portfolio as of the reporting date . the corporation 's determination of the adequacy of the allowance is based on frequent evaluations of the loan and lease portfolio and other relevant factors . consideration is given to a variety of factors in establishing the estimate . quantitative factors in the form of historical charge-off history by portfolio segment are considered . in connection with these quantitative factors , management establishes what it deems to be an adequate look-back period ( “ lbp ” ) for the charge-off history . as of december 31 , 2016 , the corporation utilized a five-year lbp , which it believes adequately captures the trends in charge-offs . in addition , management develops an estimate of a loss emergence period ( “ lep ” ) for each segment of the loan portfolio . story_separator_special_tag executive o verview the following executive overview provides a summary-level review of the results of operation for 2016 compared to 2015 and 2015 compared to 2014 as well as a comparison of the december 31 , 2016 balance sheet as compared to the december 31 , 2015 balance sheet . more detailed information regarding these comparisons can be found in the sections that follow . 2016 compared to 2015 income statement the corporation reported net income of $ 36.0 million or $ 2.12 diluted earnings per share for the twelve months ended december 31 , 2016 , as compared to $ 16.8 million , or $ 0.94 diluted earnings per share , for the same period in 2015. return on average equity ( `` roe '' ) and return on average assets ( `` roa '' ) for the twelve months ended december 31 , 2016 , were 9.75 % and 1.16 % , respectively , as compared to 4.49 % and 0.57 % , respectively , for the same period in 2015. the increase in net income for the twelve months ended december 31 , 2016 , as compared to the same period in 2015 , was largely related to the $ 17.4 million pre-tax loss on the settlement of the corporate pension plan , which was recorded for the twelve months ended december 31 , 2015. in addition to the absence of the pension settlement charge , net interest income for the twelve months ended december 31 , 2016 increased by $ 6.1 million and due diligence , merger-related and merger integration expenses decreased by $ 6.7 million from the same period in 2015. the $ 6.2 million increase in the corporation 's tax-equivalent net interest income for the twelve months ended december 31 , 2016 , as compared to the same period in 2015 , was related to a $ 268.8 million increase in average loans offset by a $ 117.8 million decrease in interest-earning deposits with other banks . this redeployment of low-yielding cash on deposit with other banks to higher yielding loans resulted in an $ 8.2 million increase in tax-equivalent interest income . the tax-equivalent yield earned on loans for the twelve months ended december 31 , 2016 was 4.57 % , while the tax-equivalent yield earned on interest-earning deposits with other banks was only 0.39 % . partially offsetting the increase in average loans , average interest-bearing deposits increased by $ 86.4 million , accompanied by an 8 basis point increase in rate paid on deposits . average long-term federal home loan bank ( “ fhlb ” ) advances and other borrowings decreased by $ 29.0 million between the twelve month periods ended december 31 , 2015 and 2016 as the inflow of deposits during 2016 alleviated the need to increase borrowings to support loan growth . 27 for the twelve months ended december 31 , 2016 , the provision of $ 4.3 million was virtually unchanged from the $ 4.4 million recorded for the same period in 2015. net loan and lease charge offs for the twelve months ended december 31 , 2016 totaled $ 2.7 million , a decrease of $ 428 thousand from the same period in 2015. non-interest income for the twelve months ended december 31 , 2016 was $ 54.0 million , a $ 1.9 million decrease from the same period in 2015. decreases of $ 1.0 million in gain on sale of available for sale investment securities , $ 319 thousand in dividends on fhlb and federal reserve bank ( “ frb ” ) stocks and $ 204 thousand in fees for wealth management services were the primary contributors to this decrease . non-interest expense for the twelve months ended december 31 , 2016 , was $ 101.7 million , a decrease of $ 24.0 million , as compared to the same period in 2015. the primary causes of this decrease were the absences of the $ 17.4 million loss on settlement of the corporate pension and the $ 6.7 million in due diligence , merger-related and merger integration costs recorded in 2015. partially offsetting these improvements were increases of $ 2.8 million and $ 679 thousand in salaries and wages and furniture , fixtures and equipment , respectively . balance sheet asset quality as of december 31 , 2016 is stable , with nonperforming loans and leases comprising 0.33 % of portfolio loans as compared to 0.45 % of portfolio loans as of december 31 , 2015. the allowance of $ 17.5 million was 0.69 % of portfolio loans and leases as of december 31 , 2016 , as compared to $ 15.9 million , or 0.70 % of portfolio loans and leases , at december 31 , 2015. the relatively unchanged level of allowance reflects the continued strength of credit quality in the loan portfolio . total portfolio loans and leases of $ 2.54 billion as of december 31 , 2016 increased $ 266.4 million , or 11.7 % , from $ 2.27 billion as of december 31 , 2015. the corporation 's available for sale investment portfolio as of december 31 , 2016 had a fair value of $ 567.0 million , as compared to $ 349.0 million at december 31 , 2015. largely responsible for the increase was the purchase , in december 2016 , of $ 200 million of short-term treasury bills . deposits of $ 2.58 billion , as of december 31 , 2016 , increased $ 327.0 million from december 31 , 2015. one third of the increase in deposits was in the non-interest-bearing segment of the portfolio . wealth assets wealth assets under management , administration , supervision and brokerage increased to $ 11.33 billion as of december 31 , 2016 , an increase of $ 2.96 billion from $ 8.36 billion as of december 31 , 2015. a significant portion of the increase was in flat- or fixed-fee accounts .
| summary of interest rate simulation replace_table_token_10_th the above interest rate simulation suggests that the corporation 's balance sheet is asset sensitive as of december 31 , 2016 in the +100 basis point scenario , demonstrating that a 100 basis point increase in interest rates would have a positive impact on net interest income over the next 12 months . the balance sheet is more asset sensitive in a rising-rate environment as of december 31 , 2016 than it was as of december 31 , 2015. this increase in sensitivity is related to a decrease in cash balances , an increase in floating rate loans , and an increase in fixed rate certificates of deposit . the magnitude of the change in net interest income resulting from a 100 basis point decrease in rates as compared to the magnitude of the increase in net income accompanying a 100 basis point increase in rates is the result of the ability to decrease loan rates to more of a degree than deposits rates in a down 100 basis point rate shift . the interest rate simulation is an estimate based on assumptions , which are derived from past behavior of customers , along with expectations of future behavior relative to interest rate changes . in today 's uncertain economic environment and the current extended period of very low interest rates , the reliability of the corporation 's assumptions in the interest rate simulation model is more uncertain than in prior periods . actual customer behavior , as it relates to deposit activity , may be significantly different than expected behavior , which could cause an unexpected outcome and may result in lower net interest income than that derived from the analysis referenced above . 32 g ap analysis the interest sensitivity , or gap analysis , identifies interest rate risk by showing repricing gaps in the corporation 's balance sheet .
| 7,265 |
trade accounts receivable story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements , the notes thereto , and the other financial information appearing elsewhere in this report . the following discussion includes forward-looking statements that involve certain risks and uncertainties . see part i ( disclosure regarding forward-looking statements ) and part i , item 1a ( risk factors ) in this report . overview we are a global market leader in the full-service natural gas compression business and a premier provider of operations , maintenance , service and equipment for oil and natural gas production , processing and transportation applications . our global customer base consists of companies engaged in all aspects of the oil and natural gas industry , including large integrated oil and natural gas companies , national oil and natural gas companies , independent producers and natural gas processors , gatherers and pipelines . we operate in three primary business lines : contract operations , aftermarket services and fabrication . in our contract operations business line , we use our fleet of natural gas compression equipment and crude oil and natural gas production and processing equipment to provide operations services to our customers . in our aftermarket services business line , we sell parts and components and provide operations , maintenance , overhaul and reconfiguration services to customers who own compression , production , processing , treating and other equipment . in our fabrication business line , we fabricate compression and oil and natural gas production and processing equipment for sale to our customers and for use in our contract operations services . in addition , our fabrication business line provides engineering , procurement and fabrication services related to the manufacturing of critical process equipment for refinery and petrochemical facilities , the fabrication of tank farms and the fabrication of evaporators and brine heaters for desalination plants . we offer our customers , on either a contract operations basis or a sale basis , the engineering , design , project management , procurement and construction services necessary to incorporate our products into production , processing and compression facilities , which we refer to as integrated projects . industry conditions and trends our business environment and corresponding operating results are affected by the level of energy industry spending for the exploration , development and production of oil and natural gas reserves . spending by oil and natural gas exploration and production companies is dependent upon these companies ' forecasts regarding the expected future supply , demand and pricing of oil and natural gas products as well as their estimates of risk-adjusted costs to find , develop and produce reserves . although we believe our contract operations business is typically less impacted by commodity prices than certain other energy service products and services , changes in oil and natural gas exploration and production spending normally result in changes in demand for our products and services . natural gas consumption in the u.s. for the twelve months ended november 30 , 2013 remained relatively flat compared to the twelve months ended november 30 , 2012. the eia forecasts that total u.s. natural gas consumption will decrease by 1.3 % in 2014 compared to 2013 and increase by an average of 0.7 % per year thereafter until 2040. the eia estimates that the u.s. natural gas consumption level will be approximately 30 trillion cubic feet in 2040 , or 16 % of the projected worldwide total of approximately 185 trillion cubic feet . 35 natural gas marketed production in the u.s. for the twelve months ended november 30 , 2013 increased by approximately 1.1 % over the twelve months ended november 30 , 2012. the eia forecasts that total u.s. natural gas marketed production will increase by 2.2 % in 2014 compared to 2013 and u.s. natural gas production will increase by an average of 1.5 % per year thereafter until 2040. the eia estimates that the u.s. natural gas production level will be approximately 33 trillion cubic feet in 2040 , or 18 % of the projected worldwide total of approximately 187 trillion cubic feet . our performance trends and outlook our revenue , earnings and financial position are affected by , among other things , market conditions that impact demand and pricing for natural gas compression and oil and natural gas production and processing and our customers ' decisions among using our products and services , using our competitors ' products and services or owning and operating the equipment themselves . in the second half of 2011 , we embarked on a multi-year plan to improve the profitability of our operations . we implemented certain key profitability initiatives associated with this plan in 2012 , and implemented additional process initiatives intended to improve operating efficiency and reduce our cost structure throughout 2013. these initiatives have positively impacted all of our business segments , and we expect additional positive impact in 2014. during 2013 , we saw steady activity in north american shale plays and areas focused on the production of oil and natural gas liquids . this activity has increased the overall amount of compression horsepower in the industry ; however , these increases continue to be offset by horsepower declines in more mature and predominantly dry gas markets , where we provide a significant amount of contract operations services . in early 2012 , natural gas prices in north america fell to their lowest levels in more than a decade , but prices recovered somewhat during 2013. historically , natural gas prices in north america have been volatile . during periods of lower natural gas prices , natural gas production growth could be limited or decline in north america , particularly in dry gas areas . booking activity levels for our north america fabricated products during the year ended december 31 , 2013 have decreased from relatively high levels in the prior year . story_separator_special_tag the timing and financial impact of these projects is difficult to predict as they typically have longer lead times and larger scope , which can lead to variations in our results of operations internationally on a year over year basis . summary of results as discussed in note 2 to the financial statements , the results from continuing operations for all periods presented exclude the results of our venezuelan contract operations business , canadian operations and contract water treatment business . those results are reflected in discontinued operations for all periods presented . net income ( loss ) attributable to exterran stockholders and ebitda , as adjusted . we recorded net income attributable to exterran stockholders of $ 123.2 million during the year ended december 31 , 2013 and net loss attributable to exterran stockholders of $ 39.5 million and $ 340.6 million during the years ended december 31 , 2012 and 2011 , respectively . the increase in net income attributable to exterran stockholders during the year ended december 31 , 2013 compared to the year ended december 31 , 2012 was primarily due to an increase in gross margins in our fabrication and north america contract operations segments , a decrease in long-lived asset impairments of $ 108.0 million , an increase in income from discontinued operations and an increase in gain on sale of property , plant and equipment , partially offset by a decrease of $ 32.7 million in cash payments received from the sale of our venezuelan joint ventures ' assets and an increase in income tax expense . the decrease in net loss attributable to exterran stockholders during the year ended december 31 , 2012 compared to the year ended december 31 , 2011 was primarily due to goodwill impairments of $ 196.8 million recorded during the year ended december 31 , 2011 , an increase in gross margin in all of our business segments , equity in income of non-consolidated affiliates of $ 51.7 million from the sale of our venezuelan joint ventures ' assets during the year ended december 31 , 2012 and an increase in income from discontinued operations . these decreases in net loss were partially offset by an increase in long-lived asset impairments of $ 130.5 million during the year ended december 31 , 2012 compared to the year ended december 31 , 2011. our ebitda , as adjusted , was $ 633.6 million , $ 460.7 million and $ 388.1 million during the years ended december 31 , 2013 , 2012 and 2011 , respectively . ebitda , as adjusted , during the year ended december 31 , 2013 compared to the year ended december 31 , 2012 and during the year ended december 31 , 2012 compared to the year ended december 31 , 2011 , was favorably impacted by higher gross margins as discussed above . for a reconciliation of ebitda , as adjusted , to net income ( loss ) , its most directly comparable financial measure calculated and presented in accordance with gaap , please read part ii , item 6 ( selected financial data non-gaap financial measures ) of this report . 37 story_separator_special_tag actions were the result of a review of our cost structure aimed at identifying ways to reduce our ongoing operating costs and to adjust the size of our workforce to be consistent with then current and expected activity levels . a significant portion of the workforce cost reduction program was completed in 2011 , with the remainder completed in 2012. during the year ended december 31 , 2012 , we incurred $ 6.5 million of restructuring charges primarily related to termination benefits and consulting services . see note 14 to the financial statements for further discussion of these charges . the decrease in interest expense during the year ended december 31 , 2013 compared to the year ended december 31 , 2012 was primarily due to a lower average balance of long-term debt and a decrease in the weighted average effective rate on our debt . the decrease in the weighted average effective rate on our debt was primarily due to the expiration of certain interest rate swaps in the third quarter of 2012 and a decrease of $ 6.5 million in the amortization of terminated interest rate swaps . additionally , during the year ended december 31 , 2013 , we expensed $ 1.6 million of unamortized deferred financing costs resulting from an amendment to the partnership credit agreement and our redemption of the 4.75 % convertible senior notes ( the 4.75 % notes ) . during the year ended december 31 , 2012 , we expensed $ 1.3 million of unamortized deferred financing costs resulting from the decrease in capacity of our revolving credit facility . the terminated interest rate swaps are being amortized into interest expense over the original terms of the swaps . in march 2012 , our venezuelan joint ventures sold their assets to pdvsa gas . we received payments , including an annual charge , of $ 19.0 million and $ 51.7 million during the years ended december 31 , 2013 and december 31 , 2012 , respectively . the remaining principal amount due to us of approximately $ 39 million as of december 31 , 2013 , is payable in quarterly cash installments through the first quarter of 2016. payments we receive from the sale will be recognized as equity in ( income ) loss of non-consolidated affiliates in our consolidated statements of operations in the periods such payments are received . the change in other ( income ) expense , net , during the year ended december 31 , 2013 compared to the year ended december 31 , 2012 was primarily due to a $ 22.8 million increase in gain on sale of property , plant and equipment .
| results by business segment . the following table summarizes revenue , gross margin and gross margin percentages for each of our business segments ( dollars in thousands ) : replace_table_token_5_th ( 1 ) defined as revenue less cost of sales , excluding depreciation and amortization expense . gross margin , a non-gaap financial measure , is reconciled , in total , to net income ( loss ) , its most directly comparable financial measure calculated and presented in accordance with gaap in part ii , item 6 ( selected financial data non-gaap financial measures ) of this report . ( 2 ) defined as gross margin divided by revenue . operating highlights the following tables summarize our total available horsepower , total operating horsepower , average operating horsepower , horsepower utilization percentages and fabrication backlog ( in thousands , except percentages ) : replace_table_token_6_th 38 replace_table_token_7_th year ended december 31 , 2013 compared to year ended december 31 , 2012 north america contract operations ( dollars in thousands ) replace_table_token_8_th the increase in revenue during the year ended december 31 , 2013 compared to the year ended december 31 , 2012 was primarily attributable to an increase in rates , a 1 % increase in average operating horsepower and a $ 6.5 million increase in revenue with no incremental cost due to the termination of contracts resulting from the exercise of purchase options by our customer on two natural gas processing plants , partially offset by a $ 7.4 million decrease in revenue due to the termination of three natural gas processing plant contracts during the second quarter of 2013. the increases in gross margin ( defined as revenue less cost of sales , excluding depreciation and amortization expense ) and gross margin percentage during the year ended december 31 , 2013 compared to the year ended december 31 , 2012 were primarily caused by the revenue increase explained above and improved management of field operating expenses from the implementation of profitability improvement initiatives .
| 7,266 |
a total of 87,500 shares were approved by the stockholders for issuance under the 2002 plan . options are granted at prices which are equal to 100 % of the fair market value on the date of grant , and expire over a term not to exceed ten years . options generally vest immediately , unless otherwise determined by the board of directors . the 2002 plan , but not the options granted , expired in january 2012. we issue new shares of common stock upon exercise of stock options . the following is a summary of option activity for the company 's stock option plans : replace_table_token_20_th the aggregate intrinsic value is calculated as the difference between story_separator_special_tag ( amounts in thousands , except share and per share amounts ) certain statements contained in this section and other parts of this report on form 10-k which are not historical facts are forward looking statements and are subject to certain risks and uncertainties . the company 's actual results may differ significantly from the projected results discussed in the forward looking statements . factors that might affect actual results include , but are not limited to , those discussed in item 1a “ risk factors ” and other factors identified from time to time in the company 's reports filed with the u.s. securities and exchange commission . the following discussion should be read in conjunction with the company 's consolidated financial statements contained in this report . 30 overview cesca therapeutics is focused on the research , development , and commercialization of autologous cell-based therapies for use in regenerative medicine . we are a leader in developing and manufacturing automated blood and bone marrow processing systems that enable the separation , processing and preservation of cell and tissue therapy products . the company was founded in 1986 and is headquartered in rancho cordova , california . our strategy is to expand our offerings in the development of regenerative medicine tools and partner with other pioneers in the stem cell arena to accelerate our clinical therapies and our worldwide penetration in the regenerative medicine market . on february 18 , 2014 , totipotentrx corporation merged with and into thermogenesis corp. in connection with the merger , thermogenesis changed its name from thermogenesis corp. to cesca therapeutics inc. the company believes that totipotentrx has the depth of clinical , scientific and biological engineering experience necessary to develop cell-based therapies in the vascular , orthopedic and oncological areas . as a result of the merger , cesca is a fully integrated regenerative medicine company with the ability and expertise to research , design , and develop cell therapies targeting unmet clinical needs in large patient populations using our cost effective , clinically proven , point-of-care delivery system- surgwerks . totipotentrx was a privately held biomedical technology company specializing in human clinical trials in the field of regenerative medicine and the exclusive provider of cell-based therapies to the fortis healthcare system . totipotentrx had two wholly-owned subsidiaries , totipotentrx cell therapy pvt . ltd. ( totirx india ) and totipotentsc product pvt . ltd. ( totisc india ) . the two subsidiaries are located in gurgaon , a suburb of new delhi , india . the operations of totipotentrx have been included in our consolidated results as of february 18 , 2014. our business strategy includes : develop and deliver proprietary , commercially viable , highly effective autologous ( patient 's own cells ) cell therapies to treat major medical diseases . rapidly and cost-effectively implement new clinical trials . rapidly initiate early clinical development of new cell therapies at our united states food and drug administration ( “ fda ” ) -registered clinical research organization in india and generate high quality data at a fraction of the cost of clinical trials undertaken in the u.s. or europe . commercialize in both developed and emerging markets . utilize our existing u.s. and asian footprints to uniquely position us to meet the needs of patients , hospitals and physicians across the globe . this footprint allows flexibility to meet the variable market demands in service and price . maintain and expand our unmatched suite of proprietary technological and clinical assets to be deployed in the regenerative medicine markets . ensure cell-therapy-related devices and platform technologies , unique cell formulations and treatment protocols are protected via a broad portfolio of patents and intellectual property filings . stem cell therapies we are currently focusing our clinical therapy efforts in three areas : · critical limb ischemia ( cli ) - the cli phase 1b trial enrolled 17 patients who were considered “ no option ” patients . cli is the last phase of peripheral vascular disease , where the leg is so deprived of blood flow and oxygen , that it has visible signs of gangrenous ulceration . in each of these cases the surgeon had determined that the patient required major amputation ( below the knee ) of the leg . alternatively , the patient was asked to participate in the study where their bone marrow stem cells were harvested and processed through a cesca device , and injected into multiple sites along the afflicted limb . after 12 months 82.4 % of the patients had retained their leg and showed measurable improvement in blood flow and pain . 31 · acute myocardial infarction ( ami ) – this therapy is designed to treat patients who have suffered an acute st-elevated myocardial infarction ( stemi ) , a particular and most threatening type of heart attack . the surgwerks-ami treatment is designed to minimize remodeling of the heart from dysfunctional blood pumping action by minimizing the dysfunctional enlarging of the heart . the entire 4-step bedside treatment takes less than 90 minutes to complete in a single procedure in the heart catheterization laboratory . · bone marrow transplant ( bmt ) – this therapy automates the processing of bone marrow for transplant which has significant advantages over the current standard of care . story_separator_special_tag our net cash used in operating activities for the year ended june 30 , 2014 of $ 7,836 , and our net loss of approximately $ 8,631 , were primarily due to costs associated with transforming the company from solely a device oriented company to a fully integrated regenerative medicine company . significant investments were made to consummate the merger with trx , develop and advance our clinical program and design and re-engineer our mxp and vxp cell processing devices to be used in our forthcoming clirst and amirst clinical trials . 35 based on our cash balance after the june 18 , 2014 public offering , historical trends , and future revenue projections , we believe our current funds are sufficient to provide for our projected needs to maintain operations and working capital requirements for at least the next 12 months . however , in order to maximize the value of our clinical trials and accelerate the planned commercialization of our products in connection with the merger with totipotentrx , we intend to raise a minimum of $ 10 million for investing in the planned clinical development strategy over 24 months . effective december 31 , 2013 , we amended the technology license and escrow agreement with cord blood registry systems , inc. the amendment removed the financial covenants , except the minimum cash and short-term investments balance covenant which it reduced to $ 2,000 at any month end . our ability to fund our longer-term cash needs is subject to various risks , many of which are beyond our control . should we require additional funding , such as additional capital investments , we may need to raise the required additional funds through bank borrowings or public or private sales of debt or equity securities . we can not assure that such funding will be available in needed quantities or on terms favorable to us , if at all see part i item 1a – risk factors . the company generally does not require extensive capital equipment to produce or sell its current products . in fiscal 2012 and 2013 , the company spent $ 545 and $ 391 , respectively . these expenditures were primarily for tooling at contract manufacturers . in fiscal 2014 , we spent $ 402 primarily for tooling at a contract manufacturer and equipment to be used in our clinical trials . at june 30 , 2014 , we had four distributors that accounted for 16 % , 16 % , 14 % and 10 % of accounts receivable . at june 30 , 2013 , we had four distributors that accounted for 28 % , 18 % , 10 % and 10 % of accounts receivable . revenues from one distributor totaled $ 2,288 or 14 % , $ 2,299 or 13 % and $ 1,870 or 10 % of net revenues for the years ended june 30 , 2014 , 2013 and 2012 , respectively . revenues from another distributor totaled $ 2,102 or 13 % and $ 2,057 or 11 % of net revenues for the years ended june 30 , 2014 and 2013 , respectively . revenues from a customer totaled $ 1,849 or 12 % for the year ended june 30 , 2014. the company manages the concentration of credit risk with these customers through a variety of methods including , letters of credit with financial institutions , pre-shipment deposits , credit reference checks and credit limits . although management believes that these customers are sound and creditworthy , a severe adverse impact on their business operations could have a corresponding material effect on their ability to pay timely and therefore on our net revenues , cash flows and financial condition . critical accounting policies the preparation of these consolidated financial statements requires the company to make estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses and related disclosure of contingent assets and liabilities . on an on-going basis , the company evaluates its estimates , including those related to stock-based compensation , bad debts , inventories , warranties , contingencies and litigation . the company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances , the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources . actual results may differ from these estimates under different assumptions or conditions . the company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements . 36 goodwill , intangible assets and impairment assessments goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired . intangible assets that are not considered to have an indefinite useful life are amortized over their useful lives , which generally range from three to ten years . clinical protocols are not expected to provide economic benefit until they are introduced to the marketplace or licensed to an independent entity . each period we evaluate the estimated remaining useful lives of purchased intangible assets and whether events or changes in circumstances warrant a revision to the remaining periods of amortization . the carrying amounts of these assets are periodically reviewed for impairment ( at least annually ) and whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable . according to asc 350 , intangibles-goodwill and other , we can opt to perform a qualitative assessment , if we determine that the fair value of a reporting unit is more likely than not ( i.e. , a likelihood of more than 50 percent ) to be less than its carrying amount , the two step impairment test will be performed . in the first step , we compare the fair value of our sole reporting unit to its carrying value .
| results of operations the following is management 's discussion and analysis of certain significant factors which have affected the company 's financial condition and results of operations during the periods included in the accompanying consolidated financial statements . results of operations for the fiscal year ended june 30 , 2014 versus the fiscal year ended june 30 , 2013 net revenues net revenues for the year ended june 30 , 2014 were $ 15,987 compared to $ 17,963 for the year ended june 30 , 2013 , a decrease of $ 1,976 , or 11 % . the decrease is primarily due to a decrease in axp disposable revenues that occurred in the first quarter of fiscal 2014 due to the termination of the ge distribution agreement and the related wind-down of their product inventory resulting in a temporary slowdown of orders from customers consuming said inventory and a decrease as our distributors in asia ordered less product due to delays in the implementation of our automated axp platform . also , other revenues decreased as we were selling thermoline and cryoseal products during the year ended june 30 , 2013. the following represents the company 's revenues by product platform for the years ended : replace_table_token_5_th gross profit gross profit was $ 5,886 or 37 % of revenues for 2014 compared to $ 6,365 or 35 % of revenues for 2013. our gross profit decreased due to a decline in revenues . the increase in gross profit percentage from 35 % to 37 % for 2014 is primarily due to lower warranty costs and a favorable mix of products sold . sales and marketing expenses sales and marketing expenses include costs primarily associated with generating revenues from the sale of cord blood and bone marrow disposables and bioarchive devices .
| 7,267 |
as a result of many factors , including those factors set forth in the “ risk factors ” section of this document , 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 new york city based clinical-stage biopharmaceutical company committed to identifying and advancing transformative therapies for the treatment of cancer and rare diseases with significant unmet needs . we prioritize creativity , diverse perspectives , integrity and tenacity to expedite our goal of bringing life-changing therapies to people with limited treatment options . our portfolio includes two development programs utilizing tara-002 , an investigational cell therapy based on the broad immunopotentiator , ok-432 , which was originally granted marketing approval by the japanese ministry of health and welfare as an immunopotentiating cancer therapeutic agent . this cell therapy is currently approved in japan for lymphatic malformations , or lms , and multiple oncologic indications . it has never been approved outside japan and we have secured worldwide rights to the asset excluding japan and taiwan and have begun to explore its use in rare and oncology indications . we are developing tara-002 in non-muscle invasive bladder cancer , or nmibc , and in lms . tara-002 's lead oncology program is in non-muscle invasive bladder cancer or nmibc , which is cancer found in the tissue that lines the inner surface of the bladder that has not spread into the bladder muscle . bladder cancer is the sixth most common cancer in the united states , with nmibc representing approximately 80 % of bladder cancer diagnoses . approximately 65,000 patients are diagnosed with nmibc in the united states each year . very few new therapeutics have been approved in nmibc since the 1990s and the current standard of care for nmibc includes intravesical bacillus calmette-guerin , or bcg . the mechanism of tara-002 is similar to bcg . both tara-002 and bcg are intravesically administered and elicit a type th1 type immune response and locally activated generally similar array of cytokines and immune cells . in august of 2020 , we announced constructive feedback following a pre-investigational new drug ( pre-ind ) interaction with the office of tissues and advanced therapies division of the center for biologics evaluation and research , or cber , at the fda on a development plan for tara-002 in nmibc . building on existing data from ok-432 , and subject to the completion of non-clinical studies as well as acceptance of the ind application , we plan to commence a phase 1 clinical trial in late 2021 to assess the safety and tolerability of tara-002 in patients with high grade nmibc . the most advanced clinical program is for lms , which are rare , non-malignant cysts of the lymphatic vascular system that primarily form in the head and neck region of children before the age of two . in july 2020 , the u.s. food and drug administration , or fda , granted rare pediatric disease designation for tara-002 for the treatment of lms . ok-432 , the originator compound to tara-002 , has been the standard of care in lms in japan for over 20 years . in addition to the clinical experience in japan , we have secured the rights to a dataset from one of the largest ever conducted phase 2 studies in lymphatic malformations , in which ok-432 was administered via a compassionate use program led by the university of iowa to over 400 pediatric and adult patients . we have updated the initial ind that was submitted by the university of iowa and submitted the update and accompanying clarifying questions to the fda division of vaccines and related products applications , or the division , in connection with the ind for tara-002 in lms . we plan to utilize the robust dataset for ok-432 in lms to support the potential filing of a biological license application ( bla ) for tara-002 in lymphatic lms . we are encouraged by the progress to date and , at the fda 's request , have submitted the full clinical study report ( csr ) of the randomized phase 2 study of ok-432 in lms led by the university of iowa . we continue to prepare for a potential bla filing in the second half of 2021 , or to initiate additional clinical work as required by fda . tara-002 was developed from the same master cell bank of genetically distinct group a streptococcus pyogenes as ok-432 ( marketed as picibanil® in japan and taiwan by chugai pharmaceutical co. , ltd. , or chugai pharmaceutical ) . following a pre-ind interaction with the office of tissues and advanced therapies division of the center for biologics evaluation and research , or cber , the fda agreed that we have successfully demonstrated initial manufacturing comparability between tara-002 and ok-432 . this initial comparability will be confirmed by gmp scale batches , which are currently underway using the same release tests that have already been approved by the fda . 50 the third development program in our portfolio is intravenous , or iv , choline chloride , an investigational phospholipid substrate replacement therapy initially in development for patients receiving parenteral nutrition , or pn , who have intestinal failure associated liver disease , or ifald . iv choline chloride has been granted orphan drug designation by the fda for this indication and has also been granted fast track designation for the treatment of ifald . following a positive end of phase 2 meeting with the fda , we received feedback on the design of the studies necessary to complete the registration package for iv choline chloride for the treatment of ifald , including a phase 1 pharmacokinetic study followed by phase 3 trial . story_separator_special_tag the shares of common stock listed on the nasdaq capital market , previously trading through the close of business on thursday , january 9 , 2020 under the ticker symbol “ prto , ” commenced trading on the nasdaq capital market , on a post-reverse stock split adjusted basis , under the ticker symbol “ tara , ” on friday , january 10 , 2020. covid-19 the ultimate impact of the current covid-19 pandemic or a similar health epidemic is highly uncertain and subject to change . we have experienced delays , but may experience additional future delays that impact our business , our research and development activities , healthcare systems and the global economy as a whole . however , we will continue to monitor the covid-19 situation closely should the effects have a material impact on our operations , liquidity and capital resources . in response to public health directives and orders , we have implemented work-from-home policies for our employees and temporarily modified our operations to comply with applicable social distancing recommendations . similar health directives and orders are affecting third parties with whom we do business , including the third parties that we have contracted with to conduct studies for tara-002 . the effects of the orders and our related adjustments in our business are likely to negatively impact productivity , disrupt our business and delay our timelines , the magnitude of which will depend , in part , on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course . severe and or long-term disruptions in our operations will negatively impact our business , operating results and financial condition in other ways , as well . specifically , we anticipate that the stress of covid-19 on healthcare systems around the globe will negatively impact our ability to conduct clinical trials in the near term due primarily to the lack of resources at clinical trial sites and the resulting inability to enroll patients in the trials . we also anticipate that the global impact of covid-19 will negatively impact our ability to conduct nonclinical studies due primarily to laboratory closures and limited availability of personnel . in addition , while the potential economic impact brought by , and the duration of , covid-19 may be difficult to assess or predict , it has significantly disrupted global financial markets , and may limit our ability to access capital , which could in the future negatively affect our liquidity . a recession or market correction resulting from the spread of covid-19 could materially affect our business and the value of our common stock . 52 financial overview research and development expenses research and development expenses consist primarily of costs incurred for the development of tara-002 and iv choline chloride , which include employee-related expenses , including salaries , benefits , travel and stock-based compensation expense , expenses incurred under agreements with clinical research organizations ( “ cros ” ) , contract development and manufacturing organizations ( “ cdmos ” ) , the cost of acquiring , developing and manufacturing clinical trial materials , clinical and non-clinical related costs , costs associated with regulatory operations and facilities , depreciation and other expenses , which include expenses for rent and maintenance of facilities and other supplies . general and administrative expenses general and administrative expenses consist principally of employee-related expenses , including salaries , benefits , travel and stock-based compensation expense , in executive and other administrative functions . other general and administrative expenses also include professional fees for legal , patent review , consulting and accounting services as well as facility related costs , as well as expenses related to audit , legal , regulatory and tax-related services associated with maintaining compliance with our nasdaq listing and sec requirements , director and officer liability insurance premiums and investor relations costs associated with being a public company . interest income , net interest income , net , consists of interest income earned on our cash , cash equivalents and restricted cash , net of interest expense related to our short-term debt . critical accounting policies and significant judgments and estimates management 's discussion and analysis of our financial position and results of operations is based on our consolidated financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states of america , or gaap . the preparation of financial statements in conformity with gaap requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes . on an ongoing basis , we evaluate estimates , which include estimates related to clinical trial accruals , valuation of deferred tax assets , fair value of business combinations , fair value of goodwill and evaluation of impairment , stock stock-based compensation expense , and reported amounts of revenues and expenses during the reported period . we base our estimates on historical experience and other market-specific or other relevant assumptions that we believe to be reasonable under the circumstances . actual results may differ materially from those estimates or assumptions . while our significant accounting policies are described in more detail in the notes to our consolidated financial statements and related notes appearing elsewhere in this annual report , we believe the following accounting policies to be most critical to the judgments and estimates used in the preparation of our financial statements . goodwill goodwill represents the excess of purchase price over the fair value of identifiable net assets acquired in a business combination . goodwill and other intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized , but instead tested for impairment at least annually . an entity has the option to first assess qualitative factors to determine whether events or circumstances lead to a conclusion that is more likely than not that the fair value of a reporting unit is greater than its carrying amount .
| 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 ( in thousands ) : replace_table_token_1_th research and development expenses . during the year ended december 31 , 2020 , our research and development expenses were approximately $ 12.0 million which represented an increase of approximately $ 8.1 million as compared to the year ended december 31 , 2019. this increase was primarily due to an increase of approximately $ 3.2 million of non-clinical , clinical , regulatory expenses and outside services associated with tara-002 , an increase of approximately $ 2.5 million for manufacturing activities associated with tara-002 , an increase of approximately $ 1.5 million in headcount cost due to bonuses earned upon the merger and the hiring of additional employees and an increase of approximately $ 0.5 million in stock-based compensation . general and administrative expenses . during the year ended december 31 , 2020 , our general and administrative expenses were approximately $ 22.5 million which represented an increase of approximately $ 18.5 million as compared to the year ended december 31 , 2019. the increase , principally on account of becoming a public company on january 9 , 2020 , was primarily due to an increase of approximately $ 8.8 million in stock-based compensation , an increase of approximately $ 2.5 million in insurance , an increase of approximately $ 2.0 million in public company costs , an increase of approximately $ 2.8 million in headcount cost due to bonuses earned upon the merger and the hiring of additional employees , an increase of approximately $ 1.2 million in recruiting fees , an increase of approximately $ 0.3 million in board of director fees , and an increase of approximately $ 0.2 million in franchise and other taxes . interest income , net .
| 7,268 |
our board of directors has adopted a written policy on transactions with related persons , which requires that our audit committee approve or ratify related person transactions required to be disclosed pursuant to item 404 ( a ) or , if applicable , item story_separator_special_tag financial condition and results of operations . you should read the following discussion and analysis of financial condition and operating results together with the section captioned “ selected consolidated financial data ” and our consolidated financial statements and the related notes included elsewhere in this annual report on form 10-k. this discussion contains forward-looking statements that involve risks and uncertainties . as a result of many factors , such as those set forth in the section of the annual report on form 10-k captioned “ risk factors ” and elsewhere in this annual report on form 10-k , our actual results may differ materially from those anticipated in these forward-looking statements . overview we are a life sciences company dedicated to improving life through the application of our pioneering , proprietary arcus genome editing platform . we leverage arcus in the development of our product candidates , which are designed to treat human diseases and create healthy and sustainable food and agricultural solutions . we are actively developing product candidates in three innovative areas : allogeneic car t cell immunotherapy , in vivo gene correction , and food . we are currently conducting a phase 1/2a clinical trial of pbcar0191 in adult patients with relapsed or refractory , or r/r , non-hodgkin lymphoma , or nhl , or r/r b-cell precursor acute lymphoblastic leukemia , or b-all . pbcar0191 is our first gene-edited allogeneic chimeric antigen receptor , or car , t cell therapy candidate targeting cd19 and is being developed in collaboration with les laboratoires servier , or servier . we have received orphan drug designation for pbcar0191 from the u.s. food and drug administration , or fda , for the treatment of all . made from donor-derived t cells modified using our arcus genome editing technology , pbcar0191 recognizes the well characterized tumor cell surface protein cd19 , an important and validated target in several b-cell cancers , and is designed to avoid graft-versus-host disease , or gvhd , a significant complication associated with donor-derived , cell-based therapies . we believe that this trial , which is designed to assess the safety and tolerability of pbcar0191 at increasing dose levels , as well as to evaluate anti-tumor activity , is the first u.s.-based clinical trial to evaluate an allogeneic car t therapy for r/r nhl . furthermore , we believe that our proprietary , one-step engineering process for producing allogeneic car t cells with a potentially optimized cell phenotype , at large scale in a cost-effective manner , will enable us to overcome the fundamental clinical and manufacturing challenges that have limited the car t field to date . in december 2019 , we announced initial data from this ongoing phase 1/2a clinical trial of pbcar0191 in adult patients with r/r nhl and r/r b-all . a total of nine adult patients were reported in these initial phase 1 trial results , including six with nhl ( three treated at dose level 1 ( 3x10 5 cells/kg ) , or dl1 , and three treated at dose level 2 ( 1x10 6 cells/kg ) , or dl2 ) , and three with b-all ( all treated at dl2 ) . these data indicated no serious adverse events or dose limiting toxicities . in the nhl cohort , four of six patients demonstrated an objective tumor response by lugano criteria at day 28 , for an overall objective response rate of 67 % , including three partial responses and one complete response . in the all cohort , one of three patients achieved a complete response at day 28 following treatment with pbcar0191 . as of december 31 , 2019 , dosing of patients at dose level 3 ( 3x10 6 cells/kg ) was underway . based on the data observed at dl1 and dl2 , we filed a protocol amendment for this trial with the fda in december 2019. the amended trial design is intended to specifically address key clinical questions . these include assessing the impact of higher total doses of cells on clinical activity and or the impact of modified lymphodepletion on the ability to achieve durable clinical benefit with associated car t cell expansion and persistence . following feedback from the fda in late january 2020 , the protocol amendment is now being implemented . in september 2019 , the fda accepted our investigational new drug , or ind , application for our second allogeneic car t cell therapy product candidate , pbcar20a , for which we expect to commence a phase 1/2a clinical trial in the first quarter of 2020. pbcar20a is wholly owned by us and targets the validated tumor cell surface target cd20 . it will be investigated in subjects with nhl , chronic lymphocytic leukemia , or cll , and small lymphocytic lymphoma , or sll . a subset of the nhl patients will have the diagnosis of mantle cell lymphoma , or mcl , and we have received orphan drug designation for pbcar20a from the fda for the treatment of this disease . based on the adverse events observed to date with pbcar0191 , the fda has agreed to allow us to commence dosing with pbcar20a directly at dose level 2 , which we expect to accelerate the timing for our expected completion of the trial . in january 2020 , the fda accepted our ind application for our third allogeneic car t cell therapy product candidate , pbcar269a , for which we expect to commence a phase 1/2a clinical trial in 2020. pbcar269a is wholly owned by us and is designed to target the validated tumor cell surface target bcma . it will be investigated in subjects with r/r multiple myeloma and we have received orphan drug designation from the fda for this indication . story_separator_special_tag if we fail to become profitable or are unable to sustain profitability on a continuing basis , then we may be required to raise additional capital on terms that are unfavorable to us or we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations . we currently conduct our operations through two reportable segments : therapeutics and food . our therapeutics segment is focused on allogeneic car t immunotherapy and in vivo gene correction . our food segment focuses on applying arcus to develop food and nutrition products through collaboration agreements with consumer-facing companies . collaborations gilead in september 2018 , we and gilead entered into a collaboration and license agreement , which we refer to as the gilead agreement , to develop genome editing tools using arcus to target viral dna associated with the hepatitis b virus . pursuant to the terms of the agreement , gilead received an exclusive license to exploit the resulting synthetic nucleases and products that use them to treat the hepatitis b virus in humans , and we are entitled to receive up to approximately $ 40.0 million in research funding over an initial three year term and milestone payments of up to an aggregate of $ 445.0 million , consisting of up to $ 105.0 million in development milestone payments and up to $ 340.0 million in commercial milestone payments . we are also entitled to receive tiered royalties ranging from the high single digit percentages to the mid-teen percentages on worldwide net sales of the products developed through the term of the agreement , subject to customary potential reductions . 99 we recognized $ 13.3 million and $ 3.7 million in revenues under the gilead agreement during the years ended december 31 , 2019 and december 31 , 2018 , respectively , and recorded $ 1.5 million and $ 2.3 million in deferred revenue as of december 31 , 2019 and december 31 , 2018 , respectively . we did not receive any milestone payments under the gilead agreement during the years ended december 31 , 2019 or december 31 , 2018. servier in february 2016 , we entered into the servier agreement , pursuant to which we have agreed to develop allogeneic car t cell therapies for up to six unique antigen targets . one target was selected at the agreement 's inception . upon selection of an antigen target under the agreement , we have agreed to perform early-stage research and development on individual t cell modifications for the selected target , develop the resulting therapeutic product candidates through phase 1 clinical trials and prepare clinical trial material of such product candidates for use in phase 2 clinical trials . we received an upfront payment of $ 105.0 million under the servier agreement . we have the ability to receive total payments , including the upfront payment , option fees and milestone payments , in the aggregate across all six targets , of up to approximately $ 1.6 billion . this includes up to $ 1.5 billion in milestone payments , consisting of up to $ 401.3 million in development milestone payments and up to $ 1.1 billion in commercial milestone payments . we are also entitled to receive tiered royalties ranging from the mid-single digit percentages to the sub-teen percentages on worldwide net sales , subject to potential customary reductions . we also have the right to participate in the development and commercialization of any licensed products resulting from the collaboration through a 50/50 co-development and co-promotion option in the united states , subject to our payment of an option fee , which is exercisable after servier 's commercial option exercise . under the servier agreement , we recognized $ 7.3 million and $ 5.8 million in revenues during the years ended december 31 , 2019 and december 31 , 2018 , respectively . the amount recorded as deferred revenue was $ 80.9 million and $ 88.6 million as of december 31 , 2019 and december 31 , 2018 , respectively . no development or sales-based milestones were received for the fiscal years ended december 31 , 2019 or december 31 , 2018. components of our results of operations revenue to date , we have not generated any revenue from product sales and do not expect to generate any revenue from product sales in the foreseeable future . we record revenue from collaboration agreements , including amounts related to upfront payments , annual fees for licenses of our intellectual property and research and development funding . research and development expenses research and development expenses consist primarily of costs incurred for our research activities , including our discovery efforts and the development of our product candidates . these include the following : salaries , benefits and other related costs , including share-based compensation expense , for personnel engaged in research and development functions ; expenses incurred under agreements with third parties , including contract research organizations , or cros , and other third parties that conduct preclinical research and development activities and clinical trials on our behalf ; costs of developing and scaling our manufacturing process and manufacturing drug products for use in our preclinical studies and ongoing and future clinical trials , including the costs of contract manufacturing organizations , or cmos , and our mcat facility that will manufacture our clinical trial material for use in our preclinical studies and ongoing and potential future clinical trials ; costs of outside consultants , including their fees and related travel expenses ; costs of laboratory supplies and acquiring , developing and manufacturing preclinical study and clinical trial materials ; 100 license payments made for intellectual property used in research and development activities ; and facility-related expenses , which include direct depreciation costs and expenses for rent and maintenance of facilities and other operating costs if specifically identifiable to research activities . we expense research and development costs as incurred .
| results of operations comparison of the years ended december 31 , 2019 and december 31 , 2018 the following table summarizes our results of operations for the years ended december 31 , 2019 and december 31 , 2018 , together with the changes in those items in dollars : replace_table_token_4_th revenue revenue for the year ended december 31 , 2019 was $ 22.2 million , compared to $ 10.9 million for the year ended december 31 , 2018. the increase of $ 11.3 million in revenue during the year ended december 31 , 2019 was primarily the result of a $ 9.6 million increase in research revenue recognized from gilead as 2019 was the first full year of revenue recognized under the gilead agreement initiated in september 2018 and a $ 1.5 million increase in collaboration revenue recognized from servier . research and development expenses replace_table_token_5_th research and development expenses for the year ended december 31 , 2019 were $ 82.4 million , compared to $ 45.1 million for the year ended december 31 , 2018. the increase of $ 37.3 million was primarily due to a $ 31.9 million increase in platform development , early-stage research and unallocated expenses , a $ 9.4 million and $ 4.9 million increase in direct research and development expenses related to our cd20 and bcma programs , respectively , partially offset by a decrease in direct research and development expenses related to our cd19 program of $ 8.9 million . the increase in direct research and development expenses for our cd20 and bcma programs was due to increases in lab services and cmo and research organization costs as we prepare to enter planned phase 1/2a clinical trials in 2020. this was partially offset by a decrease in our cd19 expenses primarily due to lower spending on cmo and research organization costs .
| 7,269 |
leu segment revenue from sales of swu and uranium revenue from our leu segment is derived primarily from : sales of the swu component of leu , sales of both the swu and uranium components of leu , and sales of natural uranium . the majority of our customers are domestic and international utilities that operate nuclear power plants , with international sales constituting 28 % of revenue from our leu segment in 2014. our agreements with electric utilities are primarily long-term , fixed-commitment contracts under which our customers are obligated to purchase a specified quantity of the swu component of leu ( or the swu and uranium components of leu ) from us . our agreements for natural uranium sales are generally shorter-term , fixed-commitment contracts . uranium sales constituted less than 1 % of the revenue from our leu segment in 2014. our revenues , operating results and cash flows can fluctuate significantly from quarter to quarter and year to year . revenue is recognized at the time leu or uranium is delivered under the terms of our contracts . customer demand is affected by , among other things , electricity markets , reactor operations , maintenance and the timing of refueling outages . utilities typically schedule the shutdown of their reactors for refueling to coincide with the low electricity demand periods of spring and fall . thus , some reactors are scheduled for annual or two-year refuelings in the spring or fall , or for 18-month cycles alternating between both seasons . customer payments for the swu component of leu typically average approximately $ 15 to $ 20 million per order . as a result , a relatively small change in the timing of customer orders for leu due to a change in a customer 's refueling schedule may cause operating results to be substantially above or below expectations . in order to manage our working capital and enhance our liquidity in light of anticipated sales and inventory levels and to respond to customer-driven changes , we have worked with customers regarding the timing of their orders , in particular the advancement of those orders from future months and years . rather than selling material into the limited spot market for enrichment , the company advanced orders in 2012 , 2013 and 2014 from future periods . when customers agree to advance orders without delivery , a sale is recorded as deferred revenue . alternatively , if customers agree to advance orders and delivery , revenue is recorded in an earlier than originally anticipated period . the advancement of orders has the effect of accelerating our receipt of cash from such advanced sales , although the 58 amount of cash and profit we receive from such sales may be reduced as a result of the terms mutually agreed with customers in connection with advancement . as of december 31 , 2014 , our backlog of sales was $ 2.7 billion compared to $ 3.3 billion at december 31 , 2013. we have not added significant new sales to our backlog since 2012 due to the supply/demand imbalance in the nuclear fuel market , and the transition in our sources of enrichment from production at the paducah gdp and the megatons to megawatts program . our opportunities to make new sales have also been moderated by the uncertainty about the future prospects for commercial production at the acp . over the foreseeable future , we expect a lower level of revenues and sales compared to recent years , as we sell from existing inventory , quantities purchased from russia under the russian supply agreement and other sources . our sales backlog includes contracts that may need to be revised to reflect anticipated supply sources during our transition . some long-term contracts in our backlog were established with milestones related to the acp that permit termination with respect to portions of the contract under limited circumstances that vary across the contracts . while we have waived , eliminated or renegotiated those termination rights where possible , we estimate that approximately 40 % of our backlog remains at various levels of risk due to milestones related to acp deployment . some of these customers have indicated they expect to exercise such contract termination rights , and where one customer purported to exercise its right to terminate , we are disputing that action . we are also working with customers to modify contracts that have delivery , scheduling , origin or other terms that may require modifications to address our anticipated supply sources during the transition period . however , we have no assurance that our customers will agree to revise existing contracts or will not seek to exercise contract termination rights or require concessions , which could adversely affect the value of our backlog and our prospects . our financial performance over time can be significantly affected by changes in prices for swu and uranium . the long-term swu price indicator , as published by tradetech , llc in nuclear market review , is an indication of base-year prices under new long-term enrichment contracts in our primary markets . since our backlog includes contracts awarded to us in previous years , the average swu price billed to customers typically lags behind the current price indicators by several years , which means that prices under contracts today exceed declining market prices . following are tradetech 's long-term and spot swu price indicators , the long-term price for uranium hexafluoride ( “ uf6 ” ) , as calculated by centrus using indicators published in nuclear market review , and tradetech 's spot price indicator for uf6 : replace_table_token_6_th substantially all of our inventories of uranium available for sale have been sold in prior years , and we are no longer able to acquire uranium through underfeeding at the paducah gdp . in a number of sales transactions , title to uranium or leu is transferred to the customer and we receive payment story_separator_special_tag leu segment revenue from sales of swu and uranium revenue from our leu segment is derived primarily from : sales of the swu component of leu , sales of both the swu and uranium components of leu , and sales of natural uranium . the majority of our customers are domestic and international utilities that operate nuclear power plants , with international sales constituting 28 % of revenue from our leu segment in 2014. our agreements with electric utilities are primarily long-term , fixed-commitment contracts under which our customers are obligated to purchase a specified quantity of the swu component of leu ( or the swu and uranium components of leu ) from us . our agreements for natural uranium sales are generally shorter-term , fixed-commitment contracts . uranium sales constituted less than 1 % of the revenue from our leu segment in 2014. our revenues , operating results and cash flows can fluctuate significantly from quarter to quarter and year to year . revenue is recognized at the time leu or uranium is delivered under the terms of our contracts . customer demand is affected by , among other things , electricity markets , reactor operations , maintenance and the timing of refueling outages . utilities typically schedule the shutdown of their reactors for refueling to coincide with the low electricity demand periods of spring and fall . thus , some reactors are scheduled for annual or two-year refuelings in the spring or fall , or for 18-month cycles alternating between both seasons . customer payments for the swu component of leu typically average approximately $ 15 to $ 20 million per order . as a result , a relatively small change in the timing of customer orders for leu due to a change in a customer 's refueling schedule may cause operating results to be substantially above or below expectations . in order to manage our working capital and enhance our liquidity in light of anticipated sales and inventory levels and to respond to customer-driven changes , we have worked with customers regarding the timing of their orders , in particular the advancement of those orders from future months and years . rather than selling material into the limited spot market for enrichment , the company advanced orders in 2012 , 2013 and 2014 from future periods . when customers agree to advance orders without delivery , a sale is recorded as deferred revenue . alternatively , if customers agree to advance orders and delivery , revenue is recorded in an earlier than originally anticipated period . the advancement of orders has the effect of accelerating our receipt of cash from such advanced sales , although the 58 amount of cash and profit we receive from such sales may be reduced as a result of the terms mutually agreed with customers in connection with advancement . as of december 31 , 2014 , our backlog of sales was $ 2.7 billion compared to $ 3.3 billion at december 31 , 2013. we have not added significant new sales to our backlog since 2012 due to the supply/demand imbalance in the nuclear fuel market , and the transition in our sources of enrichment from production at the paducah gdp and the megatons to megawatts program . our opportunities to make new sales have also been moderated by the uncertainty about the future prospects for commercial production at the acp . over the foreseeable future , we expect a lower level of revenues and sales compared to recent years , as we sell from existing inventory , quantities purchased from russia under the russian supply agreement and other sources . our sales backlog includes contracts that may need to be revised to reflect anticipated supply sources during our transition . some long-term contracts in our backlog were established with milestones related to the acp that permit termination with respect to portions of the contract under limited circumstances that vary across the contracts . while we have waived , eliminated or renegotiated those termination rights where possible , we estimate that approximately 40 % of our backlog remains at various levels of risk due to milestones related to acp deployment . some of these customers have indicated they expect to exercise such contract termination rights , and where one customer purported to exercise its right to terminate , we are disputing that action . we are also working with customers to modify contracts that have delivery , scheduling , origin or other terms that may require modifications to address our anticipated supply sources during the transition period . however , we have no assurance that our customers will agree to revise existing contracts or will not seek to exercise contract termination rights or require concessions , which could adversely affect the value of our backlog and our prospects . our financial performance over time can be significantly affected by changes in prices for swu and uranium . the long-term swu price indicator , as published by tradetech , llc in nuclear market review , is an indication of base-year prices under new long-term enrichment contracts in our primary markets . since our backlog includes contracts awarded to us in previous years , the average swu price billed to customers typically lags behind the current price indicators by several years , which means that prices under contracts today exceed declining market prices . following are tradetech 's long-term and spot swu price indicators , the long-term price for uranium hexafluoride ( “ uf6 ” ) , as calculated by centrus using indicators published in nuclear market review , and tradetech 's spot price indicator for uf6 : replace_table_token_6_th substantially all of our inventories of uranium available for sale have been sold in prior years , and we are no longer able to acquire uranium through underfeeding at the paducah gdp . in a number of sales transactions , title to uranium or leu is transferred to the customer and we receive payment
| results of operations we have two reportable segments measured and presented through the gross profit line of our income statement : the leu segment with two components , swu and uranium , and the contract services segment . the leu segment is our primary business focus and includes sales of the swu component of leu , sales of both swu and uranium components of leu , and sales of uranium . the contract services segment includes revenue and cost of sales for american centrifuge work we perform under the actdo agreement as a subcontractor to ut-battelle . the contract services segment also includes limited services provided by centrus to doe and its contractors at the portsmouth site related to facilities we continue to lease for the acp and formerly at the paducah gdp . there were no intersegment sales in the periods presented . 68 upon emergence from chapter 11 bankruptcy , centrus adopted fresh start accounting which resulted in centrus becoming a new entity for financial reporting purposes . references to `` successor '' or `` successor company '' relate to the financial position of the reorganized centrus as of and subsequent to september 30 , 2014 and results of operations for the three months ended december 31 , 2014. references to `` predecessor '' or `` predecessor company '' refer to the financial position of the company prior to september 30 , 2014 and the results of operations through september 30 , 2014. as a result of the application of fresh start accounting and the effects of the implementation of the plan of reorganization , the financial statements on or after september 30 , 2014 are not comparable with the financial statements prior to that date . refer to part iv , item 15 , for our consolidated financial statements .
| 7,270 |
principal government applications of biometrics systems include border control , visitor screening , law enforcement , national defense , intelligence , secure credentialing , access control , and background checks . principal commercial applications include : i ) user authentication for login and access to mobile devices , computers , networks , and software programs ; ii ) user authentication for financial transactions and purchases ( online and in-person ) ; iii ) physical access control to buildings , and iv ) screening and background checks of prospective employees and customers . we sell our software and services globally through systems integrators and oems , and directly to end user customers . we also derive a minor portion of our revenue from the sale of imaging software licenses to oems and systems integrators that incorporate our software into medical imaging products and medical systems . 27 story_separator_special_tag roman , times , serif ; margin : 0 0 0 0.5in ; text-align : justify '' > we derived a significant amount of license revenue in 2015 from certisign , a brazilian digital identification company . this revenue was earned during the development phase of a commercial biometrics-as-a-service platform . certisign began to roll out its biometrics service offering in early 2016 using the system we developed for it . under our agreement , we will receive license fees based on certisign 's revenue . ii ) imaging software licenses – imaging software license revenue was $ 2.2 million in 2015 versus $ 1.4 million in 2014. historically , we have sold most of our imaging software licenses to oem customers that incorporate our software into medical imaging products . revenue to such oem customers decreased approximately $ 0.1 million in 2015. the increase in imaging software license revenue in 2015 was due to a large non-oem transaction we consummated in the fourth quarter of 2015. in october 2015 , we signed an agreement with a systems integrator customer to license our imaging software for inclusion in a u.s. government healthcare management system . the arrangement included a $ 4.5 million license fee plus a $ 125,000 software maintenance fee . we delivered the licensed software and the customer paid us in the fourth quarter of 2015. however due to the unique nature of the transaction , we were unable to establish vendor specific objective evidence for the fair value of the maintenance element . accordingly , we recognized revenue over the twelve-month maintenance period that ran from october 2015 to october 2016 and recorded $ 0.9 million of license revenue in 2015. software maintenance software maintenance consists of revenue from the sale of software maintenance contracts . software maintenance contracts entitle customers to receive software support and software updates , if and when they become available , during the term of the contract . software maintenance revenue increased 9 % from $ 4.7 million in 2015 to $ 5.1 million in 2016. as a percentage of total revenue , software maintenance revenue was 24 % in 2015 and 2016. software maintenance revenue increased 8 % from $ 4.4 million in 2014 to $ 4.7 million in 2015. as a percentage of total revenue , software maintenance revenue increased from 18 % in 2014 to 24 % in 2015. the dollar increase in software maintenance revenue in 2016 and 2015 was primarily due to a base of maintenance revenue from contract renewals from prior periods that grows as we sell maintenance contracts with new licenses in current periods . a majority of our customers purchase software maintenance contracts when they initially purchase software licenses . since our software is used in active biometrics systems , many of our customers continue to renew their maintenance contracts in subsequent years while systems remain operational . 29 services services consist of fees we charge to perform software development , integration , installation , and customization services . similar to software license revenue , services revenue depends on our ability to win biometrics systems projects either directly with government customers or in conjunction with channel partners . services revenue will fluctuate when we commence new projects and or when we complete projects that were started in previous periods . services decreased 47 % from $ 3.3 million in 2015 to $ 1.7 million in 2016. as a percentage of total revenue , services decreased from 17 % in 2015 to 8 % in 2016. the dollar decrease in services revenue was primarily due to lower revenue from : i ) commercial customers ; and ii ) u.s. government customers , including the navy and usmc . services backlog of $ 0.4 million was minimal as of december 31 , 2016 , which means that services revenue in 2017 is unlikely return to the levels we achieved in 2014 and 2015. services decreased 36 % from $ 5.2 million in 2014 to $ 3.3 million in 2015. as a percentage of total revenue , services decreased from 22 % in 2014 to 17 % in 2015. the dollar decrease in services revenue was due to a $ 2.8 million decrease from government customers , which was partially offset by a $ 0.9 million increase from commercial customers . the dollar decrease in government services revenue was primarily due to lower revenue from u.s. government customers , including the navy and usmc . hardware hardware revenue consists of sales of biometrics equipment to the navy for whom we developed biometrics software . hardware products sold to this customer integrate hardware purchased from third parties with software from other third parties as well as software from aware . we evaluated the classification of gross versus net revenue recognition and determined gross recognition was appropriate . story_separator_special_tag cost of hardware decreased by 79 % from $ 3.5 million in 2014 to $ 0.7 million in 2015. cost of hardware as a percentage of hardware revenue decreased from 71 % in 2014 to 65 % in 2015 , which means that product gross margins increased from 29 % in 2014 to 35 % in 2015. the dollar decrease in cost of hardware was due to lower unit shipments of hardware products in the current year period compared to the prior year period . 31 research and development expense research and development expense consists of costs for : i ) engineering personnel , including salaries , stock-based compensation , fringe benefits , and facilities ; ii ) engineering consultants and contractors , and iii ) other engineering expenses such as supplies , equipment depreciation , dues and memberships and travel . engineering costs incurred to develop our technology and products are classified as research and development expense . as described in the cost of services section , engineering costs incurred to provide engineering services for customer projects are classified as cost of services , and are not included in research and development expense . the classification of total engineering costs to research and development expense and cost of services was ( in thousands ) : replace_table_token_4_th research and development expense increased 20 % from $ 5.8 million in 2015 to $ 6.9 million in 2016. as a percentage of total revenue , research and development expense increased from 29 % in 2015 to 32 % in 2016. the increase in research and development expense was primarily due to the reallocation of engineers from customer services projects to internal development projects . as the table above indicates , total engineering costs increased from $ 7.6 million in 2015 to $ 7.7 million in 2016. the $ 0.1 million spending increase was due to the following factors : i ) higher compensation expenses for engineers as a result of merit increases ; ii ) higher third party software development costs ; and iii ) lower contractor expenses due to the termination of contractors working on government service projects . our engineering headcount declined by one head in 2016. we believe our engineering organization was adequately staffed as of december 31 , 2016. research and development expense increased 5 % from $ 5.5 million in 2014 to $ 5.8 million in 2015. as a percentage of total revenue , research and development expense increased from 23 % in 2014 to 29 % in 2015. the increase in research and development expense was primarily due to the reallocation of engineers from customer services projects to internal development projects . as the table above indicates , total engineering costs decreased from $ 7.9 million in 2014 to $ 7.6 million in 2015. the spending decrease was due to the following factors , which in the aggregate resulted in $ 0.3 million less expense : i ) higher compensation expenses for engineers hired in 2014 for which there was a partial year of expense in 2014 versus a full year in 2015 ; ii ) higher amortization expenses for acquired technology ; iii ) lower compensation and contractor expenses due to the termination of employees and contractors working on government service projects ; iv ) lower contractor expenses due to the termination of contractors working on internal development projects ; and v ) lower recruiting fees due to reduced hiring in 2015. our engineering headcount declined by one head in 2015. as we described in the strategy section in part 1 of this form 10-k , we intend to introduce new products that will allow us to offer more complete biometrics solutions . we believe this strategy will allow us to sell more software into biometrics systems projects in order to grow our revenue . our preference is to develop such products internally , however to the extent we are unable to do that , we may purchase or license technologies from third parties . we anticipate that we will continue to focus our future research and development activities on enhancing existing products and developing new products . in 2016 , we engaged a third party software development company to assist us in the development of an important new product . work commenced in the fourth quarter of 2016 and is expected to be completed in mid 2017. research and development expense in 2016 included a portion of the cost of this contract and we expect that research and development expenses in the first half of 2017 may include an additional $ 750,000 depending on the achievement of contract milestones . selling and marketing expense selling and marketing expense primarily consists of costs for : i ) sales and marketing personnel , including salaries , sales commissions , stock-based compensation , fringe benefits , travel , and facilities ; and ii ) advertising and promotion expenses . 32 sales and marketing expense increased 5 % from $ 3.9 million in 2015 to $ 4.1 million in 2016. as a percentage of total revenue , sales and marketing expense decreased from 20 % in 2015 to 19 % in 2016. the dollar increase in selling and marketing expense was primarily due to increased spending on sales agents , travel and tradeshows , which was partially offset by lower sales commissions and salaries . sales and marketing expense increased 5 % from $ 3.7 million in 2014 to $ 3.9 million in 2015. as a percentage of total revenue , sales and marketing expense increased from 16 % in 2014 to 20 % in 2015. the dollar increase in selling and marketing expense was primarily due to the addition of one employee in our sales organization which was partially offset by the departure of another employee in the second half of the year . sales commissions were $ 35,000 higher in 2015 despite a $ 4.1 million decrease in total revenue . the small commission increase was due to higher license sales and brazilian sales agent commissions .
| summary of financial results we used revenue and operating income to summarize financial results over the past three years as we believe these measurements are the most meaningful way to understand our operating performance . 2016 compared to 2015 revenue and operating income in 2016 were $ 21.6 million and $ 5.9 million , respectively , which compared to revenue and operating income in 2015 of $ 19.6 million and $ 3.9 million , respectively . revenue increased by $ 2.0 million in 2016 primarily as a result of higher license revenue for biometrics and imaging software products . higher biometrics product license sales were driven by three large sales to : i ) the united states marine corps ( “ usmc ” ) , ii ) the united states navy ( “ navy ” ) , and iii ) a systems integrator for a u.s. government end user customer . higher imaging product license sales were related to a $ 4.5 million license sale in 2015 that we recognized over the period october 2015 to october 2016. higher software license revenue was partially offset by lower services and hardware revenue . services revenue declined because we completed significant projects with commercial and government customers in 2015 that were not replaced with projects of a similar size . hardware revenue declined because the navy completed the bulk of its hardware purchases in 2015. operating income increased by $ 2.0 million in 2016 because : i ) the $ 2.0 million revenue increase resulted in $ 1.2 million more operating income ; and ii ) patent related income increased by $ 0.8 million . 2015 compared to 2014 revenue and operating income in 2015 were $ 19.6 million and $ 3.9 million , respectively , which compared to revenue and operating income in 2014 of $ 23.7 million and $ 7.1 million , respectively .
| 7,271 |
the commercial interiors industry , including the market for floorcovering products , is largely driven by reinvestment by corporations into their existing businesses in the form of new fixtures and furnishings for their workplaces . in significant part , the timing and amount of such reinvestments are impacted by the profitability of those corporations . as a result , macroeconomic factors such as employment rates , office vacancy rates , capital spending , productivity and efficiency gains that impact corporate profitability in general , also affect our business . most of our sales are to customers in the corporate office market segment , but we also focus our marketing and sales efforts on non-corporate office segments to reduce somewhat our exposure to economic cycles that affect the corporate office market segment more adversely , as well as to capture additional market share . our mix of corporate office versus non-corporate office modular carpet and lvt sales in the americas was 45 % and 55 % , respectively , for 2018. company-wide , our mix of corporate office versus non-corporate office modular carpet and lvt sales was 60 % and 40 % , respectively , in 2018. on august 7 , 2018 , the company completed the acquisition of nora for a purchase price of 385.1 million , or $ 447.2 million at the exchange rate as of the transaction date , including acquired cash of 40.0 million ( $ 46.5 million ) for a net purchase price of 345.1 million ( $ 400.7 million ) . nora is an industry leader in the rubber flooring market , and this acquisition is expected to advance the company 's growth strategy in expanding market segments , particularly in the healthcare , life sciences and education market segments . similar to interface , nora operates on an international footprint and the company expects the acquisition will also allow for geographic sales synergies as well . during 2018 , we had net sales of $ 1,179.6 million , up 18.4 % compared to $ 996.4 million in 2017. operating income for 2018 was $ 76.4 million as compared to $ 111.6 million in 2017. net income for 2018 was $ 50.3 million , or $ 0.84 per share , compared with $ 53.2 million , or $ 0.86 per share , in 2017. the 2018 period includes the results of the acquired nora business from august 7 through the end of the year , including nora net sales of $ 112.6 million during that stub period . these results included amortization related to the fair value of inventory acquired of $ 26.7 million , and amortization of acquired intangible assets of $ 5.4 million . 2018 also includes $ 9.5 million related to nora transaction expenses . also included in our results for 2018 were $ 20.5 million of restructuring and asset impairment charges as well as $ 6.7 million of tax benefits related to the finalization of our analysis of the u.s. tax cuts and jobs act enacted in 2017. please see item 8 , note 15 “ taxes on income ” for further discussion of these tax benefits . during 2017 , we had net sales of $ 996.4 million , up 3.9 % compared to $ 958.6 million in 2016. operating income for 2017 was $ 109.8 million as compared to $ 84.9 million in 2016. net income for 2017 was $ 53.2 million , or $ 0.86 per share , compared with $ 54.2 million , or $ 0.83 per share , in 2016. included in our results for 2017 were $ 7.3 million of restructuring and asset impairment charges as well as $ 15.2 million of tax charges related to the u.s. tax cuts and jobs act enacted in 2017. please see item 8 , note 15 “ taxes on income ” for further discussion of these tax charges . restructuring plan s on december 29 , 2018 , the company committed to a new restructuring plan in its continuing efforts to improve efficiencies and decrease costs across its worldwide operations , and more closely align its operating structure with its business strategy . the plan involves ( i ) a restructuring of its sales and administrative operations in the united kingdom , ( ii ) a reduction of approximately 200 employees , primarily in the europe and asia-pacific geographic regions , and ( iii ) the write-down of certain underutilized and impaired assets that include information technology assets and obsolete manufacturing equipment . as a result of this plan , the company recorded a pre-tax restructuring and asset impairment charge in the fourth quarter of 2018 of approximately $ 20.5 million . the charge is comprised of severance expenses ( approximately $ 10.8 million ) , impairment of assets ( approximately $ 8.6 million ) and other items ( approximately $ 1.1 million ) . the charge is expected to result in future cash expenditures of $ 12 million , primarily for severance payments ( approximately $ 10.8 million ) . the restructuring plan is expected to be substantially completed in the first half of 2019 , and is expected to yield gross annual savings of approximately $ 12 million beginning in fiscal 2019. the company expects to redeploy in 2019 essentially all of the anticipated savings toward the funding of sales and strategic growth initiatives , yielding negligible net savings on the company 's income statement . 22 in the fourth quarter of 2016 , we committed to a separate restructuring plan . the plan involved ( i ) a substantial restructuring of the flor business model that included closure of its headquarters office and most retail flor stores , ( ii ) a reduction of approximately 70 flor employees and a number of employees in the commercial carpet tile business , primarily in the americas and europe regions , and ( iii ) the write-down of certain underutilized and impaired assets that included information technology assets , intellectual property assets , and obsolete manufacturing , office and retail store equipment . story_separator_special_tag in absolute dollars , the increase in costs of sales was a result of higher sales for 2018 as compared to 2017. as a percentage of sales , our costs of sales increased to 64.0 % in 2018 versus 61.3 % in 2017. this increase was a result of ( 1 ) higher costs of sales related to the acquired nora business , including purchase accounting amortization of $ 32.1 million for acquired inventory and intangible assets , ( 2 ) delayed productivity initiatives due to increased sales and production volumes , as well as ( 3 ) a change in the sales mix weighted more heavily toward the interfaceservices business . these service sales typically generate a lower gross margin compared to the rest of our operations . for 2017 , our costs of sales increased $ 20.4 million ( 3.5 % ) compared with 2016. fluctuations in currency exchange rates did not have a significant impact ( less than 1 % ) on the comparison . in absolute dollars , the increase in costs of sales was a result of the higher sales for 2017 as compared to 2016. as noted above , sales increased 3.9 % in 2017. as a percentage of sales , our costs of sales improved to 61.3 % in 2017 versus 61.5 % in 2016. this improvement was a result of ( 1 ) productivity initiatives , including our investment in our manufacturing facilities in lagrange , georgia , ( 2 ) lower cost of sales as a percentage of sales due to the introduction of our lvt product offerings , which commanded margins in 2017 that were accretive to our modular carpet products , and ( 3 ) non-recurring charges in 2016 related to the transition to a centralized warehouse and distribution center in our americas business . these benefits were partially offset by ( 1 ) higher raw materials costs due to input cost inflation , particularly in our european business , and ( 2 ) negative gross margin impacts due to the exit of our flor specialty retail business . our flor business delivers higher gross margins than our commercial business , and with the closure of the specialty retail stores the decline in sales had a negative impact on our cost of sales as a percentage of sales . 25 for 2018 , our sg & a expenses increased $ 60.3 million ( 22.6 % ) versus 2017. sg & a expenses for the acquired nora business were $ 34.9 million from august 7 through the end of the 2018 year . currency fluctuations had only a slight ( less than 1 % ) unfavorable impact on sg & a expenses . the increase in sg & a expenses during the year was due to ( 1 ) transaction costs in connection with the nora acquisition of $ 5.3 million , ( 2 ) higher performance-based stock compensation of approximately $ 7.0 million as performance targets were met to a higher degree in 2018 as compared to 2017 , ( 3 ) higher selling expenses of $ 24.0 million related to the acquired nora business , ( 4 ) higher selling expense of $ 7.5 million due to higher sales volumes in the legacy interface business , and ( 5 ) higher administrative expenses of $ 15.8 million primarily due to the acquired nora business as noted above . as a percentage of sales , sg & a expenses increased to 27.8 % in 2018 versus 26.8 % in 2017. for 2017 , our sg & a expenses increased $ 5.4 million ( 2.1 % ) versus 2016. currency fluctuations had only a slight ( less than 1 % ) unfavorable impact on sg & a expenses . the increase in sg & a expenses during the year was due to ( 1 ) higher incentive-based compensation ( approximately $ 6 million ) and performance-based stock compensation ( approximately $ 1.5 million ) as performance targets were met to a higher degree in 2017 as compared to 2016 , and ( 2 ) higher administrative expenses of $ 5 million as we centralize certain support functions . these increases were partially offset by ( 1 ) lower marketing expenses of $ 3.9 million , a result of our restructuring efforts as well as global consolidation of costs for marketing expenditures leading to lower levels of total spend , and ( 2 ) lower selling costs of $ 4.2 million due primarily to exiting our flor specialty retail business in 2017. despite the higher sg & a expense in absolute dollars , due to the increase in sales noted above , sg & a expenses declined as a percentage of sales in 2017 to 26.8 % versus 27.3 % in 2016. interest expense for 2018 , our interest expense increased $ 8.3 million to $ 15.4 million , versus $ 7.1 million in 2017. this increase was a result of ( 1 ) additional debt incurred to complete the nora acquisition and ( 2 ) higher average interest rates on our borrowings ( our average borrowing rate for 2018 was 3.5 % as compared to 2.9 % for 2017 ) . our interest rate swap entered into in 2017 did not have any significant impact on interest expense for 2018. for 2017 , our interest expense increased $ 1.0 million to $ 7.1 million , versus $ 6.1 million in 2016. this increase was a result of ( 1 ) higher average interest rates under our syndicated credit facility during 2017 ( the average interest rate for 2016 was 2.5 % as compared to 2.9 % for 2017 ) , and ( 2 ) in 2017 we fixed the variable interest rate on $ 100 million of our term loan borrowings under the syndicated credit facility by entering into an interest rate swap transaction . the effect of this interest rate swap was to increase the interest rate on the $ 100 million notional amount of the swap above the variable rate in effect for our other term loan borrowings under the syndicated credit facility .
| analysis of results of operations the following discussion and analyses reflect the factors and trends discussed in the preceding sections . our net sales that were denominated in currencies other than the u.s. dollar were approximately 49 % in 2018 , 46 % in 2017 , and 48 % in 2016. because we have such substantial international operations , we are impacted , from time to time , by international developments that affect foreign currency transactions . in 2018 , the strengthening of the euro and british pound against the u.s. dollar had a positive impact on our net sales and operating income . in 2017 , the strengthening of the euro , australian dollar and canadian dollar had a small positive impact on our net sales and operating income . during 2016 , our sales and operating income were negatively impacted by the strengthening of the u.s. dollar and euro against the british pound sterling , with smaller impacts due to weakening of the australian dollar and canadian dollar against the u.s. dollar . the following table presents the amounts ( in u.s. dollars ) by which the exchange rates for converting euros , british pounds , australian dollars and canadian dollars into u.s. dollars have affected our net sales and operating income during the past three years : replace_table_token_4_th the following table presents , as a percentage of net sales , certain items included in our consolidated statements of operations during the past three years : replace_table_token_5_th net sales below we provide information regarding our net sales and analyze those results for each of the last three fiscal years . fiscal years 2018 , 2017 , and 2016 were 52-week periods .
| 7,272 |
the percentage of insurance coverage of the outstanding principal and interest of the ars varies by security . the par and carrying values , and story_separator_special_tag overview the company 's fiscal year ends on the saturday closest to january 31 , typically resulting in a fifty-two week year , but occasionally giving rise to an additional week , resulting in a fifty-three week year . a store is included in comparable store sales when it has been open as the same brand at least one year and its square footage has not been expanded or reduced by more than 20 % within the past year . for purposes of this item 7. management 's discussion and analysis of financial condition and results of operations , the fifty-two week period ended january 28 , 2012 is compared to the fifty-two week period ended january 29 , 2011 and the fifty-two week period ended january 29 , 2011 is compared to the fifty-two week period ended january 30 , 2010. the company had net sales of $ 4.158 billion for the fifty-two weeks ended january 28 , 2012 , an increase of 20 % from $ 3.469 billion for the fifty-two weeks ended january 29 , 2011. operating income for fiscal 2011 was $ 190.0 million , which was down from $ 231.9 million in fiscal 2010. net income from continuing operations was $ 126.9 million and net income from continuing operations per diluted share was $ 1.42 in fiscal 2011 , compared to net income from continuing operations of $ 150.3 million and net income from continuing operations per diluted share of $ 1.67 in fiscal 2010. excluding charges for impairments and write-downs of store-related long-lived assets , charges related to store closures and lease exits , and other charges associated with legal settlements and a change in intent regarding the company 's auction rate securities ( ars ) , the company reported adjusted , non-gaap net income per diluted share from continuing operations of $ 2.30 for the fifty-two weeks ended january 28 , 2012. excluding store-related asset impairment charges and exit charges associated with domestic store closures , the company reported non-gaap net income per diluted share from continuing operations of $ 2.05 for the fifty-two weeks ended january 29 , 2011 . 36 the company believes that the non-gaap financial measures are useful to investors as they provide the ability to measure the company 's operating performance and compare it against that of prior periods without reference to the consolidated statements of operations and comprehensive income impact of non-cash , store-related asset impairment charges , charges related to store closures and lease exits , and other charges associated with legal settlements during the fiscal year and a change in intent regarding the company 's ars . these non-gaap financial measures should not be used as alternatives to net income per diluted share or as indicators of the ongoing operating performance of the company and are also not intended to supersede or replace the company 's gaap financial measures . the table below reconciles the gaap financial measures to the non-gaap financial measures discussed above . replace_table_token_7_th ( 1 ) the store-related asset impairment charges relate to stores whose asset carrying value exceeded their fair value . for the fifty-two week period ended january 28 , 2012 , the charge was associated with 14 abercrombie & fitch , 21 abercrombie kids , 42 hollister and two gilly hicks stores . for the fifty-two week period ended january 29 , 2011 , the charge was associated with two abercrombie & fitch , two abercrombie kids , nine hollister and 13 gilly hicks stores . ( 2 ) for the fifty-two week period ended january 28 , 2012 , the charge associated with the asset write-downs was related to the reconfiguration of three flagship stores and a small write-off related to a cancelled flagship project . ( 3 ) for the fifty-two week periods ended january 28 , 2012 and january 29 , 2011 , the charges for store closures and lease exits were associated with lease buyouts and other lease obligations related to stores closing prior to natural lease expirations , other lease terminations , and other incidental costs associated with store closures . ( 4 ) for the fifty-two week period ended january 28 , 2012 , the charge was related to legal settlements during the fourth quarter . ( 5 ) for the fifty-two week period ended january 28 , 2012 , the charge associated with the ars was related to a change in intent with regard to the company 's auction rate securities portfolio , which resulted in recognition of an other-than-temporary impairment . net cash provided by operating activities , the company 's primary source of liquidity , was $ 365.2 million for fiscal 2011. this source of cash was primarily driven by results from operations , adjusted for non-cash items , an increase in accounts payable and accrued expenses partially offset by increases in inventory . the company used $ 318.6 million of cash for capital expenditures . the company 37 also repurchased $ 196.6 million of common stock , paid dividends totaling $ 61.0 million , repaid borrowings under the credit agreement of $ 45.0 million and received $ 46.5 million in proceeds from the exercise of stock options during fiscal 2011. as of january 28 , 2012 , the company had $ 583.5 million in cash and equivalents , no outstanding debt aside from that related to landlord financing obligations , and immaterial stand-by letters of credit . story_separator_special_tag marketing , general and administrative expense marketing , general and administrative expense during fiscal 2011 was $ 437.1 million compared to $ 400.8 million in fiscal 2010. for fiscal 2011 , the marketing , general and administrative expense rate ( marketing , general and administrative expense divided by net sales ) was 10.5 % , compared to 11.6 % for fiscal 2010. marketing , general and administrative expense for the fifty-two weeks ended january 28 , 2012 included $ 10.0 million in charges in connection with fourth quarter legal settlements . in addition to legal settlement charges , the increase in marketing , general and administrative expense for fiscal 2011 was primarily due to increases in compensation , including equity compensation , outside services , marketing , travel and it expenses . other operating expense ( income ) , net other operating expense , net was $ 3.5 million compared to other operating income , net of $ 10.1 million for fiscal 2010. other operating expense , net for the fifty-two weeks ended january 28 , 2012 42 included $ 13.4 million of expense related to a change in the company 's intent regarding the sale of its ars portfolio , which resulted in recognition of an other-than-temporary impairment in fiscal 2011. interest expense ( income ) , net and tax expense fiscal 2011 interest expense was $ 7.9 million , offset by interest income of $ 4.3 million , compared to interest expense of $ 7.8 million , offset by interest income of $ 4.4 million for fiscal 2010. the effective tax rate for fiscal 2011 was 32.0 % compared to 34.3 % for fiscal 2010 , in each year benefiting from foreign operations . as of january 28 , 2012 , there were approximately $ 25.6 million of net deferred tax assets in japan with a valuation allowance of $ 2.4 million . the valuation allowance in japan was established as the result of changes to the business configuration of operations in japan , as well as tax law changes . the realization of the net deferred tax assets not subject to a valuation allowance is dependent upon the future generation of sufficient profits in japan . while the company believes it is more likely than not that the net deferred tax assets will be realized , it is not certain . should circumstances change , some or all of the net deferred tax assets not currently subject to a valuation allowance may be in the future . any increase in the valuation allowance would result in additional tax expense . income from discontinued operations , net of tax the company completed the closure of its ruehl branded stores and related direct-to-consumer operations in the fourth quarter of fiscal 2009. accordingly , the after-tax operating results appear in income ( loss ) from discontinued operations , net of tax on the consolidated statements of operations and comprehensive income for all years presented . results from discontinued operations , net of tax , were immaterial for fiscal 2010. refer to note 17 , discontinued operations , of the notes to consolidated financial statements included in item 8. financial statements and supplementary data of this annual report on form 10-k for further discussion . net income and net income per diluted share net income for fiscal 2011 was $ 127.7 million compared to $ 150.3 million for fiscal 2010. net income per diluted share for fiscal 2011 was $ 1.43 compared to $ 1.67 for fiscal 2010. net income per diluted share for fiscal 2011 included store-related asset impairment charges of approximately $ 0.49 per diluted share , asset write-down charges of approximately $ 0.10 per diluted share , store closure and exit charges of approximately $ 0.13 per diluted share , legal charges of approximately $ 0.07 per diluted share , and other-than-temporary impairment charges of approximately $ 0.09 per diluted share related to a change in intent regarding the company 's ars portfolio . net income per diluted share for fiscal 2010 included store-related asset impairment charges of approximately $ 0.34 per diluted share and store exit charges of approximately $ 0.03 per diluted share . refer to the gaap reconciliation table in the overview section of item 7. management 's discussion and analysis of financial condition and results of operations for a reconciliation of net income per diluted share on a gaap basis to net income per diluted share on a non-gaap basis , excluding charges for impairment and write-downs of store related long-lived assets , charges related to store closures and lease exits , and other charges associated with legal settlements during the quarter and with a change in intent regarding the company 's ars . 43 fiscal 2010 compared to fiscal 2009 net sales net sales for fiscal 2010 were $ 3.469 billion , an increase of 18 % from fiscal 2009 net sales of $ 2.929 billion . the net sales increase was attributable to a 7 % increase in comparable store sales , a 40 % increase in the direct-to-consumer business , including shipping and handling revenue , and new stores , primarily international . the impact of foreign currency on sales for fiscal 2010 and fiscal 2009 was less than 1 % of net sales . total company u.s. store sales for fiscal 2010 were $ 2.547 billion , an increase of 7 % from fiscal 2009 sales of $ 2.378 billion . total company international store sales for fiscal 2010 were $ 505.1 million , an increase of 97 % from fiscal 2009 sales of $ 256.2 million . direct-to-consumer sales in fiscal 2010 , including shipping and handling revenue , were $ 405.0 million , an increase of 40 % from fiscal 2009 direct-to-consumer sales of $ 290.1 million .
| financial summary the following summarized financial and statistical data compares fiscal 2011 to fiscal 2010 , fiscal 2010 to fiscal 2009 , and fiscal 2009 to fiscal 2008 : replace_table_token_9_th * a store is included in comparable store sales when it has been open as the same brand 12 months or more and its square footage has not been expanded or reduced by more than 20 % within the past year . * * net sales for the fifty-two week periods ended january 28 , 2012 , january 29 , 2011 and january 30 , 2010 reflect the activity of 21 , 19 and 16 stores , respectively . current trends and outlook our results for fiscal 2011 were below our expectations in a very challenging environment . during fiscal 2011 , we saw all-time high cotton costs , resulting in higher average unit costs . in addition , we were not able to offset the increases in the costs with increased average unit retail prices due to a highly aggressive promotional environment in the u.s. we expect to see a significant reversal in the average unit cost trend in fiscal 2012 , especially in the second half of the year ; however , we remain cautious about our ability to raise average unit retail prices in the u.s. we expect significant margin improvement in fiscal 2012 due primarily to a combination of average unit cost reductions and the expected performance of our 39 new international stores and our direct-to-consumer business . we will continue to take a long-term approach , and will not sacrifice quality to achieve cost reductions . we are confident that we are on track in regard to our long-term strategy of leveraging the international appeal of our brands to build a highly profitable , sustainable , global business . there are five key elements to this strategy . first , continuing to provide high-quality , trend-right merchandise and a compelling and differentiated store experience . second , continuing to close underperforming u.s.
| 7,273 |
our benefits costs incurred in 2016 included costs of $ 5.1 million for changes in estimated run-off related to prior periods . workers ' compensation costs our workers ' compensation coverage has been provided through an arrangement with the chubb group of insurance companies ( “ the chubb program ” ) since 2007. the chubb program is a fully insured policy whereby chubb has the responsibility to pay all claims incurred under the policy regardless of whether we satisfy our responsibilities . under the chubb 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 . chubb 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 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 2016 averaging 172,578 paid worksite employees in the fourth quarter , which represents a 12.7 % increase over the fourth quarter of 2015 . approximately 24.5 % and 23.3 % of our average paid worksite employees were in our middle market sector for the years ended december 31 , 2016 and 2015 , respectively , 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 174,200 and 175,800 in the first quarter of 2017 . our average gross profit per worksite employee per month was $ 247 in 2016 and $ 250 in 2015 , which included a contribution to average gross profit from our other products and services offerings of $ 16 per worksite employee per month in 2016 and $ 17 per worksite employee per month in 2015 . adjusted operating expenses increased 6.9 % in 2016 to $ 385.0 million . on a per worksite employee per month basis , adjusted operating expenses decreased from $ 206 in 2015 to $ 193 in 2016 . our adjusted net income in 2016 was $ 76.7 million , a $ 22.2 million increase compared to 2015 . our adjusted ebitda increased 28.3 % over 2015 to $ 141.2 million . our adjusted ebitda per worksite employee per month increased 12.7 % from $ 63 in 2015 to $ 71 in 2016 . we ended 2016 with working capital of $ 39.4 million . during 2016 , we paid $ 20.6 million in dividends and repurchased shares of our common stock at a cost of $ 175.9 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 - 30 - 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 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 we believe the following accounting policies are critical and or require significant judgments and estimates used in the preparation of our consolidated financial statements : benefits costs – we provide group health insurance coverage to our worksite employees through a national network of carriers including united , unitedhealthcare of california , kaiser permanente , blue shield of california , hmsa bluecross blueshield of hawaii and tufts , all of which provide fully insured policies or service contracts . 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 - 32 - 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 , 2016 , plan costs were less than the premiums paid and owed to united by $ 15.0 million . as this amount is in excess of the agreed-upon $ 9.0 million surplus maintenance level , the $ 6.0 million difference is included in prepaid health insurance costs , a current asset , on our consolidated balance sheets . in addition , the premiums owed to united at december 31 , 2016 , were $ 22.6 million , which is included in accrued health insurance costs , a current liability , on our consolidated balance sheets . 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 $ 1.3 billion in 2016 : replace_table_token_8_th workers ' compensation costs – since october 1 , 2007 , our workers ' compensation coverage has been provided through our arrangement with chubb . under the chubb 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 . chubb bears the economic burden for all claims in excess of these levels . the chubb program is a fully insured policy whereby chubb 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 , 2016 and 2015 , we reduced accrued workers ' compensation costs by $ 10.9 million and $ 1.3 million , respectively , for changes in estimated losses related to prior reporting periods .
| results of operations year ended december 31 , 2016 compared to year ended december 31 , 2015 . 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 7 to the consolidated financial statements , “ impairment charges and other , ” for additional information . ( 2 ) 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 . ( 3 ) gross billings of $ 9,011 and $ 9,032 per worksite employee per month , less payroll cost of $ 7,533 and $ 7,544 per worksite employee per month , respectively . revenues our revenues , which represent gross billings net of worksite employee payroll cost , increased 13.0 % in 2016 compared to 2015 , but decreased 0.7 % , or $ 10 on a per worksite employee per month basis compared to 2015 . the revenue increase was primarily due to an 13.7 % increase in the average number of worksite employees paid per month . - 36 - we provide our peo hr outsourcing solutions to small and medium-sized businesses in strategically selected markets throughout the united states .
| 7,274 |
those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement , whether due to error or fraud . the company is not required to have , nor were we engaged to perform , an audit of its internal control over financial reporting . as part of our audit , we are required to obtain an understanding of internal control over financial reporting , but not for the purpose of expressing an opinion on the effectiveness of the company 's internal control over financial reporting . accordingly , we express no such opinion . our audit included performing procedures to assess the risks of material misstatement of the financial statements , whether due to error or fraud , and performing procedures that respond to those risks . such procedures included examining , on a test basis , evidence regarding the amounts and disclosures in the financial statements . our audit also included evaluating the accounting principles used and significant estimates made by management , as well as evaluating the overall presentation of the financial statements . we believe that our audit provide a reasonable basis for our opinion . the financial statements as of december 31 , 2016 , were audited by d'arelli pruzansky , p.a . , who sold its audit practice to assurance dimensions , inc. as of may 3 , 2017 , and whose report dated march 30 , 2017 , expressed an unmodified opinion on those statements assurance dimensions coconut creek , florida march 8 , 2018 we have served as the company 's auditor since 2017 f- 2 celsius holdings , inc. consolidated balance sheets replace_table_token_8_th the accompanying notes are an integral part of these consolidated financial statements f- 3 celsius holdings , inc. consolidated statements of operations replace_table_token_9_th the accompanying notes are an integral part of these consolidated financial statements f- 4 celsius holdings , inc. consolidated statements of comprehensive income for the years ended december 31 , 2017 and 2016 replace_table_token_10_th the accompanying notes are an integral part of these consolidated financial statements f- 5 celsius holdings , inc. consolidated statements of changes in stockholders ' equity for the years ended december 31 , 2017 and 2016 replace_table_token_11_th the accompanying notes are an integral part of these consolidated financial statements f- 6 celsius holdings , inc. consolidated statements of cash flows replace_table_token_12_th the accompanying notes are an integral part of these consolidated financial statements f- 7 celsius holdings , inc. notes to consolidated financial statements december 31 , 2017 and 2016 1. organization and description of business business —celsius holdings , inc. ( the “ company ” or “ celsius holdings ” ) was incorporated under the laws of the state of nevada on april 26 , 2005. on january 24 , 2007 , the company entered into a merger agreement and plan of reorganization with elite fx , inc. , a florida corporation . under the terms of the merger agreement , elite fx , inc. was merged into the company 's subsidiary , celsius , inc. and became a wholly-owned subsidiary of the company on january 26 , 2007. in addition , on march 28 , 2007 the company established celsius netshipments , inc. a florida corporation as two subsidiaries of the company . on february 7 , 2017 , the company established celsius asia holdings limited a hong kong corporation as a wholly-owned subsidiary of the company . on february 7 , 2017 celsius china holdings limited a hong kong corporation became a wholly-owned subsidiary of celsius asia holdings limited and on may 9 , 2017 , celsius asia holdings limited established celsius ( beijing ) beverage limited , a china corporation as a wholly-owned subsidiary of celsius asia holdings limited . since the merger , the company is engaged in the development , marketing , sale and distribution of “ functional ” calorie-burning fitness beverages under the celsius® brand name . 2. basis of presentation and summary of significant accounting policies the consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the united states of america ( “ us gaap ” ) . consolidation policy — the accompanying consolidated financial statements include the accounts of celsius holdings , inc. and its subsidiaries . all material inter-company balances and transactions have been eliminated in consolidation . significant estimates — the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the united states of america requires management to make estimates and assumptions that affect the reported amounts of assets , liabilities , revenue and expenses and disclosure of contingent assets and liabilities at the story_separator_special_tag you should read the following discussion in conjunction with the audited financial statements and the corresponding notes , the unaudited financial statements and the corresponding notes included elsewhere in this information statement . this item 7 contains forward-looking statements . the matters discussed in these forward-looking statements are subject to risk , uncertainties , and other factors that could cause actual results to differ materially from those made , projected or implied in the forward-looking statements . please refer to “ item 1a . risk factors ” for a discussion of the uncertainties , risks and assumptions associated with these statements . story_separator_special_tag interest only at the rate of five percent ( 5 % ) per annum until maturity and is secured by a pledge of substantially all the company 's assets . as of december 31 , 2017 , the principal amount outstanding under the credit facility with cd financial was $ 3.5 million . between december 30 , 2016 and march 14 , 2017 , the company raised an aggregate of $ 15.0 million in capital through the sale of an aggregate of 4,833,329 shares of our common stock at a purchase price of $ 3.00 per share in a private offering to 13 accredited investors . investors in the private placement story_separator_special_tag those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement , whether due to error or fraud . the company is not required to have , nor were we engaged to perform , an audit of its internal control over financial reporting . as part of our audit , we are required to obtain an understanding of internal control over financial reporting , but not for the purpose of expressing an opinion on the effectiveness of the company 's internal control over financial reporting . accordingly , we express no such opinion . our audit included performing procedures to assess the risks of material misstatement of the financial statements , whether due to error or fraud , and performing procedures that respond to those risks . such procedures included examining , on a test basis , evidence regarding the amounts and disclosures in the financial statements . our audit also included evaluating the accounting principles used and significant estimates made by management , as well as evaluating the overall presentation of the financial statements . we believe that our audit provide a reasonable basis for our opinion . the financial statements as of december 31 , 2016 , were audited by d'arelli pruzansky , p.a . , who sold its audit practice to assurance dimensions , inc. as of may 3 , 2017 , and whose report dated march 30 , 2017 , expressed an unmodified opinion on those statements assurance dimensions coconut creek , florida march 8 , 2018 we have served as the company 's auditor since 2017 f- 2 celsius holdings , inc. consolidated balance sheets replace_table_token_8_th the accompanying notes are an integral part of these consolidated financial statements f- 3 celsius holdings , inc. consolidated statements of operations replace_table_token_9_th the accompanying notes are an integral part of these consolidated financial statements f- 4 celsius holdings , inc. consolidated statements of comprehensive income for the years ended december 31 , 2017 and 2016 replace_table_token_10_th the accompanying notes are an integral part of these consolidated financial statements f- 5 celsius holdings , inc. consolidated statements of changes in stockholders ' equity for the years ended december 31 , 2017 and 2016 replace_table_token_11_th the accompanying notes are an integral part of these consolidated financial statements f- 6 celsius holdings , inc. consolidated statements of cash flows replace_table_token_12_th the accompanying notes are an integral part of these consolidated financial statements f- 7 celsius holdings , inc. notes to consolidated financial statements december 31 , 2017 and 2016 1. organization and description of business business —celsius holdings , inc. ( the “ company ” or “ celsius holdings ” ) was incorporated under the laws of the state of nevada on april 26 , 2005. on january 24 , 2007 , the company entered into a merger agreement and plan of reorganization with elite fx , inc. , a florida corporation . under the terms of the merger agreement , elite fx , inc. was merged into the company 's subsidiary , celsius , inc. and became a wholly-owned subsidiary of the company on january 26 , 2007. in addition , on march 28 , 2007 the company established celsius netshipments , inc. a florida corporation as two subsidiaries of the company . on february 7 , 2017 , the company established celsius asia holdings limited a hong kong corporation as a wholly-owned subsidiary of the company . on february 7 , 2017 celsius china holdings limited a hong kong corporation became a wholly-owned subsidiary of celsius asia holdings limited and on may 9 , 2017 , celsius asia holdings limited established celsius ( beijing ) beverage limited , a china corporation as a wholly-owned subsidiary of celsius asia holdings limited . since the merger , the company is engaged in the development , marketing , sale and distribution of “ functional ” calorie-burning fitness beverages under the celsius® brand name . 2. basis of presentation and summary of significant accounting policies the consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the united states of america ( “ us gaap ” ) . consolidation policy — the accompanying consolidated financial statements include the accounts of celsius holdings , inc. and its subsidiaries . all material inter-company balances and transactions have been eliminated in consolidation . significant estimates — the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the united states of america requires management to make estimates and assumptions that affect the reported amounts of assets , liabilities , revenue and expenses and disclosure of contingent assets and liabilities at the story_separator_special_tag you should read the following discussion in conjunction with the audited financial statements and the corresponding notes , the unaudited financial statements and the corresponding notes included elsewhere in this information statement . this item 7 contains forward-looking statements . the matters discussed in these forward-looking statements are subject to risk , uncertainties , and other factors that could cause actual results to differ materially from those made , projected or implied in the forward-looking statements . please refer to “ item 1a . risk factors ” for a discussion of the uncertainties , risks and assumptions associated with these statements . story_separator_special_tag interest only at the rate of five percent ( 5 % ) per annum until maturity and is secured by a pledge of substantially all the company 's assets . as of december 31 , 2017 , the principal amount outstanding under the credit facility with cd financial was $ 3.5 million . between december 30 , 2016 and march 14 , 2017 , the company raised an aggregate of $ 15.0 million in capital through the sale of an aggregate of 4,833,329 shares of our common stock at a purchase price of $ 3.00 per share in a private offering to 13 accredited investors . investors in the private placement
| results of operations year ended december 31 , 2017 compared to year ended december 31 , 2016 revenue revenue for the year ended december 31 , 2017 was $ 36.2 million , compared to $ 22.8 million for the year ended december 31 , 2016 , an increase of 59 % . this increase was driven primarily by a 72 % increase in domestic revenues derived from blended growth rates of 49 % in retail accounts , 143 % in health and fitness accounts and 84 % growth in internet retailer accounts , as well as 37 % growth in international revenues , from 2016. international revenue growth was primarily the result of increased sales volume through func foods , our nordic distribution , partner as well as initial revenues generated from the launch of distribution of our products into the asian market . 18 the following table sets forth the amount of revenues by category and changes therein for the years ended december 31 , 2017 and december 31 , 2016 : replace_table_token_2_th gross profit gross profit was $ 15.4 million , or 42.7 % of revenue , in the year ended december 31 , 2017 compared to $ 9.7 million , or 42.7 % of revenue , in 2016. the increase in gross profit from 2016 to 2017 is primarily attributable to the increases in revenue .
| 7,275 |
those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial story_separator_special_tag results of operation s this management 's discussion and analysis of financial condition and results of operations contains forward-looking statements that involve risks and uncertainties . our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors , including those discussed in item 1a . “ risk factors ” and “ forward-looking statements. ” we have acquired and initiated a number of businesses during the periods presented and addressed in this management 's discussion and analysis of financial condition and results of operations . our financial statements include the results of operations of those businesses from the date acquired or when they commenced operations . this management 's discussion and analysis of financial condition and results of operations has been updated to reflect the revision of our financial statements for entities which have been treated as discontinued operations . overview we are an international transportation services company that operates automotive and commercial truck dealerships principally in the united states , canada and western europe , and distributes commercial vehicles , diesel engines , gas engines , power systems and related parts and services principally in australia and new zealand . we employ more than 24,000 people worldwide . in 2016 , our business generated $ 20.1 billion in total revenue , which is comprised of $ 18.7 billion from retail automotive dealerships , $ 1.0 billion from retail commercial truck dealerships and $ 0.4 billion from commercial vehicle distribution and other operations . retail automotive dealership . we believe we are the second largest automotive retailer headquartered in the u.s. as measured by the $ 18.7 billion in total retail automotive dealership revenue we generated in 2016. as of december 31 , 2016 , we operated 355 retail automotive franchises , of which 164 franchises are located in the u.s. and 191 franchises are located outside of the u.s. the franchises outside the u.s. are located primarily in the u.k. in 2016 , we retailed and wholesaled more than 556,000 vehicles . we are diversified geographically , with 59 % of our total retail automotive dealership revenues in 2016 generated in the u.s. and puerto rico and 41 % generated outside the u.s. we offer over 40 vehicle brands , with 72 % of our retail automotive dealership revenue in 2016 generated from premium brands , such as audi , bmw , mercedes-benz and porsche . each of our dealerships offer a wide selection of new and used vehicles for sale . in addition to selling new and used vehicles , we generate higher-margin revenue at each of our dealerships through maintenance and repair services and the sale and placement of third-party finance and insurance products , third-party extended service and maintenance contracts and replacement and aftermarket automotive products . in march 2016 , we acquired an additional 8 % interest in the jacobs group , one of our german automotive dealership joint ventures , and now own 68 % of that joint venture . we began consolidating this joint venture during the third quarter of 2015. retail automotive dealerships represented 92.8 % of our total revenues and 91.2 % of our total gross profit in 2016. retail commercial truck dealership . in november 2014 , we acquired a controlling interest in a heavy and medium duty truck dealership group located primarily in texas and oklahoma , which we renamed premier truck group ( “ ptg ” ) . prior to the 2014 transaction , we held a 32 % interest in ptg and accounted for this investment under the equity method . in 2015 , we acquired an additional 5 % of ptg , bringing our ownership interest to 96 % . in april 2016 , we acquired the remaining ownership interests of ptg , bringing our total ownership interest to 100 % . as of december 31 , 2016 , ptg operated twenty locations in the u.s. and canada , including fourteen full-service dealerships offering primarily freightliner and western star branded trucks . two of these locations , chattanooga and knoxville , were acquired in february 2015. four of these locations were acquired in april 2016 and represent freightliner and western star in the greater toronto , canada market area . we acquired two additional retail commercial truck dealerships that also represent freightliner in december 2016 in the niagara falls , canada market area . ptg also offers a full range of used trucks available for sale as well as service and parts departments , many of which are open 24 hours a day , seven days a week . this business represented 5.0 % of our total revenues and 4.8 % of our total gross profit in 2016 . 32 commercial vehicle distribution . we are the exclusive importer and distributor of western star heavy-duty trucks ( a daimler brand ) , man heavy and medium duty trucks and buses ( a vw group brand ) , and dennis eagle refuse collection vehicles , together with associated parts , across australia , new zealand and portions of the pacific . this business , known as penske commercial vehicles australia ( “ pcv australia ” ) , distributes commercial vehicles and parts to a network of more than 70 dealership locations , including six company-owned retail commercial vehicle dealerships . we are also a leading distributor of diesel and gas engines and power systems , principally representing mtu , detroit diesel , mercedes-benz industrial , allison transmission and mtu onsite energy . this business , known as penske power systems ( “ pps ” ) , offers products across the on- and off-highway markets in australia , new zealand and portions of the pacific and supports full parts and aftersales service through a network of branches , field locations and dealers across the region . the on-highway portion of this business complements our existing pcv australia distribution business . story_separator_special_tag during the first quarter of 2015 , we divested our car rental business that included hertz car rental franchises in the memphis , tennessee market and certain markets throughout indiana in light of our perceived inability to grow that business . the results of operations of our car rental business are included in discontinued operations for the years ended december 31 , 2015 and 2014. the results of our commercial vehicle distribution business in australia and new zealand are principally driven by the number and types of products and vehicles ordered by our customers . the future success of our business is dependent upon , among other things , general economic and industry conditions , our ability to consummate and integrate acquisitions , the level of vehicle sales in the markets where we operate , our ability to increase sales of higher margin products , especially service and parts services , our ability to realize returns on our significant capital investment in new and upgraded dealership facilities , the success of our distribution of commercial vehicles , engines , and power systems and the return realized from our investments in various joint ventures and other non-consolidated investments . see item 1a . “ risk factors ” and “ forward-looking statements ” below . critical accounting policies and estimates the preparation of financial statements in accordance with accounting principles generally accepted in the united states of america requires the application of accounting policies that often involve making estimates and employing judgments . such judgments influence the assets , liabilities , revenues and expenses recognized in our financial statements . management , on an ongoing basis , reviews these estimates and assumptions . management may determine that modifications in assumptions and estimates are required , which may result in a material change in our results of operations or financial position . the following are the accounting policies applied in the preparation of our financial statements that management believes are most dependent upon the use of estimates and assumptions . 34 revenue recognition dealership vehicle , parts and service sales . we record revenue when vehicles are delivered and title has passed to the customer , when vehicle service or repair work is completed , and when parts are delivered to our customers . sales promotions that we offer to customers are accounted for as a reduction of revenues at the time of sale . rebates and other incentives offered directly to us by manufacturers are recognized as a reduction of cost of sales . reimbursements of qualified advertising expenses are treated as a reduction of selling , general and administrative expenses . the amounts received under certain manufacturer rebate and incentive programs are based on the attainment of program objectives , and such earnings are recognized either upon the sale of the vehicle for which the award was received , or upon attainment of the particular program goals if not associated with individual vehicles . taxes collected from customers and remitted to governmental authorities are recorded on a net basis ( excluded from revenue ) . during 2016 , 2015 , and 2014 , we earned $ 654.9 million , $ 628.9 million , and $ 592.5 million , respectively , of rebates , incentives and reimbursements from manufacturers , of which $ 638.2 million , $ 611.7 million , and $ 578.2 million , respectively , was recorded as a reduction of cost of sales . the remaining $ 16.7 million , $ 17.2 million , and $ 14.3 million , was recorded as a reduction of selling , general and administrative expenses during 2016 , 2015 , and 2014 , respectively . dealership finance and insurance sales . subsequent to the sale of a vehicle to a customer , we sell installment sale contracts to various financial institutions on a non-recourse basis ( with specified exceptions ) to mitigate the risk of default . we receive a commission from the lender equal to either the difference between the interest rate charged to the customer and the interest rate set by the financing institution or a flat fee . we also receive commissions for facilitating the sale of various products to customers , including guaranteed vehicle protection insurance , vehicle theft protection and extended service contracts . these commissions are recorded as revenue at the time the customer enters into the contract . in the case of finance contracts , a customer may prepay or fail to pay their contract , thereby terminating the contract . customers may also terminate extended service contracts and other insurance products , which are fully paid at purchase , and become eligible for refunds of unused premiums . in these circumstances , a portion of the commissions we received may be charged back based on the terms of the contracts . the revenue we record relating to these transactions is net of an estimate of the amount of chargebacks we will be required to pay . our estimate is based upon our historical experience with similar contracts , including the impact of refinance and default rates on retail finance contracts and cancellation rates on extended service contracts and other insurance products . aggregate reserves relating to chargeback activity were $ 23.5 million and $ 23.8 million as of december 31 , 2016 and 2015 , respectively . commercial vehicle distribution . revenue from the distribution of vehicles , engines , power systems and parts is recognized at the time of delivery of goods to the retailer or the ultimate customer . impairment testing other indefinite-lived intangible assets are assessed for impairment annually on october 1 and upon the occurrence of an indicator of impairment through a comparison of its carrying amount and estimated fair value . an indicator of impairment exists if the carrying value exceeds its estimated fair value and an impairment loss may be recognized up to that excess . the fair value is determined using a discounted cash flow approach , which includes assumptions about revenue and profitability growth , profit margins , and the cost of capital .
| results of operations the following tables present comparative financial data relating to our operating performance in the aggregate and on a “ same-store ” basis . dealership results are included in same-store comparisons when we have consolidated the acquired entity during the entirety of both periods being compared . as an example , if a dealership were acquired on january 15 , 2014 , the results of the acquired entity would be included in annual same-store comparisons beginning with the year ended december 31 , 2016 and in quarterly same store comparisons beginning with the quarter ended june 30 , 2015 . 2016 compared to 2015 and 2015 compared to 2014 ( in millions , except unit and per unit amounts ) our results for 2014 include a gain of $ 16.0 million ( $ 9.7 million after-tax ) , or $ 0.10 per share , relating to the revaluation at fair value of a previously held non-controlling interest in ptg , of which we acquired a controlling interest in november 2014 . 37 retail automotive dealership new vehicle data ( in millions , except unit and per unit amounts ) replace_table_token_6_th units retail unit sales of new vehicles increased from 2015 to 2016 , with an increase of 21.4 % internationally and a decrease of 0.5 % in the u.s. the increase is due to a 13,908 unit increase from net dealership acquisitions , coupled with a 2,263 unit , or 1.0 % , increase in same-store new retail unit sales during the year . new units increased internationally primarily due to inclusion of our german automotive dealership joint venture which we began consolidating during the third quarter of 2015 , as well as due to the strong performance of our u.k. business , which experienced a 7.4 % increase in same-store new unit sales . the same-store unit decrease in the u.s. was driven primarily by an increased focus on improvements to gross profit , which negatively impacted unit sales . overall , same-store units increased 7.4
| 7,276 |
our mission is to help individuals forge life-long relationships with others that share their interests and values . through these mobile applications , our users can search for and communicate with other like-minded individuals . our product creates a virtual community where users can meet , chat and message . we operate location-based social networks for meeting new people on mobile platforms , including on iphone , android , ipad and other tablets that facilitate interactions among users and encourage users to connect and chat with each other . our online dating mobile platforms monetize through advertising , in-app purchases , and paid subscriptions . the company offers online marketing capabilities , which enable marketers to display their advertisements in different formats and in different locations . in the near future , we plan to offer sophisticated data science for highly effective hyper-targeting . the company is actively seeking the opportunities to works with its advertisers to maximize the effectiveness of their campaigns by optimizing advertisement formats and placements . we temporarily suspended our paid advertisements for little love to adjust our marketing strategy of little love from april 2018. little love is currently under development and upgrade . the company believes it will relaunch its advertisement for the little love in the second quarter of 2020. our self-developed mobile gaming application is eternal tribe ( “ 永恒部落 ” ) which was launched by us in january 2018. for eternal tribe , our users can deposit fund on as needed basis for the in-app purchases . enteral tribe is android-based mobile games developed solely by us to diversify our product portfolio . we updated eternal tribe based on the collected user experiences and market feedbacks and launched an upgraded version of eternal tribe in july 2018 and engaged third party to co-market and co-operate eternal tribe on different platforms and channels . however , based on the market responses , we suspended eternal tribe in november 2018 and dismissed the development team for eternal tribe . the revenue from eternal tribe was immaterial for the year ended september 30 , 2019. we plan to focus our limited resources on other games that we are co-developing or co-operating ; or about to develop or operate with other parties . as china mobile game market continues to grow at rapid pace , our management team believe it is the right time to leverage our expertise in gaming app development to tap into this hot market . we have been actively developing co-operation relationship with other developers and operators since march 2018. there are two games that we co-operated with their developers : magician hero ( “ 魔纹游戏 ” ) and shu mountain fantasy ( “ 蜀山奇缘 ” ) of which we were responsible for marketing , co-operating and maintenance on the platforms and channels introduced by us . magician hero features non-stop-3d real action and battles based on greek mythology . shu mountain fantasy is a role-playing game of xian xia theme based on the period of the fairy magic war , so that users can witness the fall of the fairy tales . there was no revenue from the co-operations with other developers or operators for the year ended september 30 , 2019. the co-operation agreements with other developers have expired by may 2019 . 18 on april 20 , 2017 , cx network entered into a series of vie agreements with shenzhen chuangxiang network technology limited , or shenzhen cx , and its stockholders , in which cx network effectively assumed management of the business activities of shenzhen cx and has the right to appoint all executives and senior management and the members of the board of directors of shenzhen cx . shenzhen cx is a chinese limited liability company and was formed under laws of the people 's republic of china on august 14 , 2015. shenzhen cx engages in the business of developing and operating membership-based social network , dating and mobile gaming , and interactive live broadcast platforms . the company is currently devoting its efforts to develop mobile applications and online platforms servicing the asia market . for more information of the vie agreements , please refer to the “ corporate structure ” section above . pursuant to the share exchange agreement signed on march 20 , 2018 , cxkj acquired 100 % of the issued and outstanding securities of cx cayman in exchange for 5,350,000 shares of common stock , par value $ 0.0001 per share of cxkj . as a result of the share exchange , the business of cx cayman becomes our business . as such , the following results of operations are focused on the operations of cx cayman and exclude the operations of the company prior to the share exchange . upon the consummation of the share exchange , we engage in the business of developing and operating membership-based social network , dating and mobile gaming , and interactive live broadcast platforms . we are currently devoting our efforts to develop mobile applications and online platforms servicing the asia market . conversion of debenture and issuance on april 25 , 2018 , pursuant to a securities purchase agreement ( the “ debenture purchase agreement ” ) entered into on april 19 , 2017 , in which the company agrees to issue and sell in a private placement to a non-u.s. person ( the “ purchaser ” ) a series a convertible debenture in an aggregate principal amount of $ 150,000 ( the “ debenture ” ) with an 8 % annual interest convertible into shares of common stock , par value $ .0001 per share ( the “ conversion share ( s ) ” ) at price of $ 0.15 per share to the purchaser , the purchaser converted the debenture with 8 % annual interest into 1,080,000 conversion shares . story_separator_special_tag name change , domicile change and reverse split on july 11 , 2017 , mlgt merged with and into cxkj ( the “ merger ” ) , with cxkj as the surviving corporation that operates under the name “ cx network group , inc. ” ( the “ name change ” ) , pursuant to an agreement and plan of merger ( the “ merger agreement ” ) dated july 3 , 2017. pursuant to the merger agreement , immediately after the effective time of the merger , the company 's corporate existence is governed by the laws of the state of nevada and the articles of incorporation and bylaws of cxkj ( the “ domicile change ” ) , and each outstanding share of mlgt 's common stock , par value $ 0.0001 per share was converted into 0.0667 outstanding share of common stock of cxkj , par value $ 0.0001 per share at a one-for-fifteen reverse split ratio . the name change , merger and reverse split was approved by the financial industry regulatory authority ( “ finra ” ) on july 11 , 2017 and such corporation actions took effect at the open of business on july 12 , 2017. immediately prior to the effectiveness of the reverse split , we had 217,300,000 shares of common stock of mlgt issued and outstanding . immediately upon the effectiveness of the reverse stock split , we have 14,486,670 shares of common stock of cxkj issued and outstanding . on august 11 , 2017 , the company was notified by finra department of market operations ( the “ department ” ) that they did not process the reverse split because they believed that the documentation provided by the company did not support the company 's request to process a reverse split . in the same letter , the department notified the company that they processed the company 's request of the merger , the mechanism the company used to consummate the corporate actions mentioned above . also in that letter , the department mentioned that it announced the reverse split on july 11 , 2017 but subsequently revised the announcement on july 28 , 2017. on august 14 , 2017 , the company received a notice from the department that they did not process the symbol change because “ there is currently no symbol assigned to the company. ” on august 16 , 2017 , the company appealed the decisions made by the department as mentioned herein above in connection with reverse stock split , name change and domicile change ( for more information about the corporate actions , refer to the current report on form 8-k the company filed on july 12 , 2017 ) . on october 3 , 2017 , a subcommittee of finra 's uniform practice code committee decided to remand the case to the department for further review . subsequently , the department granted the company 's application for a symbol change . on november 3 , 2017 , the trading symbol for the company was changed to “ cxkj ” , effective immediately . the new cusip number is 12672t 108 . 20 story_separator_special_tag company did not have any investing activity in the year ended september 30 , 2019. net cash provided by financing activities for the year ended september 30 , 2019 was $ 135,511 as compared to $ 651,824 for the year ended september 30 , 2018. the decrease in cash provided by financing activities for the year ended september 30 , 2019 was mainly due to the decrease of proceeds from related parties and partially offset by the repayment to related parties . critical accounting policies and estimates going concern in assessing the company 's liquidity , the company monitors and analyzes its cash and cash equivalents and its operating and capital expenditure commitments . the company 's liquidity needs are to meet its working capital requirements , operating expenses and capital expenditure obligations . as of september 30 , 2019 , the company 's current liabilities exceeded the current assets , its accumulated deficit was approximately $ 2,301,435 and the company has incurred losses since inception . none of the company 's stockholders , officers or directors , or third parties , are under any obligation to advance us funds , or to invest in us . accordingly , we may not be able to obtain additional financing . if we are unable to raise additional capital , we may be required to take additional measures to conserve liquidity , which could include , but not necessarily be limited to , curtailing operations , suspending the pursuit of our business plan , and reducing overhead expenses . we can not provide any assurance that new financing will be available to us on commercially acceptable terms , if at all . these conditions raise substantial doubt about our ability to continue as a going concern . the financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the company be unable to continue as a going concern . use of estimates the preparation of financial statements in conformity with u.s. gaap requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period . actual results could differ from those estimates . net loss per common share the company complies with accounting and disclosure requirements of fasb asc topic 260 , “ earnings per share. ” net loss per common share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding for the period . at september 30 , 2019 and 2018 , the company did not have any dilutive securities and other contracts that could , potentially , be exercised or converted into common stock and then share in the earnings of the company .
| financial operations overview results of operations for the years ended september 30 , 2019 and 2018 replace_table_token_4_th revenues for the year ended september 30 , 2019 , we had total revenues of $ 83,851 as compared to $ 505,080 for the year ended september 30 , 2018. the revenues during fiscal year 2019 were mainly generated through in-app purchases in our mobile applications hot chat and little love . the decrease of $ 421,229 , or 83 % , during the year ended september 30 , 2019 was primarily due to the reduction in marketing and promotion activities , which led to the decrease of in-app purchase on hotchat and little love . the number of active users of hotchat and little love decreased , resulting in a significant drop in revenue . cost of revenues for the years ended september 30 , 2019 and 2018 , cost of revenues amounted to $ 12,877 and $ 72,590 , respectively . the decrease of cost of revenues in the year ended september 30 , 2019 compared to the year ended september 30 , 2018 was primarily attributable to the decrease of labor cost and professional expenses associated with maintenance of mobile platform . gross profit for the years ended september 30 , 2019 and 2018 , gross profit amounted to $ 70,974 and $ 432,490 , respectively . the decrease of gross profit during the year ended september 30 , 2019 compared to the year of 2018 was primarily attributable to the decrease in the revenues . selling expenses for the years ended september 30 , 2019 and 2018 , selling expenses amounted to $ 0 and $ 80,040 , respectively . the decrease of selling expenses in the amount was primarily attributable to the reduction in marketing and promotion activities . general and administrative expenses for the years ended september 30 , 2019 and 2018 , general and administrative expenses amounted to $ 333,373 and $ 626,826 , respectively .
| 7,277 |
in june 2015 , occidental issued $ 1.5 billion of debt that was comprised of $ 750 million of 3.50-percent senior unsecured notes due 2025 and $ 750 million of 4.625-percent senior unsecured notes due 2045. occidental received net proceeds of approximately $ 1.48 billion . interest on the story_separator_special_tag in this report , `` occidental '' means occidental petroleum corporation ( opc ) , or opc and one or more entities in which it owns a controlling interest ( subsidiaries ) . occidental 's principal businesses consist of three segments . the oil and gas segment explores for , develops and produces oil and condensate , natural gas liquids ( ngls ) and natural gas . the chemical segment ( oxychem ) mainly manufactures and markets basic chemicals and vinyls . the midstream and marketing segment gathers , processes , transports , stores , purchases and markets oil , condensate , ngls , natural gas , carbon dioxide ( co 2 ) and power . it also trades around its assets , including transportation and storage capacity . additionally , the midstream and marketing segment operates a crude oil export terminal , as well as invests in entities that conduct similar activities . occidental 's oil and gas assets are located in some of the world 's highest-margin basins and are characterized by an advantaged mix of short- and long-cycle , high-return development opportunities . in the united states , occidental continues to hold a leading position in the permian basin . other core operations are in the middle east ( oman , qatar and uae ) and latin america ( colombia ) . occidental 's midstream and marketing business provides access to domestic and international markets through pipeline infrastructure and occidental 's ingleside crude terminal with an emphasis on operational excellence . oxychem is a world-class chemical business that generates high financial returns . strategy general occidental is focused on delivering a unique shareholder value proposition through continual enhancements to its asset quality , organizational capability and innovative technical applications that provide competitive advantages . the attributes of occidental 's strategy include its mix of short- and long-cycle investment opportunities , low base production declines , strong financial position and focus on generating shareholder returns through its value-based development approach . occidental aims to maximize shareholder returns through a combination of : ø consistent dividend growth ; ø value growth through oil and gas development that meets above cost-of-capital returns and return targets of greater than 15 percent and 20 percent for domestic and international projects , respectively ; ø targeted production growth rates of 5 to 8 percent average per year over the long-term ; and ø maintenance of a strong balance sheet to secure business and enhance shareholder value . occidental conducts its operations with a focus on its social responsibility commitments and initiatives , including health and safety , and environmental stewardship . capital is employed to operate all assets in a safe and environmentally sound manner . occidental accepts commodity , engineering and limited exploration risks . occidental seeks to limit its financial and political risks . price volatility is inherent in the oil and gas business and occidental 's strategy is to position the business to thrive in an up- or down-cycle commodity price environment . recent strategic initiatives have resulted in occidental exiting its non-core areas , including south texas in 2017 , and strengthening its position in areas where occidental has a competitive advantage and an advantaged asset portfolio . in 2017 , occidental continued to build upon its business , including a growing dividend and production growth at low oil prices . during the year , occidental 's board of directors and management implemented a short-term strategic plan that is intended to maintain production and sustain the dividend at a west texas intermediate ( wti ) oil price of $ 40 per barrel . at $ 50 wti , occidental 's plan anticipates that the business will generate additional capital to cover production growth of 5 to 8 percent , and fulfill occidental 's dividend growth goal . this plan has continued into 2018 and , longer term , occidental will continue to build upon this low-cost , high-margin value proposition through development and operation of its focused and advantaged assets . the following describes the application of occidental 's overall strategy for each of its operating segments : oil and gas occidental 's oil and gas segment focuses on long-term value creation and leadership in health , safety and the environment . in each core operating area , occidental 's operations benefit from scale , technical expertise , environmental and safety leadership , and commercial and governmental collaboration . these attributes allow occidental to bring additional production quickly to market , extend the life of older fields at lower costs , and provide low-cost growth opportunities with advanced technology . as a result of occidental 's strategic positioning , occidental 's assets provide current production and a future portfolio of projects that are flexible , have short-cycle investment paybacks , deliver a low base decline and provide decades of diverse and unique opportunities to support energy demand across many future scenarios . together with occidental 's technical capabilities , the oil and gas segment is able to achieve low development and operating costs to obtain full-cycle value while promoting innovative ideas that differentiate occidental 's approach and provide future opportunities . the oil and gas business implements occidental 's strategy primarily by : ø operating and developing areas where reserves are known to exist and to increase production from core areas , primarily in the permian basin , colombia , oman , qatar and uae ; ø focusing on cost-reduction efficiencies , improvement in new well productivity and better base management to reduce total spend per barrel ; 12 ø using enhanced oil recovery techniques , such as co 2 , water and steam floods , in mature fields ; ø focusing many of occidental 's subsurface characterization and technical activities on unconventional opportunities , primarily in the permian basin . story_separator_special_tag operations 2017 developments in the third quarter of 2017 , occidental closed on two divestitures of non-core acreage in the permian basin for proceeds of approximately $ 0.6 billion , resulting in a pre-tax gain of approximately $ 81 million . concurrently , occidental purchased additional ownership interests and assumed operatorship in co 2 enhanced oil recovery ( eor ) properties located in the seminole-san andres unit for approximately $ 0.6 billion , which was primarily allocated to proved property . in the fourth quarter of 2017 , occidental sold other non-core proved and unproved acreage in the permian basin for approximately $ 90 million , resulting in a pre-tax gain of approximately $ 55 million . occidental also classified approximately $ 0.5 billion in non-core proved and unproved permian acreage to assets held for sale at december 31 , 2017. in april 2017 , occidental completed the sale of its south texas operations for net proceeds of $ 0.5 billion resulting in pre-tax gain of $ 0.5 billion . story_separator_special_tag style= '' height:240px ; width:320px ; '' / > 1. qatar 2. united arab emirates 3. oman oman in oman , occidental is the operator of block 9 with a 50-percent working interest , block 27 with a 65-percent working interest , block 53 with a 45-percent working interest ; and block 62 , with an 80-percent working interest . also , in november 2017 , occidental was awarded a three-year exploration contract in block 30. in december 2015 , the existing psc for block 9 expired and occidental agreed to operate block 9 under modified operating terms until a new contract was approved . the block 9 exploration and production sharing agreement 15-year extension was signed in january 2017 and was ratified in march 2017 through royal decree . in 2017 , the average gross production from block 9 was 91,000 boe per day . the term for block 27 expires in 2035 and the average gross production was 16,000 boe per day in 2017. a 30-year psc for block 53 ( mukhaizna field ) was signed with the government of oman in 2005 , pursuant to which occidental assumed operation of the field . by the end of 2017 , occidental had drilled more than 3,000 new wells and continued implementation of a major steamflood project . in 2017 , the average gross daily production was 123,000 boe per day . in 2008 , occidental was awarded a 20-year contract for block 62 , subject to declaration of commerciality , where it is pursuing development and exploration opportunities targeting natural gas and condensate resources . in 2014 , occidental signed a five-year extension for the initial phase for the discovered non-associated gas area ( natural gas not in contact with crude oil in a reservoir ) for block 62. in 2017 , the average gross daily production was 22,000 boe per day . occidental 's oman operations reached a significant milestone in november 2017 with the production of its one billionth gross barrel of oil , including condensate , from all its blocks . over two-thirds of this production has come in the last ten years , illustrating the tremendous growth achieved over that period . in 2017 , occidental 's share of production in oman averaged 95,000 boe per day . qatar in qatar , occidental is the operator of the offshore fields idd el shargi north dome ( isnd ) and idd el shargi south dome ( issd ) , with a 100-percent working interest in each . the terms for isnd and issd expire in october 2019 and december 2022 , respectively . occidental 's net share of production from isnd and issd was 53,000 boe and 4,000 boe per day respectively , in 2017. occidental operated al-rayyan ( block 12 ) until the term expired on may 31 , 2017 , when block 12 was successfully transitioned back to the government of qatar . production from block 12 in 2017 was not significant . occidental has continued to successfully implement large scale water flooding projects combined with state-of-the-art horizontal drilling , advanced completion techniques as well as utilizing extensive automated artificial lift systems that are significantly extending the life of the fields . since the commencement of its operations in 1994 , occidental has boosted the production from the idd el shargi fields by over 400 percent with current gross oil rates of around 91,000 boe per day . utilizing occidental 's expertise in artificial lift , together with other game-changing technologies and innovations , the issd field continues to outperform expectations and exited 2017 with record gross production rates of over 9,000 boe per day . despite complex marine operations , occidental is recognized as a regional leader in its safety performance as well as being the lowest-cost offshore oil operator in the state of qatar . occidental also partners in the dolphin energy project , an investment that is comprised of two separate economic interests . occidental has a 24.5-percent interest in the upstream operations to develop and produce natural gas , ngls and condensate from qatar 's north field through mid-2032 . occidental also has a 24.5-percent interest in dolphin energy limited which operates a pipeline and is discussed further in `` midstream and marketing segment – pipeline transportation . occidental 's net share of production from the dolphin upstream operations was 42,000 boe per day in 2017. occidental 's share of production from qatar was approximately 100,000 boe per day in 2017. united arab emirates in 2011 , occidental acquired a 40-percent participating interest in al hosn gas , joining with the abu dhabi national oil company ( adnoc ) in a 30-year joint venture agreement . in 2017 , al hosn gas gross production exceeded expectations , producing over 525 mmcf per day of natural gas and 90,000 barrels per day of ngls and condensate .
| business review domestic interests occidental conducts its domestic operations through land leases , subsurface mineral rights it owns , or a combination of both surface land and subsurface mineral rights it owns . occidental 's domestic oil and gas leases have a primary term ranging from one to ten years , which is extended through the end of production once it commences . of the total 3.4 million net acres in which occidental has interests , approximately 83 percent is leased , 16 percent is owned subsurface mineral rights and 1 percent is owned land with mineral rights . the following charts show occidental 's domestic total production volumes for the last five years : domestic production volumes ( thousands boe/day ) notes : excludes volumes from california resources , which was separated on november 30 , 2014 , and included as discontinued operations for all applicable periods . operations sold include south texas ( sold in april 2017 ) , piceance ( sold in march 2016 ) , williston ( sold in november 2015 ) and hugoton ( sold in april 2014 ) united states assets united states 1. delaware basin 2. midland basin 3. central basin platform permian basin the permian basin extends throughout west texas and southeast new mexico and is one of the largest and most active oil basins in the united states , accounting for more than 20 % of the total united states oil production . occidental manages its permian basin operations through two business units : permian resources , which includes growth-oriented unconventional opportunities , and permian eor , which utilizes enhanced oil recovery techniques such as co 2 floods and waterfloods . occidental has a leading position in the permian basin , producing 14 approximately 9 percent of the total oil in the basin . by exploiting the natural synergies between permian resources and permian eor , occidental is able to deliver unique short- and long-term advantages , efficiencies and expertise across its permian basin operations .
| 7,278 |
the fair value of the underlying investment 's other financial assets and liabilities ( excluding net investment in direct financing leases ) story_separator_special_tag of operations . management 's discussion and analysis of financial condition and results of operations is intended to provide the reader with information that will assist in understanding our financial statements and the reasons for changes in certain key components of our financial statements from period to period . management 's discussion and analysis of financial condition and results of operations also provides the reader with our perspective on our financial position and liquidity , as well as certain other factors that may affect our future results . the discussion also provides information about the financial results of the segments of our business to provide a better understanding of how these segments and their results affect our financial condition and results of operations . the following discussion should be read in conjunction with our consolidated financial statements included in item 8 of this report and the matters described under item 1a . risk factors . business overview we provide long-term financing via sale-leaseback and build-to-suit transactions for companies worldwide and , as of december 31 , 2015 , manage a global investment portfolio of 1,336 properties , including 869 net-leased properties and three operating properties within our owned real estate portfolio . our business operates in two segments – real estate ownership and investment management , as described below . real estate ownership — we own and invest in commercial properties , primarily in the united states and europe , that are then leased to companies , primarily on a triple-net lease basis , which requires the tenant to pay substantially all of the costs associated with operating and maintaining the property . we earn lease revenues from our wholly-owned and co-owned real estate investments that we control . in addition , we generate equity earnings through our investments in the shares of the managed reits and certain co-owned real estate investments that we do not control . in addition , through our ownership of special member interests in the operating partnerships of the managed reits , we participate in the cash flows of those reits . investment management — we earn revenue as the advisor to the managed programs . under the advisory agreements with the managed programs , we perform various services , including but not limited to the day-to-day management of the managed programs and transaction-related services . we earn dealer manager fees in connection with the public offerings of the managed programs . we structure and negotiate investments and debt placement transactions for the managed reits , for which we earn structuring revenue , and we manage their portfolios of real estate investments , for which we earn asset-based management revenue . in addition , we generate equity earnings ( losses ) through our investment in the shares of ccif . the managed programs reimburse us for certain costs that we incur on their behalf , consisting primarily of broker-dealer commissions and marketing costs while we are raising funds for their public offerings , and certain personnel and overhead costs . economic overview in the united states , the overall economic environment was marked by very moderate growth during 2015. gross domestic product expanded 2.4 % and inflation , as measured by the cpi , finished the year relatively flat , up 0.7 % , in part due to the negative impact from declining energy prices . the labor market continued to gain momentum as the unemployment rate ended the year at 5.0 % . progress in the job market contributed to the decision by the federal reserve system to raise interest rates for the first time in nearly a decade . in december 2015 , the federal reserve system raised its key interest rate 0.25 % . while interest rates finished the year slightly up from 2014 , they remained at historically low levels . the movement in rates coupled with widening spreads and receding equity valuations led to an increase in the cost of capital for many domestic reits during the year . however , strong demand for commercial properties from investors kept commercial property yields , or capitalization rates , at compressed levels as competition for assets , including net-leased properties , remained high . additionally , development levels in certain sectors increased over prior years as public and private investors sought additional yield . despite increased development starts , new supply remains at relatively low levels historically . in europe , the economic recovery continued to be slow in most northern and western european countries despite stimulus efforts by the european central bank . inflation remained relatively unchanged , with the harmonized index of consumer prices up 0.2 % year-over-year . the united kingdom and germany experienced better growth and lower unemployment figures relative to most of their european peers and spain 's economy continued to gain momentum . however , similar to 2014 , many other european countries , including those considered emerging economies , operated at recessionary levels consisting of negative economic growth and high unemployment . in december 2015 , the european central bank lowered the depository facility rate to -0.3 % and announced the extension of its quantitative easing program to help spur economic growth and inflation . the divergent monetary policies between the federal reserve system and the european central bank have led to w. p. carey 2015 10-k – 33 more attractive long-term borrowing rates in europe and a further weakening of the euro against the u.s. dollar . from december 31 , 2014 to december 31 , 2015 , the euro depreciated by approximately 10 % against the u.s. dollar . consistent with 2014 , higher capitalization rates on commercial properties with similar risk profiles to those in the united states in conjunction with lower borrowing rates have created a favorable climate for investing in net-lease assets in europe . story_separator_special_tag investment transactions during 2015 , we earned $ 92.1 million in structuring revenue related to the following transactions on behalf of the managed programs : we structured investments in 12 properties , two loans receivable , and one equity investment for an aggregate of $ 366.9 million , inclusive of acquisition-related costs , on behalf of cpa ® :17 – global . approximately $ 205.2 million was invested in europe and $ 161.7 million was invested in the united states . we structured investments in 66 properties for an aggregate of $ 1.1 billion , inclusive of acquisition-related costs , on behalf of cpa ® :18 – global . approximately $ 571.4 million was invested in the united states and $ 565.2 million was invested internationally . we structured investments in seven domestic hotels for a total of $ 706.9 million , inclusive of acquisition-related costs , on behalf of cwi 1. one of these investments is jointly-owned with cwi 2. we structured investments in three domestic hotels for a total of $ 323.5 million , inclusive of acquisition-related costs , on behalf of cwi 2. one of these investments is jointly-owned with cwi 1. financing transactions during 2015 , we arranged mortgage financing totaling $ 170.2 million for cpa ® :17 – global , $ 566.7 million for cpa ® :18 – global , $ 317.9 million for cwi 1 , and $ 142.0 million for cwi 2. in august 2015 , we arranged a credit agreement for cpa ® :17 – global , which provides for a $ 200.0 million senior unsecured revolving credit facility and a $ 50.0 million delayed-draw term loan facility . as a result , our board of directors terminated its previous authorization to provide loans of up to $ 75.0 million to cpa ® :17 – global for the purpose of facilitating acquisitions ( note 4 ) . in december 2015 , we arranged a credit agreement for cwi 1 , which provides for a $ 50.0 million senior unsecured revolving credit facility . as a result , our board of directors terminated its previous authorization to provide loans to cwi 1 for the purpose of facilitating acquisitions ( note 4 ) . in december 2015 , we arranged a credit agreement for ccif , which provides for a $ 175.0 million senior unsecured term loan credit facility . w. p. carey 2015 10-k – 35 investor capital inflows during 2015 , we earned $ 4.8 million in dealer manager fees related to the following offerings on behalf of the managed programs : cpa ® :18 – global commenced its initial public offering in may 2013 and , through the termination of its offering in april 2015 , raised approximately $ 1.2 billion , of which $ 100.4 million was raised during 2015. cwi 2 commenced its initial public offering in the first quarter of 2015 and began to admit new stockholders on may 15 , 2015 ( note 2 ) . through december 31 , 2015 , cwi 2 had raised approximately $ 247.0 million through its offering . in july 2015 , the registration statements on form n-2 for the ccif feeder funds were each declared effective by the sec . the registration statements enable the ccif feeder funds to sell common shares up to $ 1.0 billion and to invest that equity capital into ccif , which is the master fund in a master-feeder structure . the ccif feeder funds intend to invest the proceeds that they raise through their respective public offerings into the master fund , ccif . the advisor to ccif is wholly owned by us . through december 31 , 2015 , the feeder funds have invested $ 2.0 million in ccif . proposed regulatory changes the sec has approved amendments to the rules of the financial industry regulatory authority , inc. applicable to securities of unlisted reits , such as the managed reits , and direct participation programs , such as the managed bdcs . the amendments are scheduled to become effective on april 11 , 2016. the rule changes provide , among other things , that : ( i ) financial industry regulatory authority , inc. members , such as our broker dealer subsidiary , carey financial , llc , include in customer account statements the net asset value per share , of the unlisted entity that have been developed using a methodology reasonably designed to ensure the net asset value per share 's reliability ; and ( ii ) net asset value per share disclosed from and after 150 days following the second anniversary of the admission of shareholders of the unlisted entity 's public offering be based on an appraised valuation developed by , or with the material assistance of , a third-party expert and updated on at least an annual basis , which is consistent with our current practice regarding our managed reits . the rule changes also propose that account statements include additional disclosure regarding the sources of distributions to shareholders of unlisted entities . it is not practicable at this time to determine whether these rules will adversely affect market demand for shares of unlisted reits and direct participation programs . we will continue to assess the potential impact of the rule changes on our investment management business . in april 2015 , the dol issued a proposed regulation that would substantially expand the range of activities that would be considered to be fiduciary investment advice under erisa and the internal revenue code . since the proposal 's issuance , the dol has received extensive commentary from industry participants and other regulatory authorities . in addition , there have been requests from congress for greater cooperation with the sec and the financial industry regulatory authority , inc. to eliminate regulatory conflict within the existing proposal . the dol has made public statements indicating that it intends to make modifications to the recent proposal . it is difficult to assess what the final form of the proposal will be and if it will ultimately be adopted .
| financial highlights our results for the year ended december 31 , 2015 as compared to 2014 included the following significant items : lease revenues from properties acquired during 2015 were $ 32.5 million ; lease revenues and property level contribution from properties acquired in the cpa ® :16 merger on january 31 , 2014 increased by $ 9.7 million and $ 3.3 million , respectively , for the full year ended december 31 , 2015 as compared to the 11 months ended december 31 , 2014 ; we recognized an aggregate of $ 22.8 million in lease termination income , including $ 15.0 million related to a property classified as held for sale ( note 16 ) during 2015 ; structuring revenue increased by $ 20.9 million for 2015 as compared to 2014 , primarily due to higher investment volume for cpa ® :17 – global and cpa ® :18 – global . we also recognized structuring revenue from cwi 2 in 2015 , which completed its first acquisition in may 2015 ; asset management revenue increased by $ 11.9 million for 2015 as compared to 2014 , primarily as a result of the growth in assets under management due to investment volume for cpa ® :17 – global , cpa ® :18 – global , cwi 1 , and cwi 2 ; we reversed $ 25.0 million of liabilities for german real estate transfer taxes ( note 7 ) in 2015 , which is reflected in merger , property acquisition , and other expenses in the consolidated financial statements ; we recognized impairment charges totaling $ 29.9 million on 12 properties and a parcel of vacant land and an allowance for credit losses of $ 8.7 million on a direct financing lease during 2015 ( note 6 , note 9 ) ; and we incurred expenses of $ 5.7 million related to our review of a range of strategic alternatives during 2015 ,
| 7,279 |
there was no expense recorded for the years ended december 31 , 2016 or 2017 related to the investor relations warrants as they had been fully expensed as of december 31 , 2015 . private placement warrants - 2016 in april 2016 , story_separator_special_tag you should read the following discussion and analysis of our financial condition and results of operations in conjunction with the consolidated financial statements and the related notes to the consolidated financial statements included later in this annual report on form 10-k. in addition to historical financial information , the following discussion contains forward-looking statements that reflect our plans , estimates , beliefs and expectations that involve risks and uncertainties . our actual results and the timing of events could differ materially from those discussed in these 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 ” and “ special note regarding forward-looking statements. ” overview resonant is a late-stage development company that has created an innovative software , intellectual property , or ip , and services platform that has the ability to increase designer efficiency , reduce the time to market and lower unit costs in the designs of filters for radio frequency , or rf , front-ends for the mobile device industry . the rf front-end , or rffe , is the circuitry in a mobile device responsible for analog signal processing and is located between the device 's antenna and its digital circuitry . the software platform we are developing is based on fundamentally new technology that we call infinite synthesized networks ® , or isn ® , to configure and connect resonators , the building blocks of rf filters . filters are a critical component of the rf front-end used to select desired radio frequency signals and reject unwanted signals . our isn ® platform allows us to develop unique , custom designs that address the increasing complexity of the rffe due to carrier aggregation ( the combining of multiple frequencies into a single data stream to increase throughput through higher data rates ) , or ca , by both reducing the size of the filter and improving performance . our goal is to utilize our isn ® platform to support our customers in reducing their time to develop complex filter and module designs , to access new classes of filter designs , and to do it more cost effectively . we are commercializing our technology through the creation of filter designs that address the problems in the high growth rffe industry created by the growing number of frequency bands in mobile devices . the worldwide adoption of long term evolution , or lte , as the global standard , and the use of mobile devices to access the internet , has resulted in massive proliferation of frequency bands which , when combined with ca for higher data rates and multiple input multiple output , or mimo , has resulted in an ever-increasing number and complexity of filters in the rffe . we have developed and continue to expand a series of single-band designs for frequency bands presently dominated by larger and more expensive bulk acoustic wave , or baw , filters . we are also developing multiplexer filter designs for two or more bands to address the ca requirements of our customers . we are using our isn ® platform to efficiently integrate these designs into rf modules for our module customers . finally , we are developing unique filter designs , enabled by isn ® , to replace multiple filters and associated componentry for many bands , with higher performance . currently , we are leveraging isn ® to develop these designs targeted for either the surface acoustic wave ( saw ) or temperature compensated , surface acoustic wave ( tc-saw ) manufacturing processes . in order to succeed , we must convince rffe suppliers that our filter designs can significantly reduce the size and cost of their products . we believe licensing our designs is the most direct and effective means of validating our isn ® platform and related ip libraries to address this rapidly growing market . our target customers make part or all of the rffe . we intend to retain ownership of our designs , and we expect to be compensated through license fees and royalties based on sales of rffe filters that incorporate our designs . we currently do not intend to manufacture or sell any physical products or operate as a contract design company developing designs for a fee . our typical customer engagement process begins with the execution of a joint development agreement , or jda , and license agreement , or la , which provides for a typical development cycle of six to nine months , for specific bands . depending on the complexity of the design , we estimate that initial samples of products to original equipment manufacturers , or oems , will occur typically within nine to thirty-six months following execution of a license agreement . we classify these new designs as either isn ready ( 9-12 months ) , isn pilot ( 12-18 months ) , isn advanced ( 18-36 months ) or isn development ( custom ) . it is following these development cycles that designs are manufactured and sampled to oem customers . oems can take from three to six months , or longer , to qualify a design as fit for use , reliable and ready for mass production . the point at which an oem begins taking product from our customers in mass production is typically when royalty revenues would begin . our customer agreements typically provide for upfront design fees and royalty payments for each unit sold using our filter designs and typically last for a minimum of two years , and in many cases for the life of the design . we began 2016 with no customers under contract and no license agreements . story_separator_special_tag we have earned minimal revenues since inception , and our operations have been funded with initial capital contributions and proceeds from the sale of equity securities and debt . we have incurred accumulated losses totaling $ 67.8 33 million from inception through december 31 , 2017 . our losses are primarily the result of research and development costs associated with commercializing our technology , combined with start-up and operating costs including those related to financings and being a public company . we expect to continue to incur substantial costs for commercialization of our technology on a continuous basis because our business model involves developing and licensing custom filter designs . our consolidated financial statements account for the continuation of our business as a going concern . we are subject to the risks and uncertainties associated with a new business . our principal source of liquidity as of december 31 , 2017 consists of existing cash and cash equivalents of $ 19.5 million . during the year ended december 31 , 2017 , we used $ 15.6 million of cash and investments for operating activities , the purchase of property and equipment , and expenditures for patents . due to these conditions , along with planned growth , substantial doubt exists as to our ability to continue as a going concern . after evaluation of these conditions , we believe our current resources will provide sufficient funding for planned operations into the second half of 2018. if necessary , we will seek to raise additional capital from the sale of equity securities or the incurrence of indebtedness to allow us to continue operations . there can be no assurance that additional financing will be available to us on acceptable terms , or at all . additionally , if we issue additional equity securities to raise funds , whether to existing investors or others , the ownership percentage of our existing stockholders would be reduced . new investors may demand rights , preferences or privileges senior to those of existing holders of common stock . additionally , we may be limited as to the amount of funds we can raise pursuant to sec rules and the continued listing requirements of nasdaq . if we can not raise needed funds , we might be forced to make substantial reductions in our operating expenses , which could adversely affect our ability to implement our business plan and ultimately our viability as a company . these consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty . story_separator_special_tag we had current assets of $ 20.2 million and current liabilities of $ 3.1 million at december 31 , 2017 , resulting in working capital of $ 17.1 million . this compares to working capital of $ 7.0 million at december 31 , 2016. the change in working capital is primarily the result of the cash provided by financing activities offset by use of cash in our normal business operations . our consolidated financial statements account for the continuation of our business as a going concern . we are subject to the risks and uncertainties associated with a new business . our principal source of liquidity as of december 31 , 2017 consists of existing cash and cash equivalents of $ 19.5 million . during the year ended december 31 , 2017 , we used $ 15.6 million of cash and investments for operating activities , the purchase of property and equipment , and expenditures for patents . due to these conditions , along with planned growth , substantial doubt exists as to our ability to continue as a going concern . after evaluation of these conditions , we believe our current resources will provide sufficient funding for planned operations into the second half of 2018. if necessary , we will seek to raise additional capital from the sale of equity securities or the incurrence of indebtedness to allow us to continue operations . there can be no assurance that additional financing will be available to us on acceptable terms , or at all . additionally , if we issue additional equity securities to raise funds , whether to existing investors or others , the ownership percentage of our existing stockholders would be reduced . new investors may demand rights , preferences or privileges senior to those of existing holders of common stock . additionally , we may be limited as to the amount of funds we can raise pursuant to sec rules and the continued listing requirements of nasdaq . if we can not raise needed funds , we might be forced to make substantial reductions in our operating expenses , which could adversely affect our ability to implement our business plan and ultimately our viability as a company . these consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty . we have a form s-3 universal shelf registration statement on file with the sec . the universal shelf registration statement on form s-3 permits us to sell , in one or more public offerings , shares of our common stock , shares of preferred stock or debt securities , or any combination of such securities and warrants to purchase securities , for proceeds in an aggregate amount of up to $ 35.0 million , subject to limitations on the amount of securities we may sell in any twelve-month period . as of december 31 , 2017 , we have raised a total of $ 11.5 million of gross proceeds from the sale of 2,715,000 shares of our common stock , leaving approximately $ 23.5 million of securities available for issuance pursuant to the form s-3 . the form s-3 will expire in may 2019 .
| results of operations comparison of the years ended december 31 , 2016 and 2017 revenues . revenues consist of the recognized portion of amounts received from customers for the development of our filter designs , milestone payments based on the achievement of specific milestones and royalties from shipments of our licensed designs . the revenues related to upfront payments associated with our filter design development contracts are recognized ratably over the estimated development period associated with that upfront payment . for the years ended december 31 , 2016 and 2017 , we recognized $ 302,000 and $ 653,000 , respectively , of revenue primarily related to upfront payments for the development of filter designs . we expect revenues to continue to be recorded due to the $ 143,000 of deferred revenue we have recorded as of december 31 , 2017. we also believe that based on the potential future milestone payments and royalties from our license agreements , there may be future revenues recorded . research and development . research and development expenses consist of the direct engineering and other costs associated with the development and commercialization of our technology , including the development of filter designs for our customers . these consist primarily of the cost of employees and consultants , including stock-based compensation , and to a lesser extent costs for equipment , software and supplies . we also include the costs for our intellectual property development program under research and development . this program focuses on patent strategy and invention extraction . research and development expenses increased $ 3.2 million from $ 6.9 million in 2016 to $ 10.0 million in 2017. the increase was the result of the increased payroll , benefit costs , consulting costs , travel and development costs related to increased activity on our various filter designs under development .
| 7,280 |
the revolving credit agreement is collateralized by a pledge of certain of the company 's accounts receivable , deposit accounts , intellectual property , investment property , and equipment , and story_separator_special_tag you should read the following discussion and analysis of our financial condition and results of operations together with the consolidated financial statements and the related notes to those statements included in item 8 to this annual report on form 10-k. in addition to historical financial information , the following discussion contains forward-looking statements that reflect our plans , estimates , beliefs , and expectations , and involve risks and uncertainties . 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 the section titled item 1a . risk factors and the special note about forward-looking statements . references to notes are notes included in our consolidated financial statements appearing elsewhere in this annual report on form 10-k. overview we are a technology company that empowers ad buyers . we provide a self-service platform that enables our clients to purchase and manage data-driven digital advertising campaigns using their own teams . our platform allows clients to manage integrated advertising campaigns across various advertising formats , including display , video and social , and on a multitude of devices , including computers , mobile devices and connected tv , an approach that we refer to as omnichannel . our company was founded in 2009 by two pioneers of programmatic advertising buying who were motivated to allow buyers of advertising to precisely target audiences with the most relevant and highest performing ads . we commercially launched our platform in may 2011. since launch , we have also extended our platform to address additional advertising formats . in 2011 , approximately 100 % of gross spend on our platform was for display advertising compared to 48 % in 2016 , with the remainder derived from mobile , video , social , native and audio . we had approximately 258 clients at the beginning of 2015 , and we added 131 additional clients ( net of any lost clients ) during that year . we had approximately 389 clients at the beginning of 2016 , and we added 177 additional clients ( net of any lost clients ) during that year . our clients are the advertising agencies and other service providers for advertisers . by aligning our business with buyers we avoid inherent conflicts of interest that exist when serving both the buy and sell-side , which we believe helps us build trust with our clients . we provide our platform through a self-service , browser based user interface and also enable clients to customize and build their own features and reports on our platform through our application programming interfaces . after adding a client through our sales team or an in-bound request , we teach clients how to use our platform to design and execute advertising campaigns independently . we generate revenue by charging our clients a platform fee based on a percentage of a client 's total spend on advertising , data and other features through our platform , the total of which we refer to as gross spend . we enter into ongoing master service agreements with our clients as opposed to episodic insertion orders . to further align our interests with those of our clients , we do not buy advertising inventory in order to resell it to our clients for a profit . the growing digitization of media and fragmentation of audiences has increased the complexity of advertising , and thereby increased the need for automation in ad buying , which we provide on our platform . in order to grow , we will need to continue to develop our platform 's programmatic capabilities and advertising inventory . we believe that key opportunities include our ongoing expansion into video and television ad inventory and continuing development of our data usage and advertising targeting capabilities . we believe that our revenue as a percentage of gross spend , which is sometimes referred to as take rate , may fluctuate from period to period due to a number of factors , such as changes in the proportion of spend represented by our larger customers with the lowest platform fees , our clients ' use of platform features and volume discounts . 50 we expect that our revenue as a percentage of gross spend will fluctuate and may decrease in the future , especially as we introduce and as our clients select new platform features , expand our omnichannel capabilities , extend our reach to tv inventory and add additional clients whose businesses may have different underlying business models . we believe that growth of the programmatic advertising market is important for our ability to grow our business . adoption of programmatic advertising by advertisers allows us to acquire new clients and grow revenue from existing clients . although our clients include some of the largest advertising agencies in the world , we believe there is significant room for us to expand further within these clients and gain a larger amount of their advertising spend through our platform . we also believe that the industry trends noted above will lead to advertisers adopting programmatic advertising through platforms such as ours . similarly , the adoption of programmatic advertising by inventory owners and content providers allows us to expand the volume and type of advertising inventory that we present to our clients . for example , we have expanded our native advertising offerings through our recent integrations with supply-side partners . we plan to invest for long-term growth . we anticipate that our operating expenses will increase significantly in the foreseeable future as we invest in platform operations and technology and development to enhance our product features , including programmatic buying of television ad inventory , and in sales and marketing to acquire new clients and reinforce our relationships with existing clients . story_separator_special_tag for example , many advertisers allocate the largest portion of their budgets to the fourth quarter of the calendar year in order to coincide with increased holiday purchasing . historically , the fourth quarter of the year reflects our highest level of advertising activity and the first quarter reflects the lowest level of such activity . we expect our revenue to continue to fluctuate based on seasonal factors that affect the advertising industry as a whole , and events such as the u.s. election cycle and the olympics . components of our results of operations we have one primary business activity and operate in one operating and reportable segment . revenue we generate revenue from clients who enter into agreements with us to use our platform to purchase advertising inventory , data and other add-on features . we report revenue on a net basis which represents gross billings net of amounts we pay suppliers for the cost of advertising inventory , data and add-on features . our accounts receivable are recorded at the amount of gross billings to clients , net of allowances , for the amounts we are responsible to collect , and our accounts payable are recorded at the amount payable to suppliers . accordingly , both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis . see critical accounting policies and estimatesrevenue recognition for a description of our revenue recognition policies . operating expenses we classify our operating expenses into the following four categories : platform operations . platform operations expense consists of expenses related to hosting our platform and providing support to our clients . platform operations expense includes hosting costs , personnel costs , amortization of capitalized software costs for the development of our platform and allocated overhead . personnel 53 costs included in platform operations include salaries , bonuses , stock-based compensation , and employee benefit costs , and are primarily attributable to personnel who provide our clients with support using our platform and the network operations group that supports our platform . we capitalize certain costs associated with the development of our platform and amortize these costs in platform operations over their estimated useful lives . we allocate overhead such as information technology infrastructure , rent and occupancy charges based on headcount . many of the expenses included in platform operations do not increase or decrease proportionately with increases or decreases in our revenue . we expect platform operations expenses to increase in absolute dollars in future periods as we continue to experience increased volumes of transactions through our platform and hire additional personnel to support our clients . sales and marketing . sales and marketing expense consists primarily of personnel costs , including salaries , bonuses , stock-based compensation , employee benefits costs and commission costs for our sales and marketing personnel . sales and marketing expense also includes costs for market development programs , advertising , promotional and other marketing activities , and allocated overhead . we allocate overhead such as information technology infrastructure , rent and occupancy charges based on headcount . commissions costs are expensed as incurred . our sales organization focuses on marketing our platform to increase its adoption by existing and new clients . we are also focused on expanding our international business by growing our sales teams in countries in which we currently operate , as well as establishing a presence in additional countries . as a result , we expect sales and marketing expenses to increase in absolute dollars in future periods . sales and marketing expense as a percentage of revenue may fluctuate from period to period based on revenue levels and the timing of our investments in our sales and marketing functions as these investments may vary in scope and scale over periods and are impacted by the revenue seasonality in our industry and business . technology and development . our technology and development expense consists primarily of personnel costs , including salaries , bonuses , stock-based compensation and employee benefits costs , third party consultant costs associated with the ongoing development and maintenance of our platform , amortization of capitalized third party software used in the development of our platform and allocated overhead . we allocate overhead such as information technology infrastructure , rent and occupancy charges based on headcount . technology and development costs are expensed as incurred , except to the extent that such costs are associated with software development that qualifies for capitalization , which are then recorded as capitalized software development costs included in other assets , non-current on our consolidated balance sheet . we amortize capitalized software development costs relating to our platform to platform operations expense . we believe that continued investment in our platform is critical to attaining our strategic objectives and long-term growth . we therefore expect technology and development expense to increase as we continue to invest in the development of our platform to support additional features and functions , increase the number of advertising and data inventory suppliers and ramp up the volume of advertising spending on our platform . our development efforts also include additional platform functionality to support our international expansion . we also intend to invest in technology to further automate our business processes . general and administrative . our general and administrative expense consists primarily of personnel costs , including salaries , bonuses , stock-based compensation , and employee benefits costs associated with our executive , finance , legal , human resources , compliance , and other administrative personnel , as well as accounting and legal professional services fees , bad debt expense and allocated overhead . we allocate overhead such as information technology infrastructure , rent and occupancy charges based on headcount . we expect to continue to invest in corporate infrastructure and incur additional expenses associated with our operation as a public company , including increased legal and accounting costs , investor relations costs , higher insurance premiums and compliance costs associated with developing the requisite infrastructure required for internal controls .
| results of operations the following tables set forth our consolidated results of operations and our consolidated results of operations as a percentage of revenue for the periods presented : replace_table_token_7_th replace_table_token_8_th * percentages may not sum due to rounding . comparison of the years ended december 31 , 2014 , 2015 and 2016 revenue replace_table_token_9_th 56 2015 compared to 2014 the increase in revenue was primarily due to a 161 % increase in gross spend on our platform . gross spend on our platform by existing clients added prior to 2015 increased by 135 % in the aggregate in 2015 , and these existing clients represented 88 % of the total gross spend in 2015. in 2015 , 59 % of existing clients added prior to 2015 increased their gross spend on our platform and their average increase in gross spend was approximately $ 2.0 million . 2016 compared to 2015 the increase in revenue was primarily due to an 86 % increase in gross spend on our platform . gross spend on our platform by existing clients added prior to 2016 increased by 71 % in the aggregate in 2016 , and these existing clients represented approximately 91 % of the total gross spend in 2016. in 2016 , 55 % of existing clients added prior to 2016 increased their gross spend on our platform and their average increase in gross spend was approximately $ 2.1 million . revenue as a percentage of gross spend in the aggregate may fluctuate from period to period based on our client mix and the extent to which clients utilize our platform 's features . platform operations replace_table_token_10_th 2015 compared to 2014 the increase in platform operations expense was primarily due to increases of $ 5.7 million in hosting costs and $ 3.3 million in personnel costs .
| 7,281 |
we conducted our audits in accordance with the standards of the public company accounting oversight board ( united states ) . those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement . an audit includes examining , on a test basis , story_separator_special_tag the following discussion should be read in conjunction with the consolidated financial statements , the related notes and the important notice to investors that appear elsewhere in this report . critical accounting policies and estimates the company 's discussion and analysis of its results of operations , financial condition and liquidity are based upon the company 's consolidated financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states . the preparation of these financial statements requires the company to make estimates and judgments that affect the reported amounts of assets , liabilities , shareholders ' equity , sales and expenses , as well as related disclosures of contingent assets and liabilities . the company bases its estimates on historical experience and on various other assumptions that management believes to be reasonable under the circumstances . actual results may materially differ from these estimates under different assumptions or conditions . on an ongoing basis , the company reviews its estimates to ensure that the estimates appropriately reflect changes in its business and new information as it becomes available . management believes the critical accounting policies discussed below affect its more significant estimates and assumptions used in the preparation of its consolidated financial statements . for a complete discussion of all of the company 's significant accounting policies , see note 2 significant accounting policies to the notes to consolidated financial statements in this form 10-k. revenue recognition sales are recognized in accordance with accounting standards codification ( asc ) topic 605 , revenue recognition , as products are shipped to customers , net of an allowance for sales returns and accruals for sales programs . the company records a reserve for anticipated returns through a reduction of sales and cost of sales in the period that the related sales are recorded . sales returns are estimated based upon historical returns , current economic trends , changes in customer demands and sell-through of products . in addition , from time to time , the company offers sales programs that allow for specific returns . the company records a reserve for anticipated returns related to these sales programs based on the terms of the sales program as well as historical returns , current economic trends , changes in customer demands and sell-through of products . historically , the company 's actual sales returns have not been materially different from management 's original estimates . the company does not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions used to calculate the allowance for sales returns . however , if the actual costs of sales returns are significantly different than the recorded estimated allowance , the company may be exposed to losses or gains that could be material . assuming there had been a 10 % increase over the recorded estimated allowance for 2011 sales returns , pre-tax loss for the year ended december 31 , 2011 would have been increased by approximately $ 3.5 million . the company also records estimated reductions to revenue for sales programs such as incentive offerings . sales program accruals are estimated based upon the attributes of the sales program , management 's forecast of future product demand , and historical customer participation in similar programs . the company 's primary sales program , the preferred retailer program , offers longer payment terms during the initial sell in period , as well as potential rebates and discounts , for participating retailers in exchange for providing certain benefits to the company , including the maintenance of agreed upon inventory levels , prime product placement and retailer staff training . under this program , qualifying retailers can earn either discounts or rebates based upon the amount of product purchased . discounts are applied and recorded at the time of sale . for rebates , the company accrues an estimate of the rebate at the time of sale based on the customer 's estimated qualifying current year product purchases . the estimate is based on the historical level of purchases , adjusted for any factors expected to affect the current year purchase levels . the estimated year-end rebate is adjusted quarterly based on actual purchase levels , as necessary . the preferred retailer program is generally short term in nature and the actual costs of the program are known as of the end of the year and paid to customers shortly after year-end . in addition to the preferred retailer program , the company from time to time offers additional sales program incentive offerings 26 which are also generally short term in nature . historically the company 's actual costs related to its preferred retailer program and other sales programs have not been materially different than its estimates . revenues from gift cards are deferred and recognized when the cards are redeemed . in addition , the company recognizes revenue from unredeemed gift cards when the likelihood of redemption becomes remote and under circumstances that comply with any applicable state escheatment laws . the company 's gift cards have no expiration . to determine when redemption is remote , the company analyzes an aging of unredeemed cards ( based on the date the card was last used or the activation date if the card has never been used ) and compares that information with historical redemption trends . the company does not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions used to determine the timing of recognition of gift card revenues . story_separator_special_tag the company 's policy is to accrue the estimated cost of satisfying future warranty claims at the time the sale is recorded . in estimating its future warranty obligations , the company considers various relevant factors , including the company 's stated warranty policies and practices , the historical frequency of claims , and the cost to replace or repair its products under warranty . the company 's estimates for calculating the warranty reserve are principally based on assumptions regarding the warranty costs of each club product line over the expected warranty period . where little or no claims experience may exist , the company 's warranty obligation calculation is based upon long-term historical warranty rates of similar products until sufficient data is available . as actual model-specific rates become available , the company 's estimates are modified to ensure that the forecast is within the range of likely outcomes . historically , the company 's actual warranty claims have not been materially different from management 's original estimated warranty obligation . the company does not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions used to calculate the warranty obligation . however , if the number of actual warranty claims or the cost of satisfying warranty claims significantly exceeds the estimated warranty reserve , the company may be exposed to losses that could be material . assuming there had been a 10 % increase over the 2011 recorded estimated allowance for warranty obligations , pre-tax loss for the year ended december 31 , 2011 would have been increased by approximately $ 0.8 million . income taxes current income tax expense or benefit is the amount of income taxes expected to be payable or receivable for the current year . a deferred income tax asset or liability is established for the difference between the tax basis 28 of an asset or liability computed pursuant to asc topic 740 , income taxes , and its reported amount in the financial statements that will result in taxable or deductible amounts in future years when the reported amount of the asset or liability is recovered or settled , respectively . in accordance with the applicable accounting rules , the company maintains a valuation allowance for a deferred tax asset when it is deemed it to be more likely than not that some or all of the deferred tax asset will not be realized . in evaluating whether a valuation allowance is required under such rules , the company considers all available positive and negative evidence , including prior operating results , the nature and reason for any losses , its forecast of future taxable income , and the dates on which any deferred tax assets are expected to expire . these assumptions require a significant amount of judgment , including estimates of future taxable income . these estimates are based on the company 's best judgment at the time made based on current and projected circumstances and conditions . as a result of the company 's evaluation during 2011 , the company recorded a $ 52.5 million increase to income tax expense in order to establish a valuation allowance against its u.s. deferred tax assets . in addition , the company has discontinued recognizing income tax benefits related to its u.s. net operating losses until it is determined that it is more likely than not that the company will generate sufficient taxable income to realize the benefits from its u.s. deferred tax assets . for further information , see note 16 income taxes to the notes to consolidated financial statements in this form 10-k. pursuant to asc topic 740-25-6 , the company is required to accrue for the estimated additional amount of taxes for uncertain tax positions if it is deemed to be more likely than not that the company would be required to pay such additional taxes . the company is required to file federal and state income tax returns in the united states and various other income tax returns in foreign jurisdictions . the preparation of these income tax returns requires the company to interpret the applicable tax laws and regulations in effect in such jurisdictions , which could affect the amount of tax paid by the company . the company accrues an amount for its estimate of additional tax liability , including interest and penalties , for any uncertain tax positions taken or expected to be taken in an income tax return . the company reviews and updates the accrual for uncertain tax positions as more definitive information becomes available . historically , additional taxes paid as a result of the resolution of the company 's uncertain tax positions have not been materially different from the company 's expectations . information regarding income taxes is contained in note 16 income taxes to the notes to consolidated financial statements . share-based compensation the company accounts for share-based compensation arrangements in accordance with asc topic 718 , stock compensation , which requires the measurement and recognition of compensation expense for all share-based payment awards to employees and directors based on estimated fair values . asc topic 718 further requires a reduction in share-based compensation expense by an estimated forfeiture rate . the forfeiture rate used by the company is based on historical forfeiture trends . if actual forfeitures are not consistent with the company 's estimates , the company may be required to increase or decrease compensation expenses in future periods . the company uses the black-scholes option valuation model to estimate the fair value of its stock options and stock appreciation rights ( sars ) at the date of grant . the black-scholes option valuation model requires the input of highly subjective assumptions including the company 's expected stock price volatility , the expected dividend yield , the expected life of an option or sar and the risk-free rate , which is based on the u.s. treasury yield curve in effect at the time of grant for the estimated life of the option or sar .
| executive summary the company 's 2011 results reflect the impact of a challenging golf market as well as an unfavorable shift in the competitive landscape driven by the success of certain competitor products launched during the year . these factors , combined with the absence of a fourth quarter woods launch by the company and the negative impact of natural disasters in japan , australia and south east asia , resulted in an 8 % decline in sales and a 300 basis point decline in gross margins with relatively flat operating expenses in 2011 compared to 2010. these declines were partially offset by the positive effects of changes in foreign currency rates on sales and gross margins during the period as well as savings from the company 's ongoing gross margin initiatives and current year restructuring initiatives , as discussed below in more detail . net loss for the year ended december 31 , 2011 increased to $ 171.8 million compared to $ 18.8 million in the comparable period of 2010. diluted loss per share increased to $ 2.82 in 2011 compared to $ 0.46 in 2010. the company 's net loss for the years ended december 31 , 2011 and 2010 include the following charges : replace_table_token_6_th ( 1 ) the company 's income tax provision for 2011 includes charges of $ 52.5 million related to the establishment of a valuation allowance against its u.s deferred tax assets , and $ 21.6 million related to the recognition of certain prepaid tax expenses on intercompany profits . see note 16 income taxes to the notes to consolidated financial statements included in this form 10-k. in june 2011 , as a result of the company 's performance , the company announced a restructuring plan ( the reorganization and reinvestment initiatives ) that involved personnel changes at all levels of the organization and a reevaluation of business processes .
| 7,282 |
this discussion should be read in conjunction with the other sections of this form 10-k , including “ risk factors , ” and the financial statements . the various sections of this discussion contain a number of forward-looking statements , all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this annual report on form 10-k. see “ forward-looking statements. ” our actual results may differ materially . the preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements , as well as the reported revenues and expenses during the reporting periods . on an ongoing basis , we evaluate estimates and judgments , including those described in greater detail below . we base our estimates on historical experience and on various other factors that we believe are 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 . as used in this “ management 's discussion and analysis of financial condition and results of operation , ” except where the context otherwise requires , the term “ we , ” “ us , ” “ our , ” or “ the company , ” refers to the business of sun power holdings corp. story_separator_special_tag payment for the indenture of trust is further guaranteed by the company and street smart outdoor corp. currently , medrecycler-ri , inc. has entered into a lease agreement in west warwick , rhode island , has taken preliminary steps to order the equipment , and is beginning to engage specialists and staff for building out the rhode island project . in order to secure actual operations of the rhode island project , we estimate that medrecycler-ri , inc. must still secure a minimum of $ 17,200,000 in long term financing . medrecycler-ri , inc. is currently negotiating with the state of rhode island and potential bond financiers to secure the long-term financing for the rhode island project . although we anticipate , assuming the long-term financing is secured , the rhode island project may be fully operational as early as the first quarter of 2020 , but , at this time , that schedule could slip as a result of delays in closing on long-term financing . all initial operational earnings will be earmarked for interest , principal repayment , and the fulfillment of other covenants of the long-term financing until all reserves have been met . as we have not secured long term financing , we can make no statement regarding the long term success of the rhode island project , though , even in a best case scenario , the rhode island project may not be cash flow positive until fully operational and proceeds fulfill covenants under the terms of the yet to be finalized debt financing . through medrecycler , llc , the company owns fifty-one percent ( 51 % ) of medrecycler-ri , inc. , which was pledged by the company to mr. campanella pursuant to a forbearance agreement related to debts owed to mr. campanella . the remaining forty nine percent ( 49 % ) of medrecycler-ri , inc. is held by nicholas campanella , personally , marmac corporate advisors , llc , and eilers law group , p.a. , holding thirty nine percent ( 39 % ) , eight percent ( 8 % ) , two percent ( 2 % ) , respectfully . mr. campanella received his ownership as consideration for his personal pledges securing the indenture of trust , marmac corporate advisors , llc and eilers law group , p.a . received their respective ownership as consideration for efforts and services performed . one hundred percent ( 100 % ) of the ownership of medrecycler-ri , inc. has been pledged to bridge financing , including any pledge rights held by mr. campanella in medrecycler , llc . on october 21 , 2019 , medrecycler-ri , inc. amended the indenture of trust to include an addition $ 2,700,000 in bridge financing to secure delivery of equipment for installation . medrecycler ri , inc. is currently exploring permanent financing options to fund its operations that meet the underwriting requirements of various bond/debt investors and issuing authorities , which if put into place would require changes to medrecycler ri , inc. 's and or the company 's organizational ownership structure . the company is exploring creative solutions that would meet the requirements of the various financing parties and still provide equivalent profit sharing arrangements between the parties that would also allow sun pacific to undertake other projects as it focuses on the best organizational structure to allow it to fund and grow its green energy objectives . 18 currently the company is also exploring migrating its subsidiary , national mechanical group corp from plumbing operations to partnering on a solar farm project in mexico in which it will partner with other subject matter experts and seek project financing . if successful , national mechanical group corp would own equity in the partnership that would own a portion of the project and also receive compensation for its work in project management and other professional services . story_separator_special_tag the company believes that the claim has no merit and that the transaction has been structured in a manner that is most advantageous to the company and its shareholders by preserving as much value as possible from the rhode island project , while also balancing the requirements of those parties approving permanent financing . strategic vision our objective is to grow our business profitably as a premier green energy-based provider of both product and services to the public and private sectors . we are working to deploy our strategy in building upon our general and other contracting expertise in conjunction with our intellectual property and subject matter expertise in green energy that may allow us to grow a group of profitable business lines in solar , waste to energy , efficient lighting , and other unique energy related areas . recent advances in a multitude of different yet converging technologies have significantly improved the ability to integrate energy efficient products and solutions into infrastructure related projects . these technological advances decrease the requirements needed to jointly operate a multitude of differing assets , devices , and tools that create new ways to integrate evolving new technologies . this technological change and convergence in energy efficient devices , integrated communications among devices , and societal needs to more effectively and environmentally friendly we believe presents a significant opportunity for us in providing and supporting simple to complex integrated solutions . our challenges continue to be reaching critical mass in our solar shelter business , expanding into other green energy related projects , completion of the rhode island project and securing operational capital . except for the bridge financing for the rhode island project , we do not have any material existing financing arrangements in place . while the company has never been adequately funded from inception , the company has attempted to use debt , equity , and other opportunistic in-kind compensation to further the company 's strategic vision . 20 going concern the company has an accumulated deficit of $ 8,342,437 and a working capital deficit of $ 10,491,807 as of december 31 , 2019. the company 's continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations , which it has not been able to accomplish to date , and or obtain additional financing from its stockholders and or other third parties . in order to further implement its business plan and satisfy its working capital requirements , the company will need to raise additional capital . there is no guarantee that the company will be able to raise additional equity or debt financing at acceptable terms , if at all . there is no assurance that the company will ever be profitable . these consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the company be unable to continue as a going concern . critical accounting policies and estimates our significant accounting policies are more fully described in the notes to our consolidated financial statements . those material accounting estimates that we believe are the most critical to an investor 's understanding of our financial results and condition are discussed immediately below and are particularly important to the portrayal of our financial position and results of operations and require the application of significant judgment by our management to determine the appropriate assumptions to be used in the determination of certain estimates . use of estimates in the preparation of financial statements preparation of financial statements in conformity with accounting principles generally accepted in the united states requires management to make estimates and assumptions that affect reported amounts in the financial statements and accompanying notes . actual results could differ from those estimates . significant estimates include the allowance for doubtful accounts and impairment assessments related to long-lived assets . consolidation the consolidated financial statements include the accounts of the company and its wholly owned , and less-than-wholly owned subsidiaries of which the company holds a controlling interest . all significant intercompany balances and transactions have been eliminated . amounts attributable to minority interests in the company 's less-than-wholly owned subsidiary are presented as non-controlling interest on the accompanying condensed consolidated balance sheets and statements of operations . cash and cash equivalents for purposes of the consolidated statements of cash flows , cash includes demand deposits and short-term liquid investments with original maturities of three months or less when purchased . the federal deposit insurance corporation ( fdic ) provided insurance coverage of up to $ 250,000 , per depositor , per institution . at december 31 , 2019 , none of the company 's cash balances were in excess of federally insured limits with the exception of $ 1,161,388 of cash balances held in escrow at umb bank , na under a project fund that the company 's subsidiary , medrecycler-ri , inc. is drawing balances against for the development of its medical waste to energy project in rhode island . any and all withdrawals are strictly controlled by the lending institution and use of proceeds must be approved prior to release of funds . accounts receivable in the normal course of business , we decide to extend credit to certain customers without requiring collateral or other security interests . management reviews its accounts receivable at each reporting period to provide for an allowance against accounts receivable for an amount that could become uncollectible . this review process may involve the identification of payment problems with specific customers . periodically we estimate this allowance based on the aging of the accounts receivable , historical collection experience , and other relevant factors , such as changes in the economy and the imposition of regulatory requirements that can have an impact on the industry . these factors continuously change and can have an impact on collections and our estimation process .
| organizational overview utilizing managements history in general contracting , coupled with our subject matter expertise and intellectual property ( “ ip ” ) knowledge of solar panels and other leading-edge technologies , sun pacific holding ( “ the company ” ) is focused on building a “ next generation ” green energy company . the company offers competitively priced “ next generation ” solar panel and lighting products by working closely with design , engineering , integration and installation firms in order to deliver turnkey solar and other energy efficient solutions . we provide solar bus stops , solar trashcans and “ street kiosks ” that utilize our unique advertising offerings that provide state and local municipalities with costs efficient solutions . we provide general , electrical , and plumbing contracting services to a range of both public and commercials customers in support of our goals of expanding our green energy market reach . in conjunction with these general contracting services and as part of our effort to expand our green energy marketplace , we have recently started the process to develop and build out a waste to energy plant in the state of rhode island and have started , through a partnership , with ownership terms to be defined upon securing financing , the opportunity to develop and build a solar farm in durango mexico . 17 our green energy solutions can be customized to meet most enterprise and or government mandated regulations and advanced system requirements . our portfolio of products and services allow our clients to select a solution that enables them to establish a viable standard product offering that focuses on the goals of the client 's entire organization . currently , the company has six ( 6 ) subsidiary holdings . sun pacific power corp which was the initial company that specialized in solar , electrical and general construction , bella electric , llc that in conjunction with the company operates our electrical contracting work .
| 7,283 |
some of these claims and lawsuits allege personal injury or health problems resulting from exposure to asbestos story_separator_special_tag the following discussion should be read in conjunction with the other sections of this report , including the consolidated financial statements and related notes contained in item 8 of this annual report on form 10-k. business overview we operate in three reportable business segments of the heating , ventilation , air conditioning and refrigeration ( “ hvacr ” ) industry . our reportable segments are residential heating & cooling , commercial heating & cooling , and refrigeration . for more detailed information regarding our reportable segments , see note 18 in the notes to the consolidated financial statements . we sell our products and services through a combination of direct sales , distributors and company-owned parts and supplies stores . the demand for our products and services is seasonal and significantly impacted by the weather . warmer than normal summer temperatures generate demand for replacement air conditioning and refrigeration products and services , and colder than normal winter temperatures have a similar effect on heating products and services . conversely , cooler than normal summers and warmer than normal winters depress the demand for hvacr products and services . in addition to weather , demand for our products and services is influenced by national and regional economic and demographic factors , such as interest rates , the availability of financing , regional population and employment trends , new construction , general economic conditions and consumer spending habits and confidence . a substantial portion of the sales in each of our business segments is attributable to replacement business , with the balance comprised of new construction business . the principal elements of cost of goods sold are components , raw materials , factory overhead , labor , estimated costs of warranty expense and freight and distribution costs . the principal raw materials used in our manufacturing processes are steel , copper and aluminum . in recent years , pricing volatility for these commodities and related components has impacted us and the hvacr industry in general . we seek to mitigate the impact of commodity price volatility through a combination of pricing actions , commodity contracts , improved production efficiency and cost reduction initiatives . we also partially mitigate volatility in the prices of these commodities by entering into futures contracts and fixed forward contracts . financial highlights net sales increased $ 174.2 million , or 5 % , to $ 3,642 million in 2016 from $ 3,467 million in 2015. operational income from continuing operations in 2016 was $ 429 million compared to $ 305 million in 2015. the increase was primarily due to increased sales and reductions in our commodities and material costs in 2016 as well as the goodwill and asset impairment charges in 2015. net income in 2016 increased to $ 278 million from $ 187 million in 2015. diluted earnings per share from continuing operations were $ 6.34 per share in 2016 compared to $ 4.11 per share in 2015 , including non-cash impairment charges in our refrigerated display case business in 2015. we generated $ 355 million of cash flow from operating activities in 2016 compared to $ 331 million in 2015. in 2016 , we returned $ 69 million through dividend payments . overview of results the residential heating & cooling segment led our overall financial performance in 2016 , with a 7.2 % increase in net sales and a $ 70 million increase in segment profit compared to 2015. this segment 's results benefited from industry growth in the replacement and new construction markets as well as market share gains . our commercial heating & cooling segment also performed well in 2016 with a 3.5 % increase in net sales and a $ 19 million increase in segment profit compared to 2015. this segment 's results benefited from market growth in north america and material cost savings . sales in our refrigeration segment were up 1.3 % and segment profit increased $ 16 million compared to 2015. this segment 's results benefited from industry growth and market share gains . on a consolidated basis , our gross profit margins increased to 29.6 % in 2016 due primarily to favorable price and material cost savings across our business . these improvements were partially offset by unfavorable foreign exchange rates , unfavorable mix , and continued investment in distribution expansion in our residential heating & cooling segment . 18 story_separator_special_tag style= '' line-height:120 % ; text-align : justify ; text-indent:18px ; font-size:10pt ; '' > residential heating & cooling net sales increased 7 % in 2016 compared to 2015. sales volume increased net sales by 6 % due to industry growth and market share gains and the benefits of favorable price and mix contributed 1 % . segment profit in 2016 increased $ 70 million due to $ 51 million in lower commodities and material costs , $ 33 million from higher sales volume and $ 12 million from favorable factory productivity which includes the addition of a second factory in mexico , 21 and $ 5 million in other product costs . partially offsetting these increases was $ 6 million from unfavorable price and mix combined , $ 4 million of unfavorable foreign currency exchange rates , $ 11 million in distribution investments , and $ 10 million of sg & a expenses to support wage inflation and investments in information technology and research and development . commercial heating & cooling the following table presents our commercial heating & cooling segment 's net sales and profit for 2016 and 2015 ( dollars in millions ) : replace_table_token_9_th commercial heating & cooling net sales increased 3 % in 2016 compared to 2015. sales volume increased net sales by 3 % , price and mix increased net sales by 1 % and changes in foreign currency exchange rates unfavorably impacted net sales by 1 % . story_separator_special_tag income from equity method investments decreased to $ 13 million in 2015 compared to $ 14 million in 2014 due to decreases in earnings from our joint ventures . asset impairment during the fourth quarter we completed a strategic review of our north american supermarket display cases and systems business . as a result , we performed an impairment analysis using a market approach and determined that intangible and certain long-lived assets relating to our north american supermarket business were impaired and we recorded a charge of $ 45 million in `` asset impairment '' in the consolidated statement of operations . we did not have any impairments of intangible assets related to continuing operations in 2014. interest expense , net net interest expense of $ 24 million in 2015 increased from $ 17 million in 2014 primarily due to an increase in our average borrowings . income taxes the income tax provision was $ 95 million in 2015 compared to $ 110 million in 2014 , and the effective tax rate was 33.8 % in 2015 compared to 34.5 % in 2014. our effective tax rates differ from the statutory federal rate of 35 % for certain items , including tax credits , state and local taxes , non-deductible expenses , foreign taxes at rates other than 35 % and other permanent tax differences . loss from discontinued operations the loss from discontinued operations related to the service experts business sold in march 2013 and the hearth business sold in april 2012. the $ 1 million of pre-tax losses incurred in 2015 primarily relate to changes in retained product liabilities and general liabilities for service experts and hearth . in 2014 , there were $ 4 million of pre-tax losses incurred primarily related to changes in retained product liabilities and general liabilities for service experts and hearth . year ended december 31 , 2015 compared to year ended december 31 , 2014 - results by segment residential heating & cooling the following table presents our residential heating & cooling segment 's net sales and profit for 2015 and 2014 ( dollars in millions ) : replace_table_token_12_th residential heating & cooling net sales increased 8 % in 2015 compared to 2014 driven by strong volume increases and favorable price and mix . sales volume increases contributed 7 % and were attributable to industry growth in new construction and replacement markets and market share gains . benefits of price increases and favorable product mix contributed 2 % . changes in foreign currency exchange rates unfavorably impacted net sales by 1 % . 24 segment profit in 2015 increased $ 43 million due to $ 39 million from material cost savings , $ 29 million from higher sales volume , and $ 10 million from favorable price and mix . partially offsetting these increases were $ 12 million of unfavorable foreign exchange rates , $ 10 million in higher distribution expenses related to continued investment in distribution expansion , $ 10 million of sg & a inflation , and $ 3 million due to lower factory absorption and higher warranty expenses . commercial heating & cooling the following table presents our commercial heating & cooling segment 's net sales and profit for 2015 and 2014 ( dollars in millions ) : replace_table_token_13_th commercial heating & cooling net sales increased 1 % in 2015 compared to 2014 driven by higher volume . net sales increased by 6 % due to higher volume while changes in foreign currency exchange rates unfavorably impacted net sales by 5 % . segment profit in 2015 increased $ 6 million compared to 2014. the benefits of $ 15 million from incremental volume , $ 14 million from lower material costs and $ 2 million from higher prices were partially offset by $ 9 million in unfavorable mix , $ 4 million for information technology and distribution investments and start-up costs to enter the vrf market , $ 6 million for unfavorable foreign exchange rates , $ 5 million of higher sg & a expenses and $ 1 million from increases in other product costs . refrigeration the following table presents our refrigeration segment 's net sales and profit for 2015 and 2014 ( dollars in millions ) : replace_table_token_14_th refrigeration net sales declined 5 % in 2015 compared to 2014 primarily due to an 8 % impact from unfavorable foreign exchange rates and a 2 % impact from the australian carbon levy repeal that was effective july 1 , 2014. these decreases were partially offset by 4 % volume growth , led by our north american supermarket businesses , and price and mix combined contributed 1 % . segment profit in 2015 compared to 2014 decreased $ 3 million compared to 2014 primarily due to $ 14 million from unfavorable mix , predominantly in the north american supermarket business , $ 9 million lower profitability in our australia refrigerant business , $ 1 million of costs related to investments for future growth , $ 5 million from unfavorable foreign currency exchange rates , and $ 3 million for higher sg & a expenses . partially offsetting these decreases were $ 14 million from material cost savings , $ 2 million from higher sales volume , and $ 13 million from improved factory productivity and lower warranty and other product costs . corporate and other corporate and other expenses increased $ 10 million in 2015 to $ 84 million from $ 74 million in 2014 due primarily to higher incentive compensation , general wage inflation , health care costs and currency losses . 25 accounting for futures contracts realized gains and losses on settled futures contracts are a component of segment profit ( loss ) . unrealized gains and losses on unsettled futures contracts are excluded from segment profit ( loss ) as they are subject to changes in fair value until their settlement date . both realized and unrealized gains and losses on futures contracts are a component of losses and other expenses , net in the accompanying consolidated statements of operations .
| results of operations the following table provides a summary of our financial results , including information presented as a percentage of net sales ( dollars in millions ) : replace_table_token_5_th the following table provides net sales by geographic market ( dollars in millions ) : replace_table_token_6_th year ended december 31 , 2016 compared to year ended december 31 , 2015 - consolidated results net sales net sales increased 5 % in 2016 compared to 2015 , with sales volume up approximately 5 % . the increase in volume was driven by all our business segments . the effects of both changes in foreign currency exchange rates and the effects of price and mix were neutral to net sales . gross profit gross profit margins for 2016 increased 230 basis points ( `` bps '' ) to 29.6 % compared to 27.3 % in 2015. lower material costs increased our profit margin by 260 bps , increased factory productivity increased our profit margin by 30 bps , and other items contributed 10 bps . offsetting these increases were decreases of 20 bps from unfavorable mix , 20 bps from unfavorable foreign currency adjustments , 20 bps for investments in distribution and other growth initiatives , and increased product warranty costs decreased our profit margin by 10 bps . 19 selling , general and administrative expenses sg & a expenses increased by $ 41 million in 2016 compared to 2015. as a percentage of net sales , sg & a expenses increased 40 bps from 16.7 % to 17.1 % in the same periods . the dollar increase in sg & a expenses was principally due to increased incentive compensation and general wage inflation .
| 7,284 |
this discussion should be read in conjunction with the accompanying consolidated financial statements and notes to consolidated financial statements . overview we design , manufacture and sell a wide range of display systems to customers throughout the world . we focus our sales and marketing efforts on markets , geographical regions and products . our primary five segments consist of four domestic segments and one international segment . the four domestic segments consist of live events , commercial , schools and theatres , and transportation . our net sales and profitability historically have fluctuated due to the impact of large product orders , such as display systems for professional sports facilities and colleges and universities , as well as the seasonality of the sports market . net sales and gross profit percentages also have fluctuated due to other seasonality factors , including the impact of holidays , which primarily affects our third quarter . our gross margins on large product orders tend to fluctuate more than those for smaller standard orders . large product orders that involve competitive bidding and substantial subcontract work for product installation generally have lower gross margins . although we follow the percentage of completion method of recognizing revenues for large custom orders , we nevertheless have experienced fluctuations in operating results and expect that our future results of operations will be subject to similar fluctuations . orders are booked and included in backlog only upon receipt of a firm contract and after receipt of any required deposits . as a result , certain orders for which we have received binding letters of intent or contracts will not be booked until all required contractual documents and deposits are received . in addition , order bookings can vary significantly as a result of the timing of large orders . general our business , especially the large video display business in all of our business units , is very competitive , and generally our margins on large video display contracts are similar across the business units over the long-term . there are , however , differences that arise in the short term among the business units , which are discussed more fully in the following analysis . overall , our business growth is driven by the market demand for large format electronic displays and the depth and quality of our products , including related control systems , service offerings and our technology that serve these market demands . this growth , however , is partially offset by declines in product prices caused by increasing competition as well as declines in the costs of the raw materials and improved product designs and manufacturing methods which decreases the per unit selling prices of displays . within each business unit , there are also key growth drivers that apply uniquely to that business unit . commercial business unit : over the long-term , we believe that the following factors are important growth drivers to our commercial business unit : the continued deployment of digital billboards , which we believe can expand as billboard companies continue developing new sites for digital billboards and start to replace digital billboards which are reaching end of life , which we expect could start happening in fiscal 2014. this growth is dependent on there being no adverse changes in the digital billboard regulatory environment , which could restrict future deployments of billboards , as well as maintaining our current market share of the business that is concentrated in a few large billboard companies . the growing interest in our standard display products that are used in many different retail-type establishments among other types of applications . the demand in this area is driven by : on-premise advertising through outdoor electronic display systems by retailers and other types of commercial establishments to attract motorists and others into their establishment ; the establishments need to communicate messages to the general public ; and in the future , increased demand from national accounts , including retailers , quick-serve restaurants and other types of nationwide organizations . increasing interest in spectaculars , which include very large , intricate displays seen at casinos , auto dealerships , amusement parks and times square type locations . the introduction of architectural lighting products for commercial buildings , which real estate owners use to add accents or effects to an entire side or circumference of a building to communicate messages or to decorate the building . 20 live events business unit : over the long-term , we believe that growth in the live events business unit will result from a number of factors , including : facilities spending more on larger display systems . lower product costs , which are driving an expansion of the marketplace . our product and services offerings , which remain the most integrated and comprehensive offerings in the industry . the competitive nature of sports teams , which strive to out-perform their competitors with display systems . the desire for high-definition video displays , which typically drives larger displays or higher resolution displays , both of which increase the average transaction size . schools and theatres : over the long-term , we believe that growth in the schools and theatres business unit will result from a number of factors , including : increasing demand for video systems in high schools , as school districts realize the revenue generating potential of these displays versus traditional scoreboards . increasing demand for different types of displays , such as message centers at schools to communicate to students , parents and the broader community . the use of more sophisticated display systems in less common venues , such as aquatic centers and track facilities . transportation : over the long-term , we believe that growth in the transportation business unit will result from increasing applications of electronic displays in locations to manage an increasing number of commuters , including roadway , airport , parking , transit and other applications . this growth is highly dependent on government spending , primarily federal government spending . story_separator_special_tag excluding this issue , we do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to determine the allowance for doubtful accounts . as of april 28 , 2012 and april 30 , 2011 , we had an allowance for doubtful accounts balance of approximately $ 2.4 million and $ 2.5 million , respectively . warranties . we have recognized a reserve for warranties on our products equal to our estimate of the actual costs to be incurred in connection with our performance under the warranties . generally , estimates are based on historical experience taking into account known or expected changes . if we would become aware of an increase in our estimated warranty costs , additional reserves may become necessary , resulting in an increase in costs of goods sold . we do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to determine our reserve for warranties . as of april 28 , 2012 and april 30 , 2011 , we had approximately $ 22.2 million and $ 23.0 million reserved for these costs , respectively . extended warranty and product maintenance . we recognize deferred revenue related to separately priced extended warranty and product maintenance agreements . the deferred revenue is recognized ratably over the contractual term . if we would become aware of an increase in our estimated costs under these agreements in excess of our deferred revenue , additional reserves may be necessary , resulting in an increase in costs of goods sold . in determining if additional reserves are necessary , we examine cost trends on the contracts and other information and compare that to the deferred revenue . we do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to determine estimated costs under these agreements . as of april 28 , 2012 and april 30 , 2011 , we had $ 14.0 million and $ 13.3 million of deferred revenue related to separately priced extended warranty and product maintenance agreements , respectively . inventory . inventories are stated at the lower of cost or market . market refers to the current replacement cost , except that market may not exceed the net realizable value ( that is , the estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal ) , and market is not less than the net realizable value reduced by an allowance for normal profit margins . in valuing inventory , we estimate market value where it is believed to be the lower of cost or market , and any necessary changes are charged to costs of goods sold in the period in which they occur . in determining market value , we review various factors such as current inventory levels , forecasted demand and technological obsolescence . we do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to calculate the estimated market value of inventory . however , if market conditions change , including changes in technology , product components used in our products or in expected sales , we may be exposed to unforeseen losses that could be material . income taxes . as part of the process of preparing our consolidated financial statements , we are required to estimate our income taxes in each of the jurisdictions in which we operate . this process involves estimating the actual current tax expense , as well as assessing temporary differences in the treatment of items for tax and financial reporting purposes . these timing differences result in deferred tax assets and liabilities , which are included in our consolidated balance sheets . we must then assess the likelihood that our deferred tax assets will be recovered from future taxable income in each jurisdiction , and to the extent we believe that recovery is not likely , a valuation allowance must be established . we review deferred tax assets , including net operating losses , and to the extent we believe that the asset may not be realized , we recognize a valuation allowance . if our estimates of future taxable income are not met in future periods , a valuation allowance for some of these deferred tax assets may be required . we believe that we will generate taxable income in future years which will allow for realization of deferred tax assets . realization of the deferred tax assets would require approximately $ 25 million of taxable income , which we believe is achievable through carry back of losses or future earnings . 22 we operate within multiple taxing jurisdictions , both domestic and international , and are subject to audits in these jurisdictions . these audits can involve complex issues , including challenges regarding the timing and amount of deductions and the allocation of income amounts to various tax jurisdictions . at any one time , multiple tax years are subject to audit by various tax authorities . we record our income tax provision based on our knowledge of all relevant facts and circumstances , including the existing tax laws , the status of any current examinations and our understanding of how the tax authorities view certain relevant industry and commercial matters . in evaluating the exposures associated with our various tax filing positions , we record reserves for probable exposures consistent with asc 740 , income taxes . a number of years may elapse before a particular matter for which we have established a reserve is audited and fully resolved or clarified . we adjust our income tax provision in the period in which actual results of a settlement with tax authorities differs from our established reserve , when the statute of limitations expires for the relevant taxing authority to examine the tax position , or when more information becomes available .
| results of operations net sales replace_table_token_2_th fiscal year 2012 as compared to fiscal year 2011 commercial : the increase in net sales in our commercial business unit for fiscal 2012 compared to fiscal 2011 is the net result of : an increase in orders of approximately 49 percent in our billboard business . this growth was the result of the large outdoor advertising companies increasing their rollout of digital billboards beginning in calendar 2011 and our ability to gain back a portion of the business with one large outdoor advertising company . an increase of approximately 60 percent in orders for large video display systems , primarily spectaculars , which we attribute to improvements in the economy and a growing market . a 15 percent increase in orders for our standard product displays , which appears to be a reflection of improvement in the economy as well as our expanded product offerings , including our galaxypro line of displays . live events : net sales were generally flat in fiscal 2012 as compared to fiscal 2011. during fiscal 2012 , orders and net sales were impacted by : a decrease in orders and net sales for professional baseball facilities . during fiscal 2011 , we booked approximately $ 22.9 million in orders for professional baseball projects compared to approximately $ 10.7 million in 2012. net sales in professional baseball facilities were $ 28.8 million and $ 9.6 million for fiscal 2011 and 2012 , respectively . these changes were the result of higher than expected orders in fiscal 2011 that were delayed from fiscal 2010 as a result of economic conditions , which drove 2011 to unusually high levels . a decrease in orders and net sales for professional football and basketball facilities .
| 7,285 |
we generate revenues by providing a broad range of general and specialized hospital healthcare services and outpatient services to patients in the communities in which we are located . as of december 31 , 2017 , we owned or leased 125 hospitals included in continuing operations , comprised of 123 general acute care hospitals and two stand-alone rehabilitation or psychiatric hospitals . we also owned or leased two hospitals included in discontinued operations at december 31 , 2017. for the hospitals that we own and operate , we are paid for our services by governmental agencies , private insurers and directly by the patients we serve . we have been implementing a portfolio rationalization and deleveraging strategy by divesting hospitals and non-hospital businesses that are attractive to strategic and other buyers . generally , these businesses are not in one of our strategically beneficial service areas , are less complementary to our business strategy and or have lower operating margins . more recently , in connection with our announced divestiture initiative , strategic buyers have made offers to buy certain of our assets . through consideration of these offers we have divested or may divest hospitals and non-hospital businesses when we find such offers to be attractive and in line with our operating strategy . additionally , as part of our portfolio rationalization strategy , on april 29 , 2016 , we completed a spin-off of 38 hospitals and qhr into qhc , and distributed , on a pro rata basis , all of the shares of qhc common stock to our stockholders of record as of april 22 , 2016. in recognition of the spin-off , we recorded a non-cash dividend of approximately $ 713 million during the year ended december 31 , 2016 , representing the net assets of qhc distributed to our stockholders . financial and statistical data reported in this form 10-k include qhc operating results through the spin-off date . same-store operating results and statistical data exclude information for the hospitals divested in the spin-off of qhc in the year ended december 31 , 2016 , and for the comparable period in 2015. in connection with the spin-off , we entered into a separation and distribution agreement as well as certain ancillary agreements with qhc on april 29 , 2016. these agreements allocated between qhc and us the various assets , employees , liabilities and obligations ( including investments , property and employee benefits and tax-related assets and liabilities ) that comprise the separate companies and govern certain relationships between , and activities of , qhc and us for a period of time after the spin-off . completed divestiture and acquisition activity on april 29 , 2016 , we sold our unconsolidated minority equity interests in valley health system , llc , a joint venture with uhs representing four hospitals in las vegas , nevada , in which we owned a 27.5 % interest , and in summerlin hospital medical center , llc , a joint venture with uhs representing one hospital in las vegas , nevada , in which we owned a 26.1 % interest . we received $ 403 million in cash in return for the sale of these equity interests and recognized a gain of approximately $ 94 million on the sale of our investment during the year ended december 31 , 2016. on december 22 , 2016 , we completed the sale and leaseback of ten medical office buildings for net proceeds of $ 159 million to hcp , inc. the buildings , with a combined total of 756,183 square feet , are located in five states and support a wide array of diagnostic , medical and surgical services in an outpatient setting for the 57 respective nearby hospitals . because of our continuing involvement in these leased buildings , the transaction does not qualify for sale treatment and the related leases have been recorded as financing obligations in the accompanying consolidated balance sheet . on december 31 , 2016 , we sold an 80 % majority ownership interest in the home care division to a subsidiary of almost family , inc. for $ 128 million . the following table provides a summary of hospitals included in continuing operations that we divested during the year ended december 31 , 2017 : replace_table_token_12_th 58 during 2017 , as reflected in the chart above , we completed the divestiture of all of the hospitals out of the previously announced 30 hospitals included in continuing operations which had been subject to definitive agreements or non-binding letters of intent . these 30 hospitals represented annual net operating revenues in 2016 of approximately $ 3.4 billion , and we received total net proceeds of approximately $ 1.7 billion in connection with the disposition of these hospitals . in addition to the divestiture of these 30 hospitals , we continue to receive interest from acquirers for certain of our hospitals . we are pursuing these interests for sale transactions involving hospitals with a combined total of approximately $ 2.0 billion in annual net operating revenues and combined mid-single digit adjusted ebitda margins . these sale transactions are currently in various stages of negotiation with potential buyers to enter into definitive agreements . there can be no assurance that these dispositions will be completed , or if they are completed , the ultimate timing of the completion of these dispositions . there may be changes from time to time in the composition of the particular hospitals in respect of which we are pursuing potential dispositions as the result of various factors , including changes in any potential buyer or the negotiations with respect to the potential sale of any such hospital . the potential dispositions noted above , as well as the dispositions that have been completed in 2016 and 2017 to date , are intended to further implement our portfolio rationalization and deleveraging strategy as described above . when consistent with this strategy , we intend to continue to evaluate offers from potential buyers for additional divestitures and optimize our hospital asset portfolio . story_separator_special_tag 60 self-pay revenues represented approximately 12.6 % and 12.2 % of net operating revenues for the years ended december 31 , 2017 and 2016 , respectively . the amount of foregone revenue related to providing charity care services as a percentage of net operating revenues was approximately 3.1 % and 2.6 % for the years ended december 31 , 2017 and 2016 , respectively . direct and indirect costs incurred in providing charity care services as a percentage of net operating revenues was approximately 0.4 % for both the years ended december 31 , 2017 and 2016. legislative overview the u.s. congress and certain state legislatures have introduced and passed a large number of proposals and legislation designed to make major changes in the healthcare system , including changes that have increased access to health insurance . the most prominent of these recent efforts , the affordable care act , affects how healthcare services are covered , delivered and reimbursed . it mandates that substantially all u.s. citizens maintain health insurance and increases health insurance coverage through a combination of public program expansion and private sector health insurance reforms . however , the future of the affordable care act is uncertain . the presidential administration and certain members of congress have stated their intent to repeal or make significant changes to the affordable care act , its implementation or its interpretation . for example , as part of the tax reform legislation which was enacted in december 2017 , congress eliminated the financial penalty associated with the individual mandate , effective january 1 , 2019 , which may result in fewer individuals electing to purchase health insurance . in addition , the president signed an executive order directing agencies to relax limits on certain health plans , potentially permitting the sale of short-term health insurance plans and coverage that does not meet the affordable care act 's minimum requirements . of critical importance to us will be the potential impact of any changes specific to the medicaid funding and expansion provisions of the affordable care act . we operate hospitals in five of the ten states that experienced the largest reductions in uninsured rates among adult residents between 2013 and 2015. in general , the states with the greatest reductions in the number of uninsured adult residents have expanded medicaid . a number of states have opted out of the medicaid coverage expansion provisions , but could ultimately decide to expand their programs at a later date . of the 19 states in which we operated hospitals that were included in continuing operations as of december 31 , 2017 , 8 states have taken action to expand their medicaid programs . at this time , the other 11 states have not , including florida , tennessee and texas , where we operated a significant number of hospitals as of december 31 , 2017. some states use , or have applied to use , waivers granted by cms to implement expansion , impose different eligibility or enrollment restrictions , or otherwise implement programs that vary from federal standards . cms administrators have indicated that they are increasing state flexibility in the administration of medicaid programs . for example , cms has granted a limited number of state applications for waivers that allow a state to condition medicaid enrollment on work or other community engagement . several states have similar applications pending . the affordable care act makes a number of changes to medicare and medicaid , such as reductions to the medicare annual market basket update for federal fiscal years 2010 through 2019 , a productivity offset to the medicare market basket update , and a reduction to the medicare and medicaid disproportionate share hospital payments , each of which could adversely impact the reimbursement received under these programs . the affordable care act also includes provisions aimed at reducing fraud , waste and abuse in the healthcare industry . we believe that the affordable care act has had a positive impact on net operating revenues and income from continuing operations as the result of the expansion of private sector and medicaid coverage that has occurred . however , legislative and executive branch efforts related to healthcare reform could result in increased prices for consumers purchasing health insurance coverage or the sale of insurance plans that contain gaps in coverage , which could destabilize insurance markets and impact the rates of uninsured or underinsured adults . other provisions of the affordable care act , such as requirements related to employee health insurance coverage and changes to medicare and medicaid reimbursement , have increased our operating costs or adversely impacted the reimbursement we receive . 61 it is difficult to predict the ongoing effect of the affordable care act due to executive orders , changes to the law 's implementation , clarifications and modifications resulting from the rule-making process , judicial interpretations resulting from court challenges to its constitutionality and interpretation , whether and how many states ultimately decide to expand medicaid coverage , the number of uninsured who elect to purchase health insurance coverage , budgetary issues at federal and state levels , and efforts to change or repeal the statute . we may not be able to fully realize the positive impact the affordable care act may otherwise have on our business , results of operations , cash flow , capital resources and liquidity . we can not predict whether we will be able to modify certain aspects of our operations to offset any potential adverse consequences from the affordable care act or the impact of any alternative provisions that may be adopted . in recent years , a number of laws , including the affordable care act and macra , have promoted shifting from traditional fee-for-service reimbursement models to alternative payment models that tie reimbursement to quality and cost of care . cms currently administers various acos and bundled payment demonstration projects and has indicated that it will continue to pursue similar initiatives .
| results of operations our hospitals offer a variety of services involving a broad range of inpatient and outpatient medical and surgical services . these include general acute care , emergency room , general and specialty surgery , critical care , internal medicine , obstetrics , diagnostic services , psychiatric and rehabilitation services . the strongest demand for hospital services generally occurs during january through april and the weakest demand for these services generally occurs during the summer months . accordingly , eliminating the effects of new acquisitions and or divestitures , our net operating revenues and earnings are historically highest during the first quarter and lowest during the third quarter . 64 the following tables summarize , for the periods indicated , selected operating data . replace_table_token_14_th replace_table_token_15_th ( a ) operating expenses include salaries and benefits , supplies , other operating expenses , government and other legal settlements and related costs , electronic health records incentive reimbursement and rent . ( b ) adjusted admissions is a general measure of combined inpatient and outpatient volume . we computed adjusted admissions by multiplying admissions by gross patient revenues and then dividing that number by gross inpatient revenues . ( c ) includes loss from discontinued operations . ( d ) includes acquired hospitals to the extent we operated them in both periods and excludes our hospitals that have previously been classified as discontinued operations for accounting purposes . in addition , also excludes information for the hospitals divested in the spin-off of qhc , sold or closed during the years ended december 31 , 2017 and 2016. in addition , same-store data excludes discontinued operations in the periods presented . same-store operating results also exclude the overall impact of the change in estimate related to net patient receivables recorded in the fourth quarter of 2017 . 65 year ended december 31 , 2017 compared to year ended december 31 , 2016 net operating revenues decreased by 16.7 % to approximately $ 15.4 billion for the year ended december 31 , 2017 , from approximately $ 18.4
| 7,286 |
executive overview introduction icahn enterprises l.p. ( “ icahn enterprises ” ) is a master limited partnership formed in delaware on february 17 , 1987. icahn enterprises holdings l.p. ( “ icahn enterprises holdings ” ) is a limited partnership formed in delaware on february 17 , 1987. references to “ we , ” “ our ” or “ us ” herein include both icahn enterprises and icahn enterprises holdings and their subsidiaries , unless the context otherwise requires . icahn enterprises owns a 99 % limited partner interest in icahn enterprises holdings . icahn enterprises holdings and its subsidiaries own substantially all of the assets and liabilities of icahn enterprises and conduct substantially all of its operations . therefore , the financial results of icahn enterprises and icahn enterprises holdings are substantially the same , with differences relating primarily to the allocation of the general partner interest . we do not discuss icahn enterprises and icahn enterprises holdings separately unless we believe it is necessary to an understanding of the businesses . we are a diversified holding company owning subsidiaries currently engaged in the following continuing operating businesses : investment , energy , automotive , food packaging , metals , real estate , home fashion and , as of december 2020 , pharma . we also report the results of our holding company , which includes the results of certain subsidiaries of icahn enterprises and icahn enterprises holdings ( unless otherwise noted ) , and investment activity and expenses associated with our holding company . our historical results also report the results of our mining segment , until sold on august 1 , 2019 , and our railcar segment through the date we sold our last remaining railcars on lease , which occurred in the third quarter of 2018. significant transactions and developments current economic conditions in march 2020 , the world health organization categorized covid-19 as a pandemic and the president of the united states declared the covid-19 outbreak a national emergency . the covid-19 pandemic , and actions taken by governments and others in response thereto , has negatively impacted the global economy , financial markets , and the industries in which our subsidiaries operate . our consolidated results of operations and financial condition have been impacted primarily by the volatility in the fair value of investments held by our investment segment and the holding company ( primarily unrealized ) as well as declines in the global demand for refined products , especially gasoline and diesel fuels , with respect to our energy segment . the impact on our businesses has also included the acceleration of selective planned store closures in our automotive segment , lowering current year forecasts across various segments and recording write-downs to inventories . the extent and duration of the impact on our future results of operations , liquidity and financial condition is uncertain and may be significant . however , we believe that we and our subsidiaries have sufficient available liquidity to meet anticipated cash requirements for at least the next twelve months . debt issuances in january 2020 , icahn enterprises and icahn enterprises finance corp. ( together the “ issuers ” ) issued an additional $ 600 million in aggregate principal amount of 4.750 % senior unsecured notes due 2024 ( the “ new 2024 notes ” ) and an additional $ 250 million in aggregate principal amount of 5.250 % senior unsecured notes due 2027 ( the “ new 2027 notes ” ) the proceeds from these notes , together with cash on hand , were used to redeem all of our prior outstanding $ 1.35 billion principal amount of 5.875 % senior unsecured notes due 2022 , and to pay accrued interest , related fees and expenses . 30 in january 2021 , the issuers issued $ 750 million in aggregate principal amount of 4.375 % senior unsecured notes due 2029 ( the “ new 2029 notes ” ) . the proceeds from these notes , together with cash on hand , were used to redeem $ 750 million principal amount of our 6.250 % senior unsecured notes due 2022 , and to pay accrued interest , related fees and expenses . acquisition of vivus , inc. in december 2020 , we acquired all of the outstanding common stock of vivus , inc. ( “ vivus ” ) upon its emergence from bankruptcy . prior to vivus ' emergence from bankruptcy , we held an investment in all of vivus ' convertible corporate debt securities as well as all of its other outstanding debt . as a result of this transaction , we consolidate the results of vivus beginning december 2020 and report the results within our new pharma segment . story_separator_special_tag losses across various sectors . the positive performance of our investment segment 's long positions was driven by gains from a consumer , cyclical sector investment , two technology sector investments , two financial sector investments and a consumer , non-cyclical sector investment with gains aggregating approximately $ 1.7 billion . the aggregate performance of investments with net gains across various other sectors accounted for an additional $ 495 million positive performance of our investment segment 's long positions . the positive performance of long positions was offset in part by losses from a consumer , non-cyclical sector investment , an energy sector investment and a technology sector investment with losses aggregating $ 727 million . 33 energy our energy segment is primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing businesses . the sale of petroleum products accounted for approximately 91 % , 94 % and 95 % of our energy segment 's net sales for the years ended december 31 , 2020 , 2019 and 2018 , respectively . the results of operations of the petroleum business are primarily affected by the relationship between refined product prices and the prices for crude oil and other feedstocks that are processed and blended into petroleum products , such as gasoline , diesel fuel and jet fuel , that are produced by a refinery ( “ refined products ” ) . story_separator_special_tag the lower cost of consumed crude oil was due to a decrease in volumes resulting from the scheduled maintenance , as discussed above , reduced utilization at one refinery , lower crude oil prices and higher derivative gains of $ 36 million . these decreases were offset in part by a $ 58 million write-down of inventory to net realizable value in the first quarter of 2020 and a $ 147 million increase in the net cost of rins . gross margin for our energy segment decreased by $ 891 million for the year ended december 31 , 2020 as compared to the comparable prior year period . gross margin as a percentage of net sales was ( 6 ) % and 10 % for the year ended december 31 , 2020 and 2019 , respectively . the decrease in the gross margin as a percentage of net sales was primarily attributable to the petroleum business , which was primarily due to unfavorable market pricing and crack spreads , offset in part by higher derivative gains over the comparable periods . automotive our automotive segment 's results of operations are generally driven by the distribution and installation of automotive aftermarket parts and are affected by the relative strength of automotive part replacement trends , among other factors . our automotive segment is in the process of implementing a multi-year transformation plan , which includes the integration and restructuring of its businesses . the transformation plan includes operating the automotive services and aftermarket parts businesses as separate businesses , streamlining icahn automotive 's corporate and field support teams , facility closures , consolidations and conversions , inventory optimization actions , and the re-focusing of its automotive parts business on certain core markets . costs to implement the transformation plan will include restructuring charges , which will be recorded when specific plans are approved , and which may be significant . 35 our automotive segment 's priorities include : ● positioning the service business to take advantage of opportunities in the do-it-for-me market and vehicle fleets ; ● optimizing the value of the commercial parts distribution business in certain high-volume core markets ; ● exiting the automotive parts distribution business in certain low volume , non-core markets ; ● improving inventory management across icahn automotive 's parts and tire distribution network ; ● investment in customer experience initiatives and selective upgrades in facilities ; ● investment in employees with focus on training and career development investments ; and ● business process improvements , including investments in our supply chain and information technology capabilities . the following table presents our automotive segment 's operating revenue , cost of revenue and gross margin . our automotive segment 's results of operations also include automotive services labor . automotive services labor revenues are included in other revenues from operations in our consolidated statements of operations ; however , the sale of any installed parts or materials related to automotive services are included in net sales . therefore , we discuss the combined results of our automotive net sales and automotive services labor revenues below . replace_table_token_5_th net sales and other revenue from operations for our automotive segment for the year ended december 31 , 2020 decreased by $ 406 million ( 14 % ) as compared to the comparable prior year period . the decrease was attributable to a decrease in aftermarket parts sales of $ 261 million ( 17 % ) and a decrease in automotive services revenues of $ 145 million ( 11 % ) . on an organic basis , aftermarket parts sales decreased $ 106 million over the comparable periods due to a decrease in commercial sales of $ 59 million ( 6 % ) and a decrease in retail sales of $ 47 million ( 12 % ) . store closures related to the transformation plan accounted for another $ 155 million decrease in aftermarket parts sales . the decrease in automotive services revenues represents a decrease on a primarily organic basis . the covid-19 pandemic , and the impacts of the actions taken by governments and others , have significantly contributed to the decline in revenues , in particular the automotive services revenues and commercial sales revenues which , until march 2020 , were experiencing growth on an organic basis . cost of goods sold and other expenses from operations for the year ended december 31 , 2020 decreased by $ 296 million ( 14 % ) as compared to the comparable prior year period . the decrease was due to lower sales volumes , as described above . gross margin on net sales and other revenue from operations for the year ended december 31 , 2020 decreased by $ 110 million ( 14 % ) as compared to the comparable prior year period . gross margin as a percentage of net sales and other revenue from operations was 28 % for each of the years ended december 31 , 2020 and 2019. our automotive segment has experienced some margin rate contraction for its aftermarket parts businesses due to the effect of stores that were in the process of closing down and the shift in aftermarket parts sales from retail to commercial , as well as from the negative impact from the covid-19 pandemic , as described above . this was offset by the acceleration of planned store closures , which resulted in a greater portion of our automotive segment 's business being derived from higher margin automotive services , as described above . 36 food packaging our food packaging segment 's results of operations are primarily driven by the production and sale of cellulosic , fibrous and plastic casings for the processed meat and poultry industry and derives a majority of its total net sales from customers located outside the united states . net sales for the year ended december 31 , 2020 increased $ 24 million ( 6 % ) as compared to the comparable prior year period .
| results of operations consolidated financial results our operating businesses comprise consolidated subsidiaries which operate in various industries and are managed on a decentralized basis . in addition to our investment segment 's revenues from investment transactions , revenues for our continuing operating businesses primarily consist of net sales of various products , services revenue , franchisor operations and leasing of real estate . due to the structure and nature of our business , we primarily discuss the results of operations by individual reporting segment in order to better understand our consolidated operating performance . certain other financial information is discussed on a consolidated basis following our segment discussion , including other revenues and expenses included in continuing operations as well as our results from discontinued operations . in addition to the summarized financial results below , refer to note 13 , “ segment and geographic reporting , ” to the consolidated financial statements for a reconciliation of each of our reporting segment 's results of continuing operations to our consolidated results . the comparability of our summarized consolidated financial results presented below is affected by , among other factors , ( i ) the performance of the investment funds , ( ii ) the results of our energy segment 's operations , impacted by the demand and prices for its products , ( iii ) impairment charges , primarily in our automotive segment in 2018 and ( iv ) the sale of ferrous resources in 2019. refer to our respective segment discussions and “ other consolidated results of operations , ” below for further discussion . 31 replace_table_token_1_th management 's discussion and analysis of results of operations discusses the comparisons between the years ended december 31 , 2020 and 2019. certain discussions of results of operations for the comparisons between the years ended december 31 , 2019 and 2018 are not included in this report .
| 7,287 |
we do not intend to update any of these forward-looking statements or publicly announce the results of any revisions to these forward-looking statements , other than as is required under u.s. federal securities laws . our business is subject to numerous risks and uncertainties , including those relating to variability in our operating results , the inability of certain of our customers or suppliers to access their traditional sources of credit , our industry 's rapidly changing technology , our dependence on a few large customers for a substantial portion of our revenue , a loss of revenue if contracts with the u.s. government or defense and aerospace contractors are canceled or delayed , our ability to implement innovative technologies , our ability to bring new products to market and achieve design wins , the efficient and successful operation of our wafer fabrication facilities , assembly facilities and test and tape and reel facilities , our ability to adjust production capacity in a timely fashion in response to changes in demand for our products , variability in manufacturing yields , industry overcapacity and current macroeconomic conditions , inaccurate product forecasts and corresponding inventory and manufacturing costs , dependence on third parties and our ability to manage platform providers and customer relationships , our dependence on international sales and operations , our ability to attract and retain skilled personnel and develop leaders , our ability to successfully integrate the business of rfmd and triquint and fully realize the anticipated benefits from the business combination , the possibility that future acquisitions may dilute our stockholders ' ownership and cause us to incur debt and assume contingent liabilities , fluctuations in the price of our common stock , additional claims of infringement on our intellectual property portfolio , lawsuits and claims relating to our products , security breaches and other similar disruptions compromising our information and exposing us to liability , and the impact of stringent environmental regulations , these and other risks and uncertainties , which are described in more detail under item 1a , “ risk factors ” in this annual report on form 10-k and in other reports and statements that we file with the sec , could cause actual results and developments to be materially different from those expressed or implied by any of these forward-looking statements . the following discussion should be read in conjunction with , and is qualified in its entirety by reference to , our audited consolidated financial statements , including the notes thereto . overview company on february 22 , 2014 , rf micro devices , inc. ( “ rfmd ” ) entered into an agreement and plan of merger and reorganization as subsequently amended on july 15 , 2014 ( the `` merger agreement '' ) , with triquint semiconductor , inc. ( `` triquint '' ) providing for the combination of rfmd and triquint in a merger of equals ( `` business combination '' ) under a new holding company named qorvo , inc. ( the “ company ” or “ qorvo ” ) . the transactions contemplated by the merger agreement were consummated on january 1 , 2015 , and as a result , triquint 's results of operations are included in qorvo 's consolidated statements of operations for the period of january 1 , 2015 through march 28 , 2015 ( the `` post-combination period '' ) . for financial reporting and accounting purposes , rfmd was the acquirer of triquint in the business combination . unless otherwise noted , “ we , ” “ our ” or `` us ” in this report refers to rfmd and its subsidiaries prior to the closing of the business combination and to qorvo and its subsidiaries after the closing of the business combination . we are a leading provider of core technologies and radio frequency ( “ rf ” ) solutions for mobile , infrastructure and defense and aerospace applications . we have more than 6,700 global employees dedicated to delivering solutions for everything that connects the world . qorvo has one of the industry 's broadest portfolios of rf products and core technologies , and world-class iso9001- , iso 14001- and iso/ts 16949-certified manufacturing facilities . our richardson , texas facility is a u.s. department of defense ( “ dod ” ) -accredited ‘ trusted source ' ( category 1a ) for gallium arsenide ( “ gaas '' ) , gallium nitride ( “ gan ” ) and bulk acoustic wave ( “ baw ” ) technologies , products and services . we are a preferred supplier to the world 's leading companies that serve the mobile device , networks 33 infrastructure and defense and aerospace markets . our design and manufacturing expertise encompasses many semiconductor process technologies , which we source both internally and through external suppliers . we operate worldwide with our design , sales and manufacturing facilities located throughout asia , europe and north america . our primary design and manufacturing facilities are located in north carolina , oregon , texas and florida , and our primary assembly and test facilities are located in china , costa rica and texas . business segments we design , develop , manufacture and market our products to leading u.s. and international original equipment manufacturers ( “ oems ” ) and original design manufacturers ( “ odms ” ) in the following operating segments : mobile products ( mp ) - mp is a leading global supplier of rf solutions that perform various functions in the increasingly complex cellular radio front end section of smartphones and other cellular devices . these rf solutions are required in fourth generation ( “ 4g ” ) data-centric devices operating under long-term evolution ( “ lte ” ) 4g networks , as well as third generation ( “ 3g ” ) and second generation ( “ 2g ” ) mobile devices . story_separator_special_tag during fiscal 2013 , other operating expenses included a $ 5.0 million loss realized on the transfer of our mbe wafer growth operations to iqe as well as expenses related to the purchase of amalfi . segment product revenue , operating income and operating income as a percentage of revenue mobile products replace_table_token_4_th mp revenue increased $ 459.7 million , or 49.2 % , in fiscal 2015 as compared to fiscal 2014. approximately $ 174.0 million of this increase relates to the inclusion of triquint revenue for the post-combination period . the remaining increase is primarily due to increased demand for our cellular rf solutions for smartphones . mp operating income increased $ 294.5 million , or 268.1 % , in fiscal 2015 as compared to fiscal 2014 , primarily due to higher revenue and improved gross margin resulting from a favorable change in product mix towards higher margin products and manufacturing- and sourcing-related cost reductions , which were partially offset by average selling price erosion . mp revenue increased $ 173.9 million , or 22.8 % , in fiscal 2014 as compared to fiscal 2013 , primarily due to increased demand for our cellular rf solutions and smartphones . mp operating income increased $ 57.3 million , or 109.0 % , in fiscal 2014 as compared to fiscal 2013 , primarily due to higher revenue and improved gross margin ( resulting from manufacturing and sourcing-related cost reductions , partially offset by average selling price erosion ) which was partially offset by increased personnel expenses associated with new product development for 3g/4g mobile devices and our investment in cmos pas . infrastructure and defense products replace_table_token_5_th idp revenue increased $ 100.4 million , or 47.1 % , in fiscal 2015 as compared to fiscal 2014 . approximately $ 85.5 million of this increase relates to the inclusion of triquint revenue for the post-combination period . the remaining increase is primarily due to increased demand for our wireless infrastructure products . 37 idp operating income increased $ 39.9 million , or 123.6 % , in fiscal 2015 as compared to fiscal 2014 , primarily due to improved gross margin resulting from manufacturing and sourcing-related cost reductions and a favorable shift in product mix towards higher margin wireless infrastructure products , which was partially offset by average selling price erosion . idp revenue increased $ 10.2 million , or 5.0 % , in fiscal 2014 as compared to fiscal 2013 , primarily due to increased demand for our wifi products . idp operating income increased $ 21.1 million , or 189.0 % , in fiscal 2014 as compared to fiscal 2013 , primarily due to improved gross margin resulting from manufacturing- and sourcing-related cost reductions and increased revenue , which was partially offset by average selling price erosion . see note 16 of the notes to the consolidated financial statements in part ii , item 8 of this report for a reconciliation of segment operating income ( loss ) to the consolidated operating income ( loss ) for fiscal years 2015 , 2014 and 2013 . other ( expense ) income and income taxes replace_table_token_6_th interest expense interest expense has decreased as a result of lower debt balances . our 2014 notes became due on april 15 , 2014 and the remaining principal balance of $ 87.5 million plus interest of $ 0.4 million was paid with cash on hand . during the first quarter of fiscal 2013 , our 0.75 % convertible subordinated notes due 2012 became due and we paid the remaining principal balance of $ 26.5 million . during fiscal 2013 , we purchased and retired $ 47.4 million original principal amount of our 2014 notes . loss on the retirement of convertible subordinated notes the remaining principal balance of our 2014 notes was retired in the first quarter of fiscal 2015. during fiscal 2014 , we did not purchase and retire any of our 2014 notes . during fiscal 2013 , we purchased and retired $ 47.4 million original principal amount of our 2014 notes for an average price of $ 98.34 , which resulted in a loss of $ 2.8 million as a result of applying financial accounting standards board ( `` fasb '' ) accounting standards codification ( `` asc '' ) 470-20. other income ( expense ) in fiscal 2015 , we incurred a foreign currency loss of $ 0.2 million as compared to a gain of $ 0.2 million in fiscal 2014 and a loss of $ 1.2 million in fiscal 2013. the foreign currency loss for fiscal 2015 was driven by the changes in the local currency denominated balance sheet accounts , the appreciation of the u.s dollar against the british pound and euro , and the depreciation of the u.s dollar against the renminbi . the foreign currency loss for fiscal 2013 was driven by the changes in the local currency denominated balance sheet accounts , the appreciation of the u.s dollar against the british pound and euro , and the depreciation of the u.s. dollar against the renminbi . additionally , during fiscal 2014 , we recognized a $ 2.1 million gain on an equity investment . income taxes income tax benefit for fiscal 2015 was $ 75.1 million , which is primarily comprised of tax expense related to domestic and international operations offset by a tax benefit of $ 135.8 million related to a decrease in the valuation allowance against domestic deferred tax assets . realization of substantially all of the domestic deferred tax assets is now more likely than not with the addition of the domestic deferred tax liabilities arising from amortizable intangible assets in connection with the business combination . for fiscal 2015 , this resulted in an annual effective tax rate of ( 61.9 % ) . 38 in comparison , income tax expense for fiscal 2014 was $ 11.2 million , which was primarily comprised of tax expense related to international operations . for fiscal 2014 , this resulted in an annual effective tax rate of 47.05 % .
| results of operations consolidated the following table presents a summary of our results of operations for fiscal years 2015 , 2014 and 2013 : replace_table_token_3_th revenue our overall revenue increased $ 562.7 million , or 49.0 % , in fiscal 2015 as compared to fiscal 2014. approximately $ 259.5 million of this increase relates to the inclusion of triquint revenue for the post-combination period . the remaining increase was primarily due to increased demand for our cellular rf solutions for smartphones . our overall revenue increased $ 184.1 million , or 19.1 % , in fiscal 2014 as compared to fiscal 2013. fiscal 2014 reflected increased demand for our cellular rf solutions for smartphones and our wifi products . we sold our products to our largest end customer through multiple contract manufacturers , which in the aggregate , accounted for approximately 32 % , 20 % and 9 % of total revenue in fiscal years 2015 , 2014 and 2013 , respectively . samsung electronics , co. , ltd. ( samsung ) , accounted for approximately 14 % , 25 % and 22 % of our total revenue in fiscal years 2015 , 2014 and 2013 , respectively . the majority of the revenue from these customers was from our mobile product sales . no other customer accounted for more than 10 % of our total revenue . international shipments amounted to $ 1,395.2 million in fiscal 2015 ( approximately 82 % of revenue ) compared to $ 805.4 million in fiscal 2014 ( approximately 70 % of revenue ) and $ 667.7 million in fiscal 2013 ( approximately 69 % of revenue ) . shipments to asia totaled $ 1,282.2 million in fiscal 2015 ( approximately 75 % of revenue ) compared to $ 756.1 million in fiscal 2014 ( approximately 66 % of revenue ) and $ 603.6 million in fiscal 2013 ( approximately 63 % of revenue ) .
| 7,288 |
under the terms of the agreement , goldcorp shareholders will receive 0.3280 shares of newmont 's common stock and $ 0.02 in cash for each goldcorp common share they own , for a total transaction value of approximately $ 10 billion as of the announcement date on january 14 , 2019. the transaction , which is subject to approval by both newmont and goldcorp shareholders , and other customary conditions and regulatory approvals , is expected to close in the second quarter of 2019. upon closing , the combined company will be known as newmont goldcorp . on november 2 , 2016 , newmont completed the sale of its 48.5 % economic interest in pt newmont nusa tenggara ( “ ptnnt ” ) , which operated the batu hijau copper and gold mine ( “ batu hijau ” ) in indonesia ( the “ batu hijau transaction ” ) . as a result , newmont presents batu hijau as a discontinued operation for all periods presented . in the following discussion and analysis , the operating statistics , results of operations , cash flows and financial condition that we present and discuss are those of our continuing operations unless otherwise indicated . for additional information regarding our discontinued operations , see note 11 to the consolidated financial statements and the discussion in our results of consolidated operations below . we continue to focus on delivering superior operational execution to generate the financial flexibility we need to fund our best projects , make strategic partnerships focused on profitable growth , reduce debt and return cash to shareholders . story_separator_special_tag exploration expense increased in 2018 , compared to 2017 , primarily due to increased expenditures at various projects in north america and australia as we continue to focus on developing future reserves . exploration expense increased in 2017 , compared to 2016 , primarily due to higher expenditures for near-mine exploration at tanami , cc & v , kalgoorlie and yanacocha , in addition to greenfield exploration in the guiana shield and other locations as we continue to focus on developing future reserves . for additional information about proven and probable reserves , including additions and reductions , see the discussion in gold , copper and silver reserves in item 1 , business , and proven and probable reserves in item 2 , properties . advanced projects , research and development expense includes development project management costs , feasibility studies and other project expenses that do not qualify for capitalization . advanced projects , research and development expense was $ 153 , $ 143 , and $ 134 for 2018 , 2017 , and 2016 , respectively . advanced projects , research and development expense increased in 2018 , compared to 2017 , primarily due to on-going study costs associated with the yanacocha sulfides and chaquicocha oxides projects in south america and the long canyon phase 2 project in north america . advanced projects , research and development expense increased in 2017 , compared to 2016 , primarily due to costs associated with full potential opportunities in north america and advanced studies on the yanacocha sulfides project , partially offset by prior-year merian pre-production expenses . general and administrative expense was $ 244 , $ 237 , and $ 233 for 2018 , 2017 , and 2016 , respectively . general and administrative expense increased in 2018 , compared to 2017 , primarily due to higher it project and services costs as well as higher labor costs . general and administrative expense in 2017 was in line with 2016. general and administrative expense as a percentage of sales increased in 2018 to 3.4 % , compared to 3.2 % and 3.5 % in 2017 and 2016 , respectively . impairment of long-lived assets totaled $ 369 , $ 14 and $ 1,003 for 2018 , 2017 and 2016 , respectively . the 2018 impairments primarily related to the impairment of long-lived assets at certain exploration properties and the emigrant operation in north america , due to the company 's decision to focus on advancing other projects and a change in mine plan resulting in a significant decrease in mine life at emigrant , respectively . the 2017 impairments related to equipment and long lived assets in south america , australia and corporate . the 2016 impairments were primarily related to the impairment of long-lived assets at yanacocha in south america as a result of the updated long-term mining and closure plans . for additional information , see note 6 to our consolidated financial statements . other expense , net was $ 29 , $ 32 , and $ 58 for 2018 , 2017 , and 2016 , respectively . other expense , net decreased in 2018 , compared to 2017 , primarily due to prior-year net adjustments to the contingent consideration and related liabilities associated with the acquisition of the final 33.33 % interest in boddington in june 2009 and decreases in other expenses , partially offset by increased severance , legal and other settlements in 2018. other expense , net decreased in 2017 , compared to 2016 , primarily due to lower severance and outsourcing costs , primarily at corporate , and lower adjustments to the contingent consideration and related liabilities associated with the acquisition of the final 33.33 % interest in boddington in june 2009. other income , net was $ 155 , $ 54 , and $ 69 for 2018 , 2017 , and 2016 , respectively . other income , net increased in 2018 , compared to 2017 , primarily due to a gain from the exchange of certain royalty interests for cash consideration and an equity ownership and warrants in maverix metals inc. ( “ maverix ” ) in june 2018 , decreases in australian dollar-denominated liabilities from a weaker australian dollar , an increase in interest income , and an increase in business interruption insurance proceeds . these increases were partially offset by unrealized holding losses on marketable equity securities related primarily to continental gold inc. and investment impairments for other-than-temporary declines in value of an equity method investment and a cost method investment in december 2018. story_separator_special_tag in january 2018 , the financial accounting standards board released guidance on the accounting for tax on the global intangible low-taxed income ( “ gilti ” ) provisions of the act . the gilti provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations . the guidance indicates that either accounting for deferred taxes related to gilti inclusions or treating any taxes on gilti inclusions as period cost are both acceptable methods subject to an accounting policy election . effective the first quarter of 2018 , the company elected to treat any potential gilti inclusions as a period cost as it is not 66 projecting any material impact from gilti inclusions and any deferred taxes related to any inclusion would be immaterial . as of december 31 , 2018 , the company does not have any gilti inclusion . for additional information regarding our income and mining taxes , including details of our deferred tax assets , see note 9 to our consolidated financial statements . equity income ( loss ) of affiliates was $ ( 33 ) , $ ( 16 ) , and $ ( 13 ) in 2018 , 2017 , and 2016 , respectively . the increased loss in 2018 from 2017 is mainly due to a $ 10 and $ 5 increase in losses recognized at tmac resources inc. and minera la zanja s.r.l . ( “ la zanja ” ) , respectively . the equity loss from affiliates increased in 2017 from 2016 primarily due to a $ 5 increase in losses recognized at la zanja as a result of an impairment of its long-lived assets . net income ( loss ) from discontinued operations was $ 61 , $ ( 38 ) and $ ( 131 ) in 2018 , 2017 , and 2016 , respectively . net income ( loss ) from discontinued operations increased in 2018 from 2017 , primarily due to the impacts on the holt royalty obligation from an increase in discount rate , a decrease in gold price and an expected decrease in production from prior periods . the loss decreased in 2017 compared to 2016 primarily due to the net impacts of the batu hijau transaction in 2016. for additional information regarding our discontinued operations , see note 11 to our consolidated financial statements . for discussion regarding batu hijau 's operating results , see the discontinued operations section in results of consolidated operations below . net loss ( income ) attributable to noncontrolling interests , net of tax from continuing operations was $ ( 39 ) , $ ( 5 ) , and $ 586 in 2018 , 2017 , and 2016 , respectively . the income from noncontrolling interests increased in 2018 compared to 2017 primarily due to decreased losses at yanacocha . the income from noncontrolling interests increased in 2017 compared to 2016 due to decreased losses at yanacocha , primarily related to the 2016 impairment of long-lived assets , and increased earnings at merian due to a full year of production in 2017. other comprehensive income ( loss ) was $ ( 11 ) , $ 42 , and $ - in 2018 , 2017 , and 2016 , respectively . the decrease in 2018 from 2017 was primarily due to the change in fair value of pension and other post-retirement benefits , foreign currency translation adjustments and a reduced impact from cash flow hedge instruments . the increase in 2017 from 2016 was primarily due to the change in fair value of marketable securities and pension and other post-retirement benefits , partially offset by a reduced impact from cash flow hedge instruments . results of consolidated operations replace_table_token_38_th ( 1 ) excludes depreciation and amortization and reclamation and remediation . ( 2 ) all-in sustaining costs is a non-gaap financial measure . see non-gaap financial measures beginning on page 80 . 67 2018 compared to 2017 consolidated gold ounces produced decreased 3 % due to : · lower production from north america due to lower ore grade mined at cc & v , long canyon and twin creeks , as well as lower leach tons placed at carlin , phoenix and cc & v , partially offset by higher ore grade milled at phoenix ; · consistent production from south america as a draw down of in-circuit inventory and higher mill throughput at merian were offset by lower leach production at yanacocha ; · lower production from australia due to lower ore grade milled at boddington and kalgoorlie , partially offset by higher ore grade milled and recovery at tanami . the lower ore grade milled at kalgoorlie was a result of reduced ore tons mined from the pit due to a failure in the east wall of the pit , leading to the processing of lower-grade stockpiles ; and · higher production from africa due to higher ore grade milled and recovery , as well as a draw down of in-circuit inventory at ahafo , partially offset by lower mill throughput , ore grade and recovery at akyem . consolidated copper production decreased 4 % primarily due to lower ore grade milled at phoenix in north america and boddington in australia . costs applicable to sales per consolidated gold ounce increased 2 % primarily due to lower ounces sold , higher stockpile and leach pad inventory adjustments and higher oil prices , partially offset by a lower co-product allocation of costs to gold . costs applicable to sales per consolidated copper pound increased 15 % primarily due to a higher co-product allocation of costs to copper . depreciation and amortization per gold ounce decreased 2 % primarily due to lower amortization rates , partially offset by lower ounces sold and higher stockpile and leach pad inventory adjustments . depreciation and amortization per consolidated copper pound increased 6 % primarily due to a higher co-product allocation of depreciation and amortization to copper . all-in sustaining costs per consolidated gold ounce increased 2 % primarily due to higher costs applicable to sales per ounce .
| consolidated financial results the details of our net income ( loss ) from continuing operations attributable to newmont stockholders are set forth below : replace_table_token_25_th replace_table_token_26_th results in 2018 compared to 2017 were impacted by lower income tax expense , as higher taxes in the prior year from the tax cuts and jobs act ( “ the act ” ) enacted in december 2017 and a tax benefit recorded in the current year for the settlement of an 61 uncertain tax position in canada were partially offset by increased valuation allowances recorded on deferred tax assets in the united states during the fourth quarter of 2018 , and a gain from the sale of our royalty portfolio in june 2018 , partially offset by increased impairments of the company 's long-lived assets related to certain exploration properties and the emigrant operation in north america and lower production at various sites , including cc & v , boddington , akyem , kalgoorlie and carlin , as further described within the results of consolidated operations section below . results in 2017 compared to 2016 were impacted by a $ 1,003 impairment charge ( $ 529 attributable to newmont ) in 2016 , a full year of production at merian and long canyon , an increase in gold production from the cc & v expansion completed in the first quarter of 2016 , and higher realized prices , partially offset by higher taxes from the act enacted in december 2017 , a 2016 gain from the sale of the company 's investment in regis resources ltd ( “ regis ” ) and adverse weather conditions impacting production at tanami and yanacocha during the first quarter of 2017. the details of our sales are set forth below . see note 4 to our consolidated financial statement for additional information . replace_table_token_27_th replace_table_token_28_th the following analysis summarizes consolidated gold sales : replace_table_token_29_th ( 1 ) per ounce measures may not recalculate due to rounding .
| 7,289 |
at december 31 , 2012 , abbott 's long-term debt rating was a+ by standard and poor 's corporation and a1 by moody 's investors service . operating cash flows in excess of capital expenditures and cash dividends have partially funded acquisitions over the last three years . 28 in 2013 , abbott will focus on several key initiatives . in the nutritional business , abbott will continue to build its product portfolio with the introduction of new science-based products , expand in high-growth emerging markets and implement additional margin improvement initiatives . in the established pharmaceuticals business , which includes international sales of branded generic products , abbott will continue to focus on obtaining additional product approvals across numerous countries and expanding its presence in emerging markets . in the diagnostics business , abbott will focus on the development of next-generation instruments and other advanced technologies , expansion in emerging markets , and further improvements in the segment 's operating margin . in the vascular business , abbott will continue to focus on marketing products in the xience and endovascular franchises , increasing international mitraclip sales , and obtaining regulatory review of the mitraclip device in the u.s. as well as further clinical development of absorb , its bioresorbable vascular scaffold ( bvs ) device and a further roll-out of absorb in numerous countries . in abbott 's other segments , abbott will focus on developing differentiated technologies in higher growth markets . critical accounting policies sales rebates in 2012 , approximately 56 percent of abbott 's consolidated gross revenues were subject to various forms of rebates and allowances that abbott recorded as reductions of revenues at the time of sale . most of these rebates and allowances are in the proprietary pharmaceutical products segment and the nutritional products segment . abbott provides rebates to pharmacy benefit management companies , state agencies that administer the federal medicaid program , insurance companies that administer medicare drug plans , state agencies that administer the special supplemental nutrition program for women , infants , and children ( wic ) , wholesalers , group purchasing organizations , and other government agencies and private entities . rebate amounts are usually based upon the volume of purchases using contractual or statutory prices for a product . factors used in the rebate calculations include the identification of which products have been sold subject to a rebate , which customer or government agency price terms apply , and the estimated lag time between sale and payment of a rebate . using historical trends , adjusted for current changes , abbott estimates the amount of the rebate that will be paid , and records the liability as a reduction of gross sales when abbott records its sale of the product . settlement of the rebate generally occurs from two to eight months after sale . abbott regularly analyzes the historical rebate trends and makes adjustments to reserves for changes in trends and terms of rebate programs . rebates and chargebacks charged against gross sales in 2012 , 2011 and 2010 amounted to approximately $ 6.2 billion , $ 5.5 billion and $ 4.9 billion , respectively , or 22.9 percent , 22.2 percent and 23.1 percent , respectively , based on gross sales of approximately $ 26.9 billion , $ 24.8 billion and $ 21.1 billion , respectively , subject to rebate . a one-percentage point increase in the percentage of rebates to related gross sales would decrease net sales by approximately $ 269 million in 2012. abbott considers a one-percentage point increase to be a reasonably likely increase in the percentage of rebates to related gross sales . other allowances charged against gross sales were approximately $ 542 million , $ 409 million and $ 415 million for cash discounts in 2012 , 2011 and 2010 , respectively , and $ 365 million , $ 490 million and $ 537 million for returns in 2012 , 2011 and 2010 , respectively . cash discounts are known within 15 to 30 days of sale , and therefore can be reliably estimated . returns can be reliably estimated because abbott 's historical returns are low , and because sales returns terms and other sales terms have remained relatively unchanged for several periods . management analyzes the adequacy of ending rebate accrual balances each quarter . in the domestic nutritional business , management uses both internal and external data available to estimate the level of inventory in the distribution channel . management has access to several large customers ' inventory management data , and for other customers , utilizes data from a third party that measures time on the retail shelf . these sources allow management to make reliable estimates of inventory in the distribution channel . except for a transition period before or after a change in the supplier for the wic business in a state , inventory in the distribution channel does not vary substantially . management also estimates the states ' processing lag time based on claims data . in addition , internal processing time is a factor in 29 estimating the accrual . in the wic business , the state where the sale is made , which is the determining factor for the applicable price , is reliably determinable . estimates are required for the amount of wic sales within each state where abbott has the wic business . external data sources utilized for that estimate are participant data from the u.s. department of agriculture ( usda ) , which administers the wic program , participant data from some of the states , and internally administered market research . the usda has been making its data available for many years . internal data includes historical redemption rates and pricing data . at december 31 , 2012 , abbott had wic business in 22 states . in the domestic proprietary pharmaceutical business , the most significant charges against gross sales are for medicaid and medicare rebates , pharmacy benefit manager rebates and wholesaler chargebacks . story_separator_special_tag goodwill and indefinite-lived intangible assets , which relate to in-process research and development acquired in a business combination , are reviewed for impairment annually or when an event that could result in an impairment occurs . at december 31 , 2012 , goodwill and intangibles amounted to $ 15.8 billion and $ 8.6 billion , respectively , and amortization expense for intangible assets amounted to $ 1.4 billion in 2012. there were no impairments of goodwill in 2012 , 2011 or 2010. in 2012 and 2011 , abbott recorded impairment charges of $ 82 million and $ 174 million , respectively , for certain research and development assets due to changes in the projected development and regulatory timelines for the projects . litigation abbott accounts for litigation losses in accordance with fasb accounting standards codification no . 450 , `` contingencies . '' under asc no . 450 , loss contingency provisions are recorded for probable losses at management 's best estimate of a loss , or when a best estimate can not be made , a minimum loss contingency amount is recorded . these estimates are often initially developed substantially earlier than the ultimate loss is known , and the estimates are refined each accounting period as additional information becomes known . accordingly , abbott is often initially unable to develop a best estimate of loss , and therefore the minimum amount , which could be zero , is recorded . as information becomes 31 known , either the minimum loss amount is increased , resulting in additional loss provisions , or a best estimate can be made , also resulting in additional loss provisions . occasionally , a best estimate amount is changed to a lower amount when events result in an expectation of a more favorable outcome than previously expected . abbott estimates the range of possible loss to be from approximately $ 70 million to $ 100 million for its legal proceedings and environmental exposures . accruals of approximately $ 80 million have been recorded at december 31 , 2012 for these proceedings and exposures . these accruals represent management 's best estimate of probable loss , as defined by fasb asc no . 450 , `` contingencies . '' 32 results of operations sales the following table details the components of sales growth by reportable segment for the last three years : replace_table_token_4_th total net sales in 2012 reflect unit growth , partially offset by the impact of unfavorable foreign exchange . the decrease in 2012 vascular products sales is partially due to the winding down of royalty and supply agreements related to certain third-party products , including promus . excluding this royalty and supply agreement revenue in both periods and the unfavorable effect of exchange , vascular products sales 33 increased 3.4 percent in 2012. in 2011 and 2010 , total net , total u.s. , total international , proprietary pharmaceutical products segment and established pharmaceutical products segment sales reflect the acquisition of solvay 's pharmaceuticals business on february 15 , 2010 and unit growth , while the relatively weaker u.s. dollar favorably impacted international sales across all segments . total net , total international and established pharmaceutical products segment sales growth in 2011 also reflects the acquisition of piramal healthcare limited 's healthcare solution business in september 2010. a comparison of significant product and product group sales is as follows . percent changes are versus the prior year and are based on unrounded numbers . replace_table_token_5_th n/m percent change is not meaningful ( 1 ) other coronary products include primarily guidewires and balloon catheters . endovascular includes vessel closure , carotid stents and other peripheral products . 34 excluding the negative effect of exchange , total international proprietary sales increased 8.9 percent in 2012. in proprietary pharmaceuticals , a generic version of tricor entered the u.s. market in the fourth quarter of 2012. total established pharmaceutical products sales decreased in 2012 due to the negative effect of exchange and decreased sales of clarithromycin and serc due to , in part , pricing pressures in europe , partially offset by growth in emerging markets . excluding the effect of exchange , total established pharmaceutical products sales increased 2.1 percent . u.s. pediatric nutritional sales in 2012 reflect market share gains for similac and unit growth for pediasure . the increase in 2012 u.s. adult nutritional sales reflects unit growth for the ensure and glucerna products . international pediatric and adult nutritionals sales increases over the three years were due primarily to volume growth in developing countries and were negatively impacted in 2012 by the effect of the relatively stronger u.s. dollar . the increases in u.s. proprietary product sales in 2011 and 2010 are primarily due to increased sales of humira and the acquisition of solvay pharmaceuticals in february 2010 , partially offset by decreased sales of depakote , zemplar , and kaletra . the increases in established pharmaceutical sales in 2011 and 2010 are primarily due to the acquisitions of solvay pharmaceuticals and piramal and growth in emerging markets . u.s. pediatric nutritionals sales in 2011 and 2010 were affected by the voluntary recall of certain similac-brand powder infant formulas in september 2010 and the subsequent recovery in market share in 2011. international proprietary pharmaceuticals , international adult nutritionals and immunochemistry sales were positively impacted by the effect of the relatively weaker u.s. dollar in 2011 and 2010. abbott has periodically sold product rights to non-strategic products and has recorded the related gains in net sales in accordance with abbott 's revenue recognition policies as discussed in note 1 to the consolidated financial statements . related net sales were approximately $ 58 million in 2010 , while there were no significant sales in 2012 and 2011. the expiration of licenses and patent protection and generic competition can affect the future revenues and operating income of abbott . there are currently no significant patent or license expirations in the next three years that are expected to affect abbott after the separation of abbvie .
| financial review abbott 's revenues are derived primarily from the sale of a broad line of health care products under short-term receivable arrangements . patent protection and licenses , technological and performance features , and inclusion of abbott 's products under a contract or by a pharmacy benefit manager most impact which products are sold ; price controls , competition and rebates most impact the net selling prices of products ; and foreign currency translation impacts the measurement of net sales and costs . abbott 's primary products are nutritional products , prescription pharmaceuticals , diagnostic testing products and vascular products . in october 2011 , abbott announced a plan to separate into two publicly traded companies , one in diversified medical products and the other in research-based pharmaceuticals . to accomplish the separation , abbott created a new company , abbvie inc. ( `` abbvie '' ) for its research-based pharmaceuticals business which consists primarily of abbott 's proprietary pharmaceutical products segment . on january 1 , 2013 , abbott distributed all of the outstanding shares of abbvie to abbott 's shareholders . as a result of the distribution , abbvie is now an independent company trading under the symbol `` abbv '' . beginning in the first quarter of 2013 , the historical results of the research-based pharmaceuticals business will be reflected in abbott 's consolidated financial statements as discontinued operations . prior to the separation of abbvie , sales in international markets were approximately 60 percent of consolidated net sales . post-separation , sales outside the u.s. are expected to comprise approximately 70 percent of net sales .
| 7,290 |
story_separator_special_tag the following discussion should be read in conjunction with , and is qualified in its entirety by , the consolidated financial statements and notes thereto included elsewhere in this annual report on form 10-k. this item contains forward-looking statements that involve risks and uncertainties . actual results may differ materially from those indicated in such forward-looking statements . factors that may cause such a difference include , but are not limited to , those discussed in “ item 1a , risk factors relating to our business. ” replace_table_token_4_th 16 story_separator_special_tag income , primarily due to an improved gross margin from home sales despite a year-over-year increase in inventory impairment of $ 13.1 million . increased home sale revenues of 19 % also contributed to higher pretax income in the west . our mountain segment experienced a $ 48.3 million year-over-year improvement in pretax income , primarily driven by a 35 % increase in home sale revenues and an improved gross margin from home sales . our corporate segment experienced a $ 64.0 million decrease in pretax income from the prior year primarily as a result of the significant gains recognized on the sale of investments in 2017 that did not recur in 2018 as well as an increase in compensation-related general and administrative expenses . homebuilding pretax income for 2017 was $ 185.9 million , an increase of $ 70.6 million from $ 115.4 million for the year ended december 31 , 2016. the increase was primarily attributable to an 11 % increase in home sale revenues , a 50 basis point improvement in gross margin from home sales and $ 53.6 million in realized gains due to the sales of investments held by our corporate segment . the increases were slightly offset by a higher sg & a rate driven by compensation-related expenses that increased due to higher headcount . the year-over-year improvements in pretax income for our west and mountain segments were driven primarily by higher home sale revenues of 17 % and 7 % , respectively . pretax income was negatively impacted in our west segment as a result of a $ 4.6 million increase in impairments while pretax income was positively impacted in our mountain segment by an improving gross margin from home sales . our east segment had a $ 9.5 million improvement in pretax income primarily as a result of a $ 4.4 million reduction in inventory impairments . the pretax gain for our corporate segment was driven by the realized gains on the sales of investments discussed above , partially offset by an increase in compensation-related expenses . 18 assets replace_table_token_6_th total homebuilding assets increased 7 % from december 31 , 2017 to december 31 , 2018. increases in both our west and mountain segments were the result of increases in our inventory balances . these increases were driven by a greater number of lots acquired during 2018 as compared to 2017 and , to a lesser extent , homes completed or under construction as of year-end . the funds for this land acquisition and construction activity came from our corporate segment , causing a decline in our corporate segment 's assets . in addition , our east segment assets decreased due to a lower level of investment in our mid-atlantic market over the past two years . however , as indicated by the 19 % year-over-year increase in lots owned and optioned in our east segment , including a 72 % year-over-year increase in our mid-atlantic market , we have begun reinvesting in this market recently . new home deliveries & home sale revenues : changes in home sale revenues are impacted by changes in the number of new homes delivered and the average selling price of those delivered homes . commentary for each of our segments on significant changes in these two metrics is provided below . replace_table_token_7_th west segment commentary for the year ended december 31 , 2018 , we realized significant year-over-year percentage increases in the average selling price for each of our markets in the west segment due to price increases implemented throughout 2017 and continuing into the first half of 2018 and a shift in mix to higher priced communities . our total new homes delivered were up 8 % for the year ended december 31 , 2018 due to an 8 % year over year increase in the number of homes in backlog to start the year and strong net new order activity in our arizona markets throughout 2018 resulting in increased deliveries in the second half of 2018. mountain segment commentary for the year ended december 31 , 2018 , our mountain segment experienced a 25 % year-over-year increase in the number of new homes delivered , as a result of a 17 % increase in the number of homes in backlog to start the year and an increased backlog conversion rate in our colorado markets due to a vendor related defect issue that negatively impacted our ability to close backlog in the second half of 2017. the average selling price of homes delivered for the year ended december 31 , 2018 was up 8 % as compared to the prior year as a result of price increases implemented throughout 2017 and continuing into the first half of 2018 and a shift in mix to higher priced communities . east segment commentary for the year ended december 31 , 2018 , the decrease in the average selling price of homes closed in our east segment is due to mix as a result of ( 1 ) a higher percentage of our deliveries coming from our florida markets , which have a lower average selling price than our mid-atlantic market and ( 2 ) a higher percentage of deliveries in this segment coming from communities that offer more affordable home plans . story_separator_special_tag the improvement in our sg & a rate was driven primarily by an increased ability to leverage our fixed overhead to support our 19 % increase in home sale revenues . this improved leverage was somewhat diminished by higher compensation-related expense due to increased headcount as well as a $ 6.6 million increase in stock-based compensation expense associated with performance-based stock awards that were granted in 2016 and 2017. for the year ended december 31 , 2017 , our sg & a expenses increased $ 36.9 million to $ 287.5 million , resulting in a year-over-year increase in our sg & a rate of 40 basis points . the increase in our sg & a rate was driven primarily by higher compensation-related expenses due to increased headcount . realized gains from the sales of marketable securities , net our realized gains from the sales of marketable securities for the twelve months ended december 31 , 2018 , 2017 and 2016 were $ 0.0 million , $ 17.8 million and $ 1.0 million , respectively . the year-over-year increase for the twelve months ended december 31 , 2017 was related to the sale of all of our marketable equity securities . realized gain from the sale of metropolitan district bond securities during the year ended december 31 , 2017 , we sold our metropolitan district bond securities for net proceeds of $ 44.3 million . with a cost basis of $ 8.4 million , we recorded a realized gain of $ 35.8 million . 23 other homebuilding operating data net new orders and active subdivisions : replace_table_token_12_th * calculated as total net new orders in period ÷ average active communities during period ÷ number of months in period replace_table_token_13_th west segment commentary for the year ended december 31 , 2018 , our dollar value of net new orders increased 7 % from the prior year , driven by a 7 % increase in our number of net new orders . the increase in our number of net new orders was primarily due to an improved sales pace in arizona and nevada as these markets have seen especially strong demand dynamics . the increase in our sales pace in arizona and nevada was partially offset by a decline in our sales pace in california as a result of : ( 1 ) a smaller relative proportion of affordable product offerings currently available in this market and ( 2 ) a lower pace of gross sales ( before cancellations ) as ( a ) we increased prices throughout 2017 and continuing into the first half of 2018 in response to market demand , which allowed us to offset cost increases and improve gross margins , and ( b ) homebuyer uncertainty increased in the second half of 2018 amid increasing interest rates and higher home prices . mountain segment commentary for the year ended december 31 , 2018 , our dollar value of net new orders increased 6 % year-over-year , due to a 2 % increase in our number of net new orders and a 4 % improvement in our average selling price . the increase in the average sales price is a result of price increases we have implemented throughout 2017 and continuing into the first half of 2018 in the majority of communities in this segment . our higher number of net new orders was the result of a 15 % increase in average active community count as a result of growth in colorado . this increase was partially offset by a 14 % decrease in our monthly sales absorption pace . colorado was the main driver of the decline in our sales pace as a result of : ( 1 ) an increased cancellation rate ( see further discussion below ) and ( 2 ) a lower pace of gross sales ( before cancellations ) as ( a ) we increased prices throughout 2017 and continuing into the first half of 2018 as noted above in response to market demand , which allowed us to offset cost increases and improve gross margins , and ( b ) homebuyer uncertainty increased in the second half of 2018 amid increasing interest rates and higher home prices . 24 east segment commentary for the year ended december 31 , 2018 , our dollar values of net new orders decreased 23 % year-over-year , as declines in both our average selling price of net new orders ( 14 % ) and our average active community count ( 24 % ) were only slightly offset by a 17 % improvement in our monthly sales absorption rate . the improved sales pace we realized was primarily due to an increased offering of more affordable products in our florida markets , which have realized a higher selling pace , and strong order activity in the limited number of new communities we have opened in our mid-atlantic market . our average active community count was down mostly due to decreased land acquisition activity in the mid-atlantic market over the past two years where we have invested less because our returns in this market had been lower than expected . however , as noted above , we have recently experienced improving returns in the mid-atlantic region resulting in reinvestment in this market . the decrease in the average selling price of net new orders is due to mix as a result of : ( 1 ) a higher percentage of our net new orders coming from our florida markets , which have a lower average selling price than our mid-atlantic operations , and ( 2 ) a higher percentage of our net new orders coming from an expanded offering of more affordable home plans , due to an increasing level of demand for these plans .
| executive summary overview results for the twelve months ended december 31 , 201 8 for the year ended december 31 , 2018 , we reported net income of $ 210.8 million , or $ 3.66 per diluted share , a 49 % increase compared to net income of $ 141.8 million , or $ 2.48 per diluted share , for the prior year period . the increase was primarily due to a 19 % improvement in home sale revenues and a 170 basis point improvement in gross margin from home sales . additionally , our net income benefited from a decrease in our effective tax rate primarily due to the tax cuts and jobs act that was signed into law in december 2017. these positive factors were partially offset by a $ 53.6 million decrease in realized investment gains within our corporate segment as a result of the sale of metropolitan district bond securities and marketable securities in the prior year that did not recur in 2018. home sale revenues were up from $ 2.50 billion in 2017 to $ 2.98 billion in 2018. the improvement was the result of a 12 % increase in the number of homes delivered and a 7 % increase in the average price of those homes . the higher revenues drove a 40 basis point decrease in our sg & a rate ( see “ selling , general and administrative expenses ” below ) . the dollar value of our net new home orders increased 3 % from the prior year period , driven by slight increases in the number of average active communities and sales pace .
| 7,291 |
the following is a summary of the contractual maturities and average story_separator_special_tag financial section summary the financial section of this form 10-k includes management 's discussion and analysis , consolidated financial statements , and the notes to those financial statements . bancorp has prepared the following summary to assist in your review of the financial section . it is designed to give you an overview of stock yards bancorp , inc. and summarize some of the more important activities and events that occurred during 2017. share and per share information has been adjusted to reflect the april 2016 3 for 2 stock-split which was effected in the form of a 50 % stock dividend . the financial section includes the following : management 's discussion and analysis , or md & a provides information regarding the consolidated financial condition and results of operations of bancorp . it contains management 's view about industry trends , risks , uncertainties , accounting policies that bancorp views as critical in light of its business , results of operations including discussion of the key performance drivers , financial position , cash flows , commitments and contingencies , important events , transactions that have occurred over the last three years , and forward-looking information , as appropriate . financial statements include consolidated balance sheets as of the end of the last two years , and consolidated statements of income , comprehensive income , changes in stockholders ' equity , and cash flows , for each of the last three years . bancorp 's financial statements are prepared in accordance with us gaap . notes to the financial statements provide insight into , and are an integral part of , the financial statements . the se notes contain explanations of significant accounting policies , details about certain captions on the financial statements , information about significant events or transactions that have occurred , discussions about legal proceedings , commitments and contingencies , and selected financial information relating to business segments . the notes to the financial statements also are prepared in accordance with us gaap . reports related to the financial statements and internal controls over financial reporting include the following : ● a report from kpmg llp , an independent registered public accounting firm , which includes their opinion on the presentation of bancorp 's consolidated financial statements in conformity with us gaap based on their audits ; ● a report from management indicating bancorp 's responsibility for financial reporting and the financial statements ; ● a report from management indicating bancorp 's responsibility for the system of internal control over financial reporting , including an assessment of the effectiveness of those controls ; and ● a report from kpmg llp , which includes their opinion on the effectiveness of bancorp 's internal control over financial reporting . our business stock yards bancorp , inc. was incorporated in 1988 , and its business is substantially the same as that of its wholly owned subsidiary , stock yards bank & trust company . the bank has operated continuously since it opened in 1904. the bank conducted business at one location for 85 years and began branching in 1989. at december 31 , 2017 , the bank had 28 full service banking locations in the louisville msa , 4 full service banking locations in the indianapolis msa , and 5 full service banking locations in the cincinnati msa . bancorp 's focus on flexible , attentive customer service has been key to its growth and profitability . the wide range of services provided by wealth management and trust , investment product sales , and mortgage origination helps support the corporate philosophy of capitalizing on full service customer relationships . forward-looking statements this report contains forward-looking statements under the private securities litigation reform act that involve risks and uncertainties . these forward-looking statements may be identified by the use of words such as “ expect ” , “ anticipate ” , “ plan ” , “ foresee ” , “ believe ” or other words with similar meaning . although bancorp believes assumptions underlying forward-looking statements contained herein are reasonable , any of these assumptions could be inaccurate . factors that could cause actual results to differ from results discussed in forward-looking statements include , but are not limited to : economic conditions both generally and more specifically in markets in which bancorp and its subsidiary operate ; competition for bancorp 's customers from other providers of financial services ; government legislation and regulation which change from time to time and over which bancorp has no control ; changes in interest rates ; material unforeseen changes in liquidity , deterioration in the real estate market , results of operations or financial condition of bancorp 's customers ; or other risks detailed in bancorp 's filings with the securities and exchange commission and item 1a of this form 10-k , all of which are difficult to predict and many of which are beyond the control of bancorp . 13 critical accounting policies bancorp has prepared consolidated financial information in this report in accordance with us gaap . in preparing the consolidated financial statements , bancorp makes estimates and assumptions that affect the reported amount of assets and liabilities , disclosure of contingent assets and liabilities at the date of the financial statements , and the reported amounts of revenue and expenses during the reporting period . there can be no assurances that actual results will not differ from those estimates . management has identified the accounting policy related to the allowance and provision for loan losses as critical to the understanding of bancorp 's results of operations and discussed this conclusion with the audit committee of the board of directors . since the application of this policy requires significant management assumptions and estimates , it could result in materially different amounts to be reported if conditions or underlying circumstances were to change . the provision for loan losses reflects an allowance methodology driven by risk ratings , historical losses , specific loan loss allocations , and qualitative factors . story_separator_special_tag similarly , deposit growth is crucial to funding loans and rates paid on deposits directly impact profitability . new business volume is influenced by economic factors including market interest rates , business spending , consumer confidence and competitive conditions within the marketplace . as a result of near-record loan production and sustained utilization of available lines of credit , bancorp was able to overcome elevated loan pre-payment activity and increase the loan portfolio $ 104 million , or almost 5 % , to $ 2.4 billion as of december 31 , 2017. increasing average rates on interest earning assets , along with the impact of increased volumes on loans contributed to higher interest income for 2017 , as interest income increased $ 8.6 million , or 8 % , over the same period in 2016. deposit growth during 2017 , and more significantly higher funding costs on deposits and borrowings , resulted in an increase in interest expense of $ 2.3 million or 47 % , year over year . bancorp benefited in recent years from historically low costs of funding , so that even a modest increase in interest expense results in a significant percentage change over prior periods . net interest margin in 2017 increased to 3.63 % , as compared with 3.59 % in 2016 despite the continuing pressure of a highly competitive lending environment and increasing rates paid on deposits . total non-interest income increased $ 1.6 million , or 4 % in 2017 , as compared with 2016 , and represented 30 % of total revenues , down slightly from 31 % in 2016. wealth management and trust department ( wm & t ) income , service charges on deposits , treasury management fees , and investment products fees all increased in 2017 over 2016 , with the greatest dollar increase from wm & t . wm & t represents an important part of the relationship focused philosophy of the company and , accordingly , income from the department represents approximately 45 % of total non-interest income for the bancorp . the magnitude of wm & t revenue distinguishes bancorp from other community banks of similar asset size and although the 2017 increase was partially the result of a rising stock market during the year , it also represented a strong year for wm & t in terms of new clients added . higher non-interest expenses for 2017 were primarily the result of increased personnel and technology costs , associated with growth and operational support , and increased amortization and impairment charges for investments in tax credit partnerships as the bancorp increased its commitment to customers pursuing tax-advantaged projects , primarily involving historical redevelopment . bancorp 's efficiency ratio for 2017 of 60.9 % was up from 57.6 % in 2016. for the year ended december 31 , 2017 , bancorp recorded a $ 2.6 million provision for loan losses , compared with $ 3.0 million for the same period in 2016. the provision for loan losses represents a charge to earnings necessary to maintain an allowance for loan losses that , in management 's evaluation , is adequate to provide coverage for the inherent losses on outstanding loans . the decrease in the provision was a reflection of continued historically strong credit quality metrics . bancorp 's allowance for loan losses was 1.03 % of total loans at december 31 , 2017 , compared with 1.04 % of total loans at december 31 , 2016 . 15 bancorp 's effective tax rate increased to 31.1 % in 2017 from 27.1 % in 2016 due to the $ 5.9 million charge to remeasure bancorp 's net deferred tax asset necessitated by tax reform . bancorp anticipates an overall effective tax rate of approximately 17 % in 2018. bancorp invests in certain partnerships that yield federal income tax credits . the tax benefit of these investments exceeds the impairment charge associated with them , resulting in a positive impact on net income . in 2018 , the company expects a lower level of participation in tax-credit partnerships due to reduced investment opportunities . in 2017 bancorp adopted asu 2016-09 “ compensation – stock compensation improvements to employee share-based payment accounting ” . the new standard requires excess tax benefits and deficiencies related to share-based payment awards to be reflected in the statement of operations as a component of the provision for income taxes . in 2017 bancorp recorded a benefit of $ 1.5 million for such tax benefits against the provision for income tax expense . prior to adoption of asu 2016-09 , these tax benefits were recorded directly to additional paid-in capital . as of december 31 , 2017 , the company 's total equity to total assets was 10.30 % compared with 10.33 % at december 31 , 2016. tangible common equity ( tce ) , a non-gaap measure , is a measure of a company 's capital which is useful in evaluating the quality and adequacy of capital . it is calculated by subtracting the value of intangible assets and any preferred equity from bancorp 's stockholders ' equity . the ratio of tangible common equity to total tangible assets was 10.25 % as of december 31 , 2017 , compared with 10.26 % at december 31 , 2016. see the non-gaap financial measures section for details on reconcilement to us gaap measures . challenges for 201 8 will include managing net interest margin , achieving continued loan growth , managing credit quality and adapting to technology changes and evolving customer behavior . ● considering the increase s in short-term interest rates implemented by the federal open market committee and with the expectation of additional increases in 2018 , management anticipates that net interest margins will increase during the coming year . although rising rates should have a positive effect on net interest margin , competitive pressures on rates for loans and deposits will likely result in a continued pressure on the net interest margin for 2018. increased deposit rates will also negatively impact this expectation .
| results of operations net income was $ 38.0 million or $ 1.66 per share on a diluted basis for 2017 compared with $ 41.0 million or $ 1.80 per share for 2016 and $ 37.2 million or $ 1.65 per share for 2015 . 16 net income for 201 7 was positively impacted by : ● a $ 6.3 million , or 7 % increase in net interest income , and ● a $ 1.6 million , or 4 % increase in non-interest income , and ● a $ 450 thousand , or 15 % decrease in provision for loan losses . net income for 201 7 was negatively impacted by : ● an $ 9.5 million , or 12 % increase in non-interest expense ● a $ 1.9 million , or 12 % increase in income tax . the following paragraphs provide a more detailed analysis of significant factors affecting operating results . net interest income net interest income , the most significant component of bancorp 's earnings , represents total interest income less total interest expense . net interest spread is the difference between the taxable equivalent rate earned on average interest earning assets and the rate expensed on average interest bearing liabilities . net interest margin represents net interest income on a taxable equivalent basis as a percentage of average earning assets . net interest margin is affected by both interest rate spread and the level of non-interest bearing sources of funds . the level of net interest income is determined by the mix and volume of interest earning assets , interest bearing deposits and interest bearing liabilities and by changes in interest rates . the discussion that follows is based on tax-equivalent interest data . comparative information regarding net interest income follows : replace_table_token_6_th bp = basis point = 1/100th of a percent all references above to net interest margin and net interest spread exclude the sold portion of certain participation loans from calculations .
| 7,292 |
these statements are based on our current expectations , assumptions , estimates and projections about our business and our industry and involve known and unknown risks , uncertainties and other factors that may cause our company 's or our industry 's results , levels of activity , performance or achievements to be materially different from any future results , levels of activity , performance or achievements expressed or implied in , or contemplated by , the forward-looking statements . words such as “ believe , ” “ anticipate , ” “ expect , ” “ intend , ” “ plan , ” “ focus , ” “ assume , ” “ goal , ” “ objective , ” “ will , ” “ may ” “ would , ” “ could , ” “ estimate , ” “ predict , ” “ project , ” “ target , ” “ potential , ” “ continue , ” “ encouraging ” or the negative of such terms or other similar expressions identify forward-looking statements . our actual results and the timing of events may differ significantly from the results discussed in the forward-looking statements . factors that might cause such a difference include those discussed in “ item 1a . risk factors ” as well as those discussed elsewhere in this annual report on form 10-k. these and many other factors could affect our future financial and operating results . we undertake no obligation to update any forward-looking statement to reflect events after the date of this report . overview exelixis is a biopharmaceutical company committed to developing small molecule therapies for the treatment of cancer . our two most advanced assets are cabozantinib , our wholly-owned inhibitor of multiple receptor tyrosine kinases , and cobimetinib ( gdc-0973/xl518 ) , a potent , highly selective inhibitor of mek , a serine/threonine kinase , which we out-licensed to genentech ( a member of the roche group ) , or genentech . our development and commercialization efforts are focused primarily on cabozantinib . we are evaluating cabozantinib in a broad development program comprising over forty-five clinical trials , across multiple indications , including two ongoing phase 3 pivotal trials focusing on mrcc , and advanced hepatocellular carcinoma , or hcc . cabozantinib was approved by the united states food and drug administration , or fda , on november 29 , 2012 , for the treatment of progressive , metastatic medullary thyroid cancer , or mtc , in the united states under the brand name cometriq ( r ) . cometriq became commercially available in the united states in january 2013. in march 2014 , the european commission granted cabozantinib conditional marketing authorization for the treatment of adult patients with progressive , unresectable locally advanced or metastatic mtc , also under the brand name cometriq . however , as discussed below , we have terminated the clinical development of cabozantinib in metastatic castration-resistant prostate cancer , or mcrpc , as a result of the clinical trials of cabozantinib for this indication not meeting their primary endpoints . our second most advanced oncology asset , cobimetinib , is being evaluated by genentech in a broad development program , including cobrim , a phase 3 pivotal trial evaluating cobimetinib in combination with vemurafenib in previously untreated patients with unresectable locally advanced or metastatic melanoma harboring a braf v600 mutation . on september 29 , 2014 , positive results from this trial were reported at the european society for medical oncology , or esmo , 2014 congress . the trial met its primary endpoint of demonstrating a statistically significant increase in investigator-determined progression-free survival , or pfs . roche has completed the marketing authorization application , or maa , for cobimetinib in combination with vemurafenib in the european union . in the united states , genentech filed its new drug application , or nda , in december 2014 and the fda has granted the nda priority review , with a projected action date of august 11 , 2015. our strategy we believe that the available clinical data demonstrate that cabozantinib has the potential to be a broadly active anti-cancer agent that can make a meaningful difference in the lives of patients . our objective is to build cabozantinib into a significant oncology franchise . the initial regulatory approvals of cometriq for mtc in the united states and european union provide a niche market opportunity that allows us to gain commercialization experience while providing a solid foundation for potential expansion into larger cancer indications . our near-term internal development efforts for cabozantinib are focused on cancers for which we believe cabozantinib has the greatest significant therapeutic and commercial potential . we utilize our cooperative research and development agreement , or crada , with the national cancer institute 's cancer therapy evaluation program , or nci-ctep , and investigator sponsored trials , or ists , to generate additional data , allowing us to prioritize future late stage trials in a cost-effective fashion . we believe that this staged approach to building value represents the most rational and effective use of our resources . 39 beyond our efforts regarding cabozantinib , under the terms of our various collaboration agreements , we are working with our corporate partners to realize the potential value of the compounds and programs we have out-licensed to them . the most notable of these is our cobimetinib collaboration with genentech . in the aggregate , these partnered compounds could potentially be of significant value to us if their development programs progress successfully . for additional information regarding our work with our corporate partners , please see the section entitled cobimetinib collaboration and other collaborations in item 1 - business above . collaborations we have established a collaboration with genentech for cobimetinib and other collaborations with leading pharmaceutical companies , including bristol-myers squibb company , or bristol-myers squibb , sanofi , merck ( known as msd outside of the united states and canada ) and daiichi sankyo company limited , or daiichi sankyo , for compounds and programs in our portfolio . story_separator_special_tag our ability to raise additional capital in the equity and debt markets , should we choose to do so , is dependent on a number of factors , including , but not limited to , the market demand for our common stock , which itself is subject to a number of pharmaceutical development and business risks and uncertainties , as well as the uncertainty that we would be able to raise such additional capital at a price or on terms that are favorable to us . for a description of the factors upon which our capital requirements depend , please see “ – liquidity and capital resources – capital requirements . ” clinical development and commercialization of cabozantinib our primary development and commercialization program is focused on cabozantinib , our wholly-owned inhibitor of multiple receptor tyrosine kinases , currently approved under the brand name cometriq in the united states and the european union for the treatment of metastatic mtc . however , cabozantinib may fail to show adequate safety or efficacy as an anti-cancer drug in clinical testing in other types of cancer . for example , our two phase 3 clinical trials ( comet-1 and comet-2 ) of cabozantinib in men with mcrpc failed to meet their primary endpoints . based on the outcomes of the comet trials , we have terminated the clinical development of cabozantinib in mcrpc , and other studies in mcrpc sponsored by us , including a randomized phase 2 study of cabozantinib in combination with abiraterone , have been halted . furthermore , predicting the timing of the initiation or completion of clinical trials is difficult , and our trials may be delayed due to many factors , including factors outside of our control . the future development path of cabozantinib depends upon the results of each stage of clinical development . we continue to incur significant expenses for the development of cabozantinib as it advances in clinical development . the commercial success of cometriq will depend upon the degree of market acceptance of cometriq among physicians , patients , health care payers , and the medical community . establishing and maintaining sales , marketing , and distribution capabilities are expensive and time-consuming . such expenses may be disproportional compared to the revenues we may be able to generate on sales of cometriq and have an adverse impact on our results of operations . further , if cabozantinib is approved for the treatment of an indication beyond the approved mtc indication , we expect to incur an increase in commercialization expenses in connection with any such approval . convertible senior subordinated notes in august 2012 , we issued and sold $ 287.5 million aggregate principal amount of the 4.25 % convertible senior subordinated notes due 2019 , or the 2019 notes , for net proceeds of $ 277.7 million . the 2019 notes mature on august 15 , 2019 , unless earlier converted , redeemed or repurchased , and bear interest at a rate of 4.25 % per annum , payable semi-annually in arrears on february 15 and august 15 of each year , beginning february 15 , 2013 . subject to certain terms and conditions , at any time on or after august 15 , 2016 , we may redeem for cash all or a portion of the 2019 notes . the redemption price will equal 100 % of the principal amount of the 2019 notes to be redeemed plus accrued and unpaid interest , if any , to , but excluding , the redemption date . upon the occurrence of certain circumstances , holders may convert their 2019 notes prior to the close of business on the business day immediately preceding may 15 , 2019 . on or after may 15 , 2019 , until the close of business on the second trading day immediately preceding august 15 , 2019 , holders may surrender their 2019 notes for conversion at any time . upon conversion , we will pay or deliver , as the case may be , cash , shares of our common stock or a combination of cash and shares of our common stock , at our election . the initial conversion rate of 188.2353 shares of common stock per $ 1,000 principal amount of the 2019 notes is equivalent to a conversion price of approximately $ 5.31 per share of common stock and is subject to adjustment in connection with certain events . if a fundamental change , as defined in the indenture governing the 2019 notes , occurs , holders of the 2019 notes may require us to purchase for cash all or any portion of their 2019 notes at a purchase price equal to 100 % of the principal amount of the notes to be purchased plus accrued and unpaid interest , if any , to , but excluding , the fundamental change purchase date . in addition , if certain specified bankruptcy and insolvency-related events of default occur , the principal of , and accrued and unpaid interest on , all of the then 41 outstanding notes will automatically become due and payable . if an event of default other than certain specified bankruptcy and insolvency-related events of default occurs and is continuing , the trustee by notice to us or the holders of at least 25 % in principal amount of the outstanding 2019 notes by notice to us and the trustee , may declare the principal of , and accrued and unpaid interest on , all of the then outstanding 2019 notes to be due and payable . in connection with the offering of the 2019 notes , $ 36.5 million of the proceeds were deposited into an escrow account which contains an amount of permitted securities sufficient to fund , when due , the total aggregate amount of the first six scheduled semi-annual interest payments on the 2019 notes . as of december 31 , 2014 , we have used $ 24.5 million of the amount held in the escrow account to pay the required semi-annual interest payments .
| fiscal year convention exelixis has adopted a 52- or 53-week fiscal year that generally ends on the friday closest to december 31st . fiscal year 2012 , a 52-week year , ended on december 28 , 2012 , fiscal year 2013 , a 52-week year , ended on december 27 , 2013 , fiscal year 2014 , a 53-week year , ended on january 2 , 2015 and fiscal year 2015 , a 52-week year , will end on january 1 , 2016. for convenience , references in this report as of and for the fiscal years ended december 28 , 2012 , december 27 , 2013 and january 2 , 2015 , are indicated on a calendar year basis , ended december 31 , 2012 , 2013 and 2014 , respectively . results of operations – comparison of years ended december 31 , 2014 , 2013 and 2012 revenues total revenues by category were as follows ( dollars in thousands ) : replace_table_token_5_th ( 1 ) includes amortization of upfront payments . ( 2 ) includes contingent and milestone payments . product revenues relate to the sale of cometriq . the increase in gross product revenues reflects the continued ramp up in sales of cometriq following its commercial launch in the united states in january 2013. for domestic sales , we utilize the sell-through method to recognize product revenue . once we have established enough history to reliably estimate expected returns of the product and the discounts and rebates due to payers , we expect to switch to the sell-in method which would result in the one-time recognition of deferred revenues attributable to sales to the specialty pharmacy that sells cometriq in the united states . for foreign sales , we utilize the sell-in method to recognize product revenue . in january 2015 , we amended and restated our distribution and commercialization agreement with sobi .
| 7,293 |
see “ forward-looking statements ” at the beginning of this annual report . basis of presentation during the fourth quarter of 2018 , the company initiated a strategic plan to sell its cict segment , which was completed in the first quarter of 2019. effective december 31 , 2018 , the company classified the assets , liabilities , and results of operations for this segment as “ discontinued operations ” for all periods presented . during the fourth quarter of 2016 , the company initiated a strategic restructuring of its business to enable a greater focus on its core businesses in energy chemistry and consumer and industrial chemistry . during 2017 , the company completed the sale of substantially all of the assets and transfer of certain specified liabilities and obligations of each of the drilling technologies and production technologies segments . the results of operations of these segments are presented as “ income from discontinued operations ” in the statement of operations and the related cash flows of these segments has been reclassified to discontinued operations for all periods presented . the assets and liabilities of these segments have been reclassified to “ assets held for sale ” and “ liabilities held for sale ” , respectively , in the consolidated balance sheet for all periods presented , as applicable . executive summary flotek is a global , technology-driven company that develops and supplies chemistries and services to the oil and gas industries . flotek also supplied high value compounds to companies that make food and beverages , cleaning products , cosmetics , and other products that are sold in consumer and industrial markets , classified as discontinued operations at december 31 , 2018. flotek operates in seven domestic and international markets . the company 's business includes specialty chemistries and logistics which enable its customers to pursue improved efficiencies in the drilling and completion of their wells . customers include major integrated oil and gas oil and gas companies , oilfield services companies , independent oil and gas companies , pressure-pumping service companies , and national and state-owned oil companies . additionally , the company also provides automated bulk material handling , loading facilities , and blending capabilities . continuing operations the operations of the company are categorized into one reportable segment : energy chemistry technologies . energy chemistry technologies designs , develops , manufactures , packages , and markets specialty chemistries used in oil and gas well drilling , cementing , completion , and stimulation . these technologies developed by flotek 's research and innovation team enable customers to pursue improved efficiencies in the drilling and completion of wells . discontinued operations in 2018 , the cict segment qualified for classification as a discontinued operation . the drilling technologies and production technologies segments were sold during 2017 and are classified as discontinued operations , as well . market conditions the company 's success is sensitive to a number of factors , which include , but are not limited to , drilling and well completion activity , customer demand for its advanced technology products , market prices for raw materials , and governmental actions . drilling and well completion activity levels are influenced by a number of factors , including the number of rigs in operation and the geographical areas of rig activity . additional factors that influence the level of drilling and well completion activity include : historical , current , and anticipated future oil and gas prices , federal , state , and local governmental actions that may encourage or discourage drilling activity , customers ' strategies relative to capital funds allocations , weather conditions , and technological changes to drilling and completion methods and economics . customers ' demand for advanced technology products and services provided by the company are dependent on their recognition of the value of : chemistries that improve the economics of their oil and gas operations , and chemistries that are economically viable , socially responsible , and ecologically sound . market prices for commodities , including citrus oils , can be influenced by : 18 historical , current , and anticipated future production levels of the global citrus ( primarily orange ) crops , weather related risks , health and condition of citrus trees ( e.g. , disease and pests ) , international competition and pricing pressures resulting from natural and artificial pricing influences , and market demand for orange juice . governmental actions may restrict the future use of hazardous chemicals , including , but not limited to , the following industrial applications : oil and gas drilling and completion operations , oil and gas production operations , and non-oil and gas industrial solvents . the chart below reflects the trend of total completions , drilling but uncompleted wells ( “ ducs ” ) and rig count over the last three years . source : rig counts and ducs are per baker hughes ( www.bakerhughes.com ) ; rig counts are the annual average of the reported weekly rig count activity . completions are per the u.s. energy information administration ( https : www.eia.gov/petroleum/drilling/ ) as of january 21 , 2020 . 19 outlook for 2020 the current consensus is there will be further softening in the u.s. onshore oil and gas market in 2020. however , we believe an increase in the adoption of specialty chemicals could more than offset the decrease in drilling and completions activity . our key sales focus is growing market share by improving returns for our current customers , rebuilding relationships with past customers and identifying new customers that could benefit from our chemistry solutions . additionally , we are catalyzing focus on total cost of recovery per boe , rather than initial cost , as well as strengthening the publicly available evidence for the efficacy of using advanced cnf® products to materially impact oil and gas recovery and profitability for operators . story_separator_special_tag as all available evidence should be taken into consideration when 22 assessing the need for a valuation allowance , the subsequent events that occurred in the first quarter of 2019 provided a source of income to support the release of $ 11.5 million of the valuation allowance . as such , the company reversed this portion of the valuation allowance during the fourth quarter of 2018. during the fourth quarter of 2018 , the company initiated a strategic plan to sell its consumer and industrial chemistry technologies segment , which was completed in the first quarter of 2019. the company recorded net income from discontinued operations of $ 2.7 million for the year ended december 31 , 2018 for the classification of this segment as held for sale . the sale was completed during the first quarter of 2019 as expected . results by segment replace_table_token_4_th results for 2019 compared to 2018 —energy chemistry technologies ect revenue for the year ended december 31 , 2019 , decreased $ 58.4 million , or 32.9 % , from 2018 . ect 's under-performance when compared to these market indicators were primarily attributable to product mix and continued volatile macro-environment for u.s. onshore drilling and completion activity , the transition of personnel in the company 's sales organization as well as the ongoing transition related to the company selling progressively more to oil and gas company end users rather than through energy service companies . income from operations for the ect segment decreased $ 9.7 million for the year ended december 31 , 2019 , compared to 2018 . this decrease is primarily a result of the loss on the terpene supply agreement , excess and obsolete inventory costs , lower plant utilization and a one-time charge related to the termination of an operations related contract . the loss is partially offset by improved logistical and supply chain costs , lower inventory adjustments , and decreased headcount , partially offset by lower plant utilization and a one-time charge related to the termination of an operations related contract . results for 2018 compared to 2017 —energy chemistry technologies ect revenue for the year ended december 31 , 2018 , decreased $ 65.3 million , or 26.9 % from 2017. ect 's under-performance when compared to these market indicators was primarily attributable to product mix and an ongoing transition related to the company selling progressively more to oil and gas company end users rather than through energy service companies . income from operations for the ect segment decreased $ 70.4 million for the year ended december 31 , 2018 , compared to 2017 , partially due to the $ 37.2 million goodwill impairment charge taken in the second quarter of 2018. income from operations , excluding impairment , decreased $ 33.2 million , or 98.9 % , for the year ended december 31 , 2018 , compared to 2017. this decrease is primarily a result of gross margin compression caused by reduced sales activity coupled with increases in material and labor costs , inventory reserve adjustments , and higher logistics expenditures , partially offset by a reduction in overhead expenses . discontinued operations during the fourth quarter of 2018 , the company initiated a strategic plan to sell its consumer and industrial chemistry technologies segment , which was completed in the first quarter of 2019. during 2017 , the company completed the sale or disposal of the assets and transfer or liquidation of liabilities and obligations of the drilling technologies and production technologies segments . 23 replace_table_token_5_th results for 2019 compared to 2018 —consumer and industrial chemistry technologies cict revenue for the year ended december 31 , 2019 , decreased $ 61.3 million , or 84.8 % , from 2018 , primarily due to the sale of the segment as of february 28 , 2019. income from operations for the cict segment decreased $ 3.7 million , or 120.0 % , for the year ended december 31 , 2019 , from 2018 , primarily due to the sale of the segment as of february 28 , 2019. results for 2018 compared to 2017 —consumer and industrial chemistry technologies cict revenue for the year ended december 31 , 2018 , decreased $ 1.6 million , or 2.2 % , from 2017 , primarily due to a decline in the value of terpenes and some softness for flavor ingredients . the market of citrus oils was affected by the historic high prices experienced in 2017 and 2018 , which limited market activity and top line revenue . citrus greening reduced citrus crops globally , thereby limiting the company 's performance in comparison to the growth experienced in 2016 and 2017. income from operations for the cict segment decreased $ 4.4 million , or 59.1 % , for the year ended december 31 , 2018 , from 2017 , primarily due to higher raw material costs and reduced by-product sales , as well as increased expenses related to operations of the new still put into production in the third quarter of 2018. replace_table_token_6_th results for 2018 compared to 2017 —drilling technologies on may 22 , 2017 , the company completed the sale of substantially all of the assets and transfer of certain specified liabilities and obligations of the company 's drilling technologies segment to national oilwell varco , l.p. ( “ nov ” ) for $ 17.0 million in cash consideration . on august 16 , 2017 , the company completed the sale of substantially all of the remaining assets of the company 's drilling technologies segment to galleon mining tools , inc. for $ 1.0 million in cash consideration and a note receivable of $ 1.0 million due in one year . upon completion of these sales , the company ceased all operations for the drilling technologies segment .
| results for 2019 compared to 2018 —consolidated consolidated revenue for the year ended december 31 , 2019 , decreased $ 58.4 million , or 32.9 % , from 2018 . the decrease in revenue was due to changes in product mix and continued volatile macro-environment for u.s. onshore drilling and completion activity , the transition of personnel in the company 's sales organization as well as the ongoing transition related to the company selling progressively more to oil and gas company end users rather than through energy service companies . consolidated operating expenses for the year ended december 31 , 2019 , decreased $ 10.6 million , or 6.6 % , from 2018 , and , as a percentage of revenue , increased to 125.0 % for the year ended december 31 , 2019 , from 89.9 % in 2018 . the decrease in expenses was primarily attributable to decreased sales , improved logistical and supply chain costs , lower inventory adjustments , and decreased headcount , partially offset by the loss on the purchase commitment associated with the terpene supply agreement , excess and obsolete inventory costs , lower plant utilization and a one-time charge related to the termination of an operations related contract . corporate general and administrative ( “ cg & a ” ) expenses are not directly attributable to products sold or services provided . cg & a costs decreased $ 3.5 million , or 11.1 % , for the year ended december 31 , 2019 , from 2018 . as a percentage of revenue , cg & a rose from 17.7 % to 23.4 % for the year ended december 31 , 2019 , compared to 2018 .
| 7,294 |
overview of business the company is one of the world 's largest producers of high‑performance nickel‑ and cobalt‑based alloys in flat product form , such as sheet , coil and plate . the company is focused on developing , manufacturing , marketing and distributing technologically advanced , high‑performance alloys , which are used primarily in the aerospace , chemical processing and industrial gas turbine industries . the global specialty alloy market consists of three primary sectors : stainless steel , general purpose nickel alloys and high‑performance nickel and cobalt‑based alloys . the company competes primarily in the high‑performance nickel and cobalt‑based alloy sector , which includes high‑temperature resistant alloys , or hta products , and corrosion‑resistant alloys , or cra products . the company believes it is one of the principal producers of high‑performance alloy flat products in sheet , coil and plate forms . the company also produces its products as seamless and welded tubulars and in bar , billet and wire forms . the company has manufacturing facilities in kokomo , indiana ; arcadia , louisiana ; and mountain home , north carolina . the kokomo facility specializes in flat products , the arcadia facility specializes in tubular products and the mountain home facility specializes in wire products . the company distributes its products primarily through its direct sales organization , which includes 13 service and or sales centers in the united states , europe and asia . all of these centers are company‑operated . 32 overview of markets the following table includes a breakdown of net revenues , shipments and average selling prices to the markets served by the company for the periods shown . replace_table_token_9_th ( 1 ) other revenue consists of toll conversion , royalty income , scrap sales and revenue recognized from the timet agreement ( see note 15 in the notes to the consolidated financial statements ) . other revenue does not have associated shipment pounds . ( 2 ) total product price per pound excludes “ other revenue ” . aerospace sales moderated in fiscal 2016 after improving in fiscal 2015 subsequent to decreasing in fiscal 2013 and 2014. the declines in fiscal 2013 and 2014 were due to aerospace demand being negatively impacted by customer destocking within the supply chain . this period of low demand began to recover in the latter half of fiscal 2014 , and the recovery continued through fiscal 2015 which proved to be a record year in volume for the company in aerospace shipments . aerospace sales moderated in fiscal 2016 due to delays in the transition to new engine platforms combined with some softness in demand driven by lower oil and fuel costs . underpinning the demand for the new engines is a desire for fuel efficiency , which was tempered with the lower fuel prices . we consider the tempered demand temporary as both boeing and airbus have reported sizeable backlog increases along with forecasted increases in production schedules and continued emphasis on accelerating production . demand for more fuel‑efficient engines with fewer emissions is driving new engine builds . management also anticipates that the maintenance , repair and overhaul business will continue at a steady to increasing pace due to required maintenance schedules for the rising number of engines in use year‑over‑year . sales to the chemical processing industry have declined each year over fiscals 2013 , 2014 , 2015 and 2016. sales to this market in fiscal 2015 and the second half of fiscal 2016 included some high-value special application projects with high average selling prices per pound , but overall volumes in this market were low in both fiscal 2015 and 2016 compared to prior years . demand for large-volume , project‑based orders has been at relatively low levels during the past several years . the main driver of demand in this market is capital spending in the chemical processing sector driven by end‑user demand for housing , automotive , energy and agricultural products . the chemical processing market is sensitive to oil prices , currency fluctuations and fiscal policies as well as world economic conditions and gdp growth . potential for 33 increased sales to the chemical processing industry in fiscal 2017 will be dependent on improvement in global spending in the chemical processing sector . an additional driver of demand in this market is the increase in north american production of natural gas liquids and the further downstream processing of those chemicals that may utilize equipment that requires high‑performance alloys . sales to the industrial gas turbine market ( formerly referred to as land-based gas turbine market ) peaked in fiscal 2012 and have decreased over fiscals 2013 , 2014 , 2015 and 2016. however , fiscal 2012 and 2013 were two of the company 's best years for industrial gas turbine sales volume . subject to global economic conditions , management believes that long‑term demand in this market will increase due to higher activity in power generation and alternative power systems . industrial gas turbines are favored in electric generating facilities due to low capital cost at installation , fewer emissions than the traditional fossil fuel‑fired facilities and favorable natural gas prices provided by availability of unconventional ( shale ) gas supplies . as governmental policy shifts away from coal‑fired facilities , demand for industrial gas turbines is expected to increase . sales into the other markets category moderated in fiscal 2016 after improving in fiscal 2015 subsequent to decreasing in fiscal 2013 and 2014. sales to this market in fiscal 2015 included some high-value special application projects with high average selling prices per pound . the industries in this category focus on upgrading overall product quality , improving product performance through increased efficiency , prolonging product life and lowering long‑term costs . companies in these industries are looking to achieve these goals through the use of “ advanced materials ” which supports the increased use of high‑performance alloys in an expanding number of applications . story_separator_special_tag partially offsetting the less profitable mix , gross margin was strengthened due to decreased nickel compression in the fourth quarter as compared to the second and third quarters . assuming nickel prices remain stable , the company does not expect nickel compression to have a material impact on gross margins as we move into fiscal 2017 . 35 working capital controllable working capital , which includes accounts receivable , inventory , accounts payable and accrued expenses , was $ 255.4 million at september 30 , 2016 , a decrease of $ 22.1 million or 8.0 % from $ 277.5 million at september 30 , 2015. this decrease of $ 22.1 million includes a decrease in accounts receivable of $ 14.0 million and a decrease in inventory of $ 11.3 million , partially offset by a decrease in accounts payable and accrued expenses of $ 3.2 million . dividends declared on november 17 , 2016 , the company announced that the board of directors declared a regular quarterly cash dividend of $ 0.22 per outstanding share of the company 's common stock . the dividend is payable december 15 , 2016 to stockholders of record at the close of business on december 1 , 2016. the aggregate cash payout based on current shares outstanding will be approximately $ 2.7 million , or approximately $ 11.0 million on an annualized basis . backlog set forth below is information relating to the company 's backlog , and the 30‑day average nickel price per pound as reported by the london metals exchange . this information should be read in conjunction with the consolidated financial statements and related notes thereto and the remainder of the “ management 's discussion and analysis of financial condition and results of operations ” included in this annual report on form 10‑k . replace_table_token_12_th ( 1 ) represents the average price for a cash buyer as reported by the london metals exchange for the 30 days ending on the last day of the period presented . backlog was $ 168.3 million at september 30 , 2016 , a decrease of approximately $ 18.8 million , or 10.1 % , from $ 187.2 million at june 30 , 2016. the backlog dollars decreased during the fourth quarter of fiscal 2016 due to a 7.4 % decrease in backlog average selling price combined with a 2.9 % decrease in backlog pounds . the primary driver for the reduction in backlog was lower order entry combined with the shipment of large projects . during fiscal 2016 , the backlog decreased by $ 17.4 million , or 9.4 % , from $ 185.8 million at september 30 , 2015 to $ 168.3 million at september 30 , 2016 due to a 7.6 % decrease in backlog pounds combined with a 1.9 % decrease in backlog average selling price . management believes that the decline in the backlog reflects global economic concerns and a temporary slowing of industrial demand . 36 quarterly market information replace_table_token_13_th 37 story_separator_special_tag 8pt ; text-indent:36pt ; text-align : justify ; text-justify : inter-ideograph ; font-family : times new roman , times , serif ; font-size : 10pt ; '' > cost of sales . cost of sales was $ 358.8 million , or 88.3 % of net revenues , in fiscal 2016 compared to $ 394.0 million , or 80.8 % of net revenues , in fiscal 2015. cost of sales in fiscal 2016 decreased by $ 35.2 million as compared to fiscal 2015 primarily due to lower volume , partially offset by a higher-value product mix sold . gross profit . as a result of the above factors , gross margin was $ 47.6 million for fiscal 2016 , a decrease of $ 46.1 million from $ 93.7 million in fiscal 2015. gross margin as a percentage of net revenue decreased to 11.7 % in fiscal 2016 as compared to 19.2 % in fiscal 2015. the decrease is primarily attributable to a less-profitable mix of products sold in fiscal 2016 related to the lower sales of specialty application projects and falling nickel prices . falling nickel prices created compression on gross margins due to pressure on selling prices from lower nickel prices , combined with higher cost of sales as the company sold the higher-cost inventory melted in a prior period with higher nickel prices . selling , general and administrative expense . selling , general and administrative expense was $ 39.7 million for fiscal 2016 , a decrease of $ 2.9 million , or 6.8 % , from $ 42.6 million in fiscal 2015. the decrease in expense was primarily driven by lower management incentive compensation expense in fiscal 2016. selling , general and administrative expenses as a percentage of net revenues increased to 9.8 % for fiscal 2016 , compared to 8.7 % for fiscal 2015. research and technical expense . research and technical expense was $ 3.7 million , or 0.9 % of revenue , for fiscal 2016 , compared to $ 3.6 million , or 0.7 % of net revenue , in fiscal 2015. operating income . as a result of the above factors , operating income in fiscal 2016 was $ 4.2 million , compared to operating income of $ 47.5 million in fiscal 2015. income taxes . a benefit from income taxes of $ 1.3 million was incurred in fiscal 2016 compared to expense of $ 16.7 million in fiscal 2015 , resulting in a difference of $ 18.0 million . the tax benefit realized in fiscal 2016 is primarily attributable to an increase in deferred tax assets as a result of an increase in the company 's blended state tax rate . the increased state tax rate had an approximately $ 1.8 million benefit to income taxes . additionally , the company recognized a research and development tax credit that had a $ 0.8 million tax benefit partially offset by an unfavorable tax adjustment of $ 0.3 million as a result of a federal tax law that was enacted during the year . net income .
| results of operations year ended september 30 , 2016 compared to year ended september 30 , 2015 ( $ in thousands , except per share figures ) replace_table_token_14_th 38 the following table includes a breakdown of net revenues , shipments and average selling prices to the markets served by the company for the periods shown . by market replace_table_token_15_th net revenues . net revenues were $ 406.4 million in fiscal 2016 , a decrease of 16.7 % from $ 487.6 million in fiscal 2015 , due to a decrease in average selling price per pound combined with a decrease in volume . the average product selling price was $ 21.31 per pound in fiscal 2016 , a decrease of 6.3 % , or $ 1.44 , from $ 22.75 per pound in fiscal 2015. volume was 18.0 million pounds in fiscal 2016 , a decrease of 11.3 % from 20.3 million pounds in fiscal 2015 with reductions in the aerospace , chemical processing and other markets . average product selling price decreased due to a combination of the following factors : lower raw material market prices , which decreased average selling price by approximately $ 1.29 per pound , and increased pricing competition , which decrease average selling price by approximately $ 0.50 per pound , partially offset by a change to a higher-value product mix , which increased average product selling price by approximately $ 0.35 per pound . sales to the aerospace market were $ 197.4 million in fiscal 2016 , a decrease of 8.2 % from $ 215.1 million in fiscal 2015 , due to a 5.7 % decrease in volume combined with a 2.7 % , or $ 0.63 , decrease in the average selling price per pound . the decrease in volume reflects supply chain adjustments as the transition to new generation engines progresses .
| 7,295 |
the update also removes the present requirement to delay recognition of an excess tax benefit until it reduces current taxes payable , instead , it is required to be recognized at the time of settlement , subject to normal valuation allowance considerations . this story_separator_special_tag the following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the notes to those financial statements appearing elsewhere in this annual report on form 10-k. this discussion contains forward-looking statements that involve significant risks and uncertainties . as a result of many factors , such as those set forth under “ risk factors ” in part i , item 1a of this annual report on form 10-k , our actual results may differ materially from those anticipated in these forward-looking statements . overview we are a specialty pharmaceutical company focused on the development , manufacture and commercialization of pharmaceutical products , based on our proprietary depofoam extended release drug delivery technology , for use primarily in hospitals and ambulatory surgery centers . as of december 31 , 2016 , our product portfolio includes two commercial stage products—exparel® and depocyt ( e ) , and two earlier-stage compounds—depotranexamic acid , or depotxa and depomeloxicam , or depomlx . exparel is a liposome injection of bupivacaine , an amide-type local anesthetic indicated for single-dose administration into the surgical site to produce postsurgical analgesia . exparel was approved by the united states food and drug administration , or fda , on october 28 , 2011 and commercially launched in april 2012. we drop-ship exparel directly to end users based on orders placed to wholesalers or directly to us . we do not have any product held by wholesalers . depocyt ( e ) is a sustained release liposomal formulation of the chemotherapeutic agent cytarabine and is indicated for the intrathecal treatment of lymphomatous meningitis . depocyt ( e ) was granted accelerated approval by the fda in 1999 and full approval in 2007. we sell depocyt ( e ) to our commercial partners located in the united states and europe . since our inception , we have incurred significant operating losses . we expect to continue to incur significant expenses as we further commercialize exparel ; pursue expanded uses of exparel in additional indications and opportunities ; advance the development of depofoam-based product candidates , such as depomlx and depotxa ; seek fda approval for our product candidates that successfully complete clinical trials ; develop our sales force and marketing capabilities to prepare for their commercial launch ; expand and enhance our manufacturing capacity for exparel and support regulatory and legal matters . recent highlights and developments total revenues increased $ 27.4 million , or 11 % , in the year ended december 31 , 2016 , as compared to 2015 , primarily driven by exparel product sales of $ 265.8 million , net of allowances for sales returns , prompt payment discounts , volume rebates , chargebacks and distribution service fees payable to wholesalers . in march 2017 , we announced positive top-line results from a phase 4 multicenter , randomized , double-blind , controlled , parallel group trial in patients undergoing a primary unilateral tka . the trial compared exparel-based local analgesia infiltration to standard bupivacaine-based local analgesia infiltration , each as part of a standard multi-modal analgesic protocol . patients were randomized to receive local infiltration analgesia with exparel admixed with bupivacaine and expanded in volume to local infiltration analgesia with bupivacaine expanded in volume . the trial met its co-primary endpoints for postsurgical pain control ( p=0.0381 ) and opioid reduction ( p=0.0048 ) . we plan to report the statistical results for certain key secondary endpoints from this study in the first quarter of 2017. the full results will be submitted for publication in a peer-reviewed medical journal . in february 2017 , we received an issue notification from the united states patent and trademark office stating that a patent relating to product-by-process and process claims in connection with the production of multivesicular liposomes will issue on march 7 , 2017. this patent will be listed on the orange book for exparel , and includes a patent term adjustment that equates to an expiration date of december 24 , 2021. for further discussion , see “ intellectual property and exclusivity ” in item 1 . “ business ” included in this report . in january 2017 , we announced the initiation of an agreement with depuy synthes sales , inc. , or depuy synthes , to market and promote the use of exparel for orthopedic procedures in the united states market . depuy synthes field representatives , specializing in joint reconstruction , spine , sports medicine and trauma , will collaborate with , and supplement our field teams by expanding the reach and frequency of exparel education in the hospital surgical suite and ambulatory surgery center settings . we believe our collaboration with depuy synthes will 49 accelerate and enhance our education and training efforts with orthopedic customers as we aim to broaden and strengthen the adoption and use of exparel . in addition to supporting depuy synthes , we will focus on soft tissue surgeons in key specialties and anesthesiologists , and continue to act as the overall exparel account manager . in 2016 , we recorded a $ 20.7 million charge to cost of goods sold related to a stability out-of-specification test batch of exparel . in october 2016 , as part of our routine stability monitoring , it came to our attention that one of two test batches of exparel made in early 2016 had fallen slightly ( 1 % ) out of specification for one of the 21 acceptance criteria . all other test attributes , many of which we believe are the most indicative of the product 's performance and quality , are within specification and trending according to shelf life expectations . the other stability test batch remains fully within specifications . story_separator_special_tag a product designed for single-dose local administration such as depomlx could provide a longer duration of pain relief at a significantly lower concentration of systemic nsaids , which are known to cause dose-dependent gastrointestinal side effects . meloxicam , which is currently available as an oral formulation , is a commonly used nsaid on the market today . we expect our customer audience for this drug to be similar to the target for exparel infiltration . we expect to submit an investigational new drug application and subsequently initiate a phase 1 clinical trial of depomlx in 2017. results of operations comparison of years ended december 31 , 2016 , 2015 and 2014 revenues our net product sales primarily include sales of exparel in the united states and depocyt ( e ) in the united states and europe . we also earn royalties based on sales by commercial partners of depocyt ( e ) and license fees and milestone payments from third parties . the following table provides information regarding our revenues during the periods indicated , including percent changes ( dollar amounts in thousands ) : replace_table_token_7_th 51 exparel revenue grew 11 % and 27 % in the years ended december 31 , 2016 and 2015 , respectively , primarily due to increases in sales volume of 10 % and 21 % in each respective period . the demand for exparel has continued as a result of new accounts and growth within existing accounts , which has been driven by continued adoption of exparel use in soft tissue and orthopedic procedures . the remaining increase in exparel revenue was due to 5 % price increases in april 2015 and may 2014 , partially offset by lower pricing on government sales from our participation in the federal supply schedule beginning in the third quarter of 2015. depocyt ( e ) and other product sales decreased 8 % in 2016 primarily due to fewer depocyt ( e ) lots sold to our domestic commercial partners compared to 2015 , partially offset by net sales of bupivacaine liposome injectable suspension to serve animal health indications . depocyt ( e ) product sales decreased 7 % in 2015 primarily due to the decrease in the value of the euro reflected in european sales and a decrease in domestic depocyt ( e ) sales volume . the increase in collaborative licensing and milestone revenue of 140 % in 2016 compared to 2015 was a result of $ 2.0 million in milestones earned under our agreement with aratana therapeutics , inc. , or aratana , for the development and commercialization of bupivacaine liposome injectable suspension for animal health indications . the increase in collaborative licensing and milestone revenue of 11 % in 2015 versus 2014 was primarily driven by a full versus a partial year of amortized revenue on an $ 8.0 million upfront payment received in may 2014 from mundipharma international corporation limited , or mundipharma . the payment , which is being recognized on a straight-line basis over the contractual term expiring in june 2033 , was consideration for extending the term of the existing supply and distribution agreements and expanding the territory where mundipharma can market and distribute depocyte . royalty revenue primarily reflects royalties earned on collections of end user sales of depocyt ( e ) by our commercial partners . cost of goods sold cost of goods sold primarily relates to the costs to produce , package and deliver our products to customers . these expenses include labor , raw materials , manufacturing overhead and occupancy costs , depreciation of facilities , royalty payments , quality control and engineering . the following table provides information regarding cost of goods sold during the periods indicated , including our gross margin percentage ( dollar amounts in thousands ) : replace_table_token_8_th the 11 percentage point decrease in our gross margins in 2016 versus 2015 primarily reflects $ 20.7 million for inventory and related reserves for the cost of exparel batches impacted by a routine stability test that did not meet required specifications and for replacement product and other related costs . we also had a higher exparel manufacturing cost per vial due to lower planned production , partially offset by a shift to utilizing a portion of our manufacturing lines in support of new pipeline product development opportunities at our science center campus in san diego , california starting mid-year 2015. in addition , gross margins decreased due to higher costs of $ 3.0 million related to expansion of our manufacturing capacity in swindon , england , in partnership with patheon u.k. limited , or patheon and increases of $ 2.9 million for unplanned manufacturing shutdown charges in 2016 versus 2015. despite an increase in annual sales volume during 2015 of 21 % , the 7 % decrease in cost of goods sold versus 2014 was due to a lower manufacturing cost per vial , driven by increased utilization of our exparel manufacturing facility located in san diego , california , along with the absence of manufacturing line start-up costs which were incurred during 2014. in 2015 , the full-year benefit of additional capacity from the 2014 introduction of two new manufacturing lines dedicated to exparel and higher production contributed to the increased utilization of our facilities and lower manufacturing costs per vial , which is reflected in the improvement of our gross margin to 71 % in 2015 versus 61 % in 2014. the improvements in lower manufacturing costs per vial and gross margin percentage were sustained in spite of unplanned shutdown costs of $ 3.0 million during 2015. research and development expenses research and development expenses consist primarily of costs attributable to clinical trials and related outside services , stock-based compensation expenses and other research and development costs , including phase 4 trials that are required as a 52 condition of fda approval or are conducted to generate new data such as dosing and administration techniques .
| summary of cash flows the following table summarizes our cash flows from operating , investing and financing activities for the years ended december 31 , 2016 , 2015 and 2014 ( in thousands ) : 55 replace_table_token_13_th operating activities in 2016 , net cash provided by operating activities was $ 33.5 million , which largely resulted from an 11 % increase in exparel net product sales and $ 2.0 million in milestones earned under our agreement with aratana . our operating loss of $ 37.9 million was more than offset by non-cash expenses of $ 49.1 million , including $ 31.2 million of stock-based compensation , $ 17.5 million of depreciation and amortization expense and $ 22.3 million of funds provided by net changes in our operating assets and liabilities . these net changes included a $ 30.4 million decrease in inventory due to a $ 20.5 million charge for inventory that did not meet routine stability test specifications and a $ 9.9 million decrease in our inventory investment , partially offset by increases of $ 4.1 million in accounts receivable and prepayments for clinical trials of $ 3.2 million . in 2015 , net cash provided by operating activities was $ 28.0 million , which largely resulted from increased revenues and improved gross margins versus 2014. positive cash flow from operations reflected net income of $ 1.9 million plus $ 49.5 million in add backs of non-cash expenses comprised of $ 33.4 million of stock-based compensation and $ 16.1 million of depreciation and amortization , partially offset by a $ 23.3 million net investment in operating assets and liabilities , including a substantial investment in inventory . both net income and cash flow were negatively impacted by legal expenses related to the warning letter issued by the opdp in september 2014 , the related fda lawsuit which was amicably resolved in december 2015 and the doj inquiry .
| 7,296 |
in establishing an allowance for doubtful accounts , the company evaluates its contract receivables and costs in excess of billings and thoroughly reviews historical collection experience , the financial condition of its customers , billing disputes and other factors . the company writes off uncollectible accounts receivable against the allowance for doubtful accounts if it is determined that the amounts will not be collected or if a settlement is reached for an amount that is less than the carrying value . as of december 31 , 2016 and december 31 , 2015 , the company had not recorded an allowance for doubtful story_separator_special_tag the following discussion and analysis of our financial condition and results of operations is based on and should be read in conjunction with our consolidated financial statements and the accompanying notes beginning on page f-1 of this annual report on form 10-k. certain statements made in our discussion may be forward-looking . forward-looking statements involve risks and uncertainties and a number of other factors that could cause actual results or outcomes to differ materially from our expectations . see “ forward-looking statements ” at the beginning of this annual report on form 10-k for additional discussion of some of these risks and uncertainties . unless the context requires otherwise , when we refer to “ we ” , “ us ” and “ our ” , we are describing orion group holdings , inc. and its consolidated subsidiaries . overview orion group holdings , inc. , its subsidiaries and affiliates ( hereafter collectively referred to as the `` company '' ) , is a leading specialty construction company in the building , industrial , and infrastructure sectors in the continental united states , alaska , canada , and the caribbean basin through its heavy civil marine construction and its commercial concrete construction segments . the company 's heavy civil marine construction segment services include marine transportation facility construction , marine pipeline construction , marine environmental structures , dredging of waterways , channels and ports , environmental dredging , design , and specialty services . its commercial concrete construction segment provides turnkey concrete construction services including pour and finish , dirt work , layout , forming , rebar , and mesh across the light commercial structural and other associated business areas . the company is headquartered in houston , texas with offices throughout its operating areas . our contracts are obtained primarily through competitive bidding in response to “ requests for proposals ” by federal , state and local agencies and through negotiation and competitive bidding with private parties and general contractors . our bidding activity and strategies are affected by such factors as our backlog , current utilization of equipment and other resources , job location , our ability to obtain necessary surety bonds and competitive considerations . the timing and location of awarded contracts may result in unpredictable fluctuations in the results of our operations . most of our revenue is derived from fixed-price contracts . we record revenue on construction contracts using the percentage-of-completion method , measured by the percentage of contract costs incurred to date to total estimated costs for each contract . there are a number of factors that can create variability in contract performance and therefore impact the results of our operations . the most significant of these include the following : completeness and accuracy of the original bid ; differing site conditions ; increases in commodity prices such as concrete , steel and fuel ; customer delays , work stoppages , and other costs due to weather and environmental restrictions ; availability and skill level of workers ; and a change in availability and proximity of equipment and materials . all of these factors can have a negative impact on our contract performance , which can adversely affect the timing of revenue recognition and ultimate contract profitability . we plan our operations and bidding activity with these factors in mind and they have not had a material adverse impact on the results of our operations in the past . 2016 recap and 2017 outlook in 2016 , we recorded revenues of $ 578.2 million , of which $ 293.6 million was attributable to our commercial concrete construction segment and the remaining $ 284.6 million to our heavy civil marine construction segment . in addition , we ended 2016 with a consolidated backlog of $ 434.0 million . although our revenues in 2016 increased by 24.0 % as compared with 2015 , we recorded a net loss of $ 3.6 million , as compared with net loss of $ 8.1 million in the prior year . as we begin 2017 , we continue to see strong market fundamentals and continued steady demand for our heavy civil marine construction services . we remain confident in our long term market outlook and our ability to produce consistently profitable results going forward . the commercial concrete construction segment continues to outperform our initial expectations and we are pleased with the robust market opportunities we see for 2017 and beyond . our tracking database of future projects of interest remains strong for the foreseeable future . we continue to see new bid opportunities in the private sector , reflecting increases in capital projects , both in new construction and refurbishment of existing infrastructure . bridge projects funded by various state departments of transportation , as well as projects led by local port authorities , continue to be let at normal levels . we are hopeful for a more normalized year of lettings from the u.s. corps of engineers now that funding for the remainder of fiscal year 2017 26 has been approved . despite the strong market activity , we have seen some customer permit delays which may affect short term operations . heavy civil marine construction segment demand for our heavy civil marine construction services remains strong . we continue to see solid demand for turnkey solutions from our private customers . story_separator_special_tag the margin improvement was primarily due to the completion of troubled tampa projects during the year . as a percentage of revenues , operating loss for our heavy civil marine construction segment was 4.4 % for the year ended december 31 , 2016 and 4.1 % for the year ended 2015 . commercial concrete construction segment revenues for our commercial concrete construction segment for the year ended december 31 , 2016 were $ 293.6 million compared to $ 119.4 million for the year ended december 31 , 2015 , an increase of $ 174.2 million , or 145.9 % . this increase in revenue was primarily due to a full year of operations compared to the prior year due to the timing of the acquisition . in addition , the segment experienced significant growth in the dallas market during 2016. operating income for our commercial concrete construction segment for the year ended december 31 , 2016 was $ 16.5 million , compared to $ 6.2 million , an increase of $ 10.3 million from the year ended december 31 , 2015 . the margin improvement was primarily due to the improvements in the dallas market . as a percentage of revenues , operating income for our commercial concrete construction segment was 5.6 % for the year ended december 31 , 2016 compared to 5.2 % for the year ended december 31 , 2015 . year ended december 31 , 2015 compared with year ended december 31 , 2014 heavy civil marine construction segment revenues for our heavy civil marine construction segment for the year ended december 31 , 2015 were $ 347.1 million compared to $ 385.8 million for the year ended december 31 , 2014 , a decrease of $ 38.7 million , or 10.0 % . this decrease is primarily a result of project writedown costs from projects managed by the tampa office and delays in beginning projects in the gulf coast region due to inclement weather conditions during the first and second quarters of 2015 . operating loss for our heavy civil marine construction segment for the year ended december 31 , 2015 was $ 14.2 million , compared income of $ 10.3 million , a difference of $ 24.5 million from the year ended december 31 , 2014. the margin difference was primarily due to the troubled tampa jobs during the year . as a percentage of revenues , operating loss for our heavy civil marine 30 construction segment was 4.1 % for the year ended december 31 , 2015 compared to operating income of 2.7 % for the year ended december 31 , 2014. commercial concrete construction segment revenues for our commercial concrete construction segment for the year ended december 31 , 2015 were $ 119.4 million and operating income for the same period was $ 6.2 million . the company completed the acquisition of the commercial concrete construction segment in august 2015 . therefore , there are no comparable results for the year ended december 31 , 2014. critical accounting estimates the consolidated financial statements contained in this report were prepared in accordance with accounting principles generally accepted in the united states ( `` u.s. gaap '' ) . the preparation of these financial statements in conformity with u.s. gaap requires management to make estimates and assumptions that affect both the company 's carrying values of its assets and liabilities , and the reported amounts of revenues and expenses during the reporting period . actual results could differ from those estimates . although our significant accounting policies are described in more detail in note 2 of the notes to consolidated financial statements ; we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our financial statements : revenue recognition from construction contracts ; long lived assets ; goodwill ; income taxes ; insurance coverage , litigation , claims and contingencies ; and accounting for stock issued to employees and others . revenue recognition we determine our revenue recognition guidelines for our operations based on guidance provided in applicable accounting standards and positions adopted by the fasb and the sec . we enter into construction contracts principally on the basis of competitive bids . although the terms of our contracts vary considerably , most are made on a fixed price basis . revenues from construction contracts are recognized on the percentage-of-completion method . the percentage-of-completion method measures the ratio of costs incurred and accrued to date for each contract to the estimated total costs for each contract at completion . this requires us to prepare on-going estimates of the costs to complete each contract as the project progresses . in preparing these estimates , we make significant judgments and assumptions concerning our significant cost drivers of materials , labor and equipment , and we evaluate contingencies based on possible schedule variances , production delays or other productivity factors . actual costs incurred on projects may vary from the costs we estimated . variations from estimated contract costs along with other risks inherent in fixed price contracts ( including but not limited to our contract performance ) may result in actual revenue and gross profits that differ in some cases from those we estimated and could result in losses on projects . if a current estimate of total contract cost indicates a loss on a contract , the projected loss is recognized in full when determined , without regard to the percentage of completion . we consider unapproved change orders to be contract variations on which we have customer approval for scope change , but no agreement on price associated with that scope change . these costs are included in the estimated cost to complete the contracts and are expensed as incurred . we recognize revenue equal to cost incurred on unapproved change orders when realization of price approval is probable and the estimated amount is equal to or greater than our cost related to the unapproved change order and the related margin when the change order is formally approved by the customer .
| consolidated results of operations backlog information our contract backlog represents our estimate of the revenues we expect to realize under the portion of contracts remaining to be performed . given the typical duration of our contracts , which is generally less than a year , our backlog at any point in time usually represents only a portion of the revenue that we expect to realize during a twelve month period . many projects that make up our backlog may be canceled at any time without penalty ; however , we can generally recover actual committed costs and profit on work performed up to the date of cancellation . although we have not been adversely affected by contract cancellations or modifications materially in the past , we may be in the future , especially in economically uncertain periods . consequently , backlog is not necessarily indicative of future results . in addition to our backlog under contract , we also have a substantial number of projects in negotiation or pending award at any time . backlog for our heavy civil marine construction segment at december 31 , 2016 was $ 280.7 million , as compared with $ 194.3 million at december 31 , 2015 , an increase of 44.5 % from the prior year period . backlog for our commercial concrete construction segment at december 31 , 2016 was $ 153.3 million , as compared with $ 163.3 million at december 31 , 2015 , a decrease of 6.1 % from the prior year period . 27 income statement comparisons replace_table_token_6_th year ended december 31 , 2016 compared with years ended december 31 , 2015 contract revenues . contract revenues in 2016 increased approximately 24.0 % as compared with 2015 . the increase is attributable to a full year of operations for the commercial concrete construction segment , which accounted for $ 293.6 million in contract revenues .
| 7,297 |
our annual reports on form 10-k , quarterly reports on form 10-q , current reports on form 8-k , and any amendments to these reports are available free of charge through our website as soon as reasonably practicable after those reports are electronically filed with or furnished to the sec . any information found on our website is not a part of or incorporated by reference into , this or any other report of the company filed with , or furnished to , the sec . overview we have two reportable segments , radio broadcasting and digital media . digital media ( formerly “ internet and e-commerce ” ) became a reportable segment as of the first quarter of 2011 upon the realization of organic and acquisition-related revenue growth . o ur acquisition of eagle publishing on january 10 , 2014 , including regnery publishing , eagle financial publications , eagle wellness , human events and red state , resulted in operational changes to our business and a realignment of our operating segments . we now have three operating segments : ( 1 ) broadcast , ( 2 ) digital media , and ( 3 ) publishing . we changed the composition of our operating s egments to reflect management 's view of the operating results for each segment . our operating segments reflect how our chief operating decision makers , which we define as a collective group of senior executives , assesses the performance of each operating segment and determines the appropriate allocations of resources to each segment . our operating segments do not all meet the quantitative thresholds to qualify as reportable segments ; however , we have elected to disclose the results of these non-reportable operating segments as we believe this information is useful to readers of our financial statements . we continue to review our operating segment classifications to align with operational changes in our business and may make future changes as necessary . we measure and evaluate our operating segments based on operating income and operating expenses that do not include allocations of costs related to corporate functions , such as accounting and finance , human resources , legal , tax and treasury ; nor do they include costs such as amortization , depreciation , taxes or interest expense . changes to our operating segments did not impact the reporting units used to test non-amortizable assets for impairment . all prior periods presented are updated to reflect the new composition of our operating segments . refer to note 17 – segment data in the notes to our consolidated financial statements contained in item 8 of this annual report on form 10-k for additional information . our principal sources of broadcast revenues include : · the sale of block program time to national and local program producers ; · the sale of advertising time on our radio stations to national and local advertisers ; · the sale of advertising time on our national network ; · the syndication of programming on our national network ; · the sale of banner advertisements on our station websites ; · the sale of digital streaming on our station websites ; and · revenue derived from station events , including ticket sales and sponsorships . the rates we are able to charge for broadcast time and advertising time are dependent upon several factors , including : · audience share ; · how well our stations perform for our clients ; · the size of the market ; · the number of impressions delivered ; · the number of page views achieved ; 47 · the number of events held , the number of sponsorships sold , and the attendance for each event ; · the general economic conditions in each market ; and · supply and demand on both a local and national level . our principal sources of digital media revenue ( formerly internet and e-commerce revenue ) include : · the sale of web-based or digital banner advertising ; · the sale of digital streaming advertising ; · the support and promotion to stream third-party content on our websites ; · the demand for digital delivery of our newsletters and host materials ; · product sales and royalties for on-air host materials ; · the number of video and graphic downloads ; and · the demand for our wellness products . our principal sources of publishing revenue include : · the sale of books and e-books ; · subscription fees for our magazines ; · the sale of print magazine advertising ; and · publishing fees from authors . broadcasting our foundational business is the ownership and operation of radio stations in large metropolitan markets . we also own and operate salem radio network® ( “ srn ” ) , srn news network ( “ snn ” ) , salem music network ( “ smn ” ) , today 's christian music ( “ tcm ” ) , singing news network ( formerly solid gospel network ) , and salem media representatives tm ( “ smr ” ) . srn , snn , smn and singing news network are networks that develop , produce and syndicate a broad range of programming specifically targeted to christian and family-themed talk stations , music stations and general news talk stations throughout the united states , including salem owned and operated stations . smr , a national advertising sales firm with offices in 8 u.s. cities , specializes in placing national advertising on religious and other commercial radio stations . as of december 2014 , we merged vista media representatives ( “ vmr ” ) , our national advertising sales firm established for non-christian format stations , into smr as our smr and vmr sales teams consistently pursue advertising for all station formats . we currently program 42 of our stations with our christian teaching and talk format , which is talk programming with christian and family themes . story_separator_special_tag e-commerce sites include salem consumer products ( “ scp ” ) , an e-commerce business that sells books , dvd 's and editorial content developed by our on-air personalities , eagle wellness and gene smart , online sites offering complimentary health advice and sales of nutritional products . the revenues generated from this segment are reported as digital media revenue in our consolidated statements of operations included in this annual report on form 10-k. digital media revenues are impacted by the rates our sites can charge for advertising time , the level of advertisements sold , the number of impressions delivered or the number of downloads made , and the number digital subscriptions sold . like our broadcasting segment , our second and fourth quarter advertising revenue generally exceeds our first and third quarter advertising revenue . this seasonal fluctuation in advertising revenue corresponds with quarterly fluctuations in the retail advertising industry . we also experience fluctuations in quarter over quarter comparisons based on the date in which the easter holiday is observed , as this holiday generates a higher volume of video downloads from our church product sites . additionally , we experience increased demand for advertising time and placement during election years for political advertisements . the primary operating expenses incurred in the ownership and operation of our internet businesses include : ( i ) employee salaries , commissions and related employee benefits and taxes , ( ii ) facility expenses such as rent and utilities , ( iii ) marketing and promotional expenses , ( iv ) royalties , ( v ) streaming costs , and ( vi ) cost of goods sold associated with scp and wellness products . publishing our acquisition of regnery publishing expanded our publishing operations to include book publishing in addition to print magazines and our self-publishing service . regnery publishing has published dozens of bestselling books by leading conservative authors and personalities , including ann coulter , newt gingrich , david limbaugh , ed klein , mark steyn and dinesh d'souza . 49 our publishing operating segment also includes salem publishing and xulon press . salem publishing produces and distributes numerous christian and conservative opinion print magazines , including : homecoming ® the magazine , youthworker journal , singing news ® , faithtalk magazine , and preaching magazine . through december 2014 , we also printed and produced townhall magazine . xulon press is a print-on-demand self-publishing service for christian authors . revenues generated from these entities are reported as publishing revenue in our consolidated financial statements included in item 8 of this annual report on form 10-k. publishing revenue is impacted by the retail price of books and e-books , the number of books sold , the number and retail price of e-books sold , the number and rate of print magazine subscriptions sold , the rate and number of pages of advertisements sold in each print magazine , and the number and rate at which self-published books are made . regnery publishing revenue has been impacted by elections as they generate higher levels of interest and demand for publications containing conservative and political based opinions . operating expenses incurred by salem publishing include : ( i ) employee salaries , commissions and related employee benefits and taxes , ( ii ) facility expenses such as rent and utilities , ( iii ) marketing and promotional expenses , ( iv ) printing and production costs , including paper costs , ( v ) cost of goods sold , and ( vi ) inventory reserves . known trends and uncertainties although advertising revenues have stabilized following the decline that began in 2008 , broadcast advertising revenue growth remains challenged . we are particularly dependent on broadcast revenue from our los angeles and dallas markets , which generated 12.0 % and 12.8 % , respectively , of our net broadcasting revenue for the year ending december 31 , 2015. revenues from print magazines , including advertising revenue and subscription revenues , are challenged both economically and by the increase in use of other mediums to deliver the information . book sales are contingent upon overall economic conditions and our ability to attract and retain authors . because digital media is a concentrated growth area for us , decreases in revenue streams from these areas could affect our operating results , financial condition and results of operations . to address these issues , we continue to explore opportunities in which we can cross-promote our brand and our content , including our broadcast markets , digital media , internet sites , mobile applications , and our printing and publication media . key financial performance indicators – same station definition in the discussion of our results of operations below , we compare our broadcast operating results between periods on an as-reported basis , which includes the operating results of all radio stations and networks owned or operated at any time during either period and on a “ same-station ” basis . same station operating results include those stations that we own or operate in the same format on the first and last day of each quarter as well as the corresponding quarter of the prior year . same station results for a full calendar year are calculated as the sum of the same station-results for each of the four quarters of that year . same station results for our annual report are calculated as the sum of the same station-results for each of the four quarters of that year . we use same station results , a non-gaap financial measure , both in presenting our results to stockholders and the investment community , and in our internal evaluation and management of the business . our presentation of same station results are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with gaap . our definition of same station operating results is not necessarily comparable to similarly titled measures reported by other companies . story_separator_special_tag slots .
| results of operations year ended december 31 , 2015 compared to the year ended december 31 , 2014 the following factors affected our results of operations and our cash flows for the year ended december 31 , 2015 as compared to the prior year : financing throughout the year ending december 31 , 2015 , we repaid $ 2.0 million in principal on our current senior secured credit facility , consisting of a term loan of $ 300.0 million ( “ term loan b ” ) and paid interest through each repayment date . equity throughout the year ending december 31 , 2015 , we paid total equity distributions of $ 6.6 million compared to total equity distributions of $ 6.2 million during the prior year . 50 broadcast acquisitions we completed a number of broadcast acquisitions during the year , most notable from disney 's divestiture of its radio disney properties . of the eleven radio stations that we acquired during 2015 , 10 were former radio disney properties . with the exception of wsdz-am in the st. louis , missouri market , each of these acquisitions were in markets in which we already have broadcast facilities and staff , or “ tuck-in ” acquisitions . tuck-in acquisitions are made when we believe it is advantageous to increase the strength and number of our broadcast signals while minimizing costs under our market cluster-operating concept . the st. louis market , being one of the top 25 radio markets in the united states , provides a unique opportunity to expand our platform in a new market . during the year , we paid $ 12.4 million of cash to acquire broadcast assets and radio stations . a summary of our broadcast acquisitions , in order of most recent , is as follows : · on december 18 , 2015 , we acquired radio station wsdz-am in st. louis , missouri , for $ 0.3 million in cash . · on december 15 , 2015 , we acquired radio station kdiz-am in minneapolis , minnesota , for $ 0.4 million in cash .
| 7,298 |
deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled . the effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date . deferred tax expense story_separator_special_tag this discussion should be read in conjunction with the consolidated financial statements , notes and tables included elsewhere in this report . throughout the following sections , the “ company ” refers to 1 st constitution bancorp and , as the context requires , its wholly-owned subsidiary , 1 st constitution bank ( the “ bank ” ) and the bank 's wholly-owned subsidiaries as of december 31 , 2013 , which were 1 st constitution investment company of new jersey , inc. , fcb assets holdings , inc. , 1 st constitution title agency , l.l.c. , 204 south newman street corp. and 249 new york avenue , llc . 1 st constitution capital trust ii ( “ trust ii ” ) , a subsidiary of the company as of december 31 , 2013 , is not included in the company 's consolidated financial statements as it is a variable interest entity and the company is not the primary beneficiary . the purpose of this discussion and analysis is to assist in the understanding and evaluation of the company 's financial condition , changes in financial condition and results of operations . critical accounting policies and estimates “ management 's discussion and analysis of financial condition and results of operation ” is based upon the company 's consolidated financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states of america . the preparation of these financial statements requires the company to make estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses . note 1 to the company 's consolidated financial statements for the year ended december 31 , 2013 contains a summary of the company 's significant accounting policies . management believes the company 's policies with respect to the methodologies for the determination of the allowance for loan losses and for determining other-than-temporary security impairment involve a higher degree of complexity and requires management to make difficult and subjective judgments which often require assumptions or estimates about highly uncertain matters . changes in these judgments , assumptions or estimates could materially impact results of operations . these critical policies and their application are periodically reviewed with the audit committee and the board of directors . the provision for loan losses is based upon management 's evaluation of the adequacy of the allowance , including an assessment of known and inherent risks in the portfolio , giving consideration to the size and composition of the loan portfolio , actual loan loss experience , level of delinquencies , detailed analysis of individual loans for which full collectability may not be assured , the existence and estimated net realizable value of any underlying collateral and guarantees securing the loans , and current economic and market conditions . although management uses the best information available to it , the level of the allowance for loan losses remains an estimate which is subject to significant judgment and short-term change . various regulatory agencies , as an integral part of their examination process , periodically review the company 's allowance for loan losses . such agencies may require the company to make additional provisions for loan losses based upon information available to them at the time of their examination . furthermore , the majority of the company 's loans are secured by real estate in the state of new jersey . accordingly , the collectibility of a substantial portion of the carrying value of the company 's loan portfolio is susceptible to changes in local market conditions and may be adversely affected should real estate values decline or should the central new jersey area experience an adverse economic shock . future adjustments to the allowance for loan losses may be necessary due to economic , operating , regulatory and other conditions beyond the company 's control . real estate acquired through foreclosure , or a deed-in-lieu of foreclosure , is recorded at fair value less estimated selling costs at the date of acquisition or transfer , and subsequently at the lower of its new cost or fair value less estimated selling costs . adjustments to the carrying value at the date of acquisition or transfer are charged to the allowance for loan losses . the carrying value of the individual properties is subsequently adjusted to the extent it exceeds estimated fair value less estimated selling costs , at which time a provision for losses on such real estate is charged to operations . appraisals are critical in determining the fair value of the other real estate owned amount . assumptions for appraisals are instrumental in determining the value of properties . overly optimistic assumptions or negative changes to assumptions could significantly affect the valuation of a property . the assumptions supporting such appraisals are carefully reviewed by management to determine that the resulting values reasonably reflect amounts realizable . management utilizes various inputs to determine the fair value of its investment portfolio . to the extent they exist , unadjusted quoted market prices in active markets ( level 1 ) or quoted prices on similar assets ( level 2 ) are utilized to determine the fair value of each investment in the portfolio . in the absence of quoted prices , valuation techniques would be used to determine fair value of any investments that require inputs that are both significant to the fair value measurement and unobservable ( level 3 ) . valuation techniques are based on various assumptions , including , but not limited to cash flows , discount rates , rate of return , adjustments for nonperformance and liquidity , and liquidation values . a significant degree of judgment is involved in valuing investments using level 3 inputs . story_separator_special_tag ( 2 ) the interest rate spread is the difference between the average yield on interest earning assets and the average rate paid on interest bearing liabilities . ( 3 ) the net interest margin is equal to net interest income divided by average interest earning assets . ( 4 ) tax- equivalent basis . changes in net interest income and margin result from the interaction between the volume and composition of interest earning assets , interest bearing liabilities , related yields , and associated funding costs . the rate/volume table demonstrates the impact on net interest income of changes in the volume of interest earning assets and interest bearing liabilities and changes in interest rates earned and paid . the company 's net interest income decreased on a tax-equivalent basis by $ 2,693,041 , or 9.5 % , to $ 25,797,575 for the year ended december 31 , 2013 from the $ 28,490,616 reported for the year ended december 31 , 2012. as indicated in the rate/volume table , the principal factor contributing to the decrease in net interest income for the year ended december 31 , 2013 was a decreased volume of loans in the loan portfolio combined with lower rates earned on interest-earning assets . 28 the company 's net interest income increased on a tax-equivalent basis by $ 4,704,754 , or 19.8 % , to $ 28,490,616 for the year ended december 31 , 2012 from the $ 23,785,862 reported for the year ended december 31 , 2011. as indicated in the rate/volume table , the principal factor contributing to the increase in net interest income for the year ended december 31 , 2012 was an increase in interest income of $ 3,068,532 , resulting from increased volume on the interest-earning loan portfolio . replace_table_token_5_th average interest-earning assets increased by $ 34,791,884 , or 4.9 % , to $ 750,991,842 for the year ended december 31 , 2013 from $ 716,199,958 for the year ended december 31 , 2012. the average investment securities portfolio increased by $ 10,196,863 , or 4.6 % , to $ 231,404,446 for the year ended december 31 , 2013 compared to $ 221,207,583 for the year ended december 31 , 2012. the average loan portfolio decreased by $ 64,124,810 , or 13.9 % , to $ 399,462,401 for the year ended december 31 , 2013 compared to $ 463,587,211 for the year ended december 31 , 2012 the overall risk profile of the loan portfolio was reduced by a change in its composition via a decrease in average construction loans ( which are generally riskier than other loans ) of $ 13,411,395 , or 23.7 % , to $ 43,391,226 for the year ended december 31 , 2013 from $ 56,802,621 for the year ended december 31 , 2012. in addition , the second half of 2013 saw an increase in long-term interest rates that accelerated the decrease in the balance of outstanding mortgage warehouse lines . the average balance of mortgage warehouse lines decreased by $ 53,516,752 , or 26.1 % , to $ 151,335,795 for the year ended december 31 , 2013 compared to an average balance of $ 204,852,547 for the year ended december 31 , 2012. overall , the yield on interest-earning assets , on a tax-equivalent basis , decreased 70 basis points to 4.00 % for the year ended december 31 , 2013 compared to 4.70 % for the year ended december 31 , 2012. average interest earning assets increased by $ 46,456,303 , or 6.9 % , to $ 716,199,958 for the year ended december 31 , 2012 from $ 669,743,655 for the year ended december 31 , 2011 the average total loan portfolio increased by $ 88,902,305 , or 23.7 % , to $ 463,587,211 for the year ended december 31 , 2012 from $ 374,684,906 for the year ended december 31 , 2011. due to a decrease in the level of market interest rates during 2012 , loan yields averaged 5.75 % for the year ended december 31 , 2012 , 34 basis points lower than for the year ended december 31 , 2011. the average investment securities portfolio decreased $ 24,388,907 , or 9.9 % , while the yield on that portfolio decreased 2 basis points for the year ended december 31 , 2012 compared to the year ended december 31 , 2011. overall , the yield on interest earning assets increased 14 basis points to 4.70 % for the year ended december 31 , 2012 from 4.56 % for the year ended december 31 , 2011 . 29 interest expense decreased by $ 896,253 , or 17.4 % , to $ 4,254,889 for the year ended december 31 , 2013 from $ 5,151,142 for the year ended december 31 , 2012. this decrease in interest expense was principally attributable to higher levels of interest-bearing liabilities priced at a significantly lower market interest rate level . money market and now accounts , increased on average by $ 19,161,773 in 2013 , or 9.4 % , as compared to 2012 , contributing to the funding of investment portfolio growth . the cost on these deposits decreased 15 basis points in 2013 as compared to 2012. average interest bearing liabilities rose 1.8 % in 2013 compared to 2012. the cost of total interest-bearing liabilities decreased 17 basis points to 0.72 % in 2013 from 0.89 % in 2012. interest expense decreased by $ 1,636,222 , or 24.1 % , to $ 5,151,142 for the year ended december 31 , 2012 , from $ 6,787,364 for the year ended december 31 , 2011. this decrease in interest expense was principally attributable to higher levels of interest-bearing liabilities priced at significantly lower market interest rate levels . money market and now accounts increased on average by $ 30,629,257 in 2012 , or 17.7 % , as compared to 2011 , contributing to the funding of our loan portfolio growth .
| results of operations the company reported net income for the year ended december 31 , 2013 of $ 5,780,088 , an increase of 14.2 % from the $ 5,060,504 reported for the year ended december 31 , 2012. the increase was due primarily to an increase in noninterest income , a lower level in the provision for loan losses and a decrease in noninterest expenses which , in total , more than offset a decrease in net interest income and an increase in income taxes for the year ended december 31 , 2013 compared to the same period in 2012 . 26 diluted net income per common share was $ 0.95 for the year ended december 31 , 2013 compared to diluted net income per share of $ 0.90 for the year ended december 31 , 2012. basic net income per common share for the year ended december 31 , 2013 was $ 0.97 as compared to $ 0.92 reported for the year ended december 31 , 2012. all per share information has been restated for the effect of ( i ) a 5 % stock dividend declared on december 20 , 2012 and paid on january 31 , 2013 to shareholders of record on january 14 , 2013 and ( ii ) a 5 % stock dividend declared december 15 , 2011 and paid february 2 , 2012 to shareholders of record on january 17 , 2012. in addition , during the third quarter of 2012 , the company launched a shareholders ' common stock rights offering , which expired on october 5 , 2012. the company received gross proceeds of $ 5.0 million from holders of subscription rights who exercised their basic subscription rights and from holders who exercised the over-subscription privilege . the rights ' offering was fully subscribed . accordingly , the company issued a total of 555,555 shares of common stock to the holders of subscription rights who validly exercised their subscription rights , including pursuant to the exercise of the over-subscription privilege .
| 7,299 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.