document stringlengths 8.64k 13.4k | summary stringlengths 179 2.97k | __index_level_0__ int64 0 16.8k |
|---|---|---|
its current geographic breadth and diverse product offering are reflected in three reporting segments : global ceramic ; flooring north america ( “ flooring na ” ) ; and flooring rest of the world ( “ flooring row ” ) . the global ceramic segment designs , manufactures , sources and markets a broad line of ceramic tile , porcelain tile , natural stone tile and other products including natural stone , quartz and porcelain slab countertops , which it distributes primarily in north america , europe , brazil and russia through various selling channels , which include company-owned stores , independent distributors and home centers . the flooring na segment designs , manufactures , sources and markets its floor covering products , including broadloom carpet , carpet tile , rugs , carpet cushion , laminate and vinyl products , including luxury vinyl tile ( lvt ) and sheet vinyl , and wood flooring , all of which it distributes through its network of regional distribution centers and satellite warehouses using company-operated trucks , common carriers or rail transportation . the segment 's product lines are sold through various channels , including independent floor covering retailers , independent distributors , home centers , mass merchandisers , department stores , shop at home , online retailers , buying groups , commercial contractors and commercial end users . the flooring row segment designs , manufactures , sources , licenses and markets laminate , vinyl products , including lvt and sheet vinyl , wood flooring , roofing panels , insulation boards , medium-density fiberboard ( “ mdf ” ) and chipboards , which it distributes primarily in europe , russia , australia and new zealand through various channels , including independent floor covering retailers , independent distributors , company-owned distributors , home centers , commercial contractors and commercial end users . mohawk is a significant supplier of every major flooring category with manufacturing operations in 18 nations and sales in more than 170 countries . based on its annual sales , the company believes it is the world 's largest flooring manufacturer . a majority of the company 's long-lived assets are located in the united states and europe , which are also the company 's primary markets . additionally , the company maintains operations in united kingdom , russia , mexico , australia , new zealand , brazil and other parts of the world . the company is a leading provider of flooring for residential and commercial markets and has earned significant recognition for its innovation in design and performance as well as sustainability . due to its global footprint , mohawk 's business is sensitive to macroeconomic events in the united states and abroad . the current environment has placed unprecedented demands on the company 's operations as the covid-19 pandemic has caused disruptions to the company 's markets and operations around the world . while the near-term economic and financial impact of the covid-19 pandemic is improving in its residential markets , the company expects that it will continue to see fluctuating demand across a number of its markets . in order to mitigate the impact of lower demand during the initial stages of the pandemic , the company was able to utilize retention related tax credits and certain tax deferrals for employers where the company has significant operations . during the year , the company also completed actions prompted by the evolving health crisis to enhance future performance including site closings , other facility and product rationalizations and workforce reductions . the company anticipates these global actions will deliver savings of approximately $ 100 to $ 110 million of which approximately $ 50 million was realized in 2020 , with 2020 cost of $ 150 million . the company believes it has the experience and resources necessary to capitalize on opportunities that will arise as employees return to work around the world and macroeconomic conditions improve . the company also believes it is well positioned with a strong balance sheet and limited debt . during 2020 , the company issued over $ 1 billion of long-term bonds to strengthen its ability to strategically invest and better position itself for the future . finally , the company is following the recommendations of local health authorities to minimize exposure risk for its employees , suppliers , customers and other stakeholders . for information on risk factors that could impact the company 's results , please refer to “ risk factors ” in part i , item 1a of this form 10-k. 25 index to financial statements in 2018 , the company completed five acquisitions : two that expanded the company 's global footprint with leadership positions in major markets and three that extended the company 's product offering and distribution in europe . the godfrey hirst acquisition established the company as the largest flooring manufacturer in australia and new zealand , with leading carpet and hard surface positions in both countries when combined with the company 's existing regional flooring distribution business . godfrey hirst 's prestigious wool carpet collections are exported to numerous international markets and have been integrated into the u.s. soft surface product portfolio to expand sales . the acquisition of brazil-based eliane provided the company with a leading ceramic tile position , the most appealing brand in one of the world 's largest ceramic tile markets and a gateway into the overall south american market as eliane is brazil 's largest ceramic exporter . the company has made significant investments in both godfrey hirst and eliane to upgrade product offerings , expand capacity and improve processes . the acquisition of berghoef , a leading european mezzanine flooring company , created a leading position in a category that is rapidly expanding due to increased construction of e-commerce warehousing across the continent . story_separator_special_tag flooring row segment —operating income was $ 366.9 million ( 14.5 % of segment net sales ) for 2020 reflecting an increase of $ 13.2 million , or 3.7 % , compared to operating income of $ 353.7 million ( 14.2 % of segment net sales ) for 2019. the increase in operating income was primarily attributable to higher productivity gain of approximately $ 48 million , lower inflation costs of approximately $ 38 million , partially offset by unfavorable net impact of price and product mix of approximately $ 30 million , the impact of restructuring , acquisition and integration-related costs of approximately $ 20 million , approximately $ 16 million of costs due to temporarily reduced production , and the unfavorable net impact from foreign exchange rates of approximately $ 9 million . interest expense interest expense was $ 52.4 million for 2020 , reflecting an increase of $ 11.1 million compared to interest expense of $ 41.3 million for 2019. during the second quarter of 2020 , the company issued new long-term debt to strengthen its liquidity position during the early months of the covid pandemic . the new debt issuance shifted the company from a mix of fixed and floating rate debt , with a lower average interest rate , to more fixed rate debt , which carries a higher average interest rate . other expense ( income ) other income was $ 0.8 million for 2020 , reflecting a favorable change of $ 37.2 million compared to other expense of $ 36.4 million for 2019. the change was primarily attributable to a net impairment charge of $ 59.9 million related to the company 's net investment in a manufacturer and distributor of ceramic tile in china in 2019 , partially offset by unfavorable fx and other miscellaneous items . 29 index to financial statements income tax expense for 2020 , the company recorded income tax expense of $ 68.6 million on earnings before income taxes of $ 584.4 million for an effective tax rate of 11.7 % , as compared to an income tax expense of $ 5.0 million on earnings before income taxes of $ 749.5 million , resulting in an effective tax rate of 0.7 % for 2019. in 2020 , the company realized a $ 33.8 million carryback rate differential in the u.s. and had a $ 10.3 million tax benefit from a foreign exchange loss on previously taxed earnings distributed during the year . in 2019 , the company implemented select operational , administrative and financial restructurings that centralized certain business processes and intangible assets in various european jurisdictions into a new entity . this implementation resulted in a net tax benefit of $ 136.2 million . in both 2020 and 2019 , the company was favorably impacted by its geographic mix of earnings . 30 index to financial statements liquidity and capital resources the company 's primary capital requirements are for working capital , capital expenditures and acquisitions . the company 's capital needs are met primarily through a combination of internally generated funds , commercial paper , bank credit lines , term and senior notes and credit terms from suppliers . as of december 31 , 2020 , the company had a total of $ 1,799.2 million available under its senior credit facility . the company also maintains local currency revolving lines of credit and other credit facilities to provide liquidity to its businesses around the world . none of such local facilities are material in amount . management has and will continue to evaluate its liquidity needs and strategy regarding capital resources as the economic crisis caused by the covid-19 pandemic evolves . in the second quarter of 2020 , the company issued $ 500.0 million of 3.625 % senior notes , and a subsidiary of the company issued 500.0 million of 1.750 % senior notes , with ten and seven-year terms , respectively . the company has taken multiple actions including managing inventory and production capacity , and reduced headcount through furloughs and layoffs . management believes these actions along with cash secured from increased borrowing and continuing operations will allow the company to take advantage of new opportunities . net cash provided by operating activities for the year ended 2020 was $ 1,769.8 million , compared to net cash provided by operating activities of $ 1,418.8 million for the year ended 2019. this increase of $ 351.1 million was primarily attributable to changes in working capital , partially offset by lower net earnings . the increase in cash provided by operating activities for 2019 as compared to 2018 of $ 237.4 million was primarily attributable to changes in working capital , partially offset by lower net earnings . net cash used in investing activities for the year ended 2020 was $ 954.8 million compared to net cash used in investing activities of $ 616.0 million for the year ended 2019. the increase was primarily due to an increase in the purchases of short-term investments of $ 539.7 million ( net of redemption of short-term investments ) , partially offset by reduced capital expenditures of $ 119.9 million and a decrease in acquisition costs of $ 81.1 million . net cash used in investing activities for the year ended 2019 was $ 616.0 million compared to net cash used in investing activities of $ 1,332.2 million for the year ended 2018. the decrease was primarily due to a $ 487.9 million reduction in acquisitions and a $ 248.6 million reduction in capital expenditures . net cash used in financing activities for the year ended 2020 was $ 188.2 million compared to net cash used in financing activities of $ 789.9 million for the year ended 2019. the change in cash used in financing is primarily attributable to the proceeds from the senior notes of $ 735.3 million ( net of repayments of $ 326.9 million ) , partially offset by the increase in purchases of the company 's shares of $ 88.5 million .
| results of operations following are the results of operations for the last two years : replace_table_token_4_th 27 index to financial statements year ended december 31 , 2020 , as compared with year ended december 31 , 2019 net sales the company 's global sales were affected by broader economic issues related to the covid-19 pandemic resulting in decreased demand during the period . net sales for 2020 were $ 9,552.2 million , reflecting a decrease of $ 418.5 million , or 4.2 % , from the $ 9,970.7 million reported for 2019. the decrease was primarily attributable to the lower sales volume of approximately $ 240 million , the unfavorable net impact of price and product mix of approximately $ 119 million , and the unfavorable net impact from foreign exchange rates of approximately $ 59 million . global ceramic segment —net sales decreased $ 198.3 million , or 5.5 % , to $ 3,432.8 million for 2020 , compared to $ 3,631.1 million for 2019. the decrease was primarily attributable to lower sales volume of approximately $ 89 million , the unfavorable net impact from foreign exchange rates of approximately $ 77 million , and the unfavorable net impact of price and product mix of approximately $ 33 million . flooring na segment —net sales decreased $ 249.6 million , or 6.5 % , to $ 3,594.1 million for 2020 , compared to $ 3,843.7 million for 2019. the decrease was attributable to lower volumes of approximately $ 200 million , and the unfavorable net impact of price and product mix of approximately $ 49 million .
| 7,400 |
principles of consolidation the consolidated financial statements include the accounts and results of operations of organogenesis story_separator_special_tag you should read the following discussion and analysis of financial condition and results of operations together with our consolidated financial statements and related notes included elsewhere in this annual report on form 10-k. this discussion and other parts of this annual report on form 10-k contain forward-looking statements that involve risks and uncertainties , such as statements regarding our plans , objectives , expectations , intentions and projections . our actual results could differ materially from those discussed in these forward-looking statements . factors that could cause or contribute to such differences include , but are not limited to , those discussed in the risk factors section of this annual report on form 10-k. unless the context otherwise requires , for purposes of this section , the terms we , us , the company , organogenesis or our company refer to organogenesis holdings inc. and its subsidiaries as they currently exist . overview organogenesis is a leading regenerative medicine company focused on the development , manufacture , and commercialization of solutions for the advanced wound care and surgical & sports medicine markets . our products have been shown through clinical and scientific studies to support and in some cases accelerate tissue healing and improve patient outcomes . we are advancing the standard of care in each phase of the healing process through multiple breakthroughs in tissue engineering and cell therapy . our solutions address large and growing markets driven by aging demographics and increases in comorbidities such as diabetes , obesity , cardiovascular and peripheral vascular disease and smoking . we offer our differentiated products and in-house customer support to a wide range of health care customers including hospitals , wound care centers , government facilities , ambulatory service centers ( ascs ) , and physician offices . our mission is to provide integrated healing solutions that substantially improve medical outcomes and the lives of patients while lowering the overall cost of care . we offer a comprehensive portfolio of products in the markets we serve that address patient needs across the continuum of care . we have and intend to continue to generate data from clinical trials , real-world outcomes and health economics research that validate the clinical efficacy and value proposition offered by our products . several of our existing and pipeline products in our portfolio have pma approval , bla approval or 510 ( k ) clearance from the fda . given the extensive time and cost required to conduct clinical trials and receive fda approvals , we believe that our data and regulatory approvals provide us a strong competitive advantage . our product development expertise and multiple technology platforms provide a robust product pipeline , which we believe will drive future growth . in the advanced wound care market , we focus on the development and commercialization of advanced wound care products for the treatment of chronic and acute wounds in various treatment settings . we have a comprehensive portfolio of regenerative medicine products , capable of supporting patients from early in the wound healing process through wound closure regardless of wound type . our advanced wound care products include apligraf for the treatment of venous leg ulcers ( vlus ) and diabetic foot ulcers ( dfus ) ; dermagraft for the treatment of dfus ; puraply am to address biofilm across a broad variety of wound types ; and affinity and nushield to address a variety of wound sizes and types . we have a highly trained and specialized direct wound care sales force paired with exceptional customer support services . in the surgical & sports medicine market , we focus on products that support the healing of musculoskeletal injuries , including degenerative conditions such as osteoarthritis and tendonitis . we are leveraging our regenerative medicine capabilities in this attractive , adjacent market . our surgical & sports medicine products include renu for in-office joint and tendon applications ; nucel for bony fusion in the spine and extremities ; nushield and affinity for surgical application in targeted soft tissue repairs ; and puraply am for surgical treatment of open wounds . we currently sell these products through independent agencies and our growing direct sales force . we generated net revenue of $ 338.3 million , $ 261.0 million and $ 193.4 million for the years ended december 31 , 2020 , 2019 and 2018 , respectively . we had net income of $ 17.9 million and net loss of $ 40.5 million and $ 64.8 million for the years ended december 31 , 2020 , 2019 and 2018 , respectively . while we reported net income for the year ended december 31 , 2020 , we have incurred significant losses since inception and we may incur operating losses in the future as we expend resources as part of our efforts to grow our organization to support the planned expansion of our business . as of december 31 , 2020 , we had an accumulated deficit of $ 153.1 million . our primary sources of capital to date have been from sales of our products , borrowings from related parties and institutional lenders and proceeds from the sale of our class a common stock . we operate in one segment of regenerative medicine . 70 items affecting comparability avista merger . on december 10 , 2018 , avista healthcare public acquisition corp. , our predecessor company ( ahpac ) , consummated the previously announced business combination pursuant to that certain agreement and plan of merger , dated as of august 17 , 2018 ( as amended , the avista merger agreement ) , by and among ahpac , avista healthcare merger sub , inc. , a direct wholly-owned subsidiary of ahpac ( avista merger sub ) and organogenesis inc .. as a result of the transactions contemplated by the avista merger agreement , avista merger sub merged with and into organogenesis inc. , with organogenesis inc. surviving the merger ( the avista merger ) . story_separator_special_tag several factors affect our reported revenue in any period , including product , payer and geographic sales mix , operational effectiveness , pricing realization , marketing and promotional efforts , the timing of orders and shipments , regulatory actions including healthcare reimbursement scenarios , competition and business acquisitions . included within our product revenue is our puraply product portfolio that consists of puraply and puraply am . we launched puraply in mid-2015 and introduced puraply am in 2016. in order to encourage the development of innovative medical devices , drugs and biologics , cms can grant new products an additional pass-through payment in addition to the bundled payment amount for a limited period of no more than three years . our puraply products were granted pass-through status from launch through december 31 , 2017 , which created an economic incentive for practitioners to use puraply over other skin substitutes . as a result , we saw increases in revenue related to our puraply portfolio in 2017. beginning january 1 , 2018 , puraply am and puraply transitioned to the bundled payment structure for skin substitutes , which provides for a two-tiered payment system in the hospital outpatient and asc setting . the two-tiered medicare payment system bundles payment for our advanced wound care products ( and all skin substitutes ) into the payment for the procedure for applying the skin substitute , resulting in a single payment to the provider that includes reimbursement for both the procedure and the product itself . as a result of the transition to the bundled payment structure , total medicare reimbursement for procedures using our puraply am and puraply products decreased substantially . this reduction in reimbursement resulted in a substantial decrease in revenue from our puraply am and puraply products during the first nine months of 2018 and had a negative effect on our business , results of operations and financial condition . on march 23 , 2018 , congress passed , and the president signed into law , the consolidated appropriations act of 2018 , or the act . the act restored the pass-through status of puraply and puraply am effective october 1 , 2018. as a result , effective october 1 , 2018 , medicare resumed making pass-through payments to hospitals using puraply and puraply am in the outpatient hospital setting and in ascs . puraply and puraply am had pass-through reimbursement status through september 30 , 2020. with the expiration of the pass-through reimbursement status , our net revenue from puraply and puraply am may decrease as they transition to the bundled payment structure . while we expect our net revenue from non-puraply products will continue to increase , we can not be certain that any such revenue increase will fully offset the revenue decrease from puraply products if such a decrease occurs . we are not able to estimate the extent of the changes in revenue due to the uncertainties related to the impact of the covid-19 pandemic , which could have material adverse effects on our revenue , especially to the extent that the pandemic persists or exacerbates over an extended period of time . 72 cost of goods sold , gross profit and gross profit margin cost of goods sold includes personnel costs , product testing costs , quality assurance costs , raw materials and product costs , manufacturing costs , and the costs associated with our manufacturing and warehouse facilities . the increases in our cost of goods sold correspond with the increases in sales units driven by the expansion of our sales force and sales territories , expansion of our product portfolio offerings , and the number of healthcare facilities that offer our products . we expect our cost of goods sold to increase due primarily to increased sales volumes . gross profit is calculated as net revenue less cost of goods sold and generally increases as revenue increases . gross profit margin is calculated as gross profit divided by total net revenue . our gross profit and gross profit margin are affected by product and geographic sales mix , realized pricing of our products , the efficiency of our manufacturing operations and the costs of materials used and fees charged by third-party manufacturers to produce our products . regulatory actions , including healthcare reimbursement scenarios , which may require costly expenditures or result in pricing pressures , may decrease our gross profit and gross profit margin . selling , general and administrative expenses selling , general and administrative expenses generally include personnel costs for sales , marketing , sales support , customer support , and general and administrative personnel , sales commissions , incentive compensation , insurance , professional fees , depreciation , amortization , bad debt expense , royalties , information systems costs and costs associated with our administrative facilities . we generally expect our selling , general and administrative expenses to continue to increase due to increased investments in market development and the geographic expansion of our sales forces as we drive for continued revenue growth . research and development expenses research and development expenses include personnel costs for our research and development personnel , expenses related to improvements in our manufacturing processes , enhancements to our currently available products , and additional investments in our product and platform development pipeline . our research and development expenses also include expenses for clinical trials . we expense research and development costs as incurred . we generally expect that research and development expenses will increase as we continue to conduct clinical trials on new and existing products , move products through the regulatory pathway ( e.g. , seek bla approval ) , add personnel to support product enhancements as well as to bring new products to market , and enhance our manufacturing process and procedures . write-off of deferred offering costs we deferred costs incurred related to a proposed initial public offering , or ipo , of organogenesis inc. that included legal , audit , and other professional fees .
| results of operations the following table sets forth , for the periods indicated , our results of operations : replace_table_token_1_th 74 ebitda and adjusted ebitda the following table presents a reconciliation of gaap net income ( loss ) to non-gaap ebitda and non-gaap adjusted ebitda , for each of the periods presented : replace_table_token_2_th ( 1 ) amount reflects employee retention and other benefit-related costs related to the company 's restructuring activities in the fourth quarter ended december 31 , 2020. see note 11 . restructuring . ( 2 ) amount reflects the gain recognized related to the settlement of the deferred acquisition consideration dispute with the sellers of nutech medical in february 2020 as well as the settlement of the assumed legacy lawsuit from the sellers of nutech medical in october 2020. see note 18 . commitments and contingencies . ( 3 ) amount reflects the collection of certain notes receivable from related parties previously reserved . see note 19 . related party transactions . ( 4 ) amount reflects the change in fair value of the common shares issued in connection with the acquisition of nutech medical that were forfeitable upon the occurrence of the fda requiring approval of certain products acquired from nutech medical . the forfeiture rights expired in march 2018 because there was no adverse fda event and the related expenses resulting from the write-off of the forfeiture rights were recorded within selling , general and administrative expenses in the quarter ended march 31 , 2018 . ( 5 ) in connection with our 2016 loans , we classified the warrants issued to purchase our class a common stock to the lenders , who are affiliates of ours , as a liability on our consolidated balance sheet . the warrants were net exercised in december 2018 in connection with the avista merger . amount reflects the change in the fair value of the warrant liability .
| 7,401 |
customers can purchase products from the company either in-store , online , with a mobile device or through a contact center . the company generally has the ability to have customer purchases picked up in-store or shipped direct to the customer from the company 's distribution facilities , stores or vendors . in the second quarter of fiscal 2015 , the company acquired of a kind , an e-commerce website that features specially commissioned , limited edition items from emerging fashion and home designers . the company also operates linen holdings , a provider of a variety of textile products , amenities and other goods to institutional customers in the hospitality , cruise line , healthcare and other industries . additionally , the company is a partner in a joint venture which operates seven retail stores in mexico under the name bed bath & beyond . the company accounts for its operations as two operating segments : north american retail and institutional sales . the institutional sales operating segment , which is comprised of linen holdings , does not meet the quantitative thresholds under u.s. generally accepted accounting principles and therefore is not a reportable segment . the company sells a wide assortment of domestics merchandise and home furnishings . domestics merchandise includes categories such as bed linens and related items , bath items and kitchen textiles . home furnishings include categories such as kitchen and tabletop items , fine tabletop , basic housewares , general home furnishings , consumables and certain juvenile products . the company 's strategy is centered on its customer-centric culture and its commitment to customer service : · to do more for and with its customers wherever , whenever and however they wish to interact with the company . · to provide its customers a seamless experience whether they interact with the company in a store , through one of its contact centers , on a desktop , tablet , smartphone or through social media . · to be viewed as the expert for the home , including the accompanying life stages that make a house a home , and to become the destination for customers ' needs and wants as they express their life interests and travel through their life stages , all through the expanding and differentiated products , services and solutions the company offers . the company 's objective is to be its customers ' first choice for products and services in the categories offered , in the markets , channels and countries in which the company operates , as those customers express their life interests and travel through their various life stages . the company strives to accomplish this objective through excellent customer service , including new products , services and solutions , and by offering an extensive breadth and depth of differentiated merchandise at the right value . the company is also enhancing its ability to achieve this objective through its ongoing commitment to world class information and interactive technology , comprehensive analytics and targeted marketing and communications . operating in the highly competitive retail industry , the company , along with other retail companies , is influenced by a number of factors including , but not limited to , general economic conditions including the housing market , unemployment levels and commodity prices ; the overall macroeconomic environment and related changes in the retailing environment ; consumer preferences , spending habits and adoption of new technologies ; unusual weather patterns and natural disasters ; competition from existing and potential competitors across all channels of distribution ; potential supply chain disruption ; and the ability to find suitable locations at acceptable occupancy costs and other terms to support the company 's plans for new stores . the company can not predict whether , when or the manner in which these factors could affect the company 's operating results . 19 the results of operations for the fiscal year ended february 27 , 2016 include of a kind since the date of acquisition in the second quarter of fiscal 2015. the following represents an overview of the company 's financial performance for the periods indicated : · net sales in fiscal 2015 increased approximately 1.9 % to $ 12.104 billion ; net sales in fiscal 2014 increased approximately 3.3 % to $ 11.881 billion over net sales of $ 11.504 billion in fiscal 2013. on a constant currency basis , which is a non-gaap measure , net sales increased approximately 2.3 % , as compared with fiscal 2014. net sales and comparable sales of the company 's foreign operations are calculated on a constant currency basis by translating the current year 's respective sales of its foreign operations at the same exchange rates used in the prior year . the non-gaap measure of net sales on a constant currency basis is intended to provide visibility into the company 's operations by excluding the effects of foreign currency exchange rate fluctuations . · comparable sales in fiscal 2015 increased by approximately 1.0 % , as compared with an increase of approximately 2.4 % for both fiscal 2014 and fiscal 2013. on a constant currency basis , comparable sales for fiscal 2015 increased by 1.4 % . for fiscal 2015 , comparable sales consummated through customer facing online websites and mobile applications increased in excess of 25 % over the corresponding period in the prior year , while comparable sales consummated in-store declined approximately 1 % over the corresponding period in the prior year . for fiscal 2014 , comparable sales consummated through customer facing online websites and mobile applications increased in excess of 50 % , over the corresponding period in the prior year , while comparable sales consummated in-store were relatively flat to the corresponding period in the prior year . comparable sales include sales consummated through all retail channels which have been operating for twelve full months following the opening period ( typically four to six weeks ) . story_separator_special_tag additionally , during fiscal 2016 , the company expects to continue to invest in technology related projects , including the deployment of new systems and equipment in its stores , enhancements to the company 's digital , web and mobile capabilities , ongoing investment in data analytics and the continued development and deployment of a new point of sale system . during fiscal 2015 , 2014 and 2013 , including the shares repurchased under an accelerated share repurchase agreement in fiscal 2014 , the company repurchased 18.4 million , 33.0 million and 18.3 million shares , respectively , of its common stock at a total cost of approximately $ 1.101 billion , $ 2.251 billion and $ 1.284 billion , respectively . subsequent to the end of fiscal 2015 , on april 6 , 2016 , the company 's board of directors authorized a quarterly dividend program , and declared an initial quarterly dividend of $ .125 per share to be paid on july 19 , 2016 to shareholders of record as of june 17 , 2016. the company expects to pay quarterly cash dividends on its common stock , in the future , subject to the determination by the board of directors based on an evaluation of the company 's earnings , financial condition and requirements , business conditions and other factors . 21 in addition to the quarterly dividend program , the company 's share repurchase program may be influenced by several factors , including business and market conditions . in addition , the company reviews its alternatives with respect to its capital structure on an ongoing basis . story_separator_special_tag items ( including salaries ) , occupancy expenses ( including rent ) and the year over year net benefits of certain non-recurring items , primarily relating to credit card fee litigation in the fiscal third quarter of 2014. the increase in technology expenses and related depreciation , as a percentage of net sales , represented approximately 30 basis points for fiscal 2014 as compared to the same period in the prior year . 23 operating profit operating profit for fiscal 2015 was $ 1.415 billion or 11.7 % of net sales , $ 1.554 billion or 13.1 % of net sales in fiscal 2014 and $ 1.615 billion or 14.0 % of net sales in fiscal 2013. the changes in operating profit as a percentage of net sales between fiscal 2015 and 2014 and between fiscal 2014 and 2013 were the result of the changes in gross profit margin and sg & a as a percentage of net sales as described above . the company believes operating margin compression is likely to continue in fiscal 2016 as a result of several items , including increases in , as a percentage of net sales , coupon expense , net direct to customer shipping expense , additional payroll start-up costs associated with the opening of the company 's lewisville , texas distribution facility , investments in compensation and benefits , and technology-related expenses , including depreciation related to the company 's ongoing investments . in addition , the year-over-year comparison of operating margin will be impacted by the non-recurring benefit relating to the state audit settlement which occurred in fiscal 2015. interest expense , net interest expense , net was $ 87.5 million , $ 50.5 million and $ 1.1 million in fiscal 2015 , 2014 and 2013 , respectively . for fiscal 2015 and fiscal 2014 , interest expense , net primarily related to interest on the senior unsecured notes issued in july 2014. income taxes the effective tax rate was 36.6 % for fiscal 2015 , 36.3 % for fiscal 2014 and 36.6 % for fiscal 2013. for fiscal 2015 and fiscal 2013 , the tax rate included net benefits of approximately $ 14.8 million and $ 20.0 million , respectively , primarily due to the recognition of favorable discrete state tax items . for fiscal 2014 , the tax rate included net benefits of approximately $ 20.0 million , primarily due to the recognition of favorable discrete federal and state tax items . potential volatility in the effective tax rate from year to year may occur as the company is required each year to determine whether new information changes the assessment of both the probability that a tax position will effectively be sustained and the appropriateness of the amount of recognized benefit . growth the company strives to do more for and with its customers by : offering an extensive breadth and depth of differentiated assortment of merchandise at the right value ; presenting merchandise in a distinctive manner designed to maximize customer convenience and reinforce customer perception of a wide selection ; and providing excellent customer service , including new products , services and solutions . the company is pursuing its growth objectives by investing in its omnichannel capabilities , optimizing its store operations and market coverage , including international expansion ; leveraging its combined expertise and product knowledge to provide products and services to hospitality , travel and other institutional customers ; and continuously reviewing opportunities for strategic acquisitions . 24 the company continues to expand , differentiate and leverage its merchandise assortment across all channels , concepts and countries in which it operates , to better engage with its customers wherever , whenever and however they express their life interests and travel through their life stages . through its growing analytic capabilities and omnichannel marketing approaches , the company strives to more efficiently and effectively understand and satisfy its customers ' needs . as of february 27 , 2016 , the company operated 1,530 stores plus its various websites , other interactive platforms and distribution facilities . the company 's 1,530 stores operate in all 50 states , the district of columbia , puerto rico and canada , including : 1,020 bbb stores , 276 cost plus world market stores , 105 baby stores , 78 cts stores and 51 harmon stores .
| results of operations the following table sets forth for the periods indicated ( i ) selected statement of earnings data of the company expressed as a percentage of net sales and ( ii ) the percentage change in dollar amounts from the prior year in selected statement of earnings data : replace_table_token_5_th net sales net sales in fiscal 2015 increased $ 222.7 million to $ 12.104 billion , representing an increase of 1.9 % over $ 11.881 billion of net sales in fiscal 2014 , which increased $ 377.2 million or 3.3 % over the $ 11.504 billion of net sales in fiscal 2013. on a constant currency basis , which is a non-gaap measure , net sales for fiscal 2015 increased approximately 2.3 % . net sales and comparable sales of the company 's foreign operations are calculated on a constant currency basis by translating the current year 's respective sales of its foreign operations at the same exchange rates used in the prior year . the non-gaap measure of net sales on a constant currency basis is intended to provide visibility into the company 's operations by excluding the effects of foreign currency exchange rate fluctuations . for fiscal 2015 , approximately 55 % of the increase was attributable to an increase in comparable sales and the remainder was primarily attributable to an increase in the company 's new store sales and linen holdings . for fiscal 2014 , approximately 71 % of the increase was attributable to an increase in comparable sales and the remainder was primarily attributable to an increase in the company 's new store sales . the increase in comparable sales for fiscal 2015 and fiscal 2014 was approximately 1.0 % and 2.4 % , respectively . the increase in comparable sales for fiscal 2015 was due to an increase in the average transaction amount , offset by a slight decrease in the number of transactions .
| 7,402 |
except for the historical information contained herein , the following discussion contains forward-looking statements that are subject to known and unknown risks , uncertainties and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements . we discuss such risks , uncertainties and other factors throughout this annual report and specifically under the caption “ forward-looking statements ” and under “ item 1a . risk factors ” in this annual report . in addition , the following discussion of financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes thereto appearing in item 8 in this annual report . business overview option care health , and its wholly-owned subsidiaries , provides infusion therapy and other ancillary health care services through a national network of 158 locations around the united states . the company contracts with managed care organizations , third-party payers , hospitals , physicians , and other referral sources to provide pharmaceuticals and complex compounded solutions to patients for intravenous delivery in the patients ' homes or other nonhospital settings . our services are provided in coordination with , and under the direction of , the patient 's physician . our multidisciplinary team of clinicians , including pharmacists , nurses , dietitians and respiratory therapists , work with the physician to develop a plan of care suited to each patient 's specific needs . we provide home infusion services consisting of anti-infectives , nutrition support , bleeding disorder therapies , immunoglobulin therapy , and other therapies for chronic and acute conditions . hc group holdings ii , inc. ( “ hc ii ” ) was incorporated under the laws of the state of delaware on january 7 , 2015 , with its sole shareholder being hc group holdings i , llc . ( “ hc i ” ) . on april 7 , 2015 , hc i and hc ii collectively acquired walgreens infusion services , inc. and its subsidiaries from walgreen co. , and the business was rebranded as option care , inc. ( “ option care ” ) . on march 14 , 2019 , hc i and hc ii entered into a definitive agreement ( the “ merger agreement ” ) to merge with and into a wholly-owned subsidiary of bioscrip , inc. ( “ bioscrip ” ) ( the “ merger ” ) , a national provider of infusion and home care management solutions , which was completed on august 6 , 2019 ( the “ merger date ” ) . the merger was accounted for as a reverse merger under the acquisition method of accounting for business combinations with option care being considered the accounting acquirer and bioscrip being considered the legal acquirer . following the close of the transaction , bioscrip was rebranded as option care health , inc. and the combined company 's stock , par value $ 0.0001 , was listed on the nasdaq capital market as of december 31 , 2019. effective february 3 , 2020 , the company was listed on the nasdaq global select market under the ticker symbol “ opch ” . see note 3 , business acquisitions , of the consolidated financial statements for further discussion of the merger . merger integration execution the merger of option care and bioscrip into option care health has created an opportunity to realize cost synergies while continuing to drive organic growth in chronic and acute therapies through our expanded national platform . option care health is well-positioned to leverage the investments in corporate infrastructure and drive economies of scale as a result of the merger . the forecasted synergy categories are as follows : selling , general and administrative expenses savings . merged corporate infrastructure has created significant opportunity for streamlining corporate and administrative costs , including headcount and functional spend . network optimization . the previous investments in technology and compounding pharmacies , along with the overlapping geographic footprint , allow for facility rationalization and the optimization of assets . procurement savings . the enhanced scale of the company generates supply chain efficiencies through increased purchasing leverage . the company 's platform is also positioned to be the partner of choice for pharmaceutical manufacturers seeking innovative distribution channels and patient support models to access the market . 26 we believe the achievement of these synergies will enable the delivery of high-quality , cost-effective solutions to providers across the country and help facilitate the introduction of new therapies to the marketplace while improving the profitability profile of the company . since the merger , we have worked to align our field and sales teams . we have also made strides at combining our procurement processes and contracts , all while continuing to focus on serving our patients . patient health is personal to us , which is why , throughout the integration process , we strive to improve and set the standard for quality care that is matched by best-in-class service . after completion of the merger , we have additional resources to invest in our people , processes and systems , providing us improved strength and scale to drive better patient outcomes . changes to medicare reimbursement in recent years , legislative changes have resulted in reductions in reimbursement under government healthcare programs . in december 2016 , the cures act legislation was signed into law , which decreased reimbursement for medicare part b durable medical equipment infusion drugs administered in an alternate site setting effective january 1 , 2017. the original legislation did not provide for reimbursement for the service component until 2021. center for medicare and medicaid services issued a final rule in october 2018 implementing a temporary transition benefit for medicare part b home infusion services , which will continue from january 1 , 2019 until january 1 , 2021. this temporary transition benefit defines professional services as only including nursing , and not pharmacy , care planning , care coordination , or monitoring , and only pays for an infusion day when the nurse is in the home . story_separator_special_tag the 2017 launch of additional therapies for the treatment of amyotrophic lateral sclerosis and duchenne muscular dystrophy resulted in a $ 138.9 million increase in the company 's revenue in 2018. the favorable impact of these items offset the disruption impact from the implementation of a new pharmacy system , which was deployed from november 2016 to november 2018. additionally , 2018 net revenue reflects a 31 decrease of $ 61.3 million related to the implementation of asc topic 606 , revenue from contracts with customers , ( see “ revenue recognition ” within note 2 , summary of significant accounting policies ) , which resulted in the previously reported provision for doubtful accounts being treated as an implicit price concession that reduces net revenue upon adoption in 2018. cost of revenue replace_table_token_10_th the increase in cost of revenue was primarily attributable to the increase in revenue , combined with a number of higher cost pharmaceuticals being introduced into the company 's therapy mix . this impact of the therapy mix shift on gross profit margin was partially offset by favorable formulary management and procurement contracts , as well as the introduction of generic alternatives . over the course of the year , the company focused on pharmacy efficiency through the utilization of regional compounding facilities and centers of excellence . in addition , the adoption of asc 606 in 2018 contributed to the decline in gross margin . operating expenses replace_table_token_11_th the $ 7.4 million increase in selling , general and administrative expenses was associated with the increase in sales volume , but as a percentage revenue declined to 17.8 % in 2018 from 18.5 % in 2017 as topline growth outpaced this incremental increase in operating costs and expenses . provision for doubtful accounts decreased as a result of the implementation of asc topic 606 ( see “ revenue recognition ” within note 2 , summary of significant accounting policies ) which resulted in the previously reported provision for doubtful accounts in 2017 being treated as an implicit price concession that reduces net revenue upon adoption in 2018. the increase in depreciation and amortization expense was primarily due to the investments made into the company 's pharmacy and information technology infrastructure in 2018. other income ( expense ) replace_table_token_12_th the $ 1.5 million increase in interest expense was attributable to the increasing variable interest rates associated with the outstanding debt . to minimize the impact of these increasing rates , the company repriced its first lien debt in june 2018 32 resulting in a lower spread over the underlying interest rate . additionally , the interest rate cap contracts entered into in 2017 partially mitigated the increase in interest expense . the increase in other , net was primarily due to costs incurred associated with the repricing of the previous first lien term loan . income tax expense ( benefit ) year ended december 31 , 2018 2017 variance ( in thousands , except for percentages ) income tax benefit $ ( 2,653 ) $ ( 18,585 ) $ 15,932 ( 85.7 ) % income tax benefit decreased $ 15.9 million , or 85.7 % . in december 2017 , the united states government enacted the tax cuts and jobs act of 2017 ( “ tcja ” ) , which significantly changed u.s. tax law by , among other things , reducing the corporate tax rate from 35 % to 21 % , effective january 1 , 2018. included in the tax benefit for 2017 is a benefit of $ 17.0 million related to the tax rate reduction , resulting in an effective income rate of 126.4 % . the company 's 2018 income tax benefit returned to a normalized run-rate with an effective income tax rate of 30.3 % . net ( loss ) income and other comprehensive ( loss ) income replace_table_token_13_th net income decreased $ 10.0 million . the decrease was primarily driven by the run-rate normalization of the impact of the tax reform legislation , which had a favorable impact in 2017. changes in unrealized gains on cash flow hedges , net of income taxes , increased $ 0.7 million . the increase in the variable interest rates during 2018 resulted in a corresponding increase in the fair value of the interest rate cap . net comprehensive loss was $ 5.3 million for the twelve months ended december 31 , 2018 , compared to net comprehensive income of $ 3.9 million for the twelve months ended december 31 , 2017 , primarily related to the impact of the tax reform legislation previously discussed . liquidity and capital resources for the years ended december 31 , 2019 and 2018 , the company 's primary sources of liquidity were cash on hand of $ 67.1 million and $ 36.4 million , respectively , as well as borrowings under its credit facilities , described further below . during the years ended december 31 , 2019 and 2018 , the company 's positive cash flows from operations have enabled investments in pharmacy and information technology infrastructure to support growth and create additional capacity in the future , as well as pursue acquisitions . the company 's primary uses of cash include supporting our ongoing business activities , integration efforts , and investment in various acquisitions and our infrastructure to support additional business volumes . ongoing operating cash outflows are associated with procuring and dispensing prescription drugs , personnel and other costs associated with servicing patients , as well as paying cash interest on the outstanding debt . ongoing investing cash flows are primarily associated with capital projects related to business acquisitions , the improvement and maintenance of our pharmacy facilities and investment in our information technology systems . ongoing financing cash flows are primarily associated with the quarterly principal 33 payments on our outstanding debt .
| results of operations the following table presents option care health 's consolidated results of operations for the years ended december 31 , 2019 , 2018 , and 2017 ( in thousands ) : 28 replace_table_token_4_th ( 1 ) 2019 includes the results of operations of bioscrip from august 6 , 2019 onward and are , therefore , not comparable to prior periods . ( 2 ) provision for doubtful accounts for the years ended december 31 , 2019 and 2018 reflect the adoption of asu 2014-09 , revenue from contracts with customers , and are , therefore , not comparable to prior periods . for a full discussion on the impacts of the adoption see note 4 , revenue , included in item 8 of this report . year ended december 31 , 2019 compared to year ended december 31 , 2018 the following tables present selected consolidated comparative results of operations for the years ended december 31 , 2019 and 2018 : net revenue year ended december 31 , 2019 2018 variance ( in thousands , except for percentages ) net revenue $ 2,310,417 $ 1,939,791 $ 370,626 19.1 % the 19.1 % increase in net revenue was primarily driven by additional revenue following the merger of $ 308.9 million . 29 additional increases in net revenue were the result of growth in the company 's portfolio of therapies , particularly those therapies to treat chronic conditions such as autoimmune inflammatory disorders . cost of revenue replace_table_token_5_th the 18.4 % increase in cost of revenue was primarily attributable to the increase in revenue . the increase in gross margin was driven by the therapy mix shift along with favorable formulary management and procurement contracts as we were able to take advantage of more favorable pricing due to increased buying power after the merger .
| 7,403 |
all comparisons below ( which are generally indicated by words such as “ increased , ” “ decreased , ” “ remained , ” or “ compared to ” ) , unless otherwise noted , are comparing the year ended december 31 , 2018 with the year ended december 31 , 2017. in 2018 , the company recorded an out-of-period adjustment for the years ended december 31 , 2017 and december 31 , 2016 , which increased cost of sales and decreased general and administrative expenses by $ 2.9 million and $ 2.6 million for the years ended december 31 , 2017 and december 31 , 2016 , respectively . such adjustment only applied to the north america segment , which resulted from recording certain depreciation expense on company-owned real estate as general and administrative expense rather than cost of goods sold . income from operations and net income for the year ended december 31 , 2017 as presented below were not affected by the adjustment . in 2018 , the company changed its presentation of its consolidated statement of operations to display foreign exchange gain ( loss ) , net , as a separate item below income from operations . foreign exchange gain ( loss ) , net , was previously included in general and administrative expenses and in income from operations . income before tax and net income for the years ended december 31 , 2017 and december 31 , 2016 presented below were not affected by the change in presentation . overview we design , manufacture and sell building construction products that are of high quality and performance , easy to use and cost-effective for customers . we operate in three business segments determined by geographic region : north america , europe and asia/pacific . our primary business strategy is to grow through increasing our market share and profitability in europe ; growing our share in the concrete space ; and continuing to develop our software to support our core wood products offering while leveraging our strengths in engineering , sales and distribution , and our strong brand name . we believe these initiatives and objectives are crucial to not only offer a more complete solution to our customers and bolster our sales of core wood connector products , but also to mitigate the cyclicality of the u.s. housing market . on october 30 , 2017 , we announced the 2020 plan to provide additional transparency into our strategic plan and financial objectives . we remain focused on achieving our aggressive financial targets under the 2020 plan , assuming ( i ) there are mid-single digit growth in u.s. housing starts and in the repair and remodel market , ( ii ) we can increase our market share and profitability in europe , and ( iii ) we can gain market share for both our truss and concrete product offerings . subject to future events and circumstances , our 2020 plan is centered on three key aggressive operational objectives as further described below . first , a continued focus on organic growth with a goal to achieve a net sales compound annual growth rate of approximately 8 % ( from $ 860.7 million reported in fiscal 2016 ) through fiscal 2020. since 2016 , net sales has grown at a compound annual growth rate of 12 % . second , rationalizing our cost structure to improve company-wide profitability by reducing total operating expenses as a percentage of net sales from 31.8 % in fiscal 2016 to a range of 26.0 % to 27.0 % by fiscal 2020. we expect to achieve this initiative , aside from top-line growth , through cost reduction measures in europe and our concrete product line , zero-based budgeting for certain expense categories and a commitment to remaining headcount neutral ( except in the production and sales departments to meet demands from sales growth ) . offsetting these reductions will be the company 's ongoing investment in its software initiatives as well as the expenses associated with our ongoing sap implementation . third , improving our working capital management and overall balance sheet discipline primarily through the reduction of inventory levels as well as implementing lean principles in many factories . with these efforts , we believe we could achieve an additional 25 % to 30 % reduction of our raw materials and finished goods inventory through 2020 without impacting day-to-day production and shipping procedures . 28 many of our key operating initiatives stem from the 2020 plan , including those focused on rationalizing our cost structure to drive improved profitability without sacrificing our competitive edge , on growing our market share and on improving our technologies and systems to provide best-in-class services to our customers . operating expenses as a percentage of net sales were 28.9 % for the year ended 2018 and 31.3 % for both years ended 2017 and 2016 . in dollars , operating expenses for the year ended december 31 , 2018 was $ 6.5 million above our operating expenses for the year ending december 31 , 2017 , which was mostly due to increased consulting and legal expenses , sales and sales agent commissions on increased sales volumes and sap implementation expenses . in late 2017 and throughout 2018 , we engaged a leading management consultant to perform an independent in-depth analysis of our operations , which contributed towards a reduction of expenses in 2018 and could potentially result in initiatives that reduce expenses beyond the 2020 plan as well as improvements to net working capital . we will incur additional consulting expenses in 2019 due to these initiatives , and we expect all of the consulting fees we incurred in 2018 and will incur in 2019 for the leading management consultant will have a one-year or less pay back . we believe our efforts to achieve the 2020 plan will contribute to improved business performance and operating results , improve returns on invested capital and allow us to be more aggressive in repurchasing shares of our stock in the near-term . story_separator_special_tag business segment information our north america segment has generated revenues primarily from wood construction products compared to concrete construction products . due to improved economic conditions , net sales in regions of the segment have trended up , including increases in housing starts , particularly in the north-western , south-western and south-eastern regions of the united states . our wood product net sales increased 12.6 % for the year ended december 31 , 2018 compared to the year ended december 31 , 2017 , primarily due to increased sales volumes and an 11 % price increase on a majority of our wood connector products sold in the united stated effective in the third quarter of 2018. our truss sales increased for the year ended 2018 due to increased sales volumes from customer conversions and unit sales prices . our truss specialists are focusing on converting medium size truss customers to our design and management software in 2019 , while continuing to support our smaller truss customers . to improve truss plate gross profit margins , we have relocated our truss manufacturing into our wood connector plants , which will increase efficiency and plant utilization in the wood connector plants . our concrete construction product sales increased 18.3 % for the year ended december 31 , 2018 compared to the year ended december 31 , 2017 , mostly due to increased sales volumes and unit sales prices . in late 2016 , we collaborated with the home depot , inc. ( “ the home depot ” ) to make available our mechanical anchor line of products in the home depot . this collaboration increased a portion of our finished goods inventory and we expect to continue to introduce our mechanical anchor line of products through approximately 1,900 of the home depot store locations by 2020. as of december 31 , 2018 , the product line had rolled out to 373 the home depot locations with another 400 expected by the end of the second quarter of 2019. the roll-out is occurring a much slower rate than expected due to space restrictions at the home depot stores . this slower roll-out ; however , is not expected to affect our 2020 plan target for compound annual sales growth . see “ north america ” below . our europe segment generates more revenues from wood construction products than concrete construction products . wood construction product sales decreased 6.5 % for the year ended december 31 , 2018 compared to the year ended december 31 , 2017 . net sales on wood construction products for the year ended december 31 , 2017 included $ 12.8 million of net sales provided by gbo fastening systems ' poland and romania , both of which were sold during the latter part of 2017. concrete construction product sales are mostly project based , and net sales increased 7.4 % for the year ended 2018 compared to the year ended 2017 , primarily due to increased sales volumes . the roll-out of the complete line of of gbo fastener products into the nordic region and france is progressing as planned . we are increasing our wood connector sales presence in the nordic region as expected , which will partially replace third-party suppliers and improve related profit margins . operating expenses decreased $ 3.1 million for the year ended 2018 compared to the year ended 2017 , partly due to the sale of gbo fastening systems ' poland and romania subsidiaries as well as other cost reductions measures . see “ europe ” below . our asia/pacific segment has generated revenues from both wood and concrete construction products . we believe that the asia/pacific segment is not significant to our overall performance . 30 ( 1 ) when referred to above , the company 's return on invested capital ( “ roic ” ) for a fiscal year is calculated based on ( i ) the net income of that year as presented in the company 's consolidated statements of operations prepared pursuant to generally accepted accounting principles in the u.s. ( “ gaap ” ) , as divided by ( ii ) the average of the sum of the total stockholders ' equity and the total long-term liabilities at the beginning of and at the end of such year , as presented in the company 's consolidated balance sheets prepared pursuant to gaap for that applicable year . as such , the company 's roic , a ratio or statistical measure , is calculated using exclusively financial measures presented in accordance with gaap . business outlook based on current information and subject to future events and circumstances : the company currently anticipates that the market price of steel will be flat during the first quarter of 2019. the company estimates that its full-year 2019 gross profit margin will be between approximately 44.5 % and 45.5 % . the company estimates that its full-year 2019 operating expenses , as a percentage of net sales , will be between approximately 27.5 % and 28.5 % . the company estimates that its 2019 full-year effective tax rate will be between approximately 25 % to 27 % including both federal and state income tax rates . the ultimate impact of the tax reform act may differ materially from the company 's estimates due to changes in the interpretations and assumptions made by the company as well as additional regulatory guidance that may be issued and actions the company may have taken or may take as a result of the tax cuts and jobs act , such as cash repatriation to the united states . the company will continue to assess the expected impacts of the new tax law and provide additional disclosures at appropriate times . story_separator_special_tag style= '' font-family : inherit ; font-size:10pt ; '' > * the statistic is not meaningful or material . the following table shows gross profit percentages by segment for the years ended december 31 , 2017 and 2018 , respectively : replace_table_token_8_th * the statistic is not meaningful or material .
| results of operations the following table sets forth , for the years indicated , the company 's operating results as a percentage of net sales for the years ended december 31 , 2018 , 2017 and 2016 , respectively : replace_table_token_3_th 31 comparison of the years ended december 31 , 2018 and 2017 unless otherwise stated , the results announced below , when providing comparisons ( which are generally indicated by words such as “ increased , ” “ decreased , ” “ unchanged ” or “ compared to ” ) , compare the results of operations for the year ended december 31 , 2018 , against the results of operations for the year ended december 31 , 2017 . unless otherwise stated , the results announced below , when referencing “ both years , ” refer to the year ended december 31 , 2017 and the year ended december 31 , 2018 . to avoid fractional percentages , all percentages presented below were rounded to the nearest whole number . the following table shows the change in the company 's operations from 2017 to 2018 , and the increases or decreases for each category by segment : replace_table_token_4_th net sales increased 10.4 % to $ 1,078.8 million from $ 977.0 million . net sales to contractor distributors , dealer distributors , home centers and lumber dealers increased primarily due to increased home construction activity and average net sales unit prices . wood construction product net sales , including sales of connectors , truss plates , fastening systems , fasteners and shearwalls , represented 85 % of the company 's total net sales in both years . concrete construction product net sales , including sales of adhesives , chemicals , mechanical anchors , powder actuated tools and reinforcing fiber materials , represented 15 % of the company 's total net sales in both years . gross profit increased to $ 480.5 million from $ 443.4 million .
| 7,404 |
as of april 30 , 2013 , there was approximately $ 670,000 of total unrecognized compensation cost related to non-vested stock options granted under the plans story_separator_special_tag you should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included elsewhere in this annual report . some of the information contained in this discussion and analysis or set forth elsewhere in this annual report , including information with respect to our plans and strategy for our business and related financing , includes forward-looking statements that involve risks and uncertainties . you should review the `` risk factors '' section of this annual report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis . our fiscal year ends on april 30. references to fiscal 2013 are to the fiscal year ended april 30 , 2013 . 30 overview we develop and are seeking to commercialize proprietary systems that generate electricity by harnessing the renewable energy of ocean waves . our powerbuoy® systems use proprietary technologies to convert the mechanical energy created by the rising and falling of ocean waves into electricity . we currently offer and continue to develop two powerbuoy product lines , which consist of our utility powerbuoy system and our autonomous powerbuoy system . we also offer operations and maintenance services for our powerbuoy systems . in addition , we continue to develop and expect to market our undersea substation pod product and undersea power connection infrastructure services to other companies in the marine energy sector . since fiscal 2002 , the us navy and other government agencies have accounted for a significant portion of our revenues . these revenues were largely for the support of our product development efforts . our goal is that an increased portion of our revenues be from the sale of products and maintenance services , as compared to revenue to support our product development efforts . as we continue to advance our proprietary technologies , we expect to have a net decrease in cash from operating activities unless or until we achieve positive cash flow from the planned commercialization of our products and services . we market our utility powerbuoy system , which is designed to supply electricity to a local or regional power grid , to utilities and other electrical power producers seeking to add electricity generated by wave energy to their existing electricity supply . we market our autonomous powerbuoy system , which is designed to generate power for use independent of the power grid , to customers that require electricity in remote locations . we believe there are a variety of potential applications for our autonomous powerbuoy system , including sonar and radar surveillance , tsunami warning , oceanographic data collection , offshore platforms and offshore aquaculture . we were incorporated in new jersey in april 1984 , began business operations in 1994 , and were re-incorporated in delaware in 2007. we currently have three wholly-owned subsidiaries , ocean power technologies ltd. , reedsport opt wave park llc and oregon wave energy partners i , llc , and we own approximately 88 % of the ordinary shares of ocean power technologies ( australasia ) pty ltd ( opta ) . in march 2012 , opta acquired its 100 % ownership of victorian wave partners pty . ltd. the development of our technology has been funded by capital we raised and by development engineering contracts we received starting in fiscal 1995. in fiscal 1996 , we received the first of several research contracts with the us navy to study the feasibility of wave energy . as a result of those research contracts , we entered into our first development and construction contract with the us navy in fiscal 2002 under a project for the development and testing of our wave power systems at the us marine corps base in oahu , hawaii . this project included the grid-connection of one of our utility-grade powerbuoys at the marine corps base . we generated our first revenue relating to our autonomous powerbuoy system from contracts with lockheed martin corporation , or lockheed martin , in fiscal 2003 , and we entered into our first development and construction contract with lockheed martin in fiscal 2004 for the development and construction of a prototype demonstration autonomous powerbuoy system . subsequently , we received a contract from the us navy to test our autonomous powerbuoy system as a power source for the navy 's deep water active detection system ( dwads ) . in 2011 , an autonomous powerbuoy was deployed for ocean trials off the coast of new jersey under a contract from the us navy under its littoral expeditionary autonomous powerbuoy ( leap ) program . the leap powerbuoy , or apb-350 , incorporates a unique power take-off and on-board storage system , and is significantly smaller and more compact than our standard utility powerbuoy . it is designed to provide persistent , off-grid clean energy in remote ocean locations for a wide variety of maritime security , monitoring and other commercial applications . also , in 2011 , ocean trials of our first mark 3 powerbuoy ( previously referred to as “ 150kw powerbuoy ” or “ pb150 ” ) were conducted . these ocean trials were conducted at a site approximately 33 nautical miles from invergordon , off scotland 's northeast coast . during the ocean trials , our mark 3 powerbuoy produced power in excess of our expectations of performance . our utility scale mark 3 powerbuoy structure and mooring system achieved independent certification from lloyd 's register in december 2010. this certification confirms that the mark 3 powerbuoy design complies with the requirements of lloyd 's 1999 rules and regulations for the classification of floating offshore installations at fixed locations . story_separator_special_tag currently , the cost of electricity generated from wave energy , without the benefit of subsidies or other economic incentives , substantially exceeds the prevailing price of electricity in many significant markets in the world . as a result , the near-term growth of the market opportunity for our utility powerbuoy systems , which are designed to feed electricity into a local or regional power grid , depends significantly on the availability and magnitude of government incentives and subsidies for wave energy . federal , state and local governmental bodies in many countries have provided subsidies in the form of tariff subsidies , rebates , tax credits and other incentives to utilities , power generators and distributors using renewable energy . however , these incentives and subsidies generally decline over time , and many incentive and subsidy programs have specific expiration dates . the timing , scope and size of new government programs for renewable energy is uncertain , and there can be no assurances that we or our customers will be successful in obtaining any additional government funding . we do not believe the continuing global economic uncertainty will have a material negative impact on our sources of supply , as our products incorporate what are substantially non-custom , standard parts found in many regions of the world . financial operations overview the following describes certain line items in our statement of operations and some of the factors that affect our operating results . revenues generally , we recognize revenue using the percentage-of-completion method based on the ratio of costs incurred to total estimated costs at completion . in certain circumstances , revenue under contracts that have specified milestones or other performance criteria may be recognized only when our customer acknowledges that such criteria have been satisfied . in addition , recognition of revenue ( and the related costs ) may be deferred for fixed-price contracts until contract completion if we are unable to reasonably estimate the total costs of the project prior to completion . because we have a small number of contracts , revisions to the percentage-of-completion determination or delays in meeting performance criteria or in completing projects may have a significant effect on our revenue for the periods involved . upon anticipating a loss on a contract , we recognize the full amount of the anticipated loss in the current period . generally our contracts are either cost plus or fixed price contracts . under cost plus contracts , we bill the customer for actual expenses incurred plus an agreed-upon fee . revenue is typically recorded using the percentage-of-completion method based on the maximum awarded contract amount . in certain cases , we may choose to incur costs in excess of the maximum awarded contract amounts resulting in a loss on the contract . currently , we have two types of fixed price contracts , firm fixed price and cost-sharing . under firm fixed price contracts , we receive an agreed-upon amount for providing products and services that are specified in the contract . revenue is typically recorded using the percentage-of-completion method based on the contract amount . depending on whether actual costs are more or less than the agreed-upon amount , there is a profit or loss on the project . under cost-sharing contracts , the fixed amount agreed upon with the customer is only intended to fund a portion of the costs on a specific project . we fund the remainder of the costs as part of our product development efforts . revenue is typically recorded using the percentage-of-completion method based on the amount agreed upon with the customer . an amount corresponding to the revenue is recorded in cost of revenues resulting in gross profit on these contracts of zero . our share of the costs is recorded as product development expense . most of our projects in fiscal year 2013 were under cost-sharing contracts . 32 the following table provides information regarding the breakdown of our revenues by customer for fiscal years 2013 and 2012 : replace_table_token_3_th the revenue decrease for fiscal 2013 reflected significant decreases in revenue from the us navy attributable to completion of the leap program in 2012 and the revenue related to our mark 4 powerbuoy development project . the revenue decrease was partially offset by increases in revenue from our project with mitsui engineering & shipbuilding and our powerbuoy project off the coast of oregon . overall , the us navy has been our largest customer since fiscal 2002. the doe was our largest customer in fiscal 2013 and in fiscal 2012. combined , these two customers accounted for 54 % of our revenues in fiscal 2013 and 61 % of our revenues in fiscal 2012. we currently focus our sales and marketing efforts on the west coast of north america , the west coast of europe , australia and the east coast of japan . the following table shows the percentage of our revenues by geographical location of our customers for fiscal years 2013 and 2012 : replace_table_token_4_th cost of revenues our cost of revenues consists primarily of incurred material , labor and manufacturing overhead expenses , such as engineering expense , equipment depreciation and maintenance and facility related expenses , and includes the cost of powerbuoy parts and services supplied by third-party suppliers . cost of revenues also includes powerbuoy system delivery and deployment expenses and may include anticipated losses at completion on some contracts . we operated at a gross profit of $ 0.1 million in both fiscal 2013 and 2012. most of our revenue recorded in fiscal 2013 was generated from cost-sharing contracts , which result in zero gross profit . our ability to generate a gross profit will depend on the nature of future contracts , our success at increasing sales of our powerbuoy systems and on our ability to manage costs incurred on fixed price commercial contracts .
| results of operations this section should be read in conjunction with the discussion below under “ liquidity and capital resources ” . fiscal years ended april 30 , 2013 and 2012 the following table contains statement of operations information , which serves as the basis of the discussion of our results of operations for the years ended april 30 , 2013 and 2012 : replace_table_token_5_th ( 1 ) certain subtotals may not add due to rounding . revenues revenues decreased by $ 2.1 million in fiscal 2013 , or 37 % , to $ 3.6 million as compared to $ 5.7 million in fiscal 2012. the change in revenues was attributable primarily to the following factors : revenues relating to our utility powerbuoy system decreased by $ 0.6 million due primarily to a decrease in billable work on our mark 4 powerbuoy development project and our waveport project off the coast of spain . this was partially offset by increases in revenue related to our project with mitsui engineering & shipbuilding and our powerbuoy project off the coast of oregon . revenues relating to our autonomous powerbuoy system decreased by $ 1.5 million as a result of a decrease in billable work on our project to provide our powerbuoy technology to the us navy 's leap program . the leap program has been completed in fiscal 2012. cost of revenues cost of revenues decreased by $ 2.2 million , or 39 % , to $ 3.5 million in fiscal 2013 , as compared to $ 5.7 million in fiscal 2012. this decrease in the cost of revenues reflected the decreased costs related to our mark 4 powerbuoy development project as well as our leap project with the us navy . this was partially offset by the increased activity on our project with mitsui engineering & shipbuilding and our powerbuoy project off the coast of oregon .
| 7,405 |
targeted assets include pipelines , storage tanks , transmission lines , and gathering systems , among others . these sale-leaseback or real property mortgage transactions provide the energy company with a source of capital that is an alternative to other sources such as corporate borrowing , bond offerings , or equity offerings . many of the company 's leases contain participation features in the financial performance or value of the underlying infrastructure real property asset . the triple-net lease structure requires that the tenant pay all 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 and seeks to own assets in the u.s. energy sector that perform utility-like functions , such as pipelines , storage terminals , rail terminals and gas and electric transmission and distribution assets . we also may provide other types of capital , including loans secured by energy infrastructure assets . our objective has been to generate long-term contracted revenue from operators of our assets , primarily under triple-net participating leases without direct commodity price exposure . as a result of having received the plr , we are now able to consider , and are considering , a broader set of investment opportunities than was available to us prior to issuance of the plr . for additional information , see `` company overview '' in item 1 of this report . 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 transactions provide the energy company with a source of capital that is an alternative to sources such as corporate borrowing , 42 glossary of defined terms bond offerings , or equity offerings . we believe our leadership team 's energy and utility expertise provides corenergy with a competitive advantage to acquire , own and lease u.s. energy infrastructure assets in a tax-efficient , transparent and investor-friendly reit . basis of presentation the consolidated financial statements include corenergy infrastructure trust , inc. , as of december 31 , 2019 , and its direct and indirect wholly-owned subsidiaries . all significant intercompany accounts and transactions have been eliminated in consolidation . story_separator_special_tag style= '' font-family : arial ; font-size:8pt ; '' > $ 47,185,463 other income ( expense ) net distributions and other income $ 1,328,853 $ 106,795 $ 680,091 net realized and unrealized gain ( loss ) on other equity securities — ( 1,845,309 ) 1,531,827 interest expense ( 10,578,711 ) ( 12,759,010 ) ( 12,378,514 ) gain on the sale of leased property , net — 11,723,257 — loss on extinguishment of debt ( 33,960,565 ) — ( 336,933 ) total other expense ( 43,210,423 ) ( 2,774,267 ) ( 10,503,529 ) income before income taxes 4,314,113 41,293,150 36,681,934 income tax expense ( benefit ) , net 234,618 ( 2,418,726 ) 2,345,318 net income 4,079,495 43,711,876 34,336,616 less : net income attributable to non-controlling interest — — 1,733,826 net income attributable to corenergy stockholders $ 4,079,495 $ 43,711,876 $ 32,602,790 preferred dividend requirements 9,255,468 9,548,377 7,953,988 net income ( loss ) attributable to common stockholders $ ( 5,175,973 ) $ 34,163,499 $ 24,648,802 other financial data ( 1 ) adjusted ebitda re $ 71,435,331 $ 69,395,739 $ 67,944,360 nareit ffo 16,870,068 46,796,201 46,308,969 ffo 16,857,484 47,959,311 46,046,781 affo 53,012,786 49,024,120 50,536,194 ( 1 ) refer to the `` non-gaap financial measures '' section that follows for additional details . year ended december 31 , 2019 compared to year ended december 31 , 2018 revenue . consolidated revenues were $ 85.9 million for the year ended december 31 , 2019 compared to $ 89.2 million for the year ended december 31 , 2018 , representing a decrease of $ 3.3 million . lease revenue was $ 67.1 million and $ 72.7 million for the years ended december 31 , 2019 and 2018 , respectively , with the decrease of approximately $ 5.7 million driven primarily by ( i ) the sale of the portland terminal facility , partially offset by ( ii ) an increase in variable rent collected on the pinedale lease during the year ended december 31 , 2019. transportation and distribution revenue from our subsidiaries mogas and omega was $ 18.8 million and $ 16.5 million for the years ended december 31 , 2019 and 2018 , respectively . story_separator_special_tag the following table provides a reconciliation of the gross cash distributions and dividend income received from our investment securities for the years ended december 31 , 2019 and 2018 to the net distributions and other income recorded on the consolidated statements of income . 45 glossary of defined terms for the years ended december 31 , 2019 2018 gross cash distributions and other income received from investment securities $ 1,328,853 $ 770,734 add : cash distributions received in prior period previously deemed a return of capital ( dividend income ) which have been reclassified as income ( return of capital ) in a subsequent period — — less : cash distributions and dividends received in current period deemed a return of capital and not recorded as income ( recorded as a cost reduction ) in the current period — 663,939 net distributions and other income $ 1,328,853 $ 106,795 net realized and unrealized loss on other equity securities . for the year ended december 31 , 2018 , we recorded a net loss on other equity securities of $ 1.8 million . the net loss recorded during the year ended december 31 , 2018 related to valuation considerations surrounding the arbitration award delivered to eni usa and gulf lng as well as other market information . due to the sale or asset disposition related to our investment securities at the end of 2018 and the liquidation of the remaining investment interest at the end of 2019 , we no longer have an interest in other equity securities . interest expense . for the years ended december 31 , 2019 and 2018 , interest expense totaled approximately $ 10.6 million and $ 12.8 million , respectively . the decrease was primarily attributable to ( i ) a decrease in interest expense as a result of the 7.00 % convertible notes exchanges and conversions that occurred during the year ended december 31 , 2019 , partially offset by ( ii ) additional interest expense from the 5.875 % convertible notes offering in august of 2019. for additional information , see part iv , item 15 , note 11 ( `` debt '' ) . gain on the sale of leased property . for the year ended december 31 , 2018 , a gain on the sale of leased property totaling approximately $ 11.7 million was recorded in connection with the sale of the portland terminal facility to zenith terminals on december 21 , 2018. for additional information , see part iv , item 15 , note 3 ( `` leased properties and leases '' ) . there was no gain on the sale of leased property recorded for the year ended december 31 , 2019 . loss on extinguishment of debt . for the year ended december 31 , 2019 , a loss on extinguishment of debt totaling approximately $ 34.0 million was recorded in connection with the 7.00 % convertible notes exchanges completed in the first and third quarters of 2019. for additional information , see part iv , item 15 , note 11 ( `` debt '' ) . there was no loss on extinguishment of debt recorded for the year ended december 31 , 2018 . income tax expense ( benefit ) . income tax expense was $ 235 thousand for the year ended december 31 , 2019 compared to an income tax benefit of $ 2.4 million for the year ended december 31 , 2018 . the income tax expense recorded in the current year is primarily the result of ( i ) a change in our state effective rate due to changes in state law and state operations by certain of our trs entities , ( ii ) certain fixed asset , deferred contract revenue and loan loss activities , partially offset by ( iii ) the impact of the refund liability related to the ferc rate case settlement and ( iv ) capital losses generated from the lightfoot liquidation that will be carried back against capital gains from prior years . the income tax benefit recorded in the prior year was primarily attributable to ( i ) higher losses generated by our trs subsidiaries and ( ii ) the capital losses generated from the sale of our interest in joliet to zenith terminals and lightfoot 's disposition of its remaining asset interest that were carried back against capital gains generated from the sale of a portion of the lightfoot investment in prior years . net income . net income was $ 4.1 million and $ 43.7 million for the years ended december 31 , 2019 and 2018 , respectively , representing a decrease of $ 39.6 million . after deducting $ 9.3 million and $ 9.5 million for the portion of preferred dividends that are allocable to each respective period , net income ( loss ) attributable to common stockholders for the year ended december 31 , 2019 was $ ( 5.2 ) million , or $ ( 0.40 ) per basic and diluted common share , as compared to $ 34.2 million , or $ 2.86 per basic and $ 2.79 diluted common share , for the prior year . year ended december 31 , 2018 compared to year ended december 31 , 2017 revenue . consolidated revenues were $ 89.2 million for the year ended december 31 , 2018 compared to $ 88.7 million for the year ended december 31 , 2017 , representing an increase of $ 482 thousand . lease revenue was $ 72.7 million and $ 68.8 million for the years ended december 31 , 2018 and 2017 , respectively , with the increase of approximately $ 3.9 million driven primarily by variable rent collected on the pinedale lease during 2018. transportation and distribution revenue from our subsidiaries mogas and omega was $ 16.5 million and $ 19.9 million for the years ended december 31 , 2018 and 2017 , respectively . the $ 3.5 million decrease primarily resulted from a change to straight-line revenue recognition on mogas ' long-term contract with spire under the new revenue recognition standard that was adopted on january 1 , 2018.
| results of operations the following table summarizes the financial data and key operating statistics for corenergy for the years ended december 31 , 2019 , 2018 and 2017 . 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 . 43 glossary of defined terms the following table and discussion are a summary of our results of operations for the years ended december 31 , 2019 , 2018 and 2017 : for the years ended december 31 , 2019 2018 2017 revenue lease revenue $ 67,050,506 $ 72,747,362 $ 68,803,804 transportation and distribution revenue 18,778,237 16,484,236 19,945,573 financing revenue 116,827 — — total revenue 85,945,570 89,231,598 88,749,377 expenses transportation and distribution expenses 5,242,244 7,210,748 6,729,707 general and administrative 10,596,848 13,042,847 10,786,497 depreciation , amortization and aro accretion expense 22,581,942 24,947,453 24,047,710 provision for loan gain — ( 36,867 ) — total expenses 38,421,034 45,164,181 41,563,914 operating income $ 47,524,536 $ 44,067,417 < font
| 7,406 |
2016-02 , “ leases ” ( topic 842 ) , which supersedes the existing guidance for lease accounting , “ leases ” ( topic 840 ) . asu no . 2016-02 requires lessees to recognize a lease liability and a right-of-use asset for all leases that extend beyond one year . the amendments in this asu will be effective for us for interim and annual periods beginning after december 15 , 2018. the original guidance required application on a modified retrospective basis with the earliest period presented in the financial statements . in august 2018 , the fasb issued asu 2018-11 , “ targeted improvements ” to asc 842 , which includes an option to not restate comparative periods in transition and instead to elect to use the effective date of asc 842 , “ leases ” , as the date of initial application of transition . based on the effective date , this guidance will apply and the company will adopt this asu beginning on january 1 , 2019 , and the company plans to elect the transition option provided under asu 2018-11. we have completed the qualitative analysis from the lessee perspective . as part of our process , we elected to utilize certain practical expedients that were provided for transition relief . accordingly , we are not reassessing expired or existing contracts , lease classifications or related initial direct costs as part of our assessment process . additionally , we elected the practical expedient to treat lease and non-lease components of fixed payments due to the lessor as one , and therefore no separate allocation is required on the initial implementation date of january 1 , 2019 , and thereafter . we anticipate the adoption of this standard will result in an increase in our right of use assets and lease liabilities in the range of $ 5.8 to $ 6.6 million recorded on our consolidated balance sheets on january 1 , 2019. the company does not believe the adoption of this guidance will have a material impact on its consolidated results of operations or cash flows . 45 2. discontinued operations in december 2016 , the company 's board of directors approved plans to discontinue its cardiac diagnostic monitoring business . the company sold the cardiac diagnostic monitoring business on february 17 , 2017 to datrix , llc . the following table shows the results of the cardiac diagnostic monitoring discontinued operations : replace_table_token_18_th in 2016 , the company evaluated the cardiac diagnostic monitoring business for impairment and recorded non-cash impairment charges of $ 796 . in determining the nonrecurring fair value measurements of the impairment of other short and long-term assets , the company utilized the market value approach . based on the market value assessment , the company determined fair values for the identified assets and incurred impairment charges for the remaining book value of the assets during the year ended december 31 , 2016 as set forth in the table below . these charges were reflected in the company 's discontinued operations in 2016. replace_table_token_19_th the company sold the assets of the discontinued operations on february 17 , 2017 to datrix , llc , who also assumed certain liabilities as part of the asset sale agreement . the company recognized a loss of $ 164 relating to the sale of the discontinued operations . 3. restructuring charges during 2016 , the company incurred restructuring charges of $ 132 , related to intricon uk limited facility moving costs . the company does not expect to incur any additional cash charges related to this restructuring . 4. acquisitions acquisition of hearing help express in october 2016 , the company purchased 20 percent of hearing help express . the company paid a total of $ 693 . based on the facts and circumstances surrounding the management of the business and the funding of working capital needs , the company determined that based on its ability to control the operations of hearing help express and the likelihood that the company bears the largest risk and reward of its financial results , the results of hearing help express should be consolidated in the company 's consolidated financial statements . 46 the company accounted for the transaction as a business combination in the fourth quarter of 2016. the transaction allows the company entry into the sale of products directly story_separator_special_tag company overview intricon corporation ( together with its subsidiaries , the “ company ” or “ intricon ” , “ we ” , “ us ” or “ our ” ) is an international company engaged in designing , developing , engineering , manufacturing and distributing body-worn devices . the company serves the body-worn device market by designing , developing , engineering , manufacturing and distributing micro-miniature products , microelectronics , micro-mechanical assemblies and complete assemblies , primarily for biotelemetry devices , hearing instruments and professional audio communication devices . as discussed below , the company has two operating segments - its body-worn device segment and its hearing health direct-to-end-consumer segment . our expertise in these segments is focused on four main markets : medical biotelemetry , hearing health , hearing health direct-to-end-consumer and professional audio communications . within these chosen markets , we combine ultra-miniature mechanical and electronics capabilities with proprietary technology – including ultra low power ( ulp ) wireless and digital signal processing ( dsp ) capabilities – that enhances the performance of body-worn devices . story_separator_special_tag research and development decreased over the prior year due to decreased outside service costs . restructuring charges during 2016 , the company incurred restructuring charges of $ 132 , related to intricon uk 's facility moving costs . interest expense interest expense for 2017 was $ 716 , an increase of $ 163 from $ 553 in 2016. the increase in interest expense was primarily due to higher average interest rates along with interest expenses generated from hhe that were not incurred for the full year in 2016. other expense , net in 2017 , other expense , net was $ ( 367 ) compared to $ ( 602 ) in 2016. the decrease was primarily due to foreign exchange rate gains in 2017 that did not occur in 2016 and $ 205 in net costs related to pursuing targeted acquisitions incurred in 2016. income tax expense income taxes were as follows : replace_table_token_10_th the expense in 2017 and 2016 was primarily due to foreign taxes on german and indonesia operations . in 2017 , income tax expense was partially offset by a singapore tax benefit recognized during 2017. loss from discontinued operations loss from discontinued operations , net of income taxes , was $ 128 and $ 1,770 for the years ended december 31 , 2017 and december 31 , 2016. loss on sale of discontinued operations loss on sale of discontinued operations , net of income taxes , was $ 164 for the year ended december 31 , 2017 due to our sale of datrix , llc . please refer to note 2 for additional information . loss allocated to non-controlling interest loss allocated to non-controlling interest of $ 938 and $ 157 for the years ended december 31 , 2017 and december 31 , 2016 were primarily due to losses within hhe , and the lack of 100 % ownership in this entity for the entire year . 28 liquidity and capital resources our primary sources of cash have been cash flows from operations , bank borrowings , and sales of equity . for the last three years , cash has been used for repayments of bank borrowings , the acquisition of hhe , purchases of equipment and working capital to support growth . as of december 31 , 2018 , we had approximately $ 8,047 of cash , cash equivalents and restricted cash on hand . sources of our cash for the year ended december 31 , 2018 have been from our financing activities , as described below . consolidated net working capital increased to $ 62,897 at december 31 , 2018 from $ 8,985 at december 31 , 2017. our cash flows from operating , investing and financing activities , as reflected in the statement of cash flows for the years ended december 31 , are summarized as follows : replace_table_token_11_th operating activities . the most significant items that contributed to the $ 177 provided by operating activities were net income of $ 5,547 , add backs for non-cash depreciation and stock-based compensation , and increases in accounts payable , partially offset by increases in inventory , contract assets and accounts receivable to support business growth . days sales in inventory decreased from 89 at december 31 , 2017 to 79 at december 31 , 2018. days payables outstanding decreased from 71 days at december 31 , 2017 to 65 days at december 31 , 2018. day sales outstanding decreased from 36 days at december 31 , 2017 to 34 days at december 31 , 2018. cash generated from operations may be affected by a number of factors . see “ forward looking statements ” and “ item 1a risk factors ” contained in this form 10-k for a discussion of some of the factors that can negatively impact the amount of cash we generate from our operations . investing activities . net cash used in investing activities of $ 44,997 consisted of purchases of $ 38,093 in investment securities , $ 5,507 in purchases of property , plant and equipment , and $ 1,397 for the investment in several of the company 's joint ventures , including soundperience , signison and others . financing activities . net cash provided by financing activities of $ 52,000 was comprised primarily of proceeds from the issuance of common stock , net of offering costs , of $ 88,967 and proceeds from long-term debt of $ 14,169 partially offset by repayments of borrowings of $ 25,868 and the payments for repurchase of common stock and related costs of $ 25,907. we had the following bank arrangements at december 31 : replace_table_token_12_th during the second half of 2018 , we utilized proceeds from our public offering ( see note 18 ) and repaid all of our domestic and foreign bank debt . 29 domestic credit facilities the company and its domestic subsidiaries are parties to a credit facility with cibc bank usa ( formerly known as the privatebank and trust company ) . the credit facility , as amended through december 31 , 2018 , provides for a $ 11,000 revolving credit facility , with a $ 200 sub facility for letters of credit . under the revolving credit facility , the availability of funds depends on a borrowing base composed of stated percentages of the company 's eligible trade receivables and eligible inventory , and eligible equipment less a reserve .
| business highlights in january 2019 , the company purchased the source code for the sentibo smart brain self-fitting software from soundperience for 1,829 euros , positioning the company to capitalize on the pending over-the-counter ( otc ) hearing aid regulation . sentibo smart brain self-fitting software is designed to improve both channel productivity and the quality of first-time fittings , resulting in lower prices , greater access and increased customer satisfaction . this software is being used in the german market today , most notably through signison , the company 's joint venture with the majority owner of soundperience . in addition , the company transferred its 49 % ownership interest in soundperience to the majority owner of soundperience . on august 20 , 2018 , the company completed a public offering and sale of 1,725 shares of common stock at a price to the public of $ 55.00 per share less an underwriting discount of $ 3.30 per share . the net proceeds from this offering , after deducting underwriting discounts and offering expenses , totaled approximately $ 88,967 and were used to repay debt , fund capital expenditures , to repurchase 500 shares of common stock owned by directors and officers and for working capital and other general corporate purposes . the amount of domestic and foreign bank debt repaid from the offering was $ 16,381. in march 2018 , the company entered into a new 5-year lease for an additional 37,000 square foot manufacturing and clean room facility near our corporate headquarters in arden hills , minnesota . in addition , during 2018 the company added 13 new molding presses , as well as a high-speed printed circuit board assembly line in minnesota . in june 2018 , the company entered into an additional 10,000 square foot medical assembly space in singapore . the added capacity and equipment will aid us in meeting the anticipated rising demand in our medical biotelemetry business .
| 7,407 |
as of december 31 , 2014 , the company also had available a $ 125.0 million unsecured line of credit commitment , which expires story_separator_special_tag management 's overview for the year ended december 31 , 2014 , net earnings attributable to stewart were $ 29.8 million , or $ 1.24 per diluted share , compared to $ 63.0 million , or $ 2.60 per diluted share , for the same period in 2013. pretax earnings for the year ended december 31 , 2014 were $ 51.8 million , compared to pretax earnings of $ 101.1 million for the same period in 2013. results for the year ended december 31 , 2014 include an aggregate of $ 19.2 million for litigation-related matters , approximately $ 15.8 million related to costs incurred for a shareholder settlement , including related advisory expenses , acquisition integration , projects related to the cost management program and $ 2.7 million of impairment charges . partially offsetting these charges was a credit relating to a recovery of a portion of a large title loss and realized gains of $ 9.1 million . total revenues for 2014 were $ 1,870.8 million , a decrease of $ 57.2 million , or 3.0 % , from $ 1,928.0 million for the 2013 year , due principally to fewer transactions closed resulting from a decline in overall housing industry activity , partially offset by the impact of acquisitions . our title segment revenues for the fourth quarter 2014 were $ 449.3 million , an increase of 6.3 % from the fourth quarter 2013 and an increase sequentially of 2.0 % from the third quarter 2014. in the fourth quarter 2014 , the title segment generated pretax earnings of $ 45.6 million ( 10.2 % margin ) , as compared with fourth quarter 2013 's pretax earnings of $ 48.8 million ( 11.5 % margin ) and third quarter 2014 pretax earnings of $ 74.9 million ( 17.0 % margin ) . title segment results for the third quarter 2014 include the aforementioned title loss recovery . our direct operations include local offices , commercial and international operations . we generate commercial revenues both domestically and internationally . u.s. and canadian commercial revenues increased 12.9 % from the fourth quarter 2013 to $ 47.8 million , and 15.9 % sequentially from the third quarter 2014. for the year ended december 31 , 2014 , commercial revenues increased 13.4 % . during 2014 , we refined our systems for tracking international revenue and beginning fourth quarter 2014 , we reported on commercial revenues generated outside of the united states and canada , which include europe , australia , the caribbean , and latin america . commercial revenues from those areas were $ 2.8 million for the fourth quarter 2014 , and $ 14.8 million for the full year . for the fourth quarter , total international revenues were $ 28.3 million , up 1.3 % from $ 27.9 million in the fourth quarter 2013. for the year , total international revenues were $ 116.6 million , up 3.4 % from $ 112.8 million in 2013. revenues from our mortgage services segment increased to $ 70.1 million for the fourth quarter 2014 , from $ 22.8 million in the fourth quarter 2013 , largely due to acquisitions of wetzel trott , inc. , the title and collateral valuation business of dataquick lending solutions ; and landsafe title , all of which closed in the second and third quarters 2014. revenues also increased as the result of new contracts which began contributing meaningful revenue during the second quarter and a net realized gain of $ 7.4 million . as a result , the segment reported pretax earnings of $ 7.4 million in the fourth quarter 2014 compared to a pretax loss of $ 3.7 million and pretax earnings of $ 3.3 million for the fourth quarter 2013 and third quarter 2014 , respectively . our 2014 financial results reflect the continuing implementation of both our strategic plan and our value-creation strategies which were announced early in 2014. we are making significant progress in the transformation of our mortgage services operations with the acquisitions completed in the second and third quarters 2014. our title operations performed solidly in a generally lackluster housing environment , and title losses were within their historic range , although quarter to quarter volatility remains . we remain committed to our stated goal of achieving a minimum of $ 25.0 million of annualized structural cost savings exclusive of market conditions by the end of 2015. activity around the cost management program intensified during the quarter in accordance with the underlying project plans . although this level of work and related expenses will continue through 2015 , we have already achieved approximately $ 10.0 million of annualized savings . during the fourth quarter 2014 , we acquired approximately 0.2 million shares of our common stock for an aggregate purchase price of $ 5.8 million pursuant to the previously announced $ 70 million stock repurchase program and , since the inception of the program , have acquired 0.7 million shares for an aggregate purchase price of $ 22.0 million . the consumer financial protection bureau 's mortgage disclosure rules become effective august 1 , 2015. while we and the entire industry are working diligently to provide the necessary changes in technology , processes and training , there is a potential industry-wide slowdown in transactions in the third quarter 2015 as the industry works 14 through the implementation of these rules . we have a significant team dedicated to technology and process changes as well as training to implement the mortgage disclosure rules . critical accounting estimates actual results can differ from our accounting estimates . while we do not anticipate significant changes in our estimates , there is a risk that such changes could have a material impact on our consolidated financial condition or results of operations for future periods . title loss reserves our most critical accounting estimate is providing for title loss reserves . story_separator_special_tag if our recorded reserve amount is not at the actuary 's point estimate but is within a reasonable range ( +/- 4.0 % ) of our actuarially-based reserve calculation and the actuary 's point estimate , our management assesses the major factors contributing to the different reserve estimates in order to determine the overall reasonableness of our recorded reserve , as well as the position of the recorded reserves relative to the point estimate and the estimated range of reserves . the major factors considered can change from period to period and include items such as current trends in the real estate industry ( which management can assess although there is a time lag in the development of this data for use by the actuary ) , the size and types of claims reported and changes in our claims management process . if the recorded amount is not within a reasonable range of our third-party actuary 's point estimate , we will adjust the recorded reserves in the current period and reassess the provision rate on a prospective basis . once our reserve for title losses is recorded , it is reduced in future periods as a result of claims payments and may be increased or reduced by revisions to our estimate of the overall level of required reserves . large claims ( those exceeding $ 1.0 million on a single claim ) , including large title losses due to independent agency defalcations , are analyzed and reserved for separately due to the higher dollar amount of loss , lower volume of claims reported and sporadic reporting of such claims . large title losses due to independent agency defalcations typically occur when the independent agency misappropriates funds from escrow accounts under its control . such losses are usually discovered when the independent agency fails to pay off an outstanding mortgage loan at closing ( or immediately thereafter ) from the proceeds of the new loan . once the previous lender determines that its loan has not been paid off timely , it will file a claim against the title insurer . it is at this point that the title insurance underwriter is alerted to the potential theft and begins its investigation . as is industry practice , these claims are considered a claim on the newly issued title insurance policy since such policy insures the holder ( in this case , the new lender ) that all previous liens on the property have been satisfied . accordingly , these claim payments are charged to policy loss expense . these incurred losses are typically more severe in terms of dollar value compared with traditional title policy claims since the independent agency is often able , over time , to conceal misappropriation of escrow funds relating to more than one transaction through the constant volume of funds moving through its escrow accounts . as long as new funds continue to flow into escrow accounts , an independent agency can mask one or more defalcations . in declining real estate markets , lower transaction volumes result in a lower incoming volume of funds , making it more difficult to cover up the misappropriation with incoming funds . thus , when the defalcation is discovered , it often relates to several transactions . in addition , the overall decline in an independent agency 's revenues , profits and cash flows increases the agency 's incentive to improperly utilize the escrow funds from real estate transactions . 16 internal controls relating to independent agencies include , but are not limited to , pre-signing and periodic audits , site visits and reconciliations of policy inventories and premiums . the audits and site visits cover examination of the escrow account bank reconciliations and an examination of a sample of closed transactions . in some instances , the scope of our review is limited by attorney agencies that cite client confidentiality . certain states have mandated annual reviews of all agencies by their underwriter . we also determine whether our independent agencies have appropriate internal controls as defined by the american land title association and us . however , even with adequate internal controls in place , their effectiveness can be circumvented by collusion or improper override of the controls by management at the independent agencies . to aid in the selection of independent agencies to review , we have developed an agency risk model that aggregates data from different areas to identify possible problems . this is not a guarantee that all independent agencies with deficiencies will be identified . in addition , we are typically not the only underwriter for which an independent agency issues policies , and independent agencies may not always provide complete financial records for our review . due to the inherent uncertainty in predicting future title policy losses , significant judgment is required by both our management and our third party actuaries in estimating reserves . as a consequence , our ultimate liability may be materially greater or less than current reserves and or our third party actuary 's calculated estimate . agency revenues we recognize revenues on title insurance policies written by independent agencies ( agencies ) when the policies are reported to us . in addition , where reasonable estimates can be made , we accrue for revenues on policies issued but not reported until after period end . we believe that reasonable estimates can be made when recent and consistent policy issuance information is available . our estimates are based on historical reporting patterns and other information about our agencies . we also consider current trends in our direct operations and in the title industry . in this accrual , we are not estimating future transactions ; we are estimating revenues on policies that have already been issued by agencies but not yet reported to or received by us . we have consistently followed the same basic method of estimating unreported policy revenues for more than 10 years .
| results of operations a comparison of our results of operations for 2014 to 2013 and 2013 to 2012 follows . factors contributing to fluctuations in results of operations are presented in the order of their monetary significance , and we have quantified , when necessary , significant changes . results from our mortgage services and corporate segments are included in year-to-year discussions and , when relevant , are discussed separately . our employee costs and certain other operating expenses are sensitive to inflation . title revenues . revenues from direct title operations increased $ 44.7 million , or 5.9 % , and $ 25.5 million , or 3.5 % , in 2014 and 2013 , respectively . revenues in 2014 increased primarily due to the title-related component of the acquisitions closed in the second quarter 2014 and a continued shift in mix to more residential resale and commercial orders , partially offset by declining refinance transaction volume . international revenues ( including foreign-sourced commercial revenues of $ 13.2 million ) increased $ 3.8 million , or 3.4 % , and decreased $ 1.7 million , or 1.5 % , respectively , in 2014 compared to 2013 and in 2013 compared to 2012. revenues from u.s. and canadian commercial and other large transactions increased $ 18.4 million , or 13.4 % , and increased $ 16.1 million , or 13.3 % , respectively , in 2014 compared to 2013 and in 2013 compared to 2012. while year-to-year results for commercial business can fluctuate considerably due to timing of when large transactions close , our commercial operation continued to improve its position in the marketplace . revenues from independent agencies decreased $ 140.3 million , or 13.4 % , in 2014 and increased $ 39.0 million , or 3.9 % , in 2013 compared to 2012. revenues from independent agencies fluctuate based on the same general factors that influence revenues from direct title operations .
| 7,408 |
recognition of premium revenues and costs revenues for interest sensitive and variable products consist of policy charges for the cost of insurance and product guarantees , asset charges , administration charges , amortization of policy initiation fees and surrender charges assessed against policyholder account balances . the timing of revenue recognition as it relates to these charges and fees is determined based on the nature of such charges and fees . policy charges for the cost of insurance , asset charges and policy administration charges are assessed on a daily or monthly basis and are recognized as revenue when assessed and earned . certain policy initiation fees that represent compensation for services to be provided in the future are reported as unearned revenue and recognized in income over the periods benefited . surrender charges are determined based upon contractual terms and story_separator_special_tag when reading the following management 's discussion and analysis of financial condition and results of operations , please refer to our consolidated financial statements and related notes included in item 8 , “ financial statements and supplementary data , ” of this report . unless noted otherwise , all references to fbl financial group , inc. ( we or the company ) include all of its direct and indirect subsidiaries , including its insurance subsidiaries farm bureau life insurance company ( farm bureau life ) and greenfields life insurance company . in this discussion and analysis , we explain our consolidated results of operations , financial condition and where appropriate , factors that management believes may affect future performance , including : our revenues and expenses in the periods presented , changes in revenues and expenses between periods , sources of earnings and changes in stockholders ' equity , impact of these items on our overall financial condition and expected sources and uses of cash . we have organized our discussion and analysis as follows : first , we discuss our business and drivers of profitability . we then describe the business environment in which we operate including factors that affect operating results . we highlight significant events that are important to understanding our results of operations and financial condition . we then review the results of operations beginning with an overview of the total company results , followed by a more detailed review of those results by operating segment . finally , we discuss critical accounting policies and recently issued accounting standards . the critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management 's most difficult or complex judgment . merger agreement as discussed in “ part i , item 1. business , merger agreement , ” on january 11 , 2021 , the company announced that it entered into the merger agreement . subject to the terms and conditions of the merger agreement , which has been unanimously approved by our board of directors , fbpcic will acquire all of the outstanding common shares that are not currently owned or controlled by fbpcic or ifbf , for $ 56.00 per common share in cash , without interest and less any required withholding taxes . consummation of the merger is subject to certain specified closing conditions , including approval by the company 's shareholders as described in part i , item 1 , expiration or termination of applicable waiting periods under the hart-scott-rodino antitrust improvements act of 1976 , clearance by the insurance commissioner of the state of iowa and approval by the financial industry regulatory authority . the obtaining of financing is not a condition to the obligations of fbpcic or merger sub to effect the merger . overview and profitability we operate predominantly in the life insurance industry through our principal subsidiary , farm bureau life . farm bureau life markets individual life insurance policies and annuity contracts to farm bureau members and other individuals and businesses in the midwestern and western sections of the united states through an exclusive agency force . other subsidiaries provide external wealth management services as well as investment management and other support services to our affiliated insurance companies . in addition , we manage two farm bureau affiliated property-casualty companies . we analyze operations by reviewing financial information regarding our primary products that are aggregated in annuity and life insurance product segments . in addition , our corporate and other segment includes our wealth management business , various support operations , corporate capital and other product lines that are not currently underwritten by the company . we analyze our segment results based on pre-tax adjusted operating income , which excludes the impact of certain items that are included in pre-tax net income . pre-tax adjusted operating income is the same basis used for segment reporting under u.s. generally accepted accounting principles ( gaap ) . we also analyze operations using adjusted operating income on a post-tax basis , which excludes the initial impact from tax law changes . adjusted operating income on a post-tax basis is not a measure used in financial statements prepared in accordance with gaap , but is a common life insurance industry measure of performance . we have included a reconciliation to the comparable gaap measure herein . see note 13 to our consolidated 28 financial statements included in item 8 for further information regarding how we define our segments and pre-tax adjusted operating income . we also include within our analysis “ premiums collected , ” another measure that is not used in financial statements prepared in accordance with gaap , but is a common life insurance industry measure of agent productivity . see note 13 to our consolidated financial statements included in item 8 for further information regarding this measure and its relationship to gaap revenues . we periodically revise key assumptions used in the calculation of the amortization of deferred acquisition costs , value of insurance in force acquired , deferred sales inducements , unearned revenue reserve for participating life insurance and interest sensitive products , as applicable , through an “ unlocking ” process . story_separator_special_tag individual fixed rate deferred annuity collected premiums were $ 82.8 million in 2020 , $ 118.6 million in 2019 and $ 139.0 million in 2018. indexed annuity collected premiums were $ 93.2 million in 2020 , $ 128.2 million in 2019 and $ 137.6 million in 2018. to increase spread income given lower fixed and indexed annuity sales , we increased the issuance of funding agreements with the federal home loan bank of des moines ( fhlb ) during 2020. outstanding funding agreements with fhlb , which are included in policyholder liabilities , totaled $ 585.2 million at december 31 , 2020 , $ 488.4 million at december 31 , 2019 and $ 446.0 million at december 31 , 2018. the individual annuity withdrawal rate decreased in 2020 , compared to 2019 , partially due to the suspension of required minimum distributions by the coronavirus aid , relief , and economic security ( cares ) act . the individual annuity 33 withdrawal rate increased in 2019 , compared to 2018 , due to certain policies reaching the end of their interest rate guarantee period and the competitiveness of our current crediting rates relative to other financial products . amortization of deferred acquisition costs and deferred sales inducements changed in 2020 and 2019 , compared to prior periods , due to unlocking actuarial assumptions and changes in actual and expected income earned on the underlying business . unlocking generally reflects changes in our projected earned spreads , policy lapses and mortality assumptions . the impact of improved persistency also resulted in less amortization during 2020 , compared with 2019. unlocking in 2019 was driven by a change in our withdrawal rate assumptions . the impact of unlocking interest sensitive benefit reserve assumptions during 2020 , was due primarily to a revision of our expectation of policyholder utilization of the guaranteed living withdrawal benefit rider on index annuities . no unlocking was considered to be necessary for interest sensitive benefit reserves during 2019 or 2018. replace_table_token_16_th other underwriting expenses decreased in 2020 , compared to 2019 , due to various expense management actions including deferral of projects , reduction in the use of consultants and limiting replacement of employees that left the company . in addition , travel expenses were lower due to covid-related travel restrictions . in 2018 , we offered a voluntary early retirement program to certain employees . the impact of the program to the annuity segment was a $ 1.9 million increase in other underwriting expenses and a $ 0.6 million increase in investment expenses , which lowered net investment income . the annualized yield on average invested assets for individual annuities decreased in 2020 and 2019 , compared to the prior periods , primarily due to lower yields on new investment acquisitions from premium receipts and reinvestment of the proceeds from maturing investments , compared with the average existing portfolio yield . the decrease in 2020 , compared to 2019 , was partially offset by higher other investment-related income while we recognized a decrease in other investment-related income in 2019 compared to 2018. see the “ financial condition ” section that follows for additional information regarding the yields obtained on investment acquisitions . annualized average crediting rates on our individual annuity products decreased in 2020 , compared to 2019 , due to crediting and cap rate actions taken in 2020 in response to a declining portfolio yield and a change in our mix of business in force , partially offset by increased amortization of call option costs supporting our index annuity products . annualized average crediting rates on our individual annuity products increased in 2019 , compared to 2018 , primarily due to increased amortization of call option costs . 34 replace_table_token_17_th replace_table_token_18_th pre-tax adjusted operating income for the life insurance segment decreased in 2020 , compared to 2019 , primarily due to increases in death benefits , net of reinsurance and reserves released , and the impact of unlocking actuarial assumptions , partially offset by reduced other underwriting expenses and a benefit from the impact of an increase in the volume of business 35 in force . pre-tax adjusted operating income for the life insurance segment increased in 2019 , compared to 2018 , primarily due to the impact of unlocking actuarial assumptions and the impact from an increase in the volume of business in force . results for 2018 were unfavorably impacted by the correction of an immaterial error related to a closed block of interest sensitive whole life business . the immaterial error arose and accumulated over several years , with none of those previous years being materially impacted . remediation required an adjustment to existing in force business account values as well as adjustment to benefit payments for terminated business . the correction resulted in a pre-tax charge of $ 5.5 million , consisting of $ 3.5 million related to delayed benefit payments and $ 2.0 million of accrued interest . the change in estimate and accrued interest resulted in an increase to 2018 interest sensitive product benefits interest credited of $ 2.0 million , interest sensitive death benefits of $ 3.3 million and traditional life future policy benefits of $ 0.2 million . death benefits , net of reinsurance and reserves released , vary from year-to-year due to changes in claim counts and average claim size . in 2020 , death benefits in the life insurance segment include covid-19 related claims , net of reinsurance and reserves released , totaling $ 8.8 million . amortization of deferred acquisition costs , deferred sales inducements and unearned revenue reserves changed in 2020 and 2019 , compared to prior periods , due to unlocking actuarial assumptions and changes in actual and expected profits on the underlying business , which included increased mortality in 2020. amortization , as well as reserves held on certain interest sensitive products , also changed due to the impact of unlocking . unlocking generally reflects changes in our projected earned spreads , policy lapses , premium persistency and mortality assumptions .
| financial results we believe covid-19 and the impact it had on our economy contributed to the following financial results during 2020 : as the economic downturn and lack of consumer mobility put strain on certain issuers , net realized capital losses and the change in allowance for credit losses totaled $ 16.3 million during 2020 compared to net realized capital gains including other-than-temporary impairment losses of $ 7.6 million during 2019. the majority of these losses were incurred during the first quarter 2020. we incurred death benefits , net of reinsurance and reserves released , with covid-19 reported as a cause of death totaling $ 11.2 million during 2020. we incurred a pre-tax unlocking charge of $ 6.7 million during 2020 , driven largely by a $ 13.1 million pre-tax charge associated with an expectation of lower future investment portfolio interest rates . collected annuity premium decreased to $ 182.3 million during 2020 , compared to $ 252.0 million collected during 2019. these decreases were attributable to covid-19 through fewer sales opportunities , decreased interest crediting rates and economic uncertainty . management took several actions to address these challenges . expense management was a focus , which partially offset the pandemic 's financial impact . we conducted tactical sales of investments to reduce exposure to certain industries impacted by the economic downturn . product actions were taken to improve profitability . financial position lower fixed maturity interest rates driven by lower u.s. treasury interest rates resulted in an increase in the fair value of our fixed maturity securities during 2020. the increase in fair value of our fixed maturity securities at december 31 , 2020 , compared with december 31 , 2019 , resulted in an increase in our book value per common share to $ 69.24 at december 31 , 2020 from $ 60.12 at december 31 , 2019. our capital position remains strong , with farm bureau life 's company action level risk-based capital ratio was 528 % at december 31 , 2020.
| 7,409 |
76 hersha hospitality trust and subsidiaries notes to the consolidated financial statements for the years ended december 31 , story_separator_special_tag certain statements appearing in this item 7 are forward-looking statements within the meaning of the federal securities laws . our actual results may differ materially . we caution you not to place undue reliance on any such forward-looking statements . see “ cautionary factors that may affect future results ” for additional information regarding our forward-looking statements . background as of december 31 , 2018 , we owned interests in 48 hotels in major urban gateway markets including new york , washington dc , boston , philadelphia , san diego , los angeles , miami and select markets on the west coast including 38 wholly-owned hotels , 1 hotel through our interest in a consolidated joint venture , and interests in 9 hotels owned through unconsolidated joint ventures . we have elected to be taxed as a reit for federal income tax purposes , beginning with the taxable year ended december 31 , 1999. for purposes of the reit qualification rules , we can not directly operate any of our hotels . instead , we must lease our hotels to a third party lessee or to a trs , provided that the trs engages an eligible independent contractor , as defined under the reit rules , to manage the hotels . as of december 31 , 2018 , we have leased all of our hotels to a wholly-owned trs , a joint venture owned trs , or an entity owned by our wholly-owned trs . each of these trs entities will pay qualifying rent , and the trs entities have entered into management contracts with qualified independent managers , including hhmlp , with respect to our hotels . we intend to lease all newly acquired hotels to a trs . the trs structure enables us to participate more directly in the operating performance of our hotels . each trs directly receives all revenue from , and funds all expenses relating to , hotel operations of the hotels that it leases . each trs is also subject to income tax on its earnings . overview we believe the repositioning of our portfolio better enables us to capitalize on further improvement in lodging fundamentals . during 2018 , we continued to see improvements in adr and revpar , led by hotels in most of our key markets , with our new york city properties showing the strongest outperformance . despite our improved revenue fundamentals , operating margins remained relatively flat for 2018 as weakness in the washington d.c. market offset some of the gains we realized in our overall performance . while we continue to explore acquisition opportunities in coastal gateway urban centers and select resort destinations , we remain focused on operating efficiencies within our portfolio and asset repositioning opportunities to drive earnings and cash flow growth over the next year to de-lever our balance sheet . in addition , we will continue to look for attractive opportunities to divest certain properties at favorable prices , potentially redeploying capital in markets the offer higher growth , reducing our leverage , or opportunistically repurchasing our common shares . we expect continued stability and improvement in consumer and commercial spending and lodging demand in our markets during 2019. during the third quarter of 2017 we experienced business interruptions for our hotels located in south florida due to hurricane irma . the courtyard cadillac hotel in miami , fl closed following the storm due to the hurricane damage , and as a result , we accelerated our plan to convert this hotel to an autograph collection . this hotel remained closed until august 2018 , at which time it reopened as the cadillac hotel and beach club , an autograph collection hotel . the parrot key hotel & villas in key west , fl had been closed for repairs and renovations since september 2017 , and was fully operational beginning in december 2018. the remainder of our south florida hotels were repaired and fully operational during the fourth quarter of 2017. as a result of hurricane irma , for the year ended december 31 , 2017 , we recorded an impairment loss of $ 4.3 million which represents our estimate of property damage and remediation costs incurred up to our insurance policy deductibles . during 2018 , we received a total of $ 24,246 in net insurance proceeds , which resulted in a net gain of $ 12,649 after applying proceeds to receivables and other costs . industry wide revenue per available room ( `` revpar '' ) continued growing during 2018 , as the u.s. economy expanded by approximately 3 % for 2018. the economic outlook for 2019 shows the u.s. economy growing at a slower pace than 2018 driven by lower overall global growth and rising political uncertainty . however , the manner in which the economy will continue to grow , if at all , is not predictable and we have no way of predicting how any new government policies will affect the markets in which we operate or the tourism industry in general . in addition , the availability of hotel-level financing for the acquisition of new hotels is not within our control . as a result , there can be no assurances that we will be able to grow hotel revenues , occupancy , adr or revpar at our properties as we hope . factors that might contribute to less than anticipated performance include those described under the heading “ item 1a . risk factors ” and other documents that we may file with the sec in the future . 39 story_separator_special_tag style= '' font-family : calibri , sans-serif ; font-size:10pt ; '' > . hotel operating revenues are recorded for wholly-owned hotels that are leased to our wholly owned trs and hotels owned through joint venture or other interests that are consolidated in our financial statements . story_separator_special_tag operating income operating income for the year ended december 31 , 2018 was $ 52,700 compared to operating income of $ 49,569 during the same period in 2017. operating income was negatively impacted by decreased hotel operating revenue , increased costs in areas such as hotel operating expenses , real estate taxes and property insurance , depreciation and amortization , and general and administrative expenses . these items negatively affecting operating income were offset by gains from insurance recoveries and decreases in acquisition and terminated transaction costs . additionally , the year ended december 31 , 2017 contained a loss on impairment of assets of $ 4,082 while 2018 contained no such impairment loss . interest expense interest expense increased $ 5,829 from $ 42,662 for the year ended december 31 , 2017 to $ 48,491 for year ended december 31 , 2018 . the balance of our borrowings , excluding discounts and deferred costs , have increased by $ 2,289 in total between december 31 , 2017 and december 31 , 2018 , as we originated a mortgage on the annapolis waterfront hotel of $ 28,000 which was partially offset by mortgage debt paydowns of $ 1,611 and net paydowns on our credit facility of $ 24,100 since december 31 , 2017 . the increase in interest expense when comparing the year ended december 31 , 2018 to the corresponding period in 2017 can be explained by : ( 1 ) an increase in interest expense from the credit facility which contributed $ 4,011 incrementally ; ( 2 ) an increase in interest expense from our notes payable due to variable rates increasing , resulting in an increase in expense of $ 511 ; and ( 3 ) the new mortgage debt on the annapolis waterfront hotel that contributed $ 1,018 in expense during 2018. the remaining increase in interest expense is due to the increase in interest rates on our unhedged variable rate mortgages . gain on disposition of hotel properties during the year ended december 31 , 2018 , the company recorded a gain of $ 4,148 related to the sales of the hyatt house , gaithersburg , md , the hampton inn seaport , new york , ny , and the residence inn , tysons corner , va. this is compared to a gain on sale recognized during the year ended december 31 , 2017 of $ 90,350 related to the sales of the residence inn , greenbelt , md , courtyard , alexandria , va , hyatt house , scottsdale , az , the hyatt house , pleasanton , ca , hyatt house , pleasant hill , ca , and holiday inn express , chester , ny . 44 unconsolidated joint venture investments the income ( loss ) from unconsolidated joint ventures consists of our interest in the operating results of the properties we own in joint ventures . income from our unconsolidated joint ventures increased by $ 3,557 to income of $ 1,084 for the year ended december 31 , 2018 compared to a loss of $ 2,473 during the same period in 2017 , primarily due to the loss we recognized on our equity interest in the cindat joint venture during 2017 , for which we recognized no income or losses during 2018. during the year ended december 31 , 2017 , we recognized a $ 16,240 gain on the remeasurement of investment in unconsolidated joint ventures related to our transfer and redemption of our joint venture interest in mystic partners , llc . in exchange for our interest in the partnership , we received 100 % ownership of the mystic marriott hotel & spa and $ 11,623 in cash proceeds . we recognized no similar gain in 2018. income tax expense during the year ended december 31 , 2018 , the company recorded an income tax expense of $ 267 compared to $ 5,262 for the year ended december 31 , 2017 . the large decrease in income tax expense is partially attributable to the change in the statutory tax rate applicable to the company as a result of the recent changes in tax regulations , the tax cuts & jobs act , which reduced our federal tax rate from 34 % in 2017 to 21 % for periods thereafter . this decrease in the tax rate required the company to remeasure our net deferred tax asset resulting in increased income tax expense of $ 4,601 that was recognized during the year ended december 31 , 2017 with no comparable adjustment in 2018. net ( loss ) income applicable to common shareholders net loss applicable to common shareholders for the year ended december 31 , 2018 was $ 14,184 compared to income of $ 75,699 during the same period in 2017. this decrease in net income was primarily caused by : ( 1 ) a lower net gain on hotel dispositions of $ 86,202 ; ( 2 ) decreased income from unconsolidated joint ventures of $ 12,683 ; and ( 3 ) increased interest expense of $ 5,829 . partially offsetting these items were : ( 1 ) a decrease of $ 4,995 in income tax expense ; and ( 2 ) $ 6,697 in additional loss allocated to minority interest holders . comprehensive ( loss ) income applicable to common shareholders comprehensive loss applicable to common shareholders for the year ended december 31 , 2018 was $ 13,706 compared to comprehensive income of $ 78,075 for the same period in 2017. this change can be attributed to the items affecting net income applicable to common shareholders as more fully described above . for the year ended december 31 , 2018 , we recorded comprehensive income of $ 8,881 compared to $ 107,476 of comprehensive income for the year ended december 31 , 2017 . 45 comparison of the year ended december 31 , 2017 to december 31 , 2016 ( dollars in thousands ) revenue our total revenues for the years ended december 31 , 2017 and 2016 consisted of hotel operating revenues and other revenue .
| summary of operating results the following tables outline operating results for the company 's portfolio of wholly owned hotels and those owned through joint venture interests that are consolidated in our financial statements for the three years ended december 31 , 2018 , 2017 and 2016 . we define a comparable consolidated hotel as one that is currently consolidated , that we have owned in whole or in part for the entirety of the periods being presented , and is deemed fully operational . based on this definition , for the years ended december 31 , 2018 and 2017 , there are 37 and 38 comparable consolidated hotels , respectively . the comparable key hotel operating statistics presented in the table below have been computed using pro forma methodology to compute the operating results for the portion of time prior to our ownership of hotels purchased during the comparable period for the year ended december 31 , 2018 compared to the year ended december 31 , 2017 , and the year ended december 31 , 2017 compared to the year ended december 31 , 2016 for our comparable hotels . for the comparison of december 31 , 2018 to december 31 , 2017 , comparable hotel operating results contain results from our consolidated hotels owned as of december 31 , 2018 , excluding : ( 1 ) the courtyard cadillac hotel and the the parrot key hotel & villas because both hotels were not been operating for the fourth quarter of 2017 and a significant portion of 2018 while the damage from hurricane irma was repaired ; and ( 2 ) the results of all hotels sold during the years ended december 31 , 2018 and 2017 .
| 7,410 |
events or changes in circumstances that may indicate that an asset may be impaired include the following : a significant decrease in the market price of an asset or asset group ; a significant adverse change in the extent or manner in story_separator_special_tag you should read the following discussion in conjunction with our audited consolidated financial statements and the notes thereto included elsewhere in item 8 of this form 10-k. this discussion may contain forward-looking statements that anticipate results that are subject to uncertainty . we discuss in more detail various factors that could cause actual results to differ from expectations in item 1a , risk factors in this form 10-k. overview republic is the second largest provider of services in the domestic non-hazardous solid waste industry , as measured by revenue . as of december 31 , 2015 , we operated in 41 states and puerto rico through 340 collection operations , 201 transfer stations , 193 active landfills , 67 recycling centers , 8 treatment , recovery and disposal facilities , and 12 salt water disposal wells . we also operated 69 landfill gas and renewable energy projects and had post-closure responsibility for 126 closed landfills . revenue for the year ended december 31 , 2015 increased by 3.5 % to $ 9,115.0 million compared to $ 8,803.3 million in 2014 . this change in revenue is due to increases in average yield of 2.3 % , volume of 1.1 % , and acquisitions , net of divestitures of 2.2 % , partially offset by decreases in fuel recovery fees of 1.4 % and recycled commodities of 0.7 % . the following table summarizes our revenue , costs and expenses for the years ended december 31 , 2015 , 2014 and 2013 ( in millions of dollars and as a percentage of revenue ) : replace_table_token_6_th our pre-tax income was $ 1,195.9 million , $ 885.3 million and $ 851.2 million for 2015 , 2014 and 2013 , respectively . our net income attributable to republic services , inc. was $ 749.9 million , or $ 2.13 per diluted share for 2015 , compared to $ 547.6 million , or $ 1.53 per diluted share , for 2014 , and $ 588.9 million , or $ 1.62 per diluted share , for 2013 . during each of 2015 , 2014 and 2013 , we recorded a number of charges , other expenses and benefits that impacted our pre-tax income , net income attributable to republic services , inc. ( net income – republic ) and diluted earnings per share as noted in the following table ( in millions , except per share data ) . additionally , see our “ cost of operations , ” “ selling , general and administrative expenses ” and “ income taxes ” discussions contained in the results of operations section of this management 's discussion and analysis of financial condition and results of operations for a discussion of other items that impacted our earnings . 27 replace_table_token_7_th ( 1 ) the aggregate impact of the noted items to adjusted diluted earnings per share totals to $ 0.01 for the year ended december 31 , 2014. we believe that presenting adjusted pre-tax income , adjusted net income – republic , and adjusted diluted earnings per share , which are not measures determined in accordance with accounting principles generally accepted in the united states ( u.s. gaap ) , provides an understanding of operational activities before the financial impact of certain items . we use these measures , and believe investors will find them helpful , in understanding the ongoing performance of our operations separate from items that have a disproportionate impact on our results for a particular period . we have incurred comparable charges and costs and have recorded similar recoveries in prior periods , and similar types of adjustments can reasonably be expected to be recorded in future periods . in the case of the bridgeton remediation charges and insurance recovery , we are adjusting such amounts due to their significant effect on our operating results ; however , in the ordinary course of our business , we often incur remediation charges and recoveries that we do not adjust from our operating results . our definition of adjusted pre-tax income , adjusted net income – republic , and adjusted diluted earnings per share may not be comparable to similarly titled measures presented by other companies . bridgeton ( insurance recovery ) / remediation charge and other . during 2015 , we collected an insurance recovery of $ 50.0 million related to our closed bridgeton landfill in missouri . as such , we recorded a reduction of remediation expenses included in our cost of operations . during 2014 , we updated our cost and timeline estimates to build and operate a leachate management facility and related infrastructure , manage the remediation area and monitor the site . accordingly , we recorded environmental remediation charges of $ 210.6 million . additionally , we recorded certain remediation charges for the superfund site and ongoing litigation costs . during 2013 , we recorded environmental remediation charges in the amount of $ 108.7 million to manage the remediation area and monitor the site . negotiation and withdrawal costs - central states pension and other funds . during 2015 , we recorded charges to earnings of $ 4.1 million for withdrawal events at the multiemployer pension plan to which we contribute related to our operations in puerto rico , as well as $ 0.4 million of legal charges . during 2014 , we recorded charges to earnings of $ 1.5 million , primarily related to costs associated with our 2013 withdrawal from the central states , southeast and southwest areas pension fund ( the fund ) . during 2013 , we recorded charges to earnings of $ 157.7 million primarily related to our negotiation and withdrawal liability from the fund . restructuring charges . story_separator_special_tag property and equipment , net in 2016 , we anticipate receiving approximately $ 900 million of property and equipment , net of proceeds from sales of property and equipment , as follows : replace_table_token_9_th restructuring in january 2016 , we realigned our field support functions by combining two organizational layers into one . this includes the elimination of our three regions , the consolidation of our 20 areas into 10 and the streamlining of select roles at our phoenix headquarters . we will reinvest and deploy resources into our areas by creating 10 area offices equipped with enhanced teams of operators and functional support roles . we expect to reduce administrative staffing levels , relocate office space and close certain office locations . as such , we will incur restructuring charges of approximately $ 25 million primarily for severance benefits , transition costs and lease termination costs . substantially all of these charges will be recorded in our corporate segment , and we expect the majority of the charges to be incurred in the first half of 2016. we expect the savings realized from these restructuring efforts will be re-invested in our customer-focused programs and other initiatives we recently launched . additionally , as part of these customer initiatives , we also will be consolidating our call center operations . over the next two years , we will consolidate over 100 customer service locations into three customer resource centers . the new state-of-the-art facilities and the technology deployed will provide our customer service employees with the tools and capabilities they need to provide better service to customers across a myriad of touch points , including voice , email , text , social channels and live chat . we expect severance and other restructuring related charges may approximate $ 10 million over the consolidation period . 30 story_separator_special_tag style= '' font-family : inherit ; font-size:10pt ; '' > as a result of our continued investment in recycling centers along with increases in brokering of recycled commodity volumes on behalf of our national accounts customers . cost of operations cost of operations includes labor and related benefits , which consists of salaries and wages , health and welfare benefits , incentive compensation and payroll taxes . it also includes transfer and disposal costs representing tipping fees paid to third party disposal facilities and transfer stations ; maintenance and repairs relating to our vehicles , equipment and containers , including related labor and benefit costs ; transportation and subcontractor costs , which include costs for independent haulers that transport our waste to disposal facilities and costs for local operators who provide waste handling services associated with our national accounts in markets outside our standard operating areas ; fuel , which includes the direct cost of fuel used by our vehicles , net of fuel tax credits ; disposal franchise fees and taxes , consisting of landfill taxes , municipal franchise fees , host community fees and royalties ; landfill operating costs , which includes financial assurance , leachate disposal , remediation charges and other landfill maintenance costs ; risk management costs , which includes casualty insurance premiums and claims ; cost of goods sold , which includes material costs paid to suppliers associated with recycled commodities ; and other , which includes expenses such as facility operating costs , equipment rent and gains or losses on sale of assets used in our operations . the following table summarizes the major components of our cost of operations for the years ended december 31 , 2015 , 2014 and 2013 ( in millions of dollars and as a percentage of revenue ) : replace_table_token_12_th these cost categories may change from time to time and may not be comparable to similarly titled categories used by other companies . as such , you should take care when comparing our cost of operations by cost component to that of other companies . cost of operations - 2015 compared to 2014 excluding the impact of the bridgeton insurance recovery , our cost of operations increased for 2015 compared to 2014 , primarily as a result of the following : labor and related benefits increased due to increased hourly and salaried wages as a result of merit increases , increased headcount , higher collection volumes and acquisitions . additionally , there was an increase in health care costs . 33 transfer and disposal costs increased primarily due to higher collection volumes . during both 2015 and 2014 , approximately 68 % of the total waste volume we collected was disposed at landfill sites that we own or operate ( internalization ) . maintenance and repairs expense increased due to higher collection volumes , cost of parts , internal labor , third party truck repairs , vehicle complexity and costs associated with our fleet maintenance initiative . our fuel costs decreased due to lower prices of diesel fuel , our continued conversion to lower cost compressed natural gas ( cng ) , and higher alternative fuel tax credits recognized in 2015 . the national average fuel cost per gallon for 2015 was $ 2.71 compared to $ 3.83 for 2014 , a decrease of $ 1.12 or approximately 29 % . at current consumption levels , we believe a twenty-cent per gallon change in the price of diesel fuel would change our fuel costs by approximately $ 22 million per year . offsetting these changes in fuel expense would be changes in our fuel recovery fee charged to our customers . at current participation rates , we believe a twenty-cent per gallon change in the price of diesel fuel changes our fuel recovery fee by approximately $ 22 million per year . franchise fees and taxes increased primarily due to changes in the relative mix of landfill volumes . risk management expenses decreased primarily due to favorable actuarial developments in our workers ' compensation program , partially offset by unfavorable developments in our vehicle liability insurance program .
| results of operations revenue we generate revenue primarily from our solid waste collection operations . our remaining revenue is from other services , including transfer station , landfill disposal , recycling , and energy services . our residential and small-container commercial collection operations in some markets are based on long-term contracts with municipalities . certain of our municipal contracts have annual price escalation clauses that are tied to changes in an underlying base index such as the consumer price index . we generally provide small-container commercial and large-container industrial collection services to customers under contracts with terms up to three years . our transfer stations , landfills and , to a lesser extent , our recycling facilities generate revenue from disposal or tipping fees charged to third parties . in general , we integrate our recycling operations with our collection operations and obtain revenue from the sale of recycled commodities . our revenue from energy services consists mainly of fees we charge for the treatment of liquid and solid waste derived from the production of oil and natural gas , as well as waste generated by coal-fired power plants . other non-core revenue consists primarily of revenue from national accounts , which represents the portion of revenue generated from nationwide contracts in markets outside our operating areas where the associated waste handling services are subcontracted to local operators . consequently , substantially all of this revenue is offset with related subcontract costs , which are recorded in cost of operations .
| 7,411 |
fair values are approximated based on current market data received from financial sources that trade such instruments and are based on prevailing market data and derived from third party proprietary models based on well recognized financial principles and reasonable estimates about relevant future market conditions . 96 story_separator_special_tag you should read the following discussion in conjunction with the sections of this report entitled `` risk factors , '' `` forward-looking statements , '' and `` selected consolidated financial information of arbor realty trust , inc. and subsidiaries '' and the historical consolidated financial statements of arbor realty trust , inc. and subsidiaries , including related notes , included elsewhere in this report . story_separator_special_tag size= '' 2 '' > 40 borrowers access to financing improved . these trends could worsen if another prolonged economic downturn were to occur and , if that were to happen , we believe there could be continued modifications and delinquencies in the foreseeable future , which may result in reduced net interest margins and additional losses throughout our sector . primary sources of operating revenues we derive our operating revenues primarily through interest received from making real estate-related bridge , mezzanine and junior participation loans and preferred equity investments . interest income earned on these loans and investments represented approximately 75 % , 71 % and 76 % of our total revenues in 2013 , 2012 and 2011 , respectively . property operating income is derived from our hotel and multifamily real estate owned assets . property operating income represented approximately 22 % , 26 % and 23 % of our total revenues in 2013 , 2012 and 2011 , respectively . the operation of a portfolio of hotel properties that we own is seasonal with the majority of revenues earned in the first two quarters of the calendar year . changes in financial condition assetscomparison of balances at december 31 , 2013 to december 31 , 2012 : our loan and investment portfolio balance , including our available-for-sale and held-to-maturity securities , at december 31 , 2013 and 2012 was $ 1.7 billion and $ 1.5 billion , respectively , with a weighted average current interest pay rate of 5.21 % and 4.77 % , respectively . including certain fees and costs associated with the loan and investment portfolio , the weighted average current interest rate was 5.69 % and 5.04 % , respectively . at december 31 , 2013 and 2012 , advances on our financing facilities totaled approximately $ 1.2 billion for both periods , with a weighted average funding cost of 3.03 % and 2.82 % , respectively , which excludes changes in the market value of certain interest rate swaps and financing costs . including the financing costs , the weighted average funding rate was 3.34 % and 3.12 % , respectively . cash and cash equivalents increased $ 31.2 million primarily due to proceeds received from our equity offerings in 2013 , as well as loan payoffs and interest from our investments , net of funding new loan originations and investments , payment of dividends and related party payables and purchasing our own cdo bonds . restricted cash increased $ 12.4 million primarily due to payoffs of loans from our cdos and clos net of principal repayments . restricted cash is kept on deposit with the trustees for our cdos , all three of which reached their respective replenishment dates as of january 2012 , and primarily represents proceeds from loan payoffs and paydowns net of principal repayments to the cdo bondholders , as well as unfunded loan commitments and interest payments received from loans . loans and investments increased $ 199.0 million . loan and investment activity during 2013 was primarily comprised of : originated 67 loans totaling $ 591.5 million with a weighted average interest rate of 7.29 % . received full satisfaction of 47 loans totaling $ 353.5 million that had a weighted average interest rate of 5.72 % . received partial pay downs on five loans totaling $ 48.7 million that have a weighted average interest rate of 6.28 % . modified five loans totaling $ 52.5 million resulting in a reduction of the weighted average interest rate from 9.76 % to 9.08 % . extended 25 loans totaling $ 189.5 million . 41 our allowance for loan losses was $ 122.3 million at december 31 , 2013 , a decrease of $ 39.4 million from december 31 , 2012. during 2013 , we recorded charge-offs to our allowance totaling $ 43.7 million and recorded a provision for loan loss , net of recoveries totaling $ 4.3 million . since december 31 , 2013 , we have originated ten new loans for a total of $ 80.2 million and received a total of $ 188.3 million for the repayment in full of eight loans . securitiesduring 2013 , we purchased five rmbs investments for a total of $ 29.0 million and received $ 38.6 million of total principal paydowns on the portfolio . in the fourth quarter of 2013 , we reclassified our portfolio of non-linked rmbs investments from held-to-maturity to available-for-sale as a result of a change in intent to hold the securities to maturity at december 31 , 2013 due to management 's decision to redeploy capital into the core lending business . this change resulted in a $ 34.0 million increase to available-for-sale securities and a corresponding decrease in held-to-maturity securities . we sold the majority of the available-for-sale rmbs securities in the first quarter of 2014. investments in equity affiliates decreased $ 54.9 million primarily due to the redemption of preferred operating partnership units of lightstone value plus reit l.p. ( `` lightstone '' ) as well as the deconsolidation of the previously consolidated entity . see note 5 of the `` notes to the consolidated financial statements '' set forth in item 8 hereof for a further description of this transaction . story_separator_special_tag , 2014 , the board of directors declared a cash dividend of $ 0.484375 per share of 7.75 % series b cumulative redeemable preferred stock reflecting dividends from december 1 , 2013 , through february 28 , 2014. the dividend is payable on february 28 , 2014 to preferred stockholders of record on february 15 , 2014. on may 1 , 2013 , we issued 70,000 shares of fully vested common stock to the independent members of the board of directors under the 2003 stock incentive plan , as amended and restated in 2009 ( the `` plan '' ) , and recorded $ 0.5 million to selling and administrative expense in our consolidated statements of operations in the second quarter of 2013. on february 28 , 2013 , we issued 192,750 shares of restricted common stock under the plan to certain employees of ours and acm with a total grant date fair value of $ 1.5 million and recorded $ 0.2 million to employee compensation and benefits and $ 0.4 million to selling and administrative expense in our consolidated statements of operations in the first quarter of 2013. one third of the shares vested as of the date of grant , one third will vest in february 2014 , and the remaining third will vest in february 2015. in connection with a debt restructuring with wachovia bank in the third quarter of 2009 , we issued wachovia 1.0 million warrants at an average strike price of $ 4.00. of such warrants , 500,000 warrants are exercisable at a price of $ 3.50 , 250,000 warrants are exercisable at a price of $ 4.00 and 250,000 warrants are exercisable at a price of $ 5.00. as of december 31 , 2013 , all of the warrants were exercisable , expire on july 23 , 2015 and no warrants have been exercised to date . 44 comparison of results of operations for years ended 2013 and 2012 the following table sets forth our results of operations for the years ended december 31 , 2013 and 2012 : replace_table_token_11_th nmnot meaningful 45 the following table presents the average balance of interest-earning assets and related interest-bearing liabilities , associated interest income and expense and the corresponding weighted average yields ( dollars in thousands ) : replace_table_token_12_th ( 1 ) based on unpaid principal balance for loans , amortized cost for securities and principal amount for debt . ( 2 ) weighted average yield calculated based on annualized interest income or expense divided by average carrying value . net interest income interest income increased $ 19.0 million , or 24 % , in 2013 as compared to 2012. this increase was primarily due to a 14 % increase in the average yield on core interest-earning assets from 4.97 % for 2012 to 5.65 % for 2013 , due to higher interest rates on our net originations . the increase was also due to a 9 % increase in our average core interest-earning assets from $ 1.60 billion for 2012 to $ 1.75 billion for 2013 , due to originations , net of payoffs . interest expense increased $ 1.2 million , or 3 % , for 2013 as compared to 2012. the increase was primarily due to a 3 % increase in the average balance of our interest-bearing liabilities from $ 1.26 billion for 2012 to $ 1.30 billion for 2013. the increase in the average balance was primarily due to the addition of a new clo financing facility , net of a reduction in our cdo debt due to runoff and amortization and the repurchase of three cdo notes . 46 other revenue other income , net increased $ 1.0 million , or 79 % , for 2013 as compared to 2012 , primarily due to a $ 1.1 million gain on the sale of a cdo bond investment in the second quarter of 2013 , an increase in net interest income of $ 1.0 million on our linked transactions as well as an increase of $ 0.7 million in miscellaneous asset management fees on our loan and investment portfolio , and is net of a $ 1.8 million decrease in the fair value of our linked transactions . other expenses employee compensation and benefits expense increased $ 1.9 million , or 18 % , for 2013 as compared to 2012. an increase in staffing resulting from higher loan origination volume from 2012 to 2013 contributed $ 1.5 million of this increase , while stock-based compensation recorded for the issuance of restricted common stock to certain employees in 2013 contributed an additional $ 0.4 million . selling and administrative expense increased $ 2.7 million , or 35 % , for 2013 as compared to 2012. these costs include , but are not limited to , professional and consulting fees , marketing costs , insurance expense , travel and placement fees , director 's fees , licensing fees , and stock-based compensation relating to our directors and certain employees of our manager . the increase was primarily due to $ 1.4 million of legal , consulting and director 's fees incurred in connection with the exploration and evaluation of a potential transaction with our manager . the increase was also due to $ 0.6 million of stock-based compensation recorded for the issuance of restricted common stock to certain employees of our manager in 2013 as well as a $ 0.4 million increase in professional fees . depreciation and amortization expense increased $ 1.3 million , or 25 % , for 2013 as compared to 2012 , primarily due to an increase in capital expenditures associated with two real estate investments .
| overview we invest in multi-family and commercial real estate-related bridge loans , junior participating interests in first mortgages , mezzanine loans , preferred and direct equity and , in limited cases , discounted mortgage notes and other real estate-related assets , which we refer to collectively as structured finance investments . we are organized and conduct our operations to qualify as a reit and to comply with the provisions of the internal revenue code with respect thereto . a reit is generally not subject to federal income tax on its reittaxable income that is distributed to its stockholders , provided that at least 90 % of its reittaxable income is distributed and provided that certain other requirements are met . we have also invested in mortgage-related securities . we conduct substantially all of our operations through our operating partnership and its wholly-owned subsidiaries . our operating performance is primarily driven by the following factors : net interest income earned on our investments net interest income represents the amount by which the interest income earned on our assets exceeds the interest expense incurred on our borrowings . if the yield earned on our assets decreases or the cost of borrowings increases , this will have a negative impact on earnings . however , if the yield earned on our assets increases or the cost of borrowings decreases , this will have a positive impact on earnings . net interest income is also directly impacted by the size and performance of our asset portfolio . credit quality of our assets effective asset and portfolio management is essential to maximize the performance and value of a real estate/mortgage investment . maintaining the credit quality of our loans and investments is of critical importance . loans that do not perform in accordance with their terms may have a negative impact on earnings and liquidity .
| 7,412 |
revenue recognition —tronc 's primary sources of revenue are from the sales of advertising space in published issues of its newspapers and other publications and on websites owned by , or affiliated with tronc ; distribution of preprinted advertising inserts ; sales of newspapers , digital subscriptions and other publications to distributors and individual subscribers ; and the provision of commercial printing and delivery services to third parties , primarily other newspaper companies . newspaper advertising revenue is recorded , net of agency commissions , when advertisements are published in newspapers and when inserts are delivered . website advertising revenue is recognized when delivered . commercial printing and delivery services revenues , which are included in story_separator_special_tag t he following discussion and analysis should be read in conjunction with the other sections of this annual report on form 10-k , including the consolidated financial statements and related notes thereto and “ cautionary statement concerning forward-looking statements. ” management 's discussion and analysis of financial condition and results of operations contains a number of forward-looking statements , all of which are based on our current expectations and could be affected by the uncertainties and other factors described throughout this form 10-k , including the factors disclosed under “ item 1a . — risk factors. ” we believe that the assumptions underlying the consolidated financial statements included in this annual report are reasonable . however , the consolidated financial statements may not necessarily reflect our results of operations , financial position and cash flows for future periods or what they would have been had tronc been a separate , stand-alone company during all the periods presented . overview tronc , inc. , formerly tribune publishing company , was formed as a delaware corporation on november 21 , 2013. tronc , inc. and its subsidiaries ( collectively , the “ company , ” or “ tronc ” ) is a media company rooted in award-winning journalism , in ten of the nation 's largest markets . tronc develops unique and valuable content across its vast media portfolio , which has earned a combined 105 pulitzer prizes and is committed to informing , inspiring , and engaging local communities . the company 's diverse portfolio of iconic news and information brands are in markets including chicago , il . ; fort 28 lauderdale and orlando , fl . ; baltimore , md . ; hartford , ct. ; allentown , pa. ; newport news , va ; los angeles and san diego , ca . during the third quarter of 2017 , the company expanded its portfolio with the completion of its purchase of the new york daily news , new york city 's “ hometown newspaper ” . tronc 's brands create and distribute content across its media portfolio , offering integrated marketing , media , and business services to consumers and advertisers , including digital solutions and advertising opportunities . the company continually assesses its operations in an effort to identify opportunities to enhance operational efficiencies and reduce expenses . these activities have in the past included , and could include in the future , outsourcing of various functions or operations , additional abandonment of leased space and other activities which may result in changes to employee headcount . see note 3 to the consolidated financial statements for more information on changes in operations during fiscal year 2017. the company expects to continue to take actions deemed appropriate to enhance profitability but does not currently know whether or when any such actions will occur or the potential costs and expected savings . depending on the actions taken and the timing of any such actions , the anticipated cost savings could be recognized in fiscal periods that do not correspond to the fiscal period ( s ) in which the charges are recognized . as a result , the company 's net income trends could be impacted and more difficult to predict . during fiscal 2017 , the company went through several operating changes . 2017 highlights and recent events in july 2017 , the company sold its investment in cips marketing group , inc. ( “ cips ” ) for proceeds of $ 7.3 million . in september 2017 , the company purchased the new york daily news for one dollar and assumption of various liabilities , subject to a post-closing working capital adjustment . see note 5 to the consolidated financial statements for more information about the acquisition . on december 22 , 2017 , the tax cuts and jobs act of 2017 ( the “ act ” ) was signed into law making significant changes to the internal revenue code . accordingly , the company has recorded $ 10.8 million as additional income tax expense in the fourth quarter of 2017. see note 11 to the consolidated financial statements for more information about the tax law change . on january 29 , 2018 , the company and cars.com announced an agreement to convert tronc 's eight affiliate markets into cars.com 's retail channel , effective february 1 , 2018. the agreement also includes a multi-year advertising and marketing agreement between cars.com and tronc . effective as of that date , the company will no longer resell cars.com products and will only record advertising revenue for placements by cars.com under the agreement . on february 6 , 2018 , the company , acquired a 60 % membership interest in bestreviews llc ( “ bestreviews ” ) , a company engaged in the business of testing , researching and reviewing consumer products . see note 21 to the consolidated financial statements for more information about the acquisition . on february 7 , 2018 , the company entered into the mipa , with nant capital , pursuant to which the company will sell the los angeles times , the san diego union-tribune and various other of the company 's california titles . see note 21 to the consolidated financial statements for more information about the sale . story_separator_special_tag style= '' font-family : inherit ; font-size:10pt ; '' > $ 27.6 million in circulation revenues . story_separator_special_tag national advertising revenues fell 18.6 % , or $ 18.5 million , due to declines in several categories , most notably movies , advertising agencies , wireless , packaged goods and media categories . classified advertising revenues decreased 8.0 % , or $ 5.9 million , compared to the prior year period , primarily due to decreases in the legal and recruitment categories . the new york daily news contributed $ 8.6 million to troncm advertising revenues in the year ended december 31 , 2017 . circulation revenues —circulation revenues increased 5.3 % , or $ 25.4 million , in the year ended december 31 , 2017 due primarily to the acquisition of the new york daily news in september 2017 , which contributed $ 17.2 million in circulation revenue , and increases in rates which exceeded volume decreases by $ 8.2 million . 33 other revenues —other revenues decreased 5.9 % , or $ 12.7 million , in the year ended december 31 , 2017 primarily due to declines of $ 7.0 million in direct mail and marketing and $ 4.8 million in content syndication and other revenues . the new york daily news contributed $ 5.6 million to troncm other revenues in the year ended december 31 , 2017 . operating expenses —operating expenses decreased 5.3 % , or $ 66.2 million , in the year ended december 31 , 2017 , due to decreases in all categories partially offset by corporate allocations . the new york daily news contributed $ 42.2 million to troncm operating expenses in the year ended december 31 , 2017 . year ended december 25 , 2016 compared to the year ended december 27 , 2015 advertising revenues —total advertising and marketing services revenues decreased 10.9 % , or $ 83.2 million , in the year ended december 25 , 2016 compared to the prior year period . retail advertising revenues fell 9.4 % , or $ 52.5 million , due to declines in most categories , partially offset by an increase in the real estate and clubs and organizations categories . the categories with the largest declines were specialty merchandise , auto , department stores , personal services and financial services categories . national advertising revenues fell 16.9 % , or $ 20.2 million , due to declines in several categories , most notably movies and soft goods categories . classified advertising revenues decreased 12.4 % , or $ 10.5 million , compared to prior year period , primarily due to decreases in the recruitment category . circulation revenues —circulation revenues increased 5.0 % , or $ 23.1 million , in the year ended december 25 , 2016 due primarily to the acquisition of the san diego union-tribune in may 2015. overall decreases in volume were generally offset by rate increases . other revenues —other revenues decreased 4.5 % , or $ 10.2 million , in year ended december 25 , 2016 primarily due to declines in commercial print and delivery revenues of $ 8.8 million for third-party publications . operating expenses —operating expenses decreased 6.6 % , or $ 88.3 million , in the year ended december 25 , 2016 , due primarily to decreases in compensation expense , a prior year litigation matter , newsprint and ink expense and outside services expense , partially offset by increases in occupancy costs related to the vacated lease space discussed above and corporate allocations . troncx troncx is comprised of the company 's digital revenues and related digital expenses from local websites and mobile applications , digital only subscriptions , tca and forsalebyowner.com . tca is a syndication and licensing business providing quality content solutions for publishers around the globe . working with a vast collection of the world 's best news and information sources , tca delivers a daily news service and syndicated premium content to 1,700 media and digital information publishers in more than 70 countries . forsalebyowner.com is a national consumer-to-consumer focused real estate website . the majority of the revenue generated by forsalebyowner.com is e-commerce , but approximately one-third is generated through a call center and strategic partnerships with service providers in the real estate industry . the business generates the majority of its revenue by selling listing packages directly to home sellers who receive online advertising , home pricing tools , marketing advice , yard signs and technical support . 34 replace_table_token_7_th * represents positive or negative change in excess of 100 % year ended december 31 , 2017 compared to the year ended december 25 , 2016 advertising revenues —total advertising revenues increased 0.1 % , or $ 0.2 million , in the year ended december 31 , 2017 . national advertising revenue increased $ 11.7 million , primarily due to increases in the general category . other advertising revenue increased $ 1.7 million primarily due to increases in revenue shares received from advertising partners due to increased volume . retail advertising revenue increased $ 1.3 million , primarily due to increases in the furniture and home furnishings , food and drug stores and amusements categories , partially offset by a decrease in the personal services category . these increases were offset by decreases in classified advertising revenue which decreased $ 14.5 million primarily due to decreases in the real estate and recruitment categories . the new york daily news contributed $ 7.8 million to troncx advertising revenues in the year ended december 31 , 2017 . content revenues —content revenues increased 8.5 % , or $ 3.6 million , in the year ended december 31 , 2017 , with increases in digital subscription revenue partially offset by decreases in content syndication revenue . the new york daily news contributed $ 1.0 million to troncx content revenues in the year ended december 31 , 2017 . operating expenses —operating expenses increased 2.2 % , or $ 4.5 million , in the year ended december 31 , 2017 , primarily due to contributions of $ 5.5 million from the new york daily news .
| results of operations the company intends for the following discussion of its financial condition and results of operations to provide information that will assist in understanding the company 's financial statements , the changes in certain key items in those statements from period to period and the primary factors that accounted for those changes as well as how certain accounting principles , policies and estimates affect the company 's financial statements . 29 consolidated operating results for the years ended december 31 , 2017 , december 25 , 2016 and december 27 , 2015 are shown in the table below ( in thousands ) . references in this discussion to individual markets include daily newspapers in those markets and their related businesses . replace_table_token_3_th * represents positive or negative change in excess of 100 % year ended december 31 , 2017 compared to the year ended december 25 , 2016 operating revenues —operating revenues decreased 5.1 % , or $ 82.4 million , in the year ended december 31 , 2017 compared to the prior year period due to an $ 101.8 million decrease in advertising revenues and a $ 13.9 million decrease in other revenues , partially offset by an increase of $ 33.3 million in circulation revenues . overall decreases in circulation volume were generally offset by rate increases . included in operating revenues for the year ended december 31 , 2017 are revenues for the new york daily news since the september 2017 acquisition . the new york daily news contributed $ 16.4 million in advertising revenues , $ 17.3 million in circulation revenues and $ 6.5 million in other revenues .
| 7,413 |
gaap ” ) ) and related notes included elsewhere in this annual report on form 10-k ( this “ form 10-k ” ) . the following discussion contains forward-looking statements that are subject to risks and uncertainties . see part i “ special note regarding forward-looking statements ” for a discussion of the uncertainties , risks , and assumptions associated with those statements . actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors , including those discussed below and elsewhere in this form 10-k , particularly in the section entitled “ risk factors. ” unless we state otherwise or the context otherwise requires , the terms “ we , ” “ us , ” “ our ” and the “ company ” refer to paycom software , inc. and its consolidated subsidiaries . all amounts presented in tables , other than per share amounts , are in thousands unless otherwise noted . overview we are a leading provider of comprehensive , cloud-based human capital management ( “ hcm ” ) software delivered as software-as-a-service . we provide functionality and data analytics that businesses need to manage the complete employment lifecycle , from recruitment to retirement . our solution requires virtually no customization and is based on a core system of record maintained in a single database for all hcm functions , including talent acquisition , time and labor management , payroll , talent management and human resources management applications . our user-friendly software allows for easy adoption of our solution by employees , enabling self-management of their hcm activities in the cloud , which reduces the administrative burden on employers and increases employee productivity . we generate revenues from ( i ) fixed amounts charged per billing period plus a fee per employee or transaction processed and ( ii ) fixed amounts charged per billing period . we do not require clients to enter into long-term contractual commitments with us . our billing period varies by client based on when each client pays its employees , which may be weekly , bi-weekly , semi-monthly or monthly . our revenues are primarily generated through our sales force that solicits new clients and our client relations representatives who sell new applications to existing clients . our continued growth depends on attracting new clients through further penetration of our existing markets and geographic expansion into new markets , targeting a high degree of client employee usage across our solution , and introducing new applications to our existing client base . we believe our ability to continue to develop new applications and to improve existing applications will enable us to increase revenues in the future , and the number of our new applications adopted by our clients has been a significant factor in our revenue growth . throughout our history , we have built strong relationships with our clients . as the hcm needs of our clients evolve , we believe that we are well-positioned to expand the hcm spending of our clients and we believe this opportunity is significant . to be successful , we must continue to demonstrate the operational and economic benefits of our solution , as well as effectively hire , train , motivate and retain qualified personnel . growth outlook , opportunities and challenges as a result of our significant growth and geographic expansion , we are presented with a variety of opportunities and challenges . our payroll application is the foundation of our solution , and all of our clients are required to utilize this application in order to access our other applications . consequently , we have historically generated the majority of our revenues from our payroll applications , although our revenue mix has evolved and will continue to evolve as we develop and add new non-payroll applications to our solution . we believe our strategy of focusing on increased employee usage is key to long-term client satisfaction and client retention . client adoption of new applications and client employee usage of both new and existing applications have been significant factors in our revenue growth , and we expect the continuation of this trajectory will depend , in part , on the introduction of applications to our existing client base that encourage and promote more employee usage . moreover , in order to increase revenues and continue to improve our operating results , we must also attract new clients . we intend to obtain new clients by ( i ) continuing to leverage our salesforce productivity within markets where we currently have existing sales offices , ( ii ) expanding our presence in metropolitan areas where we currently have an existing sales office through adding sales teams or offices , thereby increasing the number of sales professionals within such markets , and ( iii ) opening sales offices in new metropolitan areas . our target client size range is 50 to 5,000 employees . while we continue to serve a diversified client base ranging in size from one employee to many thousands of employees , the average size of our clients has grown significantly as we have organically grown our operations , increased the number of applications we offer and experienced traction with larger companies . our solution requires no adjustment to serve larger clients . we believe larger employers represent a substantial opportunity to increase the number of potential clients and to increase our revenues per client , with limited incremental cost to us . because we charge our clients on a per employee basis for certain services we provide , any increase or decrease in the number of employees at our clients will have a positive 28 or negative impact , respectively , on our results of operations . we expect the changes in certain factors affecting our performance will correlate with improvement or deterioration in the labor market . story_separator_special_tag because payroll forms are typically processed in the first quarter of the year and many of our clients are subject to aca form filing requirements in the first quarter , first quarter revenues and margins are generally higher than in subsequent quarters . we anticipate our revenues will continue to exhibit this seasonal pattern related to aca form filings for so long as the aca ( or replacement legislation ) includes employer reporting requirements . in addition , we often experience increased revenues during the fourth quarter due to unscheduled payroll runs for our clients that occur before the end of the year . therefore , we expect the seasonality of our revenue cycle to decrease to the extent clients utilize more of our non-payroll applications . recurring revenues also include interest earned on funds held for clients . we collect funds from clients in advance of either the applicable due date for payroll tax submissions or the applicable disbursement date for employee payment services . these collections from clients are typically disbursed from one to 30 days after receipt , with some funds being held for up to 120 days . we typically invest funds held for clients in money market funds , demand deposit accounts , commercial paper and certificates of deposit until they are paid to the applicable tax or regulatory agencies or to client employees . we expect interest earned on funds held for clients will increase as we introduce new applications , expand our client base and renew and expand relationships with existing clients . the amount of interest we earn from the investment of client funds is also impacted by changes in interest rates . implementation and other revenues implementation and other revenues are comprised of implementation fees for the deployment of our solution and other revenues from sales of time clocks as part of our time and attendance services . non-refundable implementation fees are charged to new clients at inception and upon the addition of certain incremental applications for existing clients . these fees range from 10 % to 30 % of the annualized value of the transaction . implementation revenues are recognized as deferred revenue and amortized into income over the life of the client , which is estimated to be ten years , and other revenues are recognized upon shipment of time clocks . implementation and other revenues comprised approximately 1.8 % and 1.6 % of our total revenues for the years ended december 31 , 2019 and 2018 , respectively . cost of revenues cost of revenues consists of expenses related to hosting and supporting our applications , hardware costs , systems support and technology and depreciation and amortization . these costs include employee-related expenses ( including non-cash stock-based compensation expenses ) and other expenses related to client support , bank charges for processing ach transactions , certain implementation expenses , delivery charges and paper costs . they also include our cost for time clocks sold and ongoing technology and support costs related to our systems . the amount of depreciation and amortization of property and equipment allocated to cost of revenues is determined based upon an estimate of assets used to support our operations . administrative expenses administrative expenses consist of sales and marketing , research and development , general and administrative and depreciation and amortization . sales and marketing expenses consist primarily of employee-related expenses for our direct sales and marketing staff ( such as the amortization of commissions and bonuses and non-cash stock-based compensation expenses ) , marketing expenses and other related costs . research and development expenses consist primarily of employee-related expenses ( including non-cash stock-based compensation expenses ) for our development staff , net of capitalized software costs for internally developed software . we expect to grow our research and development efforts as we continue to broaden our payroll and hr solution offerings and extend our technological solutions by investing in the development of new applications and enhancements for existing applications . general and 30 administrative expenses consist of employee-related expenses for finance and accounting , legal , human resources and management information systems personnel ( including non-cash stock-based compensation expenses ) , legal costs , professional fees and other corporate expenses . depreciation and amortization expenses consist of ( i ) the amount of depreciation and amortization of property and equipment allocated to administrative expenses ( based upon an estimate of assets used to support our selling , general and administrative functions ) and ( ii ) amortization of intangible assets . interest expense interest expense includes interest on debt related to our corporate headquarters and settlements related to an interest rate swap we entered into in connection with such debt . we capitalize interest incurred for indebtedness related to construction in progress . other income , net other income , net includes interest earned on our own funds , any gain or loss on the sale or disposal of fixed assets , costs associated with the early repayment of debt and any unrealized gain or loss related to our interest rate swap . provision for income taxes our consolidated financial statements include a provision for income taxes incurred for the anticipated tax consequences of the reported results of operations using the asset and liability method . under this method , we recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities , as well as for any operating loss and tax credit carryforwards . deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled . we recognize a valuation allowance to reduce deferred tax assets to the net amount we believe is more likely than not to be realized .
| results of operations the following table sets forth selected consolidated statements of income data and such data as a percentage of total revenues for each of the periods indicated , as well as year-over-year changes with respect to each line item . refer to the annual report on form 10-k for the year ended december 31 , 2018 , filed with the sec on february 14 , 2019 , for a discussion of results for the year ended december 31 , 2017. replace_table_token_5_th 31 revenues the increase in total revenues for the year ended december 31 , 2019 from the year ended december 31 , 2018 was primarily the result of ( i ) the addition of new clients and productivity and efficiency gains in mature sales offices , which are offices that have been open for at least 24 months , ( ii ) higher average interest rates earned on funds held for clients , ( iii ) the strong performance of our tax forms filing business , ( iv ) the sale of additional applications to our existing clients , ( v ) contributions from new sales offices that were progressing toward maturity or reached maturity during 2019 and ( vi ) the modest price increase implemented for a portion of our clients in march 2019. the increase in implementation and other revenues for the year ended december 31 , 2019 from the year ended december 31 , 2018 was primarily the result of the increased recognition of non-refundable conversion fees that are charged to new clients to offset the expense of new client set-up . these fees are deferred and recognized ratably over the ten-year estimated life of our clients .
| 7,414 |
we are driving a future in which everyday physical items are wirelessly connected to digital counterparts , or digital twins , in the cloud , and in which businesses and people access information about an item from its digital twin . our mission is to connect every thing . we deliver a platform that powers item-to-cloud connectivity , and on which enterprise solution providers innovate iot whole products . today , we deliver the identity , location and authenticity of billions of physical items . we believe our future is extending that delivery to trillions of physical items and enabling ubiquitous access to cloud-based digital twins of those items , each storing an item 's ownership , history and links . we believe the item-to-cloud connectivity that our platform will deliver will enhance businesses efficiencies and commerce and , ultimately , improve peoples ' lives . our platform , which comprises multiple product families wirelessly connects individual items and delivers data about the connected items to business and consumer applications enabled by our partner network . we link the products within our platform to deliver capabilities and performance that surpasses mix-and-match solutions built from competitor products . we and our partners connect the items via a miniature radio chip embedded in the item or in its packaging , reading and delivering each item 's identity , location and authenticity . to date , we have enabled connectivity to nearly 50 billion items , enabling businesses and consumers to derive timely information from those connected items . our platform uses rain , a type of radio-frequency identification , or rfid , technology we pioneered . we spearheaded development of the rain radio standard , lobbied governments to allocate frequency spectrum and cofounded the rain alliance that today has more than 160 member companies . our industry uses free spectrum in 78 countries encompassing roughly 96.5 % of the world 's gdp and has connected many tens of billions of items to date . we believe rain 's capabilities – in particular , endpoint ics with serialized identifiers , 30-foot range reading up to 1000 items per second without line-of-sight , radio-frequency energy harvesting for battery-free operation , essentially unlimited life and , in the future , cryptographic item authentication – position rain to be the leading item-to-cloud connectivity technology for the iot . factors affecting our performance covid-19 we are actively monitoring and mitigating the impacts of covid-19 in all aspects of our business , including for our employees , suppliers , partners and end users . for our endpoint ic business , forecasting was already difficult without covid-19 , because we sell our ics to inlay partners and therefore have limited visibility to end-user demand . the myriad uncertainties that covid-19 has introduced , especially at retail end users contending with store closures and reduced customer traffic , have exacerbated that forecasting difficulty . covid-19 's impact has been further complicated by countries reopening at different rates , with some seemingly able to manage subsequent outbreaks and others not . covid-19 has also caused uncertain long-term shifts , mostly negative , in other industries important to us besides retail apparel , such as aviation and sports . even in supply chain and logistics , or sc & l , which has seen shipment volumes surge , end users have been reticent to deploy new technologies . consequently , covid-19 negatively impacted our 2020 endpoint ic demand . additionally , a lthough we introduced our new impinj m700 in 2020 and it was in full production by the end of 2020 , we saw a slower demand ramp relative to our expectations . due to overall endpoint ic demand decline , we remain uncertain of its impact in 2021 or beyond . 41 for our systems business , covid-19 delayed pilots and deployments . these delays were due in some cases to businesses being closed by local regulations and in others by reduced or deferred capital expenditures . the delays impacted our 2020 operating results and we expect those impacts will persist into 2021. some end users have accelerated their investments in business-process modernization technologies like rain during the pandemic , but even in those cases , covid-19 can delay deployments for reasons of health and safety , product and labor availability , and store closures . consequently , although we see evidence of continued demand for rain systems , the extent to which adoption will rebound in 2021 and the degree to which it withstands the negative impacts of covid-19 , remain unclear . from an operations standpoint , covid-19 caused some of our suppliers to temporarily shut down , operate at reduced capacity , or both . for the most part we navigated these closures and capacity shortfalls successfully . we also navigated shipping challenges due to reduced transport capacity , albeit with higher shipping costs . most of our facilities and employees are in seattle , where government restrictions to slow covid-19 's spread have impacted our business , albeit modestly . almost all our employees , except for those essential few who must be in the office , are working from home . we are striving to minimize covid-19 's impact on our operations . however , our first priority is , and will continue to be , our employees ' health and safety . covid-19 's travel restrictions have also adversely affected our business , again modestly , by slowing new-product launches and typical sales activities . there can be no assurance that covid-19 's impact on our employees or business activities in 2021 will remain modest . we may experience issues due to necessary changes in our business practices , to governmental action , or to difficulties responding to unanticipated events like a natural disaster . increased remote working may result in privacy , data security and fraud risks . our understanding of the legal and regulatory requirements , as well as the guidance from authorities , related to covid-19 may be subject to future challenge , particularly as guidance evolves in response to future covid-19 developments . story_separator_special_tag in our systems business , in 2020 we introduced our new impinj r700 reader , which likewise offers significant performance advantages , and we believe will also foster adoption . despite us being in full production with both products by the end of 2020 , covid-19 has impacted demand and the speed with which we were able ramp up production , and the pace of adoption has been slower than we had anticipated . we sell our products through partners and distributors and have limited ability to determine end-user demand . consequently , we may incorrectly forecast that demand or not identify market shifts in a timely fashion , potentially affecting our business adversely . if rain market adoption , and adoption of our products specifically , does not meet our expectations or if we are unable to meet partner or end-user volume or performance expectations , because of the impact of covid-19 or otherwise , then our operating results and growth prospects will be adversely affected . if we reduce prices to win opportunities , then our gross margins may be negatively affected . in contrast , if our endpoint ic , reader ic , reader or gateway sales exceed expectations , then our revenue and profitability may be positively affected . timing and complexity of end user deployments from 2010 to 2020 , our endpoint ic sales volumes increased at a compounded annual growth rate of 25 % . however , the pace and scope of rain adoption has been uneven and unpredictable . for example , our endpoint ic unit sales volumes increased significantly in 2016 , declined in second-half 2017 and in first-half 2018 , returned to growth in second-half 2018 and in 2019 ( the latter albeit not at the same pace as in 2016 ) , and then declined again in second- and third-quarter 2020 due to covid-19 . short-term demand will remain unpredictable in scope and timing . longer term , we believe our endpoint ic opportunity will continue to grow , but we can not predict whether historical annual growth rates are indicative of the pace of future growth . additionally , covid-19 may cause end users to eliminate or significantly reduce or delay spending on rain-based solutions , impacting endpoint ic growth . 43 our systems business relies disproportionally on large-scale deployments at discrete end users . the timing of those large deployments causes large variability in our systems revenue . for example , we generated 14 % of total 2019 revenue from a north american logistics provider in connection with a project-based gateway deployment and we did not have a comparable new project-base revenue in 2020 . notably , covid-19 has caused delays in some of our pending global system deployments as sis , vars and their end users ' business locations are temporarily closed , impacting our ability to replace project-based revenue in a timely fashion . finally , although we promote our platform as an integrated offering , we sell our products individually , and end users often use only certain of our products . for any given end-user solution , whether an end user chooses to deploy our entire platform or only a portion will also affect our operating results . average selling price our product asps fluctuate based on competitive pressures and the discounting we offer to win opportunities , but generally decline over time . we expect that trend to continue . historically , we have been able to implement manufacturing and quality improvements that effectively reduce the per-unit cost of most of our products , as well as introduce newer and lower-cost products , but the timing of these cost reductions and product introductions fluctuates and may not materialize in any given quarter or year . seasonality we typically renegotiate pricing with most of our endpoint ic oems with an effective date of the first quarter of the calendar year , reducing both revenue and gross margins in the first quarter compared to prior periods . the impact tends to decline in subsequent quarters as we reduce costs and , to the extent we can migrate our customers to newer , lower-cost products , adjust product mix . endpoint ic volumes also tend to be lower in the fourth quarter than in the third quarter . system sales tend to be stronger in the fourth quarter of the calendar year , and less strong in the first quarter . we believe this seasonality is due to the availability of residual funding for capital expenditures prior to the end of many customers ' fiscal years . while , over the longer term , we expect these seasonal trends to continue , quarter-to-quarter variability in our revenue can be caused by a number of factors including uncertainty in demand and supply as a result of covid-19 , the timing of large deployments , competitor product availability as well as supply constraints , any or all of which can mask seasonality in any given year . these risks and uncertainties , as well as other risks and uncertainties that could cause our actual results to differ significantly from management 's expectations , are described in greater detail in the sections of this report captioned “ covid-19 ” and in part ii , item 1a ( risk factors ) . inventory supply from time to time we experience inventory overages or shortages , either due to us mis-estimating customer or end-user demand , constrained supplier manufacturing capacity or our product availability , fluctuations in our market , including competitor product availability , or the global economy , changes in regulations or tariffs or for a host of other reasons . these inventory dynamics can impact some or all of our products . high inventory levels can result in product obsolescence , increases in reserves or unexpected expenses that adversely affect our business . low inventory levels can affect our ability to meet customer demand , lengthen lead times and potentially causing us to miss opportunities , lose market share and or damage customer relationships , also adversely affecting our business .
| results of operations replace_table_token_3_th year ended december 31 , 2020 compared with year ended december 31 , 2019 revenue and gross profit decreased due primarily to lower systems revenue , partially offset by higher endpoint ic revenue . gross margin decreased due primarily to revenue mix with systems revenue comprising a smaller portion of our total revenue . loss from operations increased due primarily to increased operating expenses and decreased gross profit . the increase in operating expenses was primarily due to increased stock-based compensation expense , litigation-settlement and related costs incurred in second-quarter 2020 , and increased research and development personnel expenses , partially offset by decreased sales and marketing personnel expenses . year ended december 31 , 2019 compared with year ended december 31 , 2018 revenue and gross profit increased from increased endpoint ic and systems revenue . gross margin increased primarily due to revenue mix with systems revenue representing a larger portion of our total revenue , and from leverage derived from comparable overhead costs on increased revenue , partially offset by higher excess and obsolescence charges . loss from operations decreased due to increased gross profit , partially offset by increased operating expenses . the increase in operating expenses was due to increased stock-based compensation expense and higher product development costs , partially offset by decreased restructuring costs and decreased personnel expenses . revenue replace_table_token_4_th we currently derive substantially all our revenue from sales of endpoint ics , reader ics , readers and gateways . we sell our endpoint ics primarily to inlay manufacturers ; our reader ics primarily to oems and odms through distributors ; and our readers and gateways to value-added resellers , or vars , and system integrators , or sis , primarily through distributors . we expect endpoint ic sales to represent the majority of our revenue for the foreseeable future . year ended december 31 , 2020 compared with year ended december 31 , 2019 endpoint ic revenue increased $ 4.7
| 7,415 |
the transaction was accounted for as a sale of our brazilian business , which was deconsolidated . bvs , an unrelated third party whose results we do not consolidate , is the second largest consumer and commercial credit information company in brazil . our investment in bvs was valued at 130 million story_separator_special_tag as used herein , the terms equifax , the company , we , our and us refer to equifax inc. , a georgia corporation , and its consolidated subsidiaries as a combined entity , except where it is clear that the terms mean only equifax inc. all references to earnings per share data in management 's discussion and analysis , or md & a , are to diluted earnings per share , or eps , unless otherwise noted . diluted eps is calculated to reflect the potential dilution that would occur if stock options or other contracts to issue common stock were exercised and resulted in additional common shares outstanding . business overview we are a leading global provider of information solutions , employment , income and identity verifications and human resources business process outsourcing services . we leverage some of the largest sources of consumer and commercial data , along with advanced analytics and proprietary technology , to create customized insights which enable our business customers to grow faster , more efficiently , and more profitably , and to inform and empower consumers . businesses rely on us for consumer and business credit intelligence , credit portfolio management , fraud detection , decisioning technology , marketing tools , and human resources and payroll services . we also offer a portfolio of products that enable individual consumers to manage their financial affairs and protect their identity . our revenue stream is diversified among individual consumers and among businesses across a wide range of industries and international geographies . segment and geographic information segments . the u.s. consumer information solutions , or uscis , segment , the largest of our five segments , consists of three product and service lines : online consumer information solutions , or ocis ; mortgage solutions ; and consumer financial marketing services . ocis and mortgage solutions revenue is principally transaction-based and is derived from our sales of products such as consumer credit reporting and scoring , mortgage settlement services , identity management , fraud detection and modeling services . uscis also markets certain of our decisioning products which facilitate and automate a variety of consumer credit-oriented decisions . consumer financial marketing services revenue is principally project- and subscription-based and is derived from our sales of batch credit , consumer wealth or demographic information such as those that assist clients in acquiring new customers , cross-selling to existing customers and managing portfolio risk . the international segment consists of latin america , europe and canada consumer . canada consumer 's products and services are similar to our uscis offerings , while europe and latin america are made up of varying mixes of product lines that are in our uscis , north america commercial solutions and north america personal solutions reportable segments . the talx workforce solutions segment consists of the verification services and employer services business units . verification services revenue is transaction based and is derived primarily from employment , income and social security number verifications . employer services revenues are derived from our provision of certain human resources business process outsourcing services that include both transaction- and subscription-based product offerings . these services assist our customers with the administration of unemployment claims and employer-based tax credits , the handling of certain payroll-related transaction processing , and the management of the assessment of new hires . north america personal solutions revenue is both transaction- and subscription-based and is derived from the sale of credit monitoring , debt management and identity theft protection products , which we deliver to consumers through the mail and electronically via the internet . north america commercial solutions revenue is principally transaction based , with the remainder project based , and is derived from the sale of business information , credit scores and portfolio analytics that enable customers to utilize our reports to make financial , marketing and purchasing decisions related to businesses . 28 geographic information . we currently operate in the following countries : argentina , brazil , canada , chile , costa rica , ecuador , el salvador , honduras , paraguay , peru , portugal , the republic of ireland , spain , the u.k. , uruguay , and the u.s. our operations in the republic of ireland focus on data handling and customer support activities . we have an investment in the second largest consumer and commercial credit information company in brazil and offer consumer credit services in india and russia through joint ventures . of the countries we operate in , 74 % of our revenue was generated in the u.s. during the twelve months ended december 31 , 2011. key performance indicators . management focuses on a variety of key indicators to monitor operating and financial performance . these performance indicators include measurements of operating revenue , change in operating revenue , operating income , operating margin , net income , diluted earnings per share , cash provided by operating activities and capital expenditures . key performance indicators for the twelve months ended december 31 , 2011 , 2010 and 2009 , include the following : replace_table_token_5_th operational and financial highlights . on may 31 , 2011 , we completed the merger of our brazilian business with boa vista serviços s.a. ( “ bvs ” ) in exchange for a 15 % equity interest in bvs , which was accounted for as a sale and was deconsolidated ( the “ brazilian transaction ” ) . bvs , an unrelated third party whose results we do not consolidate , is the second largest consumer and commercial credit information company in brazil . on august 2 , 2011 , we acquired datavision resources , which provides data and business solutions to the mortgage , insurance and financial services industries , for $ 50.0 million . story_separator_special_tag the impact of changes in foreign currency exchange rates increased our selling , general and administrative expense by $ 5.2 million in 2011. the increase in selling , general and administrative expenses from continuing operations of $ 37.2 million in 2010 when compared to 2009 , was due to changes in foreign exchange rates , which increased 2010 expense by $ 5.2 million , and increased salary , incentive and benefits expenses of $ 32.3 million , offset by $ 24.8 million in restructuring charges that were incurred during 2009 that did not recur in 2010. the remaining increase was primarily due to the impact of the inclusion of businesses acquired in the fourth quarter of 2009. depreciation and amortization . depreciation and amortization expense from continuing operations increased in 2011 as compared to 2010 due to $ 6.6 million of incremental depreciation and amortization expense related to our fourth quarter 2010 acquisition of anakam and our 2011 acquisitions partially offset by the decline in amortization of certain purchased intangibles acquired as part of talx in 2007 which fully amortized at the end of the second quarter of 2011 and the amortization and depreciation decrease resulting from the deconsolidation of our brazilian business . depreciation and amortization expense from continuing operations in 2010 increased $ 17.0 million as compared to 2009 primarily due to our fourth quarter 2009 acquisitions which contributed $ 9.0 million of incremental depreciation and amortization expense , as well as the effect of recent investments in new products and technology infrastructure . 31 operating income and operating margin replace_table_token_8_th operating income from continuing operations for 2011 increased faster than revenue due to better operating leverage from revenue growth and business mix as well as the deconsolidation of brazil , which reduced reported revenue , but which had little impact on operating profit because it had been operating near break-even . these factors resulted in operating margin improvement of 90 basis points to 24.0 % compared to 2010. the increase in operating income from continuing operations and operating margin for 2010 , as compared to 2009 , is primarily attributed to the 8 % increase in revenue and $ 24.8 million of restructuring charges in 2009 that did not recur in 2010. other expense , net replace_table_token_9_th nm - not meaningful interest expense decreased slightly in 2011 , when compared to the same period in 2010 , due to lower average debt balances outstanding for 2011 as compared to 2010. our consolidated debt balance has increased at december 31 , 2011 , as a result of additional borrowings in the form of commercial paper , on which interest rates and accordingly interest expense are currently very low . the increase in the average cost of debt for 2011 is due to less low rate commercial paper outstanding on average year to date which caused the average cost of debt to increase as compared to the prior year period . interest expense decreased slightly for 2010 , when compared to 2009 , as a decrease in our average debt balance from $ 1.18 billion to $ 1.07 billion more than offset an increase in the average interest rate on our total debt from 4.8 % in 2009 to 5.2 % in 2010. the increase in our average interest rate paid was caused by a reduction in short term , floating rate commercial paper , while longer term fixed rate debt outstanding remained essentially unchanged . other expense ( income ) , net , from continuing operations for 2011 increased $ 9.0 million as compared to the prior year . the increase is primarily due to the merger of our brazilian business during the second quarter of 2011. on may 31 , 2011 , we completed the merger of our brazilian business with bvs , which was accounted for as a sale and was deconsolidated , in exchange for a 15 % equity interest in bvs . we recorded a $ 10.3 million pre-tax loss on the brazilian transaction in other expense ( income ) , net . other expense ( income ) , net , for 2010 as compared to 2009 , declined , as 2009 included a $ 2.2 million mark-to-market adjustment on certain insurance policies , a $ 1.1 million gain on our repurchase of $ 7.5 million principal amount of our ten-year senior notes due 2017 and a $ 1.3 million gain related to a litigation settlement . 32 income taxes replace_table_token_10_th our effective rate was 41.2 % for 2011 , up from 35.1 % for the same period in 2010. the 2011 rate was higher primarily due to the impact of the brazilian transaction which increased our effective rate by 5.2 % . in addition , the 2010 rate benefited from certain state benefits that did not recur in 2011. this is partially offset by a cumulative income tax benefit resulting from the recognition of an income tax deduction related to several prior years . we expect our effective tax rate in 2012 to be in the range of 36 % to 38 % . our effective tax rate was 35.1 % for 2010 , up from 32.2 % for the same period in 2009. the 2010 rate was higher due primarily to the prior year recognition of a $ 7.3 million income tax benefit related to our ability to utilize foreign tax credits beyond 2009 , more favorable discrete items in 2009 related to foreign and state taxes and a 2009 investment loss in subsidiary , partially offset by a permanent federal deduction realized in 2010. net income replace_table_token_11_th consolidated income from continuing operations decreased by $ 3.1 million , or 1 % , in 2011 , compared to the same period in 2010 , due to the $ 27.8 million loss recorded on the brazilian transaction ( reflected in other expense and income tax expense ) , partially offset by operating income growth of $ 41.0 million due to revenue growth , net of associated income taxes .
| segment financial results u.s. consumer information solutions replace_table_token_12_th u.s. consumer information solutions revenue increased 7 % in 2011 as compared to 2010 as a result of growth across all of our uscis business lines . the increase in revenue for 2010 , as compared to 2009 , was due to growth in mortgage solutions along with growth due to our acquisition of ixi corporation in the fourth quarter of 2009 partially offset by a small decline in online credit reporting revenue . ocis . the increase in revenue for 2011 , as compared to 2010 , was driven by increased market volume , particularly in the credit card and auto markets ; new customer wins ; new service introductions ; and select pricing actions in subscription and wholesale arrangements . an 11 % increase in core credit decision transaction volumes was partially offset by lower average price per transaction for our transaction based revenue . revenue for 2010 , as compared to 2009 , declined primarily due to a reduction of online credit decision transaction volume of 5 % caused by weakness in the u.s. consumer credit markets while pricing remained relatively flat year over year . mortgage solutions . revenue has increased in 2011 primarily due to increased sales of settlement services as a result of increased market share from existing customers partially offset by the declines in core mortgage reporting services due to lower refinancing activity as compared to the comparable periods of 2010. revenue for 2010 increased , as compared to the prior year , due to favorable long-term interest rates that resulted in higher consumer refinancing activity and increased home sales activity attributable to u.s. government incentives for housing purchases which expired on may 31 , 2010. consumer financial marketing services . 2011 revenue increased , as compared to 2010 , due to continued growth in credit-based pre-screen and portfolio management revenue as well as strong market penetration of wealth-based consumer information services .
| 7,416 |
this unvested expense is expected to be recognized during fiscal years 2020 , 2021 and 2022. performance-based awards the plan also allows for the granting of performance-based awards to a limited number of key executives . as administered by the human resources committee of the company 's board of directors , these performance-based awards are payable in common stock and are based on a formula that measures performance of the company over a three -year period . these awards are settled or forfeited after story_separator_special_tag the following management 's discussion and analysis of financial condition and results of operations ( md & a ) provides a comparison of the company 's results of operations and liquidity and capital resources for the years ended july 31 , 2019 and 2018. a discussion of changes in the company 's results of operations and liquidity and capital resources from the year ended july 31 , 2017 to july 31 , 2018 can be found in part ii , “ item 7. management 's discussion and analysis of financial condition and results of operations of our annual report on form 10-k for the fiscal year 2018 ( the “ 2018 annual report ” ) , which was filed with the securities and exchange commission on october 1 , 2018. the md & a should be read in conjunction with the company 's consolidated financial statements and notes included in item 8 of this annual report . this discussion contains forward-looking statements that involve risks and uncertainties . the company 's actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors , including those discussed elsewhere in this annual report , particularly item 1a , “ risk factors ” and in the safe harbor statement under the securities reform act of 1995 below . throughout this md & a , the company refers to measures used by management to evaluate performance , including a number of financial measures that are not defined under accounting principles generally accepted in the united states of america ( gaap ) . excluding foreign currency translation from net sales and net earnings ( i.e . constant currency ) and excluding the impact of one-time transactions are not measures of financial performance under gaap ; however , the company believes they are useful in understanding its financial results and provide comparable measures for understanding the operating results of the company between different fiscal periods . reconciliations within this md & a provide more details on the use and derivation of these measures . overview net sales for the year ended july 31 , 2019 were $ 2,844.9 million , as compared with $ 2,734.2 million for the year ended july 31 , 2018 , an increase of $ 110.7 million , or 4.0 % . net sales were negatively impacted by foreign currency translation , which decreased sales by $ 74.0 million . on a constant currency basis , net sales for the year ended july 31 , 2019 increased 6.8 % from the prior fiscal year . net earnings for the year ended july 31 , 2019 were $ 267.2 million , as compared with $ 180.3 million for the year ended july 31 , 2018 , an increase of $ 86.9 million , or 48.2 % . diluted earnings per share were $ 2.05 for the year ended july 31 , 2019 , as compared with $ 1.36 for the year ended july 31 , 2018 , an increase of 50.7 % . net earnings for the year ended july 31 , 2019 include a net discrete tax expense of $ 18.7 million related to one-time adjustments for the enactment of the tax cuts and jobs act ( tcja ) . net earnings for the year ended july 31 , 2018 include a provisional estimate for tax charges of $ 84.1 million related to the tcja . see further discussion below , income taxes . also , see note 12 in the notes to consolidated financial statements included in item 8 of this report for further discussion of tcja . 11 story_separator_special_tag engine products segment the following is a summary of net sales by product group within the company 's engine products segment for the years ended july 31 , 2019 and 2018 ( in millions ) : replace_table_token_12_th net sales for the engine products segment for the year ended july 31 , 2019 were $ 1,926.0 million , as compared with $ 1,849.0 million for the year ended july 31 , 2018 , an increase of $ 77.0 million , or 4.2 % . excluding the $ 50.2 million decrease from foreign currency translation , fiscal 2019 sales increased 6.9 % . worldwide sales from off-road were $ 315.1 million , a decrease of 3.7 % from fiscal 2018 . in constant currency , sales decreased $ 2.8 million , or 0.8 % . the decrease in off-road sales reflects increasingly uncertain end-market conditions over the course of the fiscal year , particularly related to the construction and agriculture markets , that resulted in slowing production of heavy-duty off-road equipment and slowed orders as customers appeared to be destocking . additionally , the decline in off-road was partially offset by new program wins and continued strength in sales of the company 's innovative products . worldwide sales of on-road were $ 179.8 million , an increase of 16.6 % from fiscal 2018 . in constant currency , sales increased $ 28.4 million , or 18.4 % . the increase in on-road sales reflects higher levels of heavy-duty truck production in the u.s. market . worldwide sales of aftermarket were $ 1,315.3 million , an increase of 4.2 % from fiscal 2018 . in constant currency , sales increased $ 89.3 million , or 7.1 % . the increase in aftermarket sales reflects favorable market conditions during the first half of the fiscal year , reflecting end-user demand and growth in innovative product categories , including both air and liquid filtration products . story_separator_special_tag the company believes that the liquidity available from the combination of the expected cash generated by operating activities , existing cash and available credit under existing credit facilities will be adequate to meet cash requirements for the next twelve months , including working capital needs , debt service obligations , capital expenditures , payment of anticipated dividends , share repurchase activity , and potential acquisitions . 17 cash flow summary cash flows for the years ended july 31 , 2019 , 2018 and 2017 are summarized as follows ( in millions ) : replace_table_token_15_th operating activities cash provided by operating activities for the year ended july 31 , 2019 was $ 345.8 million , as compared with $ 262.9 million for the year ended july 31 , 2018 , an increase of $ 82.9 million . this increase was mainly driven by higher net earnings before the non-cash impact of the tcja of $ 18.7 million and $ 84.1 million in fiscal years 2019 and 2018 , respectively , changes in working capital primarily due to improvements to the timing of collections of customer receipts , flat inventory levels in fiscal year 2019 , and decreased discretionary pension plan contributions in 2019 , partially offset by cash paid for taxes of $ 99.3 million compared to $ 82.6 million in 2018. investing activities cash used in investing activities for the year ended july 31 , 2019 was $ 246.4 million , as compared with $ 95.4 million for the year ended july 31 , 2018 , an increase of $ 151.0 million . the increase includes the acquisition of bofa for $ 96.0 million in fiscal 2019 and higher capital expenditures of $ 53.2 million which were primarily related to investments to expand production capacity . financing activities cash flows used in financing activities generally relate to the use of cash for payment of dividends and repurchases of the company 's common stock , net borrowing activity and proceeds from the exercise of stock options . to determine the appropriate level of payouts , the company considers recent and projected performance across key financial metrics , including earnings , cash flow from operations , and total debt . dividends paid for the years ended july 31 , 2019 and 2018 were $ 99.7 million and $ 94.7 million , respectively . share repurchases for the years ended july 31 , 2019 and 2018 were $ 129.2 million and $ 122.0 million , respectively . cash used in financing activities for the year ended july 31 , 2019 was $ 123.3 million , as compared with $ 268.8 million for the year ended july 31 , 2018 , a decrease of $ 145.5 million . the change in cash used for financing activities is primarily due higher repayments of long-term debt in 2018. financial condition the company 's total capitalization components and debt-to-capitalization ratio at july 31 , 2019 and 2018 was as follows ( in millions ) : replace_table_token_16_th as of july 31 , 2019 , total debt , including short-term borrowings and long-term debt , represented 41.6 % of total capitalization , defined as total debt plus total shareholders ' equity , compared with 38.8 % at july 31 , 2018 . 18 long-term debt outstanding at july 31 , 2019 was $ 584.4 million compared with $ 499.6 million at the prior year end , an increase of $ 84.8 million , driven primarily by the funding needs for the acquisition of bofa . accounts receivable , net at july 31 , 2019 was $ 529.5 million , as compared with $ 534.6 million at july 31 , 2018 , a decrease of $ 5.1 million . accounts receivable , net decreased due to the impact of foreign exchange rates as well as improvements to timing of collections . days sales outstanding were at 65 days as of july 31 , 2019 , down from 66 days as of july 31 , 2018 . days sales outstanding is calculated using the count back method , which calculates the number of days of most recent revenue that is reflected in the net accounts receivable balance . inventories , net at july 31 , 2019 was $ 332.8 million , as compared with $ 334.1 million at july 31 , 2018 , a decrease of $ 1.3 million . inventory turns were 5.6 times per year as of july 31 , 2019 and 2018 . inventory turns are calculated by taking the annualized cost of sales based on the trailing three-month period divided by the average of the beginning and ending net inventory values of the three-month period . accounts payable at july 31 , 2019 was $ 237.5 million , as compared with $ 201.3 million at july 31 , 2018 , an increase of $ 36.2 million . accounts payable increased primarily due to higher capital expenditures outstanding as of july 31 , 2019. off-balance sheet arrangements the company does not have any off-balance sheet arrangements , with the exception of the guarantee of 50 % of certain debt of its joint venture with caterpillar inc. , advanced filtration systems inc. ( afsi ) . as of july 31 , 2019 , the joint venture had $ 38.8 million of outstanding debt , of which the company guarantees half . the company does not believe that this guarantee will have a current or future effect on its financial condition , results of operations , liquidity or capital resources . contractual obligations the following table summarizes the company 's contractual obligations as of july 31 , 2019 , for the years indicated ( in millions ) : replace_table_token_17_th ( 1 ) purchase obligations consist primarily of inventory , tooling and capital expenditures . the company 's purchase orders for inventory are based on expected customer demand and , as a result , quantities and dollar volumes are subject to change .
| consolidated results of operations the following table summarizes consolidated results of operations for each of the fiscal years ended july 31 , 2019 and 2018 ( in millions , except per share data ) : replace_table_token_5_th net sales net sales by operating segment are as follows ( in millions ) : replace_table_token_6_th net sales by origination net sales by origination for the years ended july 31 , 2019 and 2018 are as follows ( in millions ) : replace_table_token_7_th net sales by origination is based on the country of the company 's legal entity where the customer 's order was placed . 12 impact of foreign currency translation on net sales the company 's net sales are impacted by fluctuations in foreign currency exchange rates . the following table reflects the impact of these fluctuations on net sales for the years ended july 31 , 2019 and 2018 ( in millions ) : replace_table_token_8_th ( 1 ) the impact of foreign currency translation is calculated by translating current period foreign currency revenue into u.s. dollars using the average foreign currency exchange rates for the prior fiscal year period rather than actual current period foreign currency exchange rates . the fiscal 2019 net sales increase of $ 110.7 million , or 4.0 % from fiscal 2018 , was primarily driven by the engine products segment which increased $ 77.0 million , or 4.2 % , due to strong growth in the aftermarket , on-road and aerospace and defense product groups , partially offset by declining sales of off-road and slowed orders as customers appear to be destocking . the company 's primary engine-related markets , including global construction , agriculture , mining and transportation are in various stages of their respective economic cycles .
| 7,417 |
the following table details the royalty tiers associated with cumulative calendar year net sales allocated to each royalty-bearing product as provided in the abbvie agreement : replace_table_token_25_th royalties owed to the company under the agreement can be reduced by abbvie in certain circumstances , including ( i ) if abbvie exercises its right to license or otherwise acquire rights to intellectual property controlled by a third party where a product could not be legally developed or commercialized in a country without the third-party intellectual property right , ( ii ) where a product developed under the collaboration agreement is sold in a country and not covered by a valid patent claim in such country , and ( iii ) where sales of a generic product are equal to at least a specified percentage of abbvie 's market share of its product in story_separator_special_tag financial condition and results of operations you should read the following discussion and analysis of financial condition and results of operations together with the section entitled “ selected consolidated financial data ” and our consolidated financial statements and related notes included elsewhere in this annual report on form 10-k. this discussion and other parts of this annual report on form 10-k contain forward-looking statements that involve risks and uncertainties , such as statements regarding our plans , objectives , expectations , intentions and projections . our actual results could differ materially from those discussed in these forward-looking statements . factors that could cause or contribute to such differences include , but are not limited to , those discussed in the “ risk factors ” section of this annual report on form 10-k. overview we are a biotechnology company that uses our robust , chemistry-driven approach and drug discovery capabilities to create small molecule drugs primarily for the treatment of viral infections and liver diseases . we discovered glecaprevir , the second of two protease inhibitors discovered and developed through our collaboration with abbvie for the treatment of chronic hepatitis c virus , or hcv . glecaprevir is co-formulated as part of abbvie 's newest direct-acting antiviral ( daa ) combination and marketed under the tradenames mavyret ( u.s. ) or maviret ( ex-u.s. ) ( glecaprevir/pibrentasvir ) . our royalties from our abbvie collaboration and our existing financial resources provide us funding to support our wholly-owned research and development programs , which are currently focused on the following disease targets : respiratory syncytial virus , or rsv , the most common cause of bronchiolitis and pneumonia in children under one year of age in the u.s. , resulting in an estimated 57,000 to 125,000 hospitalizations each year in the u.s. ; non-alcoholic steatohepatitis , or nash , a liver disease estimated to affect approximately 1.5 % to 6.5 % of the population in the developed world ( which is the equivalent of approximately 5 to 20 million individuals in the u.s. alone ) ; primary biliary cholangitis , or pbc , a chronic liver disease that slowly destroys bile ducts in the liver , which affects an estimated 17,000 individuals in the u.s. ; and hepatitis b virus , or hbv , the most prevalent chronic hepatitis , which is estimated to affect approximately 250 million individuals worldwide . we had $ 325.1 million in cash , cash equivalents and marketable securities at september 30 , 2018. in fiscal 2018 , we earned $ 191.6 million in per-product royalties on abbvie 's net sales of its hcv regimens and we earned the remaining $ 15.0 million milestone payment from abbvie upon reimbursement approval for maviret in japan . we expect our existing financial resources and future royalties from our abbvie collaboration will allow us to continue to fund our wholly-owned research and development programs for the foreseeable future . our wholly-owned programs our wholly-owned research and development programs are in virology , namely rsv and hbv , and in liver disease ( non-virology ) , namely nash and pbc : rsv : we discovered edp-938 , a potent n-protein inhibitor of activity of both major subgroups of rsv , referred to as rsv-a and rsv-b , and have tested it as our first clinical candidate for rsv . we believe edp-938 is differentiated from fusion inhibitors currently in development for rsv because n-protein inhibitors directly target the viral replication process of rsv and have demonstrated high barriers to resistance against rsv in vitro . o in our fiscal 2018 , we completed a phase 1 clinical study demonstrating that edp-938 was generally safe and well tolerated over a broad range of single and multiple doses with good pharmacokinetic data . 58 o we initiated a phase 2a challenge study of edp-938 in october 2018 . the challenge study will test the effect of edp-938 on healthy volunteers who will be infected with rsv and then treated with edp-938 or placebo during the course of the study . primary and secondary outcome measures include changes in viral load measurements and change of baseline symptoms . o preclinical data demonstrated that edp-938 is a potent inhibitor of both rsv-a and rsv-b activity , maintaining antiviral activity post-infection while presenting a high barrier to resistance in vitro . nash and pbc : we are working on multiple compounds that selectively bind to and activate the farnesoid x receptor , or fxr . we plan to develop these compounds , referred to as fxr agonists , for use in the treatment of nash and pbc , both of which are liver diseases with very few therapeutic options . our lead fxr agonist , edp-305 , represents a new class of fxr agonist designed to take advantage of increased binding interactions with the receptor . we believe this class is significantly different from other fxr agonists in clinical development . o in october 2017 , we announced results of a phase 1a/b clinical study of edp-305 , which was generally safe and well tolerated over a broad range of single and multiple doses with pharmacokinetic data supporting once daily oral dosing . story_separator_special_tag as a result of these efforts as well as efforts to advance other compounds into substantial preclinical development , we increased our research and development expenses in fiscal year 2018 , as compared to our fiscal year 2017. we expect to incur substantially greater expenses in fiscal 2019 as we continue to advance our fxr agonist program as well as our rsv and hbv programs . we are funding our operations primarily through payments received under our collaboration agreement with abbvie . our revenue from our collaboration agreement has resulted in our reporting net income in each of our past seven fiscal years . our revenue is dependent on royalty payments we receive from abbvie on its sales of mavyret/maviret . for its mavyret/maviret regimen , which in the majority of chronic hcv patients only requires 8 weeks of treatment compared to 12 weeks with viekira pak ® and other hcv regimens , abbvie initially set a lower list price compared to its original hcv regimens and other hcv products on the market . in 2018 , abbvie has reported increasing mavyret/maviret market share and has become the leading hcv treatment in the u.s. and several market geographies in developed countries where it is approved . however , the market for hcv therapies remains very dynamic in several jurisdictions where mavyret/maviret is already approved or abbvie is seeking approval , and we can not predict how that market will continue to evolve . 60 given the uncertainty regarding the level of abbvie 's future mav yret/maviret sales that will generate our royalty revenue and the development risks affecting the extent and timing of our future expenditures for the advancement of our internally developed compounds , it is uncertain whether we will continue to report net income in fiscal 2019 and thereafter . revenue our revenue is derived from our collaboration agreement with abbvie . in our fiscal year ended september 30 , 2016 , we generated royalty revenue from abbvie 's net sales allocable to paritaprevir , which was part of abbvie 's initial treatment regimens for hcv approved in the u.s. in december 2014 and in the eu and dozens of other countries subsequently . since then , abbvie received approvals of its newest hcv regimen , mavyret/maviret , in the u.s. and eu in the summer of 2017. substantially all our royalty revenues are now derived from the mavyret/maviret as this regimen generally has a shorter treatment duration ( 8-week treatment as approved in the eu , u.s. and japan versus 12 weeks for paritaprevir and competitive regimens ) and is pan-genotypic . the following table is a summary of revenue recognized for the years ended september 30 , 2018 , 2017 , and 2016 : replace_table_token_5_th abbvie agreement since all of our research obligations under the abbvie agreement were concluded by june 30 , 2011 , all milestone payments received since then have been recognized as revenue upon achievement of each milestone by abbvie . during the fiscal year ended september 30 , 2018 , we earned and recognized as revenue the last milestone payment for glecaprevir , which was a $ 15.0 million milestone payment upon abbvie 's achievement of commercialization regulatory approval of maviret in japan . during the fiscal year ended september 30 , 2017 , we earned and recognized as revenue a total of $ 65.0 million in milestone payments upon approval of the mavyret/maviret regimen in the u.s. and eu . during the fiscal year ended september 30 , 2016 , we earned and recognized the last milestone payment for paritaprevir , a $ 30.0 million milestone payment , upon abbvie 's achievement of commercialization regulatory approval of its paritaprevir-containing regimen in japan . we currently receive annually tiered , double-digit royalties per protease inhibitor product on abbvie 's net sales allocable to either of our collaboration 's protease inhibitor products . under the terms of our abbvie agreement , as amended in october 2014 , 50 % of abbvie 's net sales of mavyret/maviret are allocated to glecaprevir . in the case of regimens containing paritaprevir , 30 % of net sales of 3-daa regimens containing paritaprevir and 45 % of net sales of 2-daa regimens containing paritaprevir are allocated to paritaprevir for purposes of calculating our annually tiered royalties . beginning with each january 1 , the cumulative net sales of each royalty-bearing product start at zero for purposes of calculating the tiered royalties on a product-by-product basis . for detail regarding the royalty tier , see note 7 in notes to consolidated financial statements of this report which is incorporated herein by this reference . we expect all of our revenue in 2019 to be generated from our collaboration agreement with abbvie . internal programs as our internal product candidates are currently in preclinical or early clinical development , we have not generated any revenue from our own product sales and do not expect to generate any revenue from product sales derived from these product candidates for at least the next several years . 61 operating expenses the following table summarizes our operating expenses for the years ended september 30 , 2018 , 2017 , and 2016 : replace_table_token_6_th research and development expenses research and development expenses consist of costs incurred to conduct basic research , such as the discovery and development of novel small molecules as therapeutics , as well as any external expenses of preclinical and clinical development activities . we expense all costs of research and development as incurred . these expenses consist primarily of : personnel costs , including salaries , related benefits and stock-based compensation for employees engaged in scientific research and development functions ; third-party contract costs relating to research , formulation , manufacturing , preclinical study and clinical trial activities ; laboratory consumables ; allocated facility-related costs ; and third-party license fees . project-specific expenses reflect costs directly attributable to our clinical development candidates and preclinical candidates nominated and selected for further development .
| results of operations comparison of years ended september 30 , 2018 , 2017 , and 2016 replace_table_token_7_th revenue . we recognized revenue of $ 206.6 million during the year ended september 30 , 2018 , as compared to $ 102.8 million during the year ended september 30 , 2017. the increase in revenue of $ 103.8 million year-over-year was due to increased royalties of $ 153.8 million earned under our abbvie agreement as a result of the launch of mavyret/maviret in late 2017 , which was partially offset by lower milestone revenue earned in fiscal 2018 under our abbvie agreement based on timing of milestone payments earned for mavyret/maviret commercialization regulatory approvals . during the years ended september 30 , 2018 and 2017 , we recognized royalty revenue of $ 191.6 million and $ 37.8 million , respectively . substantially all of our royalties earned in fiscal 2018 were related to royalties earned on the portion of abbvie 's net sales of mavryet/maviret . our fiscal 2017 royalties were primarily based on royalties earned on the portion of abbvie 's net sales of paritaprevir-containing regimen , which carry a lower royalty allocation rate compared to mavyret/maviret . mavyret/maviret has become a leading hcv treatment in the u.s. and the countries where it is approved and has resulted in our cumulative annual royalties earned in calendar 2018 reaching the 17 % royalty tier per our calendar year royalty rate schedule under our agreement with abbvie .
| 7,418 |
under the terms of the abbvie collaboration agreement , the company received a $ 25,000 upfront , non-refundable , non-creditable cash payment ( the “ story_separator_special_tag you should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included elsewhere in this annual report on form 10-k. some of the information contained in this discussion and analysis or set forth elsewhere in this annual report on form 10-k , including information with respect to our plans and strategy for our business , includes forward-looking statements that involve risks and uncertainties as described under the heading “ cautionary note regarding forward-looking statements ” elsewhere in this annual report on form 10-k. you should review the disclosure under the heading “ risk factors ” in this annual report on form 10-k for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis . in addition , this section 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 are not included in this annual report 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 year ended december 31 , 2019 , filed with the sec on march 10 , 2020. overview we are a clinical-stage biotechnology company developing therapeutics for immuno-oncology , genetic disorders and other indications based on our proprietary spherical nucleic acid , or sna , technology . snas are nanoscale constructs consisting of densely packed synthetic nucleic acid sequences that are radially arranged in three dimensions . we believe the design of our snas gives rise to distinct chemical and biological properties that may provide advantages over other nucleic acid therapeutics and enable therapeutic activity outside of the liver . we are conducting ind-enabling studies for xcur-fxn , an sna-based therapeutic candidate , for the treatment of friedreich 's ataxia ( fa ) and expect to initiate a first-in-patient phase 1b clinical trial in 2022. we are also working to advance our sna-based therapeutic candidate cavrotolimod ( ast-008 ) in an ongoing phase 1b/2 clinical trial in cancer patients . we believe that one of the key strengths of our proprietary snas is that they have the potential for increased cellular uptake compared to conventional linear oligonucleotides and as a result the potential to achieve higher efficacy at the same doses of oligonucleotide administered . we have shown in clinical and preclinical studies that snas may have therapeutic potential in neurology , immuno-oncology and dermatology . in addition , we have shown in preclinical studies that snas may have therapeutic potential in ophthalmology , pulmonology , and gastroenterology . as a consequence , we have expanded our pipeline into neurology , and are conducting early stage research activities in ophthalmology , pulmonology , and gastroenterology . operating , financing , and cash flow considerations since our inception in 2011 , we have devoted substantial resources to the research and development of snas and the protection and enhancement of our intellectual property . we have no products approved for sale and have primarily funded our operations through sales of our securities and collaborations . through december 31 , 2020 , we have raised gross proceeds of $ 190.1 million from the sale of common stock and preferred stock . we have also received $ 36.0 million in upfront payments under our current collaborations , including an upfront payment of $ 25.0 million we received in november 2019 in connection with the abbvie collaboration agreement and an upfront payment of $ 1.0 million we received in february 2019 in connection with the dermelix collaboration agreement . on september 25 , 2020 , we also borrowed $ 17.5 million under the terms of a credit and security agreement with midcap financial trust ( as described further below ) . as of december 31 , 2020 , our cash , cash equivalents , short-term investments , and restricted cash were $ 83.3 million . since our inception , we have incurred significant operating losses . as of december 31 , 2020 , we have generated an accumulated deficit of 124.8 million . substantially all of our operating losses resulted from expenses incurred in connection with our research programs and from general and administrative costs associated with our operations . 91 we expect to continue to incur significant and increasing losses in the foreseeable future . our net losses may fluctuate significantly from quarter to quarter and year to year . we anticipate that our expenses will increase substantially as we : continue to advance cavrotolimod ( ast-008 ) through clinical development for immuno-oncology applications ; continue research and development of xcur-fxn and other neurological therapeutic candidates ; advance our sna platform in dermatological indications with suitable collaboration partners ; initiate research and development , preclinical studies and clinical trials for any additional therapeutic candidates that we may pursue in the future ; advance other therapeutic candidates through preclinical and clinical development ; increase our research and development activities to enhance our technology ; continue to manufacture increasing quantities of drug substance and drug product material for use in preclinical studies and clinical trials ; seek regulatory approval for our therapeutic candidates that successfully complete clinical trials ; maintain , expand and protect our intellectual property portfolio ; acquire or in-license other approved drugs , drug candidates or technologies ; hire additional operational , financial and management information systems and personnel , including personnel to support our product development and planned future commercialization efforts ; and incur additional costs associated with operating as a public company . story_separator_special_tag should the covid-19 pandemic or its impact or effects continue , our ability to maintain patient enrollment and our clinical development timeline could continue to be negatively impacted . we could also see an impact on our ability to supply study drug , report trial results , or interact with regulators , ethics committees or other important agencies due to limitations in regulatory authority employee resources or otherwise . in addition , we rely on contract research organizations or other third parties to assist us with clinical trials , and we can not guarantee that they will continue to perform their contractual duties in a timely and satisfactory manner as a result of the covid-19 pandemic . as the covid-19 pandemic continues to persist for an extended period of time , we continue to be impacted and could experience additional delays in patient enrollment for our phase 2 clinical trial of cavrotolimod ( ast-008 ) . any significant disruptions to our clinical development timelines would further delay our anticipated timeline for results and adversely affect our business , financial condition , results of operations and growth prospects . 93 liquidity and capital resources as of december 31 , 2020 , our cash , cash equivalents , short-term investments , and restricted cash were $ 83.3 million . based on our current operating plans , we believe that existing working capital at december 31 , 2020 , including amounts borrowed and available under the midcap credit facility ( see below ) , is sufficient to fund our operations for at least 12 months from the date of this report . however , our operating plan may change as a result of many factors currently unknown to us including due to the effects of covid-19 , and we may need to seek additional funds sooner than planned , through public or private equity or debt financings , third-party funding , marketing and distribution arrangements , as well as other collaborations , strategic alliances and licensing arrangements , or any combination of these approaches . we have historically principally raised capital through the sale of our securities . however , the covid-19 pandemic continues to rapidly evolve and has already resulted in a significant disruption of global financial markets . we believe raising capital in the current market could be very difficult for early stage biotech companies like us . if the disruption continues to persist and deepens , we could experience an inability to access additional capital , which could in the future negatively affect our operations . recent developments therapeutic development program updates cavrotolimod ( ast-008 ) as of february 23 , 2021 , we had 16 clinical trial sites open for enrollment and 7 additional sites pending activation . we expect to open up to 30 sites for the phase 2 stage of the clinical trial . we anticipate all sites will be activated by the end of 2021. as of february 23 , 2021 , we had dosed 16 patients with 32 mg of cavrotolimod ( ast-008 ) in the phase 2 portion of the clinical trial , including the primary and exploratory cohorts . including the six patients dosed with 32 mg of cavrotolimod ( ast-008 ) in the phase 1b portion of the clinical trial , a total of 22 patients have been dosed with 32 mg of cavrotolimod ( ast-008 ) . as of february 23 , 2021 , 1 of the 22 patients dosed with 32 mg of cavrotolimod ( ast-008 ) has experienced a treatment-related sae as determined by the clinical trial investigator . this patient , enrolled in the phase 2 stage of the clinical trial , reported a treatment-related sae of hypotension , flu-like symptoms which subsequently resolved . none of the 14 patients dosed in the phase 1b portion of the clinical trial with doses of cavrotolimod ( ast-008 ) less than 32 mg experienced a treatment related sae . thus , as of february 23 , 2021 , in total , 1 of 36 patients treated with cavrotolimod ( ast-008 ) have experienced a treatment related sae . changes in board of directors effective march 5 , 2021 , elizabeth garofalo , m.d . and andrew sassine were appointed to our board , each to serve as directors and as members of the audit committee . effective january 2 , 2021 , james sulat was appointed to our board , to serve as a director and chairperson of the audit committee . on march 8 , 2021 , david r. walt , ph.d. notified the board of his intention not to stand for re-election as a director when his term expires at our upcoming 2021 annual meeting of stockholders . at-the-market offering agreement in december 2020 , we entered into an equity distribution agreement with bmo capital markets corp. , or bmo , with respect to an “ at the market offering ” program under which we may offer and sell , from time to time at our sole discretion , shares of our common stock having an aggregate offering price of up to $ 50.0 million through bmo as our distribution agent . we are not obligated to sell any shares under the equity distribution agreement . as of december 31 , 2020 , no shares had been sold under the equity distribution agreement . basis of presentation the audited financial statements of exicure , inc. for the fiscal years ended december 31 , 2020 and 2019 , contained herein , include a summary of our significant accounting policies and should be read in conjunction with the discussion below . 94 segment reporting we view our operations and manage our business as one segment , which is the discovery , research and development of treatments based on our sna technology . critical accounting policies and estimates our management 's discussion and analysis of financial condition and results of operations is based on our financial statements , which have been prepared in accordance with gaap .
| results of operations comparison of the year ended december 31 , 2020 and 2019 the following table summarizes the results of our operations for the years ended december 31 , 2020 and 2019 : replace_table_token_1_th revenue the following table summarizes our revenue earned during the periods indicated : replace_table_token_2_th we recognized collaboration revenue in the amount of $ 16.6 million during the year ended december 31 , 2020 , which is primarily related to activities performed under the abbvie collaboration agreement . in november 2019 , we received an upfront payment of $ 25.0 million in connection with the abbvie collaboration agreement for which revenue has been deferred and will be recognized as revenue in future periods as we satisfy our obligations under the abbvie collaboration agreement . at december 31 , 2020 , deferred revenue under the abbvie collaboration agreement was $ 8.3 million and is expected to be recognized as revenue over the next twelve months as we satisfy our obligations under the abbvie collaboration agreement . refer to note 3 of the accompanying consolidated financial statements for more information regarding revenue recognition for the abbvie collaboration agreement . 100 the collaboration revenue of $ 1.3 million during the year ended december 31 , 2019 related to the reimbursable research and development activities performed under the dermelix collaboration agreement , for which related costs are presented on a gross basis in the accompanying consolidated statement of operations . we do not expect to generate any product revenue for the foreseeable future . however , future revenue may include amounts attributable to partnership activities including , a combination of research and development payments , license fees and other upfront payments , milestone payments , product sales and royalties , and reimbursement of certain research and development expenses , in connection with the abbvie collaboration agreement or the dermelix license agreement or any future collaboration and licenses .
| 7,419 |
reserves for losses and loss adjustment expenses are based on claims experience , actual claims reported , and estimates of claims incurred but not reported . assumptions utilized in determining appropriate reserves are based on historical experience , adjusted to provide for possible adverse deviation . these estimates are periodically reviewed and compared with actual experience and industry standards , and revised if it is determined that future experience will differ substantially from that previously assumed . since reserves are based on estimates , the ultimate liability may be more or less than such reserves . the effects of changes in such estimated reserves are classified in insurance policy benefits and claims in the consolidated statements story_separator_special_tag the following discussion and analysis of omh 's financial condition and results of operations should be read together with the audited consolidated financial statements and related notes included in this report . this discussion and analysis contains forward-looking statements that involve risk , uncertainties , and assumptions . see “ forward-looking statements ” included in this report for more information . our actual results could differ materially from those anticipated in the forward-looking statements as a result of many factors , including those discussed in “ risk factors ” included in this report . an index to our management 's discussion and analysis follows : replace_table_token_3_th 42 table of contents overview we are a leading provider of responsible personal loan products , primarily to non-prime customers . our network of approximately 1,500 branch offices in 44 states is staffed with expert personnel and is complemented by our centralized operations and our digital platform , which provides current and prospective customers the option of applying for a personal loan via our website , www.omf.com . the information on our website is not incorporated by reference into this report . in connection with our personal loan business , our insurance subsidiaries offer our customers optional credit and non-credit insurance , and other products . in addition to our loan originations , and insurance and other product sales activities , we service loans owned by us and service loans owned by third parties ; pursue strategic acquisitions and dispositions of assets and businesses , including loan portfolios or other financial assets ; and may establish joint ventures or enter into other strategic alliances . our products our product offerings include : personal loans — we offer personal loans through our branch network , centralized operations , and our website , www.omf.com , to customers who generally need timely access to cash . our personal loans are non-revolving , with a fixed-rate , fixed terms generally between three and six years , and are secured by automobiles , other titled collateral , or are unsecured . at december 31 , 2020 , we had approximately 2.30 million personal loans , of which 53 % were secured by titled property , totaling $ 18.1 billion of net finance receivables , compared to approximately 2.44 million personal loans , of which 52 % were secured by titled property , totaling $ 18.4 billion at december 31 , 2019. insurance products — we offer our custom ers optional credit insurance products ( life insurance , disability insurance , and involuntary unemployment insurance ) and optional non-credit insurance products through both our branch network and our centralized operations . credit insurance and non-credit insurance products are provided by our affiliated insurance companies . we offer gap coverage as a waiver product or insurance . we also offer optional membership plans from an unaffiliated company . our non-originating legacy products include : other receivables — we ceased originating real estate loans in 2012 and we continue to service or sub-service liquidating real estate loans . effective september 30 , 2018 , our real estate loans previously classified as other receivables were transferred from held for investment to held for sale due to management 's intent to no longer hold these finance receivables for the foreseeable future . our segment at december 31 , 2020 , c & i is our only reportable segment . the remaining components ( which we refer to as “ other ” ) consist of our liquidating springcastle portfolio servicing activity and our non-originating legacy operations , which primarily include our liquidating real estate loans . see note 18 of the notes to the consolidated financial statements included in this report for more information about our segment . 43 table of contents how we assess our business performance we closely monitor the primary drivers of pretax operating income , which consist of the following : interest income we track interest income , including certain fees earned on our finance receivables , and continually monitor the components that impact our yield . we include any late charges on loans that we have collected from customer payments in interest income . interest expense we track the interest expense incurred on our debt , along with amortization or accretion of premiums or discounts , and issuance costs , to monitor the components of our cost of funds . we expect interest expense to fluctuate based on changes in the secured versus unsecured mix of our debt , time to maturity , the cost of funds rate , and access to revolving conduit facilities . net credit losses the credit quality of our loans is driven by our underwriting philosophy , which considers the prospective customer 's household budget , his or her willingness and capacity to repay , and the underlying collateral on the loan . we closely analyze credit performance because the profitability of our loan portfolio is directly connected to net credit losses . we define net credit losses as gross charge-offs minus recoveries in the portfolio . additionally , because delinquencies are an early indicator of future net credit losses , we analyze delinquency trends , adjusting for seasonality , to determine whether our loans are performing in line with our original estimates . we also monitor recovery rates because of their contribution to the reduction in the severity of our charge-offs . story_separator_special_tag issuances of 8.875 % senior notes due 2025 and 4.00 % senior notes due 2030 , and redemptions of 8.25 % senior notes due 2020 and 7.75 % senior notes due 2021 on may 14 , 2020 , omfc issued a total of $ 600 million of aggregate principal amount of 8.875 % senior notes due 2025. on july 29 , 2020 , omfc paid an aggregate amount of $ 1.0 billion , inclusive of accrued interest and premiums , to complete the redemption of its 8.25 % senior notes due 2020. on december 17 , 2020 , omfc issued a total of $ 850 million of aggregate principal amount of 4.00 % senior notes due 2030. on january 8 , 2021 , omfc paid a net aggregate amount of $ 681 million , inclusive of accrued interest and premiums , to complete the redemption of its 7.75 % senior notes due 2021. for further information regarding the issuances and redemptions of our unsecured debt , see note 9 of the notes to the consolidated financial statements included in this report . securitization transactions completed : omfit 2020-1 and omfit 2020-2 on may 1 , 2020 , we completed a private securitization in which omfit 2020-1 issued $ 821 million principal amount of notes backed by personal loans . on august 21 , 2020 , we completed a private securitization in which omfit 2020-2 issued $ 1.0 billion principal amount of notes backed by personal loans . for further information regarding the issuances of our secured debt , see “ liquidity and capital resources—securitized borrowings ” under management 's discussion and analysis of financial condition and results of operations in this report . stock repurchase program for information regarding our stock repurchase program , see note 12 of the notes to the consolidated financial statements and “ liquidity and capital resources—sources and uses of funds ” under management 's discussion and analysis of financial condition and results of operations included in this report . appointment of member of the omfc board of directors and executive vice president of omfc on january 2 , 2020 , adam l. rosman was appointed to the omfc board of directors and as executive vice president . mr. rosman replaced john c. anderson , who resigned as a member of omfc 's board of directors and as executive vice president on january 2 , 2020. appointment of chairman of the omh board of directors on august 28 , 2020 , jay n. levine resigned as director and chairman of the omh board of directors , effective december 31 , 2020. mr. levine 's resignation was not the result of any dispute or disagreement with the company or the company 's board on any matter relating to the operations , policies or practices of the company . the omh board of directors elected douglas h. shulman as chairman of the board , replacing mr. levine , effective december 31 , 2020 . 46 table of contents outlook we are actively managing the impacts of the covid-19 pandemic and are prepared to face any additional challenges that may impact our industry . we expect near-term impacts to continue to affect our originations . the ultimate impact on our financial condition and results of operations depends on the speed of the economic recovery , driven by unemployment rates , government stimulus measures , states reopening or closing , and the distribution of the newly developed covid-19 vaccines . there is also uncertainty regarding the effects of additional outbreaks of covid-19 and the related potential for additional shutdowns over the near-term . to the extent economies are suppressed or slow to recover , we could see lower consumer demand , higher delinquency trends , and related losses in 2021. we may incorporate additional updates to the macroeconomic assumptions which could lead to further adjustments in our allowance for finance receivable losses , allowance ratio , and provision for finance receivable losses . the full extent to which the covid-19 pandemic will impact our business and operating results will depend on future developments that are highly uncertain and can not be accurately predicted , including new information that may emerge concerning covid-19 and the mitigation efforts by government entities , as well as our own continuing covid-19 operational response . we have taken and will continue to take active and decisive steps in this time of uncertainty and remain committed to the safety of our employees , while also continuing to serve our customers by keeping our branch locations open with appropriate protective protocols in place . we have served hardworking americans for many decades , through changing economic conditions and natural disasters . our prudent historical underwriting , combined with the actions we 've taken to innovate and strategically evolve our business over the last year , especially the transition to our digital closing model , has led to our strong operating performance through the pandemic and enabled us to serve and support our customers effectively during these unprecedented times . while we anticipate that the economic recovery could be unstable , we believe the actions we have taken in 2020 and the underlying strength of our balance sheet positions us to take advantage of growth opportunities as the economy recovers . our digital platform and our operating model , combined with our decades of experience , proprietary data , and advanced analytics , enable us to expand our customer base through various channels and products . with these tools , we are able to underwrite and manage our portfolio in a precise and effective manner , thus better serving our customers to meet their preferences , as well as optimizing returns . our experienced management team continues to remain focused on our strategic priorities of maintaining a solid balance sheet that enables business continuity , providing a flexible liquidity runway and capital coverage through the changing economic conditions , upholding a conservative and disciplined underwriting model , and building strong relationships with our customers .
| segment results the results of omfc are consolidated into the results of omh . due to the nominal differences between omfc and omh , content throughout this section relate only to omh . see note 2 of the notes to the consolidated financial statements included in this report for the reconciliation of results of omfc to omh . see note 18 of the notes to the consolidated financial statements included in this report for a description of our segment and methodologies used to allocate revenues and expenses to our c & i segment and other . consumer and insurance omh 's adjusted pretax income and selected financial statistics for c & i on an adjusted segment accounting basis were as follows : replace_table_token_6_th * see “ glossary ” at the beginning of this report for formulas and definitions of our key performance ratios . 53 table of contents comparison of adjusted pretax income for 2020 and 2019 interest income increased $ 239 million or 5.8 % in 2020 when compared to 2019 primarily due to growth in our average net finance receivables of $ 920 million along with higher yields driven by the impacts of lower delinquencies . interest expense increased $ 60 million or 6.3 % in 2020 when compared to 2019 primarily due to an increase in average outstanding debt of $ 1.7 billion , offset by a lower average cost of funds . see notes 9 and 10 of the notes to the consolidated financial statements included in this report for further information on our long-term debt , securitization transactions , and our revolving conduit facilities . provision for finance receivable losses increased $ 208 million or 18.8 % in 2020 when compared to 2019 primarily due to higher expected credit losses in our allowance as a result of the current year adoption of asu 2016-13 , which were primarily driven by our forecast of elevated unemployment as a result of covid-19 .
| 7,420 |
other recent accounting pronouncements , interpretations and positions issued by the fasb ( including its emerging issues task force ) , the american institute of certified public story_separator_special_tag the following discussion is intended to help the reader understand our results of operations and financial condition and is provided as a supplement to , and should be read in conjunction with , our consolidated financial statements , the accompanying notes to the consolidated financial statements , and the other information included or incorporated by reference herein . overview we are a specialty finance company engaged in automobile finance , which includes the purchase , warehousing , securitization and servicing of automobile installment sales contracts , or automobile contracts , originated by independent and franchised dealers of used automobiles . we conduct our automobile finance business through our wholly-owned subsidiaries , united auto credit corporation , or uacc and united auto business operations , llc , or uabo , which provide financing to borrowers who typically have limited or impaired credit histories that restrict their ability to obtain loans through traditional sources . financing arms of automobile manufacturers generally do not make these loans to non-prime borrowers , nor do many other traditional automotive lenders . non-prime borrowers generally pay higher interest rates and loan fees than do prime borrowers . while we have traditionally achieved growth in the amount of automobile contracts that we purchase through the opening of new branch offices , we began to pursue controlled growth in 2007 through a combination of expanding our more seasoned branch offices and opening fewer new branch offices . we intend to continue this controlled growth strategy in 2008 , and we do not currently intend to open any new branch offices in 2008. this change is designed to improve individual branch profitability , enhance loan servicing and facilitate more effective branch management . in connection with our new long-term growth strategy , we intend to increase the average portfolio of purchased contracts within the best performing seasoned branches . in addition , to improve overall corporate profitability , we began to close and consolidate certain underperforming branches in the third quarter of 2007 and the first quarter of 2008. we will continue to evaluate the possibility of additional branch closures in 2008 to improve overall performance and profitability . as a secondary platform for growth , we began to originate and service automobile contracts during 2007 through uabo , our newly created business operations unit based in dallas , texas . we currently originate and service automobile contracts in west virginia , connecticut , arkansas and nebraska through the business operations unit , and we intend to expand operations into the state of maine in 2008. we currently have no branch presence in these five states . the business operations unit , with its lower cost structure , will allow us to penetrate new markets in states where , due to interest rate caps , our traditional retail branch structure is not cost effective . we expect that the average yield for the portfolio originated in these states will be approximately 24.5 % as compared to 27.7 % in states in which we operate our national retail branch network . we expect to offset the lower yield by increased cost efficiencies generated from operating from a central location . the business operations unit is responsible for underwriting , purchasing contracts and collections . we believe that we can continue to provide a high level of service to the dealers through the business operations unit by providing consistent credit decisions and two to three day funding . at december 31 , 2007 , the business operations unit had fourteen employees and $ 3.8 million in loan balances . by following tighter underwriting guidelines from a single location , we should offset any potential drawback from managing collection activity from a central location rather than being local to the borrower as in our traditional retail branch . during 2007 , upfc and the industry in general experienced a higher rate of delinquencies and losses which we believe have been primarily due to general economic conditions , and particularly due to increased gasoline prices and employment contraction . as a result , during the third quarter of 2007 , we modified our underwriting criteria for purchasing automobile contracts requiring higher minimum income levels and higher minimum book value of the automobile in order to pursue higher-quality borrowers and more recent model year automobiles . in addition , under our revised underwriting criteria , we may purchase contracts with terms extending up to 72 months ( from up to 60 months previously ) for creditworthy borrowers who can demonstrate higher income levels and better credit records . also , as part of the underwriting review , we increased pricing for purchasing automobile contracts in 22 states by almost 100 basis points in apr . the states affected 22 by the new pricing account for approximately 60 % of automobile contracts that we current purchase and we expect that the impact will result in a gradual increase of approximately 60 basis points in weighted average yield over the next few years . at december 31 , 2007 , we had a total of 142 branches , of which 4 were opened in 1996 , 5 in 1997 , 5 in 1998 , 6 in 1999 , 8 in 2000 , 12 in 2001 , 13 in 2002 , 16 in 2003 , 17 in 2004 , 19 in 2005 , 23 in 2006 and 14 in 2007. we closed 4 underperforming branches in 2007. at december 31 , 2007 , our portfolio was composed of 129,994 automobile contracts in the aggregate gross amount of $ 926.4 million . subsequent to december 31 , 2007 , management has closed an additional 9 branches . story_separator_special_tag 123 ( r ) using the modified prospective transition method , which requires the application of the accounting standard as of january 1 , 2006 , the first day of our 2006 fiscal year . our consolidated financial statements as of and for the years ended december 31 , 2007 and 2006 reflect the impact of sfas no . 123 ( r ) . in accordance with the modified prospective transition method , our consolidated financial statements for prior periods have not been restated to reflect , and do not include , the impact of sfas no . 123 ( r ) . stock-based compensation expense recognized under sfas no . 123 ( r ) was $ 1,800,000 and $ 2,474,000 for the years ended december 31 , 2007 and 2006 , respectively . derivatives and hedging activities the automobile contracts purchased and held by us are written at fixed interest rates and , accordingly , have interest rate risk . such contracts are funded with warehouse borrowings and the warehouse borrowings accrue interest at a variable rate . prior to closing our first securitization , while we were shifting the funding source of our automobile finance business to the public capital markets through securitizations and warehouse facilities , we entered into forward agreements in order to reduce the interest rate risk exposure on our securitization notes payable . the market value of these forward agreements was designed to respond inversely to changes in interest rates . because of this inverse relationship , we were able to effectively lock in a gross interest rate spread for our automobile contracts held in portfolio prior to the sale of the securitization notes payable . losses related to these agreements were recorded on our consolidated statements of operations during 2004 because the derivative transactions did not meet the accounting requirements to qualify for hedge accounting . accordingly , we did not amortize them over the life of the automotive contracts . lending activities summary of loan portfolio the following table sets forth the composition of our loan portfolio at the dates indicated . replace_table_token_8_th ( 1 ) see note 3. summary of significant accounting policies to our notes to the consolidated financial statements in this form 10-k. allowance for loan losses our policy is to maintain an allowance for loan losses to absorb inherent losses , which may be realized on our portfolio . these allowances are general valuation allowances for estimates for probable losses not specifically identified that will occur in the next twelve months . the total allowance for loan losses was $ 48.4 million at december 31 , 2007 compared with $ 36.0 million at december 31 , 2006 , representing 5.48 % of loans at december 31 , 2007 and 4.66 % at december 31 , 2006 . 25 following is a summary of the changes in our consolidated allowance for loan losses for the periods indicated . replace_table_token_9_th ( 1 ) see critical accounting policies past due and nonaccrual loans the following table sets forth the remaining balances of all loans ( net of unearned finance charges , excluding loans for which vehicles have been repossessed ) that were more than 30 days delinquent at the periods indicated . replace_table_token_10_th our policy is to charge off loans delinquent in excess of 120 days . the following table sets forth the aggregate amount of nonaccrual loans ( net of unearned finance charges , including loans over 30 days delinquent and loans for which vehicles have been repossessed ) at the periods indicated . replace_table_token_11_th 26 cumulative losses for contract pools the following table reflects our cumulative losses ( i.e. , net charge-offs as a percent of original net contract balances ) for contract pools ( defined as the total dollar amount of net contracts purchased in a three-month period ) purchased from october 2002 through september 2007. contract pools subsequent to september 2007 were not included in this table because the loan pools were not seasoned enough to provide a meaningful comparison with prior periods . replace_table_token_12_th 27 loan maturities the following table sets forth the dollar amount of automobile contracts maturing in our automobile contracts portfolio at december 31 , 2007 based on final maturity . automobile contract balances are reflected before unearned acquisition discounts and allowance for loan losses . replace_table_token_13_th all loans are fixed rate loans . liquidity and capital resources general we require substantial cash and capital resources to operate our business . our primary funding sources are a warehouse credit line , securitizations and retained earnings . our primary uses of cash include : acquisition of automobile contracts ; interest expense ; operating expenses ; and securitization costs . the capital resources available to us include : interest income and principal collections on automobile contracts ; servicing fees that we earn under our securitizations ; releases of excess cash from the spread accounts relating to the securitizations ; securitization proceeds ; borrowings under our warehouse credit facility ; and releases of excess cash from our warehouse credit facility . management believes that the resources available to us will provide the needed capital and cash flows to fund purchases of automobile contracts , investments in our branch network and servicing capabilities and ongoing operations for the next twelve months . recent market developments we anticipate that a number of factors will adversely impact our liquidity in 2008 , including higher credit enhancement levels in our securitization transactions driven by disruptions in the capital markets and , to a lesser extent , the credit deterioration we are experiencing in our portfolio and substantially weakened demand for securities guaranteed by insurance policies , making the execution of securitization transactions more challenging and expensive . we may also realize decreased cash distributions from our securitization trusts due to weaker credit performance and higher borrowing costs . the asset-backed securities market , along with credit markets in general , has been experiencing unprecedented disruptions .
| results of operations comparison of operating results for the years ended december 31 , 2007 and december 31 , 2006 general in 2007 we reported net income of $ 10.6 million , or $ 0.65 per diluted share , compared with $ 19.1 million , or $ 1.02 per diluted share for 2006. interest income increased 17.5 % to $ 229.5 million for the year ended december 31 , 2007 from $ 195.3 million for the same period a year ago . automobile contracts purchased increased $ 40.2 million to $ 590.8 million in 2007 from $ 550.6 million in 2006 as a result of the purchase of additional automobile contracts in existing and new markets . during the twelve months ended december 31 , 2007 , we opened 15 auto finance branches and closed 4 underperforming branches bringing our total to 142 branches in 39 states . interest income interest income increased by 17.5 % to $ 229.5 million in 2007 from $ 195.3 million in 2006 due primarily to the increase in average automobile contracts of $ 143.0 million . interest income on loans represents finance charges taken into earnings during the year as well as the accretion of the acquisition discount fee on loans acquired . investment income increased as a result of higher invested cash balances combined with increased market interest rates . interest expense interest expense increased 32.4 % to $ 47.4 million in 2007 from $ 35.8 million in 2006. the average debt outstanding increased by 22.1 % to $ 783.8 million in 2007 from $ 641.9 million in 2006. the average interest rate increased to 6.05 % in 2007 from 5.58 % in 2006. the increase was the result of higher market interest rates , coupled with pay down of lower priced securitizations .
| 7,421 |
” “ domtar , ” “ we , ” “ us ” and “ our ” refers to domtar corporation and its subsidiaries . domtar corporation 's common stock is listed on the new york stock exchange and the toronto stock exchange . except where otherwise indicated , all financial information reflected herein is determined on the basis of accounting principles generally accepted in the united states ( “ gaap ” ) . in accordance with industry practice , in this report , the term “ ton ” or the symbol “ st ” refers to a short ton , an imperial unit of measurement equal to 0.9072 metric tons . the term “ metric ton ” or the symbol “ admt ” refers to an air dry metric ton . in this report , unless otherwise indicated , all dollar amounts are expressed in u.s. dollars , and the term “ dollars ” and the symbol “ $ ” refer to u.s. dollars . in the following discussion , unless otherwise noted , references to increases or decreases in income and expense items , prices , contribution to net earnings ( loss ) , and shipment volumes are based on the twelve months period ended december 31 , 2015 , 2014 and 2013. the twelve month periods are also referred to as 2015 , 2014 and 2013. reference to notes refers to footnotes to the consolidated financial statements and notes thereto included in part ii , item 8 , financial statements and supplementary data of this annual report on form 10-k. this md & a of financial condition and results of operations is intended to provide investors with an understanding of our recent performance , financial condition and outlook . topics discussed and analyzed include : · overview · 2015 highlights · outlook · consolidated results of operations and segment review · liquidity and capital resources · recent accounting pronouncements and critical accounting estimates and policies overview we have two reportable segments as described below . each reportable segment offers different products and services and requires different manufacturing processes , technology and or marketing strategies . the following summary briefly describes the operations included in our two reportable segments . pulp and paper : our pulp and paper segment consists of the design , manufacturing , marketing and distribution of communication , specialty and packaging papers , as well as softwood , fluff and hardwood market pulp . personal care : our personal care segment consists of the design , manufacturing , marketing and distribution of absorbent hygiene products . as a result of changes in the company 's organization structure , we have changed the way we allocate certain corporate general and administrative costs to the segments . further , certain corporate costs not related to segment activities , as well as the mark-to-market impact on stock-based compensation awards , are now presented on the corporate line . as a result , we have revised our 2014 and 2013 segment disclosures to conform with our 2015 presentation . previously reported numbers for operating income ( loss ) for years ended december 31 , 2014 and 2013 are as follows ; pulp and paper : $ 323 million and $ 171 million , respectively , personal care : $ 54 million and $ 43 million , respectively , corporate : $ ( 13 ) million and $ ( 53 ) million , respectively . 2015 highlights · operating income and net earnings decreased by 21 % and 67 % , respectively from 2014 · sales decreased by 5 % from 2014. net average selling prices for pulp and paper were down from 2014. our pulp volumes were up when compared to 2014 30 · recognition of accelerated depreciation of $ 77 million related to the decision to convert a paper machine at our ashdown mill to a high quality fluff pulp line · we repurchased $ 50 million of our common stock and paid $ 100 million in dividends · gain on sale of property , plant and equipment of $ 15 million replace_table_token_6_th at december at december 31 , 2015 31 , 2014 total assets $ 5,663 $ 6,185 total long-term debt , including current portion $ 1,260 $ 1,350 1 see note 6 `` earnings per common share '' for more information on the calculation of net earnings per common share . outlook in 2016 , we expect our paper shipments to be in-line with market demand while pulp shipments should be higher due to the conversion of a paper machine to a fluff pulp line . we anticipate some volatility in softwood and fluff pulp markets due to the strengthening of the u.s. dollar and announced new capacity additions . our 2016 results are expected to be negatively impacted by approximately $ 23 million related to the fluff pulp conversion outage at our ashdown mill . in personal care , new customer wins are expected to generate above-market revenue growth . costs for raw materials are expected to marginally increase . consolidated results of operations this section presents a discussion and analysis of our 2015 , 2014 and 2013 net sales , operating income ( loss ) and other information relevant to the understanding of our results of operations . replace_table_token_7_th 31 replace_table_token_8_th commentary : ( a ) sale of ariva u.s. business ( `` ariva u.s. '' ) on july 31 , 2013 . ( b ) acquisition of laboratorios indas s.a.u . ( “ indas ” ) on january 2 , 2014 and associated hygienic products llc ( “ ahp ” ) on july 1 , 2013. replace_table_token_9_th replace_table_token_10_th commentary : ( a ) includes raw materials expenses such as : fiber , chemicals and energy . ( b ) includes maintenance , freight costs , sg & a expenses and other costs . ( c ) in 2015 , we recorded $ 77 million of accelerated depreciation related to the conversion of a paper machine to a high quality fluff pulp line at our ashdown mill . story_separator_special_tag income taxes for 2014 , our income tax benefit amounted to $ 170 million compared to a tax benefit of $ 20 million in 2013 , which approximated an effective tax rate of -65 % and -28 % for 2014 and 2013 , respectively . in 2014 , the irs completed its ongoing u.s. federal income tax audit for tax years 2009 , 2010 , and 2011 , and we filed related amended state tax returns . the net impact of the audit resolution resulted in a tax benefit of $ 207 million for 2014 , which impacted the effective tax rate . this benefit consisted primarily of the recognition of previously unrecognized tax benefits of $ 200 million and additional u.s. manufacturing deductions of $ 7 million . the effective tax rate was also impacted by the recognition of $ 18 million of aftc with no related tax expense . during 2014 , we recorded $ 18 million of tax credits , mainly research and experimentation credits pertaining to current and prior years . the effective tax rate for 2014 was also significantly impacted by an enacted tax rate decrease in spain . during 2013 , we recorded $ 54 million of various tax credits pertaining to current and prior years . these credits included the conversion of $ 26 million of aftc into $ 55 million of cellulosic biofuel producer credit ( “ cbpc ” ) resulting in an after-tax benefit of $ 33 million for the new credit , as well as research and experimentation credits and other federal and state credits . also , our effective tax rate was reduced in 2013 by the impact of the u.s. manufacturing deduction and enacted law changes in certain states and provinces . the effective tax rate was increased by the impact of certain non-deductible payments , mainly the litigation settlement and the aftc repayment , and an increase in the valuation allowance on certain losses . additionally , the effective tax rate was impacted by an $ 8 million reduction in unrecognized tax benefits pertaining to the aftc which was converted to cbpc , partially offset by $ 5 million of accrued interest on uncertain tax positions . 34 valuation allowances in 2014 , we recorded a net valuation allowance of $ 7 million related to certain foreign loss carryforwards , which impacted the effective tax rate for 2014. in 2013 , we recorded a valuation allowance of $ 5 million , mostly related to certain loss carryforwards , which impacted the effective tax rate for 2013. alternative fuel tax credit as of december 31 , 2014 , we had no remaining gross unrecognized tax benefits and interest or related deferred tax assets associated with the aftc claimed on our 2009 tax return . these benefits were recognized , $ 178 million net of deferred taxes , during 2014 , thus impacting the effective tax rate . additional information regarding unrecognized tax benefits is included in part ii , item 8 , financial statements and supplementary data of this annual report on form 10-k , under note 10 “ income taxes ” . story_separator_special_tag style= '' font-family : 'symbol ' ; font-size:10pt ; font-weight : normal ; font-style : normal ; text-transform : none ; font-variant : normal ; '' > · the gain on sale of port edwards assets ( $ 10 million ) and on disposal of cornwall land ( $ 6 million ) , both in 2013 personal care sales in 2015 in our personal care segment decreased by $ 59 million , or 6 % when compared to sales in 2014. this decrease in sales is driven by unfavorable foreign currency rates of approximately 9 % , due to the fluctuation between the u.s. dollar and the euro and lower selling prices , partially offset by higher sales volume/mix of approximately 4 % . operating income increased by $ 12 million or 24 % in 2015 compared to 2014. our results were positively impacted by : · favorable raw material costs mostly due to a decrease in price in super absorbent polymers , non-woven and fluff pulp as well as insourcing initiatives ( $ 36 million ) · higher sales volume and mix ( $ 12 million ) these increases were partially offset by the following : · unfavorable foreign exchange mostly between the u.s. dollar and the euro , net of our hedging program ( $ 12 million ) · unfavorable average net selling prices ( $ 11 million ) · higher selling , general and administrative expenses as well as higher salaries and wages mostly related to additional labor for newly installed capacity ( $ 14 million ) · increased depreciation charges ( $ 3 million ) sales in 2014 in our personal care segment increased by $ 362 million , or 64 % when compared to sales in 2013. this increase in sales is mainly due to the inclusion of sales from the acquisition of indas on january 2 , 2014 and ahp on july 1 , 2013. this was partially offset by lower net average selling prices of approximately 1 % . sales volume and foreign exchange were flat when compared to 2013. operating income increased by $ 9 million or 23 % in 2014 compared to 2013. our results were positively impacted by : · acquisition of indas on january 2 , 2014 and ahp on july 1 , 2013 · write-down of property , plant and equipment in 2013 ( $ 2 million ) · closure and restructuring costs of $ 2 million in 2013 ( refer to note 16 “ closure and restructuring costs and liability ” ) these increases were partially offset by the following : · higher raw material costs mostly due to an increase in price of non-woven and fluff pulp ( $ 7 million ) · increased depreciation charges mainly due to increased capital expenditures ( $ 7 million ) · unfavorable average net selling prices ( $ 5 million ) · higher selling , general and administrative expenses due mostly to an increase in salaries and wages ( $ 8 million )
| segment review pulp and paper sales in 2015 in our pulp and paper segment decreased by $ 216 million , or 5 % when compared to sales in 2014. this decrease in sales is mostly due to a 5 % decrease in net average selling prices for pulp and paper . total sales volume and foreign exchange were flat when compared to 2014. operating income in our pulp and paper segment amounted to $ 270 million in 2015 , a decrease of $ 82 million , when compared to operating income of $ 352 million in 2014. our results were negatively impacted by : · lower average selling prices for paper and pulp ( $ 211 million ) · higher accelerated depreciation of $ 73 million related to our 2014 decision to convert a paper machine at our ashdown facility to a high quality fluff pulp line · higher costs of wood fiber in part due to wet weather in the southern u.s. region in the first half of 2015 ( $ 17 million ) · proceeds from insurance claims on machinery and equipment in 2014 ( $ 11 million ) · increase in bad debt expense ( $ 3 million ) these decreases were partially offset by : · positive impact of a weaker canadian dollar on our canadian denominated expenses , net of our hedging program ( $ 100 million ) · higher productivity when compared to 2014 ( $ 22 million ) · the gain on sale of gatineau assets ( $ 10 million ) , indianapolis assets ( $ 3 million ) and a paper machine at our plymouth facility ( $ 2 million ) , all in the second quarter of 2015 · lower energy costs mostly related to extreme cold weather in 2014 ( $ 41 million ) and chemical costs in part due to favorable prices ( $ 20 million ) · lower restructuring costs ( $ 24 million ) mostly due to the ottawa pension
| 7,422 |
the company reviewed its tax positions and increased its valuation allowance by approximately $ 3,191 in 2013 primarily due to a domestic increase of $ 1,965 and a foreign increase of $ 1,226 . at december 31 , 2013 , foreign subsidiaries had unused operating loss carryovers for tax purposes of approximately $ 5,593 . the net operating losses will expire at various dates from 2014 through 2023. for financial reporting purposes , the release of these valuation allowances would reduce income tax expenses . at december 31 , 2013 , the company had approximately $ 4,066 of foreign tax and withholding credits , story_separator_special_tag the following discussion highlights the principal factors that have affected our financial condition , results of operations , liquidity and capital resources for the periods described . this discussion should be read in conjunction with our consolidated financial statements and the related notes in item 8 of this report . this discussion contains forward-looking statements . please see cautionary note regarding forward-looking statements for the risks , uncertainties and assumptions associated with these forward-looking statements . 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 . the company is a utah corporation with its principal place of business in lehi , utah , and sells its products to a sales force of managers and distributors 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 three business segments that are divided based on the different characteristics of their distributor bases , selling and distributor compensation plans and product formulations , as well as the internal organization of our officers and their responsibilities and business operations . two business segments operate under the nature 's sunshine products brand ( nsp americas , asia pacific and europe and nsp russia , central and eastern europe ) , and one operates under the synergy worldwide brand . we market our products in australia , austria , belarus , canada , colombia , costa rica , the czech republic , denmark , the dominican republic , ecuador , el salvador , finland , germany , guatemala , honduras , hong kong , iceland , indonesia , ireland , italy , japan , kazakhstan , latvia , lithuania , malaysia , mexico , moldova , mongolia , the netherlands , nicaragua , norway , panama , peru , the philippines , poland , russia , singapore , slovenia , south korea , spain , sweden , taiwan , thailand , the ukraine , the united kingdom , the united states , venezuela and vietnam . we export our products to argentina , australia , chile , israel , new zealand and norway . in 2013 , we experienced an increase in our consolidated net sales of 2.9 percent ( or 3.7 percent in local currencies ) . nsp russia , central and eastern europe net sales increased approximately 8.5 percent ( or 8.4 percent in local currencies ) compared to the 26 same period in 2012. synergy worldwide net sales increased approximately 7.6 percent ( or 8.0 percent in local currencies ) compared to the same period in 2012. nsp americas , asia pacific and europe net sales decreased approximately 0.9 percent compared to the same period in 2012. however , in local currencies , net sales in nsp americas , asia pacific and europe increased approximately 0.3 percent . our most significant sales revenue growth was from our nsp russia , central and eastern europe , mexico and venezuela markets and in the synergy europe and south korea markets during 2013. gains in these markets were partially offset by decreases in our nsp and synergy japan and nsp and synergy north american markets . net sales revenue excluding the impact of foreign currency exchange qualifies as a non-gaap financial measure under u.s. gaap . we believe that this non-gaap financial measure more accurately represents the financial performance of the company to management and investors comparing period over period results in a consistent manner . selling , general and administrative costs as a percentage of net sales revenue for 2013 increased to 31.8 percent from 29.1 percent in the prior year primarily as a result of the company 's incremental investment in sales , marketing , science and product development personnel and programs to stimulate sales growth and drive profitability . we distribute our products to consumers through an independent sales force comprised of managers and distributors , some of whom also consume our products . typically a person who joins our independent sales force begins as a distributor . a distributor may earn manager status by committing more time and effort to selling our products , recruiting productive distributors and attaining certain product sales levels . on a worldwide basis , active managers were approximately 16,900 and 16,600 and active distributors and customers were approximately 334,200 and 333,400 at december 31 , 2013 and 2012 , respectively . critical accounting policies and estimates our consolidated financial statements have been prepared in accordance with u.s. gaap and form the basis for the following discussion and analysis on critical accounting policies and estimates . the preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets , liabilities , revenues and expenses , and related disclosure of contingent assets and liabilities . on a regular basis , we evaluate our estimates and assumptions . we base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances , the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources . story_separator_special_tag 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 obsolescence or 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 . 28 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 , 2013 , 2012 or 2011. incentive trip accrual we accrue for expenses associated with our direct sales program , which rewards managers and distributors with paid attendance for incentive trips , including company 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 incentive trip costs of approximately $ 5.8 million and $ 4.6 million at december 31 , 2013 and 2012 , 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 12 , commitment and contingencies , of the notes to consolidated financial statements , in item 8 , part 2 of this report . income taxes our income tax expense , deferred tax assets and liabilities and contingent reserves reflect management 's best assessment of estimated future taxes to be paid . we are subject to income taxes in both the united states and numerous foreign jurisdictions . significant judgments and estimates are required in determining the company 's consolidated income tax expense . deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense . in evaluating the company 's ability to recover its deferred tax assets , management considers all available positive and negative evidence , including scheduled reversals of deferred tax liabilities , projected future taxable income , tax planning strategies and recent financial operations . in projecting future taxable income , the company develops assumptions including the amount of future state , federal and foreign pretax operating income , the reversal of temporary differences , and the implementation of feasible and prudent tax planning strategies . these assumptions require significant judgment about the forecasts of future taxable income , and are consistent with the plans and estimates that the company is using to manage the underlying businesses . valuation allowances are recorded as reserves against net deferred tax assets by the company when it is determined that net deferred tax assets are not likely to be realized in the foreseeable future . as of december 31 , 2013 and 2012 , we had recorded valuation allowances of $ 11.3 million and $ 8.1 million , respectively , as offsets to our net deferred tax assets .
| 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_13_th 31 year ended december 31 , 2013 , as compared to the year ended december 31 , 2012 net sales revenue the following table summarizes the changes in our net sales revenue by operating segment for the fiscal years ended december 31 , 2013 and 2012. replace_table_token_14_th consolidated net sales revenue for the year ended december 31 , 2013 , was $ 378.1 million compared to $ 367.5 million in 2012 , an increase of approximately 2.9 percent . we experienced a $ 3.0 million unfavorable impact in foreign currency exchange rate fluctuation in 2013 , and our consolidated net sales revenue would have increased by 3.7 percent from 2012 , but for such negative impact . the increase in net sales revenue for the year ended december 31 , 2013 compared to the same period in 2012 is primarily due to an increase of net sales in our nsp russia , central and eastern europe and synergy worldwide segments and was partially offset by a decline of net sales in our nsp americas , asia pacific and europe segment . nsp americas , asia pacific and europe net sales revenue related to nsp americas , asia pacific and europe for the year ended december 31 , 2013 , was $ 207.1 million compared to $ 208.9 million for the same period in 2012 , a decrease of 0.9 percent . fluctuation in foreign exchange rates had a $ 2.6 million unfavorable impact on net sales for the year ended december 31 , 2013 , and net sales revenue would have increased by 0.3 percent excluding this negative impact . active managers within nsp americas , asia pacific and europe totaled approximately 7,900 and 8,100 at december 31 , 2013 and 2012 , respectively .
| 7,423 |
the company discontinues hedge accounting prospectively when ( i ) a derivative is no longer highly effective in offsetting changes in the fair value , ( ii ) a derivative expires or is sold , terminated , or exercised , or ( iii ) the company determines that designation of a derivative as a hedge is no longer appropriate . if a fair value hedge derivative instrument is terminated or the hedge designation is removed , the previous adjustments to the carrying story_separator_special_tag the following discussion provides information about the results of operations , financial condition , liquidity , and capital resources of east west bancorp , inc. ( referred to herein on an unconsolidated basis as “ east west ” and on a consolidated basis as the “ company ” ) and its wholly-owned subsidiaries , east west bank and subsidiaries ( referred to herein as “ east west bank ” or the “ bank ” ) and east west insurance services , inc. this information is intended to facilitate the understanding and assessment of significant changes and trends related to the company 's financial condition and the results of operations . prior periods were restated to reflect the retrospective application of adopting accounting standards update ( “ asu ” ) 2014-01 , the new accounting guidance related to the company 's investments in qualified affordable housing projects . please see note 9 — investments in qualified affordable housing partnerships , tax credit and other investments , net to the consolidated financial statements for additional information . this discussion and analysis should be read in conjunction with the consolidated financial statements and the accompanying notes presented elsewhere in this report . overview the company 's vision is to serve as the financial bridge between the united states and greater china . the company 's primary strategy to achieving this vision is to expand the company 's global network of contacts and resources to better meet its customers ' diverse financial needs in and between the world 's two largest markets . with over 130 branches in the united states and greater china , along with the full range of cross-border products and services , the company is well positioned to assist its customers with the products and services their businesses need . financial highlights the company successfully completed another year with strong earnings and financial results in 2015 , achieving healthy growth and an increase in revenues . during 2015 , noteworthy items included : net income increased $ 38.8 million or 11 % from $ 345.9 million in 2014 to $ 384.7 million in 2015 . net income per diluted share for the full year of 2015 totaled $ 2.66 , an increase of $ 0.25 or 10 % from $ 2.41 in 2014 . revenue , the sum of net interest income and noninterest income ( loss ) , before provision for credit losses increase d $ 104.7 million or 10 % to $ 1.13 billion for the year ended december 31 , 2015 . the return on average assets and the return on average equity was 1.27 % and 12.74 % , respectively for the year ended december 31 , 2015 , both up two basis points year-over-year . total assets increase d $ 3.61 billion or 13 % from 2014 to a record of $ 32.35 billion as of december 31 , 2015 . total loans receivable ( including loans held for sale ) increased $ 1.92 billion or 9 % to a record of $ 23.69 billion as of december 31 , 2015 , which was largely attributable to increases of $ 1.29 billion or 19 % in commercial real estate ( “ cre ” ) loans , $ 925.8 million or 11 % in commercial loans and $ 442.3 million or 29 % in consumer loans , partially offset by a decrease of $ 799.9 million or 21 % in single-family residential loans , as a result of loan sales during 2015 . deposits increased $ 3.47 billion or 14 % from 2014 to a record $ 27.48 billion as of december 31 , 2015 , with core deposits amounting to a record $ 20.86 billion . cost of funds decreased from 0.46 % in 2014 to 0.39 % in 2015 . the allowance for loan losses to loans held-for-investment ratio decreased to 1.12 % as of december 31 , 2015 , from 1.20 % as of december 31 , 2014 . the decrease in the allowance for loan losses to loans held-for-investment ratio was primarily the result of an overall improvement in credit quality . nonperforming assets as of december 31 , 2015 totaled $ 128.4 million , an improvement of $ 4.0 million or 3 % , compared to $ 132.4 million as of december 31 , 2014 . nonperforming assets to total assets ratio improved by six basis points to 0.40 % as of december 31 , 2015 . this ratio was below 1.00 % for the fourth consecutive year . in addition , year-to-date net charge-offs to average loans held-for-investments improved from 0.18 % for the year ended december 31 , 2014 to 0.01 % for the year ended december 31 , 2015 . 28 the strong balance sheet growth and increased revenues positioned the company well to focus on the company 's bridge banking strategy and target future growth opportunities . the company 's cost of funds was 0.39 % for the year ended december 31 , 2015 compared to 0.46 % a year ago , which was mainly due to the extinguishment of $ 545.0 million of its higher cost securities sold under repurchase agreements ( “ repurchase agreements ” ) and the shift in deposit portfolio mix . during 2015 , the company also reached an agreement with the federal deposit insurance corporation ( “ fdic ” ) to early terminate the united commercial bank ( “ ucb ” ) and washington first international ( “ wfib ” ) shared-loss agreements . the company made a total payment of $ 125.5 million for the early terminations . story_separator_special_tag nonaccrual loans are included in average loans used to compute the table below : ( $ in thousands ) year ended december 31 , 2015 vs. 2014 2014 vs. 2013 total change changes due to total change changes due to volume yield/rate volume yield/rate interest-bearing assets : due from banks and short-term investments $ ( 5,275 ) $ 5,102 $ ( 10,377 ) $ 5,874 $ 4,413 $ 1,461 resale agreements ( 524 ) ( 47 ) ( 477 ) ( 913 ) ( 2,398 ) 1,485 available-for-sale investment securities ( 3,309 ) 5,022 ( 8,331 ) 838 ( 3,155 ) 3,993 loans ( 90,580 ) 94,158 ( 184,738 ) 79,811 223,735 ( 143,924 ) fhlb and federal reserve bank stock ( 195 ) ( 1,389 ) 1,194 ( 597 ) ( 2,202 ) 1,605 total interest and dividend income $ ( 99,883 ) $ 102,846 $ ( 202,729 ) $ 85,013 $ 220,393 $ ( 135,380 ) interest-bearing liabilities : checking deposits $ 3,022 $ 1,722 $ 1,300 $ 1,875 $ 1,717 $ 158 money market deposits 2,987 2,237 750 982 2,035 ( 1,053 ) savings deposits 497 63 434 10 364 ( 354 ) time deposits 1,513 1,735 ( 222 ) ( 877 ) 1,747 ( 2,624 ) federal funds purchased and other short-term borrowings 58 — 58 — — — fhlb advances 154 ( 278 ) 432 ( 57 ) 424 ( 481 ) repurchase agreements ( 17,488 ) ( 26,397 ) 8,909 ( 2,986 ) ( 1,627 ) ( 1,359 ) long-term debt ( 187 ) ( 405 ) 218 1,381 1,442 ( 61 ) total interest expense $ ( 9,444 ) $ ( 21,323 ) $ 11,879 $ 328 $ 6,102 $ ( 5,774 ) change in net interest income $ ( 90,439 ) $ 124,169 $ ( 214,608 ) $ 84,685 $ 214,291 $ ( 129,606 ) noninterest income ( loss ) noninterest income ( loss ) includes revenue earned from sources other than interest income . these sources include service charges and fees on customer deposit accounts , fees and commissions generated from trade finance transactions , wealth management activities , fees for issuance of letters of credit and foreign exchange income , ancillary fees on loans , net gains on sales of loans and available-for-sale investment securities , changes in fdic indemnification asset and receivable/payable and miscellaneous noninterest-related income . the following table presents the components of noninterest income ( loss ) for the periods indicated : ( $ in millions ) year ended december 31 , 2015 2014 2013 branch fees $ 39.5 $ 37.9 $ 32.0 letters of credit fees and foreign exchange income 39.0 37.3 34.8 ancillary loan fees 15.0 10.6 9.4 wealth management fees 18.3 16.2 10.9 derivative commission income 16.2 12.8 8.8 changes in fdic indemnification asset and receivable/payable ( 38.0 ) ( 201.4 ) ( 228.6 ) net gains on sales of loans 24.9 39.1 7.8 net gains on sales of available-for-sale investment securities 40.4 10.9 12.1 other fees and other operating income 28.1 24.9 20.3 total noninterest income ( loss ) $ 183.4 $ ( 11.7 ) $ ( 92.5 ) 33 noninterest income increase d by $ 195.1 million to $ 183.4 million for 2015 compared to noninterest loss of $ 11.7 million for 2014 . the increase in noninterest income for 2015 was primarily due to the decline in expenses related to changes in fdic indemnification asset and receivable/payable and an increase in net gains on sales of available-for-sale investment securities . noninterest loss in 2014 decrease d by $ 80.8 million from a loss of $ 92.5 million in 2013 . the improvement in noninterest loss for 2014 was primarily due to the decline in expenses related to changes in fdic indemnification asset and receivable/payable and an increase in net gains on sale of loans . changes in fdic indemnification asset and receivable/payable decreased by $ 163.4 million to a loss of $ 38.0 million for 2015 from a loss of $ 201.4 million for 2014 . the changes in fdic indemnification asset and receivable/payable were reduced significantly which was mainly attributable to the expiration of the shared-loss coverage for the ucb and wfib commercial loans . in 2015 , the company reached an agreement with the fdic to early terminate the ucb and wfib shared-loss agreements . for 2014 , the expenses related to fdic indemnification asset and receivable/payable decreased by $ 27.2 million to a loss of $ 201.4 million from a loss of $ 228.6 million for 2013 . the decrease in the changes in the fdic indemnification asset and receivable/payable was primarily attributable to the continued payoffs and improved credit performance of the covered loan portfolio , as compared to the company 's original estimate . net gains on sales of available-for-sale investment securities increased by $ 29.5 million to $ 40.4 million for 2015 compared to $ 10.9 million for 2014 . proceeds from sales of available-for-sale investment securities for 2015 amounted to $ 1.67 billion compared to $ 623.7 million for 2014 . for 2013 , net gains and proceeds from sales of available-for-sale investment securities were $ 12.1 million and $ 663.6 million , respectively , which was largely consistent compared to 2014 . the net gains on sales of available-for-sale investment securities increased significantly in 2015 mainly due to the realized gains of $ 21.7 million associated with the sales of non-investment grade corporate debt securities with previously recognized otti . please see note 6 — available-for-sale investments securities to the consolidated financial statements for details . the other securities sold during 2015 were primarily comprised of u.s. treasury and u.s. government agency and u.s. government sponsored enterprise mortgage-backed securities . net gains on sales of loans for 2015 , which included lower of cost or market ( “ locom ” ) valuation adjustments , amounted to $ 24.9 million , compared to $ 39.1 million and $ 7.8 million for 2014 and 2013 , respectively .
| results of operations the company 's net income for the year ended december 31 , 2015 was $ 384.7 million compared to $ 345.9 million and $ 293.3 million for the years ended december 31 , 2014 and 2013 , respectively . the company has successfully increased net income for six consecutive years . the 2015 earnings performance reflected continued success in executing the company 's business strategy . underpinning the operating results in 2015 were sustained loan and deposit growth , stable loan credit quality and fee income from diverse sources . 30 revenue , the sum of net interest income and noninterest income ( loss ) , before provision for credit losses was $ 1.13 billion for the year ended december 31 , 2015 , an increase of $ 104.7 million or 10 % from $ 1.03 billion for the year ended december 31 , 2014 . revenue for the year ended december 31 , 2014 , increase d by $ 165.4 million or 19 % from $ 863.7 million for the year ended december 31 , 2013 . the increase in revenue year over year was primarily due to the reduction in expenses related to changes in the fdic indemnification asset and receivable/payable . this decrease was largely due to the expiration of the ucb non single-family shared-loss agreement in 2014 and the early termination of the remaining shared-loss agreements in 2015 . the company 's return on average assets increased two basis points to 1.27 % for the year ended december 31 , 2015 , compared to 1.25 % for the same period in 2014 ; and also increased one basis point to 1.25 % for the year ended december 31 , 2014 , compared to 1.24 % for the same period in 2013 .
| 7,424 |
estimated future benefit payments the following pension benefit payments ( which include expected future service ) are assumed to be paid in each of the following fiscal years based on the participants ' normal retirement age : replace_table_token_36_th the company contributed $ 267 , $ 2,300 and $ 1,893 to fund its obligations under the pension plans for the years ended august 31 , 2014 story_separator_special_tag the following discussion provides an analysis of our financial condition and results of operations and should be read in conjunction with the consolidated financial statements and notes thereto included in item 8 of this annual report on form 10-k. selected relationships within the consolidated statements of operations replace_table_token_4_th overview continued strong demand for many of our product areas as well as favorable sales mix contributed to increased revenues and net income over the prior year results . our strategic diversification was also a contributing factor as several product lines in both of our segments exceeded prior year revenues , offsetting shortfalls from others , which led to revenue growth for the fiscal year . additionally , our ongoing efforts with production facility consolidation , efficiency improvements and streamlining overhead costs have improved our profitability . the sale of the company 's insulfab product line in october 2013 significantly contributed to earnings and cash flows earlier in fiscal 2014. revenues from the industrial materials segment exceeded prior year results primarily due to strong demand in europe and asia for our electronic coatings products , as well as increased sales of our pulling and detection tapes , electronic materials , and power cable products . these increased sales were partially offset by a reduction in demand for our specialty materials products and fiber optic cable component products from our joint venture business . revenues from the construction materials segment surpassed the prior year primarily driven by increased demand for pipeline coatings products produced at our rye , uk facility due to middle east project demand , as well as increased sales of our coating and lining system products over the final half of the fiscal year . these increases were partially offset by decreased sales of our private label products and bridge & highway construction products due to the impact of the harsh winter across the u.s. on these businesses . in the upcoming fiscal year , we will continue with our global erp system implementation which was initiated in fiscal 2013 and is scheduled for full company-wide deployment by the end of december 2014. additionally , consolidation efforts will remain a priority and other key strategies will include a focus on our marketing and product development efforts along with a continued emphasis on identifying potential acquisition targets . our balance sheet 15 continues to remain strong , with cash on hand of $ 53.2 million and a current ratio of 3.5. our $ 15.0 million line of credit is fully available , while the balance of our term debt is $ 58.8 million . the company has two reportable segments summarized below : segment product lines manufacturing focus and products industrial materials wire and cable electronic coatings specialty products pulling and detection electronic materials structural composites fiber optic cable components ( 1 ) protective coatings and tape products including insulating and conducting materials for wire and cable manufacturers , moisture protective coatings for electronics and printing services , laminated durable papers , packaging and industrial laminate markets , pulling and detection tapes used in the installation , measurement and location of fiber optic cables , water and natural gas lines , cover tapes essential to delivering semiconductor components via tape and reel packaging , wind energy composite materials and elements ; and glass-based strength elements designed to allow fiber optic cables to withstand mechanical and environmental strain and stress . construction materials pipeline bridge and highway coating and lining systems private label protective coatings and tape products including coating and lining systems for use in liquid storage and containment applications , protective coatings for pipeline and general construction applications , high-performance polymeric asphalt additives , and expansion and control joint systems for use in the transportation and architectural markets . ( 1 ) through a 50 % owned joint venture until october 31 , 2014 , when we purchased the non-controlling 50 % interest . 16 story_separator_special_tag href= '' https : //www.sec.gov/archives/edgar/data/0000830524/000104746914009223/ # bg44601a_main_toc '' > cost of products and services sold in our construction materials segment was $ 37,072,000 for the fiscal year ended august 31 , 2014 compared to $ 35,984,000 in fiscal 2013. as a percentage of revenues , cost of products and services sold in the construction materials segment remained relatively flat despite increased sales of lower margin products primarily due to management 's ability to leverage its fixed overhead costs on a higher revenue base coupled with continued focus and scrutiny on material purchases that helped stabilize margins on many of our key product lines . in fiscal 2013 , cost of products and services sold increased $ 44,786,000 or 44 % to $ 146,035,000 for the fiscal year ended august 31 , 2013 compared to $ 101,249,000 in fiscal 2012. as a percentage of revenues , cost of products and services sold remained flat at 68 % in fiscal 2013 and fiscal 2012. cost of products and services sold in our industrial materials segment was $ 110,051,000 for the fiscal year ended august 31 , 2013 compared to $ 64,539,000 in fiscal 2012. as a percentage of revenues , cost of products and services sold in this segment remained relatively flat year over year . story_separator_special_tag other ( expense ) income other expense was $ 246,000 in fiscal 2014 compared to other income of $ 313,000 in fiscal 2013 , a decrease of $ 559,000. other ( expense ) income primarily includes interest income and foreign exchange gains and losses caused by changes in exchange rates on transactions or balances denominated in currencies other than the functional currency of our subsidiaries . the decrease in other expense in fiscal 2014 as compared to the prior year is primarily due to foreign exchange losses driven by the strengthening of the pound sterling against both the euro and us dollar throughout fiscal 2014. other income increased $ 211,000 to $ 313,000 in fiscal 2013 compared to $ 102,000 in fiscal 2012 , primarily due to foreign exchange gains driven by the strengthening of the pound sterling during fiscal 2013. income taxes the effective tax rate for fiscal 2014 was 34.5 % as compared to 35.1 % and 33.8 % in fiscal 2013 and 2012 , respectively . in all three years , we have received the benefit of the domestic production deduction and foreign rate differential . the decreased effective tax rate in fiscal 2014 is primarily due to a more favorable effective state income tax rate and foreign rate differential than realized in fiscal 2013. the effective tax rate of 35.1 % for fiscal 2013 compares unfavorably to 2012 primarily due to a less favorable effective state income tax rate than realized in the prior fiscal year . non-controlling interest the net loss from non-controlling interest relates to a joint venture in which we have , through our neptco subsidiary , a 50 % ownership interest . the joint venture between neptco and its joint venture partner ( an otherwise unrelated party ) is managed and operated on a day-to-day basis by neptco . the purpose of this joint venture is to combine the elements of each member 's fiber optic strength businesses . net income attributable to chase corporation net income in fiscal 2014 increased $ 9,417,000 or 55 % to $ 26,631,000 compared to $ 17,214,000 in fiscal 2013. the increase in net income in fiscal 2014 is primarily due to the previously mentioned $ 5,706,000 pre-tax gain that resulted from the sale of the insulfab product line in october 2013 , numerous cost containment initiatives including recent plant consolidation efforts , and the incremental benefit of $ 236,000 from capitalized internal labor used in our on-going global erp implementation project . we have capitalized $ 719,000 of internal costs related to our erp implementation project for the year to date period compared to $ 483,000 in the prior year to date period . additionally , net income in fiscal 2013 was negatively impacted by expenses of $ 564,000 in inventory fair value step up related to the neptco acquisition , and the acceleration of defined benefit plan settlement costs of $ 1,223,000 resulting from the timing of lump sum distributions to participants . 20 net income in fiscal 2013 increased $ 7,876,000 or 84 % to $ 17,214,000 compared to $ 9,338,000 in fiscal 2012. the increase in net income in fiscal 2013 was primarily due to the inclusion of neptco , and the favorable mix on product sales as discussed previously . these increases were partially offset by expenses related to the acceleration of defined benefit plan settlement costs of $ 1,223,000 resulting from the timing of lump sum distributions to participants . additionally , net income in the prior year period was negatively impacted by the following : ( a ) $ 3,206,000 in acquisition related expenses ; ( b ) expenses of $ 828,000 in inventory fair value step up related to the neptco acquisition ; ( c ) plant transition and moving expenses of $ 874,000 ; and ( d ) accelerated pension settlement charges of $ 550,000 resulting from the timing of lump sum distributions . other important performance measures we believe that ebitda and adjusted ebitda are useful performance measures . they are used by our executive management team and board of directors to measure operating performance , to allocate resources , to evaluate the effectiveness of our business strategies and to communicate with our board of directors and investors concerning our financial performance . ebitda and adjusted ebitda are non-gaap financial measures . we define ebitda as follows : net income attributable to chase corporation before interest expense from borrowings , income tax expense , depreciation expense from fixed assets , and amortization expense from intangible assets . we define adjusted ebitda as ebitda excluding costs and gains/losses related to our acquisitions and divestitures , costs of products sold related to inventory step-up to fair value , and settlement ( gains ) or losses resulting from lump sum distributions to participants from our defined benefit plan . the use of ebitda and adjusted ebitda has limitations and these performance measures should not be considered in isolation from , or as an alternative to , u.s. gaap measures such as net income . our measurement of adjusted ebitda may not be comparable to similarly titled measures used by other companies . the following table provides a reconciliation of net income attributable to chase corporation , the most directly comparable financial measure presented in accordance with u.s. gaap , to ebitda and adjusted ebitda for the periods presented : replace_table_token_7_th ( a ) represents costs related to our june 2012 acquisition of neptco ( b ) represents expenses related to the step-up in fair value of inventory through purchase accounting from the june 2012 acquisition of neptco ( c ) represents pension related curtailment and settlement costs due to the timing of lump sum distributions ( d ) represents gain on sale of insulfab product line that was completed in october 2013 liquidity and sources of capital our cash balance increased $ 23,225,000 to $ 53,222,000 at august 31 , 2014 from $ 29,997,000 at august 31 , 2013. the increased cash balance is primarily attributable to the proceeds from the sale of the insulfab product line in
| results of operations revenues and operating profit by segment are as follows : replace_table_token_5_th ( a ) includes $ 5,706 gain on sale of insulfab product line ( b ) includes $ 348 of pension related settlement costs due to the timing of lump sum distributions . ( c ) includes $ 564 of expenses related to inventory step up in fair value related to the neptco acquisition and $ 521 of pension related settlement costs due to the timing of lump sum distributions ( d ) includes $ 595 of pension related settlement costs due to the timing of lump sum distributions . ( e ) includes $ 828 of expenses related to inventory step up in fair value related to the neptco acquisition and $ 303 of pension related settlement costs due to the timing of lump sum distributions ( f ) includes $ 3,206 in acquisition related expenses , partially offset by a gain of $ 425 related to evanston , il sale leaseback transaction total revenues total revenues in fiscal 2014 increased $ 7,944,000 or 4 % to $ 224,006,000 from $ 216,062,000 in the prior year . revenues in our industrial materials segment increased $ 6,183,000 or 4 % to $ 169,657,000 for the year ended august 31 , 2014 compared to $ 163,474,000 in fiscal 2013. the increase in revenues from our industrial materials segment in fiscal 2014 was primarily due to increased sales of : ( a ) $ 3,465,000 from our global electronic coatings product line primarily due to higher sales into europe and asia ; ( b ) $ 2,015,000 from our pulling and detection tape products ; ( c ) $ 1,447,000 from electronic cover tapes ; and ( d ) $ 1,072,000 from our wire and cable products that are used in energy-related applications .
| 7,425 |
we are also a distributor of other building materials , including siding , windows , specialty lumber products and waterproofing systems for residential and nonresidential building exteriors . we purchase products from a large number of manufacturers and then distribute these goods to a customer base consisting of contractors and , to a lesser extent , general contractors , retailers and building material suppliers . depending on the market , our branches carry from about 2,000 to 11,000 skus , totaling more than 200,000 skus throughout our network of 264 branches across the united states and canada . for the fiscal year ended september 30 , 2014 ( “ fiscal year 2014 ” or “ 2014 ” ) , approximately 92 % of our net sales were in the united states . we stock one of the most extensive assortments of high-quality branded products in the industry , enabling us to deliver products to our customers on a timely basis . execution of the operating plan at each of our branches drives our financial results . revenues are impacted by the relative strength of the residential and non-residential roofing markets we serve . we strive for an appropriate mix of residential , non-residential and complementary product sales in all of our regions but allow each of our branches to influence its own marketing plan and mix of products based upon its local market . we differentiate ourselves from the competition by providing many customer services such as job site delivery , tapered insulation layouts and design and metal fabrication , and by providing credit . we consider customer relations and our employees ' knowledge of roofing and exterior building materials to be important to our ability to increase customer loyalty and maintain customer satisfaction . we invest significant resources in training our employees in sales techniques , management skills and product knowledge . while we consider these attributes important drivers of our business , we also continually pay close attention to controlling operating costs . our growth strategy includes both internal growth ( opening branches , growing sales with existing customers , adding new customers and introducing new products ) and acquisition growth . our main acquisition strategy is to target market leaders in geographic areas that we do not service or that complement our existing operations in an area . the following transactions highlight our recent success delivering on our growth strategy : · we have continued to focus on organic greenfield growth with the opening of 26 new branches in 2014 , 10 new branches in 2013 and four new branches in 2012. these 40 new branch locations in the past three years have allowed us to strategically penetrate deeper into many of our existing markets and enter into new markets . additionally , in october 2014 , we continued to expand our presence in new and existing markets with the opening of one additional greenfield location . · we have continued to focus growth through acquisitions in october 2014 with the strategic acquisitions of applicators sales & service and wholesale roofing supply . applicators sales & service is a distributor of residential roofing products and related accessories , with four locations in maine and one location in new hampshire . this acquisition complemented an existing market in which we previously had operations , allowing us to capture more of the localized market share and , in addition , provides us with a high mix of complementary products . wholesale roofing supply is a distributor of residential roofing products and related accessories with a nine-acre facility located in grand prairie , texas . this acquisition complemented an existing market in which we previously had operations , allowing us to capture more of the localized market share . · in august 2014 , we acquired all weather products , a distributor of residential and commercial roofing products and related accessories , with three locations in the western province of british columbia , canada . this acquisition complemented an existing market in which we previously had operations , allowing us to capture more of the localized market share . · in december 2012 , we acquired ford wholesale co. ( “ ford wholesale ” ) and construction materials supply ; both are distributors of residential and commercial roofing and related accessories with a combined five locations in northern california . these acquisitions provided entry into a new geographic market with no branch overlap with our existing operations . 21 · in november 2012 , we acquired mcclure-johnston a distributor of residential and commercial roofing products and related accessories , which was headquartered in the pittsburgh area and had 14 branches at the time of acquisition , including eight in pennsylvania , three in west virginia , one in western maryland and two in georgia . this acquisition complemented an existing market in which we previously had operations , allowing us to capture more of the localized market share . · in july 2012 , we acquired structural materials co. ( “ structural ” ) , a distributor of residential and commercial roofing products and related accessories headquartered in santa ana , california . structural has six locations in los angeles and orange counties and in the surrounding areas , which we integrated into our existing pacific supply region in southern california . general we sell all materials necessary to install , replace and repair residential and non-residential roofs , including : · shingles ; · single-ply roofing ; · metal roofing and accessories ; · modified bitumen ; · built up roofing ; · insulation ; · slate and tile ; · fasteners , coatings and cements ; and · other roofing accessories . we also sell complementary building products such as : · vinyl siding ; · doors , windows and millwork ; · wood and fiber cement siding ; · residential insulation ; and · waterproofing systems . the following is a summary of our net sales by product group for the last three full fiscal years ( “ 2014 ” , “ 2013 ” and “ 2012 ” ) . story_separator_special_tag existing market net sales by geographical region increased ( decreased ) as follows : northeast ( 3.7 ) % ; mid-atlantic ( 7.8 ) % ; southeast 21.4 % ; southwest 14.8 % ; midwest ( 7.8 % ) ; west ( 2.9 ) % ; and canada 4.8 % . these variations were primarily caused by short-term factors such as local economic conditions , weather conditions and storm activity that can influence the comparisons of a single geographical region . 27 product group sales for our existing markets were as follows : for the fiscal years ended replace_table_token_12_th for 2013 , our acquired markets recognized sales of $ 122.7 , $ 87.7 and $ 54.7 million in residential roofing products , non-residential roofing products and complementary building products , respectively . the 2013 existing market sales of $ 1,975.6 million plus the total sales from acquired markets of $ 265.1 million agrees ( rounded ) to our reported total 2013 sales of $ 2,240.7 million . for 2012 , our acquired markets recognized sales of $ 58.4 , $ 19.9 and $ 12.5 million in residential roofing products , non-residential roofing products and complementary building products , respectively . the 2012 existing market sales of $ 1,952.9 million plus the total sales from acquired markets of $ 90.8 million agrees ( rounded ) to our reported total 2012 sales of $ 2,043.7 million . prior year sales by product group are presented in a manner consistent with the current year 's product classifications . we believe the existing market information is useful to investors because it helps explain organic growth or decline . gross profit gross profit for consolidated and existing markets were as follows : replace_table_token_13_th our existing market gross profit declined $ 15.1 million , or ( 3.2 % ) , in 2013 , while our acquired market gross profit increased $ 45.1 million . our overall and existing market gross margins declined to 23.7 % and 23.4 % , in 2013 , respectively , from 24.5 % and 24.4 % in 2012. the decline in gross margin in 2013 was primarily due to product cost increases that have not been consistently passed through to customers due to the soft demand environment . direct sales ( products shipped by our vendors directly to our customers ) , which typically have substantially lower gross margins than our warehouse sales , represented 17.5 % and 17.7 % of our net sales in 2013 and 2012 , respectively . this decrease was primarily attributable to the lower mix of non-residential roofing product sales , which are more commonly facilitated by direct shipment . there were no material divisional impacts from changes in the direct sales mix of our geographical regions . 28 operating expenses operating expenses for consolidated and existing markets were as follows : replace_table_token_14_th operating expenses in our existing markets were relatively flat year over year increasing $ 1.0 million , or 0.3 % in 2013 , to $ 333.1 million , compared to $ 332.1 million in 2012 , while our acquired markets expenses increased by $ 43.0 million to $ 68.5 million . the following factors were the leading causes of the higher operating expenses in our existing markets : · increased payroll and related costs of $ 7.1 million primarily due to higher salaries and wages , overtime pay and payroll taxes ; · increased warehouse and selling expenses of $ 3.6 million from higher fuel and transportation costs , rent and real estate taxes , and credit card fees ; and · increased depreciation of $ 0.5 million from the impact of increased capital expenditures and acquisition activity in recent years . partially offset by : · lower employee benefit costs of $ 3.6 million due primarily to lower bonus , profit-sharing accruals and stock compensation expense ; · decreased amortization expense of $ 1.6 million from lower amortization of intangibles ; and · decreased bad debt expense of $ 4.5 million due primarily to a lower percentage of past-due accounts and very low historical write-offs . in 2013 and 2012 , we expensed a total of $ 14.0 million and $ 9.4 million , respectively , for the amortization of intangible assets recorded under purchase accounting , including the impact from acquired markets . our existing markets operating expenses as a percentage of the related net sales were 16.9 % and 17.0 % in 2013 and 2012 , respectively . interest expense , financing costs and other interest expense , financing costs and other were $ 8.2 million in 2013 compared to $ 17.2 million in 2012 due primarily to lower debt balances in 2013 and a marginally lower effective interest rate . the 2012 expense includes a charge of $ 2.6 million for the recognition of the fair value of certain interest rate derivatives and $ 1.2 million resulting from the refinancing of our debt . these negative factors on interest expense , financing costs and other in 2012 were partially offset by the benefit from lower outstanding total debt . excluding the impact of our interest rate derivatives , interest expense , financing costs and other would have been $ 1.3 and $ 7.5 million lower in 2013 and 2012 , respectively . income taxes income tax expense was $ 48.9 million in 2013 , an effective tax rate of 40.2 % , compared to $ 50.9 million in 2012 , which was an effective tax rate of 40.3 % . we expect our future annual income tax rate to average approximately 39.5 % to 40.5 % , excluding any discrete items . seasonality and quarterly fluctuations in general , sales and net income are highest during our first , third and fourth fiscal quarters , which represent the peak months of construction and re-roofing , especially in our branches in the northern and mid-western united states and in canada . we have historically incurred low net income levels or net losses during the second quarter when our sales are substantially lower .
| results of operations the following discussion compares our results of operations for 2014 , 2013 and 2012. the following table presents information derived from our consolidated statements of operations expressed as a percentage of net sales for each of the respective the periods indicated . percentages may not total due to rounding . replace_table_token_6_th 23 2014 compared to 2013 the following table presents a summary of our results of operations for 2014 and 2013 , broken down by existing markets and acquired markets . replace_table_token_7_th ( 1 ) in 2014 and 2013 , we recorded amortization expense for our acquired markets related to intangible assets recorded under purchase accounting of $ 3.2 million and $ 2.9 million , respectively . net sales consolidated net sales increased $ 86.2 million , or 3.8 % , to $ 2.33 billion in 2014 , from $ 2.24 billion in 2013. existing market sales increased $ 62.2 million or 2.9 % . acquired market sales increased $ 23.9 million due primarily to the full year 's sales impact from the 2013 acquisitions , as well as the partial year impact from our 2014 acquisitions . there were 253 business days in both 2014 and 2013. we attribute the existing market sales increase primarily to the following factors : · increased demand in our non-residential and complimentary products groups ; and · 26 new greenfield branches opened in 2014 and 10 in 2013 ; partially offset by : · softer demand in our residential products group during the first half of 2014 due to the extended wetter weather , increased winter storm activity and colder temperatures that most of our markets experienced ; and · lower residential and commercial roofing average selling prices during 2014 , compared to 2013. in 2014 , we acquired three branches , opened 26 new branches , and closed two branches . we estimate the impact of inflation or deflation on our sales and gross profit by looking at changes in our average selling prices and gross margins ( discussed below ) .
| 7,426 |
andina 's objective was to acquire , through a merger , share exchange , asset acquisition , share purchase recapitalization , reorganization or other similar business combination , one or more operating businesses . on december 20 , 2013 , andina consummated a merger transaction ( the “ merger ” ) with tecno corporation ( “ tecnoglass holding ” ) as ultimate parent of tecnoglass s.a. ( “ tg ” ) and c.i . energía solar s.a. es . windows ( “ es ” ) . the surviving entity was renamed tecnoglass inc. the merger transaction was accounted for as a reverse merger and recapitalization where tecnoglass holding was the acquirer and tgi was the acquired company . the company manufactures hi-specification , architectural glass and windows for the global residential and commercial construction industries . currently the company offers design , production , marketing , and installation of architectural systems for buildings of high , medium and low elevation size . products include windows and doors in glass and aluminum , office partitions and interior divisions , floating façades and commercial window showcases . the company sells to customers in north , central and south america , and exports about half of its production to foreign countries . tg manufactures both glass and aluminum products . its glass products include tempered glass , laminated glass , thermo-acoustic glass , curved glass , silk-screened glass , acoustic glass and digital print glass . its alutions plant produces mill finished , anodized , painted aluminum profiles and rods , tubes , bars and plates . alutions ' operations include extrusion , smelting , painting and anodizing processes , and exporting , importing and marketing aluminum products . es designs , manufactures , markets and installs architectural systems for high , medium and low rise construction , glass and aluminum windows and doors , office dividers and interiors , floating facades and commercial display windows . in 2014 , the company established two florida limited liability companies , tecnoglass llc ( “ tecno llc ” ) and tecnoglass re llc ( “ tecno re ” ) to acquire manufacturing facilities , manufacturing machinery and equipment , customer lists and exclusive design permits . basis of presentation and management 's estimates the accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the united states of america ( “ us gaap ” ) and pursuant to the accounting and disclosure rules and regulations of the securities and exchange commission ( “ sec ” ) . the preparation of the accompanying consolidated financial statements requires the company to make estimates and judgements that affect the reported amounts of assets and liabilities , revenues and expenses , and related disclosures of contingent assets and liabilities at the date of the company 's financial statements . actual results may differ from these estimates under different assumptions and conditions . estimates inherent in the preparation of these consolidated financial statements relate to the collectability of account receivables , the valuation of inventories , estimated earnings on uncompleted contracts , useful lives and potential impairment of long-lived assets , and valuation of warrants and other derivative financial instruments . f- 7 note 2. restatements restatement this note 2 to the consolidated financial statements discloses the nature of the restatements and adjustments and shows the impact of the restatements on revenues , expenses , income , assets , liabilities , equity , and cash flows from operating activities , investing activities , and financing activities , and the cumulative effects of these adjustments on the consolidated statement of operations , balance sheet , and cash flows for 2014. in addition , this note shows the effects of the adjustment to opening retained earnings as of january 1 , 2014 , which adjustment reflects the impact of the restatement on periods prior to 2014. the annual impact on 2014 was a reduction in pre-tax income and net income of $ 10,807 million . description of restatement matters and restatement adjustment in preparing the company 's annual report on form 10-k for the fiscal year ended december 31 , 2015 , the company identified six non-cash errors : ( 1 ) in the way the company had accounted for the fair value and classification of its “ earnout shares ” , ( 2 ) in the classification and presentation of deferred tax assets and liabilities , ( 3 ) in the classification of its shipping and handling costs , ( 4 ) in the presentation of related party revenue on consolidated statements of operations and comprehensive income , ( 5 ) in the classification of purchases and sales of investments in the consolidated statements of cash flows , and ( 6 ) earnings per share . a description of each of the restatement adjustments is provided below : ( a ) the company entered into an agreement and plan of reorganization ( the “ merger agreement ” ) as of august 17 , 2013. pursuant to the merger agreement , on the closing date of december 20 , story_separator_special_tag the following discussion of the company 's financial condition and results of operations should be read in conjunction with the company 's consolidated financial statements and notes to those statements included in this form 10-k. this discussion contains forward-looking statements that involve risks and uncertainties . please see the section entitled “ forward-looking statements and introduction ” in this form 10-k. story_separator_special_tag purchase options and up to $ 20.7 million upon the exercise of the warrants issued in our ipo . as of december 31 , 2014 , 102,570 warrants have been exercised for proceeds of $ 0.8 million . story_separator_special_tag change in fair value of warrant liability we incurred a non-cash , non-operating loss of $ 24.9 million in the year ended december 31 , 2015 due to the increase in the fair value of warrants relative to their last reported fair value at december 31 , 2014. the fair value of the warrants changes in response to market factors not controlled by us such as the market price of our shares and the volatility index of comparable companies . there are no income tax effects of this warrant liability due to our company being registered in the cayman islands . management does not consider the effects of the change in the fair value of the warrants to be indicative of our ongoing operating performance . change in fair value of earnout share liability we incurred a non-cash , non-operating loss of $ 10.9 million in the year ended december 31 , 2015 due to the increase in the fair value of earnout share liability relative to their last reported fair value at december 31 , 2014. the fair value of the earnout shares changes in response to market factors such as the market price of our shares and the volatility index of comparable companies and the company 's forecasted ebitda . there are no income tax effects of this earnout liability due to our company being registered in the cayman islands . management does not consider the effects of the change in the fair value of the earnout shares to be indicative of our ongoing operating performance . interest expense between the years ended december 31 , 2015 and 2014 , interest expense increased by $ 0.4 million , or approximately 4 % , from $ 8.9 million to $ 9.3 million as our debt increased from $ 94.2 million as of december 31 , 2014 to $ 138.4 million in december 31 , 2015. non-operating income non-operating income increased $ 1.7 million , from $ 12.2 million in the year ended december 31 , 2014 to $ 13.9 million in the year ended december 31 , 2015 , primarily as a result of an increase in financial revenues of $ 1.1 million comprised of interest income on receivable , as well as recoveries of scrap materials of $ 0.5 million . non-operating income is comprised mostly of foreign currency transaction gains which amounted to $ 10.1 million and $ 10.8 million during the year ended december 31 , 2015 and 2014 , respectively , related to the company 's colombian subsidiaries es and tg which have the colombian peso as functional currency , yet have important us dollar denominated transactions . 18 off-balance sheet arrangements we did not have any material off-balance sheet arrangements as of december 31 , 2015. contractual obligations future contractual obligations represent an impact to future cash flows as shown in the table for the period ended december 31 , 2015 : replace_table_token_3_th future interest obligations are estimated assuming constant reference rates for obligations with variable interest rates . the average interest rate is approximately 7.3 % and 10.4 % per annum for long term debt and capital lease obligations respectively , and can vary up or down in accordance with money market rates in colombia . critical accounting policies the preparation of financial statements in conformity with u.s. gaap requires that management make significant estimates and assumptions that affect the assets , liabilities , revenues and expenses , and other related amounts during the periods covered by the financial statements . management routinely makes judgments and estimates about the effect of matters that are inherently uncertain . as the number of variables and assumptions affecting the future resolution of the uncertainties increases , these judgments become more subjective and complex . we have identified the following accounting policies as the most important to the portrayal of our current financial condition and results of operations . revenue recognition our principal sources of revenue are derived from product sales of manufactured glass and aluminum products . delivery to the customer is deemed to have occurred when the title is passed to the customer . generally , the title passes to the customer upon shipment , but could occur when the customer receives the product based on the terms of the agreement with the customer . the selling prices of all goods that the company sells are fixed , and agreed to with the customer , prior to shipment . selling prices are generally based on established list prices . the company recognizes revenue for standard form sales . standard form sales are customer sales comprising low value installations that are of short duration . a standard form agreement is executed between the company and its customer . services are performed by the company during the installation process . the price quote is determined by the company , based on the requested installation , and approved by the customer before the company proceeds with the installation . the customer 's credit worthiness and payment capacity is evaluated before the company will proceed with the initial order process . revenues from fixed price contracts , which represent approximately 22 % of the company 's sales for the year ended december 31 , 2015 are recognized using the percentage-of-completion method , measured by the percentage of costs incurred to date to total estimated costs for each contract . these contracts typically have a duration ranging between one and three years . revenues recognized in advance of amounts billable pursuant to contracts terms are recorded as unbilled receivables on uncompleted contracts based on work performed and costs to date .
| overview we are a holding company operating through our wholly-owned subsidiaries : tg , which manufactures , transforms , markets and exports a variety of glass products since 1994 and established the alutions plant in 2007 for aluminum products , and es , a leader in the production of high-end windows and architectural glass systems . we have more than 30 years ' experience in the glass and aluminum structure assembly market in colombia . we manufacture hi-specification architectural glass and windows for the global residential and commercial construction industries . currently we offer design , production , marketing , and installation of architectural systems for buildings of high , medium and low elevation size . products include windows and doors in glass and aluminum , floating façades , office partitions and interior divisions , and commercial window showcases . in recent years , we have expanded our us sales outside of the florida market , entering into high-tech markets for curtain walls , obtaining a niche market access since this product is in high demand and marks a new trend in architecture . this product is a very sophisticated product and therefore garners high margins for us . these products involve high performance materials that are produced by alutions and tg with state of the art technology . in panama , es sells products primarily to companies participating in large construction projects in the most exclusive areas of the city . for example , es products were supplied in the construction of the tallest building in central and south america , the point , as well as in the construction of the most modern hotels in the region such as megapolis and the trump . based on es 's knowledge of the construction market in central america , es has entered into one of the highest value window supply contracts in the hotel industry in central america for the soho plaza . how we generate revenue tg manufactures both glass and aluminum products .
| 7,427 |
the net foreign currency losses realized in 2018 and in 2017 were primarily driven by the euro-denominated term loan ( which was settled as part of the february 2018 term loan refinancing , see note 17 to these consolidated financial statements for further information ) and the non-permanent intercompany debt denominated in local currency and translated to story_separator_special_tag overview we are a global provider of specialty catalysts , materials , chemicals and services with leading supply positions across our portfolio . we compete in the global specialty chemicals and materials industry where we seek to focus on attractive , high-growth applications . our products and services provide critical performance to our customers ' products and we are able to offer many of our customers regionally sourced materials to reduce costs and improve delivery logistics . we provide our customers with a combination of product technology and applications knowledge , global supply chain capabilities , and local production and logistical support . we conduct operations through four reporting segments : ( 1 ) refining services , ( 2 ) catalysts ( including our 50 % interest in the zeolyst joint venture ) , ( 3 ) performance materials and ( 4 ) performance chemicals . refining services : we are the leading provider of sulfuric acid recycling services to north american refineries for the production of alkylate , an essential gasoline component for lowering vapor pressure and increasing octane to meet stringent gasoline specifications and fuel efficiency standards . we are also a leading north american producer of on-purpose virgin sulfuric acid for water treatment , mining , and industrial applications . catalysts : we are a global supplier of finished silica catalysts and catalyst supports necessary to produce high strength and high stiffness plastics used in packaging films , bottles , containers , and other molded applications . we are also a leading global supplier of zeolites used for catalysts that remove nitric oxide from diesel engine emissions as well as sulfur from fuels during the refining process . performance materials : we are an industry leader in north america , europe and south america in transportation safety . our products are used to delineate roads and runways with highly reflective markings , improving safety by enhancing visibility at night and in poor weather . our microspheres also serve as functional additives in industrial applications , including polymers and plastics , and in abrasive applications for metal surfaces . performance chemicals : we are a leading global supplier of silicate and derivative products which serve as an environmentally friendly substitute for materials used in a variety of applications . these include end uses such as matting agents in surface coatings , clarifying agents for edible oils and beverages , additives for paints and coatings , and in cosmetics to improve feel attributes . effective march 1 , 2019 , we changed the structure of our internal organization to create the four independent businesses described above in order to promote increased visibility to business unit performance , optimize our product portfolio and create efficiencies . previously , we had two reportable segments , namely the environmental catalysts and services segment and the performance materials and chemicals segment . the segment results and disclosures included in our consolidated financial statements reflect the new segment structure for all periods presented . the changes to our segment structure affect only the manner in which the results of our reportable segments were previously reported ; there are no changes to our consolidated balance sheet , statement of income or cash flows for the prior periods . in 2019 , we served over 4,000 customers globally across many end uses and , as of december 31 , 2019 , operated out of 70 manufacturing facilities , which are strategically located across six continents . 48 basis of presentation our zeolite catalysts product group operates through the zeolyst joint venture , which we account for as an equity method investment in accordance with gaap . we do not record sales by the zeolyst joint venture as revenue and such sales are not consolidated within our results of operations . however , adjusted ebitda reflects our share of the earnings of the zeolyst joint venture that have been recorded as equity in net income from affiliated companies in our consolidated statements of income and includes zeolyst joint venture adjustments on a proportionate basis based on our 50 % ownership interest . key performance indicators adjusted ebitda and adjusted net income adjusted ebitda and adjusted net income are financial measures that are not prepared in accordance with gaap and that we use to evaluate our operating performance , for business planning purposes and to measure our performance relative to that of our competitors . adjusted ebitda and adjusted net income are presented as key performance indicators as we believe these financial measures will enhance a prospective investor 's understanding of our results of operations and financial condition . ebitda consists of net income ( loss ) attributable to pq group holdings before interest , taxes , depreciation and amortization . adjusted ebitda consists of ebitda adjusted for ( i ) non-operating income or expense , ( ii ) the impact of certain non-cash , nonrecurring or other items included in net income ( loss ) and ebitda that we do not consider indicative of our ongoing operating performance , and ( iii ) depreciation , amortization and interest of our 50 % share of the zeolyst joint venture . adjusted net income consists of net income ( loss ) attributable to pq group holdings adjusted for ( i ) non-operating income or expense and ( ii ) the impact of certain non-cash , nonrecurring or other items included in net income ( loss ) that we do not consider indicative of our ongoing operating performance . we believe that these non-gaap financial measures provide investors with useful financial metrics to assess our operating performance from period-to-period by excluding certain items that we believe are not representative of our core business . story_separator_special_tag because of this seasonality associated with certain of our segments , results for any one quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full year . foreign currency as a global business , we are subject to the impact of gains and losses on currency translations , which occur when the financial statements of foreign operations are translated into u.s. dollars . we operate a geographically diverse business with approximately 40 % of our sales for the years ended december 31 , 2019 and 2018 in currencies other than the u.s. dollar . because our consolidated financial results are reported in u.s. dollars , sales or earnings generated in currencies other than the u.s. dollar can result in a significant increase or decrease in the amount of those sales and earnings when translated to u.s. dollars . the foreign currencies to which we have the most significant exchange rate exposure include the euro , british pound , canadian dollar , brazilian real and the mexican peso . 50 results of operations year ended december 31 , 2019 compared to the year ended december 31 , 2018 story_separator_special_tag style= '' font-family : inherit ; font-size:10pt ; '' > $ 38.7 million , unfavorable manufacturing costs of $ 16.5 million and the unfavorable effects of foreign currency translation of $ 7.6 million . favorable customer pricing was primarily a result of a roll-off of a below-market contract in our virgin sulfuric acid product line and higher average selling prices in north america for our highway safety products . the decrease in volumes was due to a decline in sulfuric acid sales and lower sales to the consumer and industrial products industries . the unfavorable change in manufacturing costs was driven by the higher labor costs , timing of plant maintenance projects and increased transportation costs . the unfavorable effects of foreign currency were driven by the stronger u.s. dollar . selling , general and administrative expenses selling , general and administrative expenses for the year ended december 31 , 2019 were $ 166.9 million , a decrease of $ 1.7 million , or 1.0 % , compared with $ 168.6 million for the year ended december 31 , 2018 . the decrease in selling , general and administrative expenses was due to lower research and development expenditures and a decrease in professional fees , which was partially offset by an increase in compensation-related costs . other operating expense , net other operating expense , net for the year ended december 31 , 2019 was $ 35.8 million , an increase of $ 6.3 million , or 21.4 % , compared with $ 29.5 million for the year ended december 31 , 2018 . the increase in other operating expense , net was primarily due to the effects of non-recurring gains in the current year as compared to the prior year . during the year ended december 31 , 2019 , we realized a gain of $ 11.0 million on the disposition of assets related to a non-core product line as well a gain of $ 7.1 million on the sale of property . during the year ended december 31 , 2018 , we recognized non-recurring gains on the termination of a customer supply contract of $ 20.6 million and insurance recoveries totaling $ 6.5 million related to losses sustained as a result of hurricane harvey in august 2017 ( of which $ 5.5 million was recorded in other operating expense , net ) . 53 equity in net income of affiliated companies equity in net income of affiliated companies for the year ended december 31 , 2019 was $ 46.0 million , an increase of $ 8.4 million , compared with income of $ 37.6 million for the year ended december 31 , 2018 . the increase was primarily due to $ 52.2 million of earnings generated by the zeolyst joint venture during the year ended december 31 , 2019 as compared to $ 42.9 million for the year ended december 31 , 2018 , which was a result of higher year-over-year growth in hydrocracking and specialty chemical event-driven sales . interest expense , net interest expense , net for the year ended december 31 , 2019 was $ 111.5 million , a decrease of $ 2.2 million , as compared with $ 113.7 million for the year ended december 31 , 2018 . the decrease in interest expense was due to lower average debt balances . debt extinguishment costs debt extinguishment costs for the years ended december 31 , 2019 and 2018 were $ 3.4 million and $ 7.8 million , respectively . during the year ended december 31 , 2019 , we prepaid $ 210.0 million of outstanding principal balance on the term loan facility ( as defined below ) . in connection with this prepayment , we wrote off $ 1.0 million of previously unamortized deferred financing costs and original issue discount of $ 2.4 million as debt extinguishment costs . during the year ended december 31 , 2018 , we prepaid $ 100.0 million of outstanding principal balance on the term loan facility . in connection with this prepayment , we wrote off $ 0.6 million of previously unamortized deferred financing costs and original issue discount of $ 1.3 million as debt extinguishment costs . on february 8 , 2018 we refinanced our existing senior secured term loan facility with a new $ 1,267.0 million senior secured term loan facility to reduce the applicable interest rates . we recorded $ 2.1 million of new creditor and third-party financing fees as debt extinguishment costs . in addition , previously unamortized deferred financing costs of $ 1.4 million and original issue discount of $ 2.4 million associated with the existing senior secured term loan facility were written off as debt extinguishment costs .
| highlights the following is a summary of our financial performance for the year ended december 31 , 2019 compared with the year ended december 31 , 2018 . sales sales decreased $ 41.1 million to $ 1,567.1 million . the decrease in sales was primarily due to lower sales volumes and the unfavorable effects of foreign currency translation of $ 29.2 million , which was partially offset by higher average customer prices and favorable mix . gross profit gross profit increased $ 8.8 million to $ 390.5 million . the increase in gross profit was primarily due to favorable customer pricing , which was partially offset by lower sales volumes , unfavorable manufacturing costs and the unfavorable effects of foreign currency translation . operating income operating income increased $ 4.2 million to $ 187.8 million . the increase in operating income was primarily due to an increase in gross profit for the year ended december 31 , 2019 . equity in net income of affiliated companies equity in net income of affiliated companies for the year ended december 31 , 2019 was $ 46.0 million , compared with net income of $ 37.6 million for the year ended december 31 , 2018 . the increase was due to higher earnings of $ 8.4 million generated by the zeolyst joint venture during the year ended december 31 , 2019 as compared to the year ended december 31 , 2018 . 51 the following is our consolidated statement of income and a summary of financial results for the years ended december 31 , 2019 and 2018 .
| 7,428 |
accounting standards issued but not yet adopted prior to december 31 , 2020 , as an egc , we elected to use the extended transition period provided by the jumpstart our business startups act for the implementation of new or revised accounting story_separator_special_tag financial condition and results of operations the following management 's discussion and analysis of financial condition and results of operations is intended to highlight and supplement data and information presented elsewhere in this annual report , including the consolidated financial statements and related notes thereto included in item 8. the following discussion includes forward-looking statements that reflect our plans , estimates and assumptions and involve numerous risks and uncertainties , including , but not limited to , those described in the “ risk factors ” section of this annual report . see also “ cautionary note regarding forward-looking statements. ” future results could differ significantly from the historical results presented in this section . business and executive overview we started our business in 1960 and are among the longest-operating seller servicers in the united states . we are a growth-oriented mortgage company that employs a relationship-based loan sourcing strategy to execute our mission of delivering the promise of home ownership in neighborhoods and communities across the united states . our business model is centered on providing a personalized mortgage-borrowing experience that is delivered by our knowledgeable loan officers and supported by our diverse product offerings . throughout these individualized interactions , we work to earn our clients ' trust and confidence as a financial partner that can help them find their way through life 's changes and build for the future . through steady organic growth and a series of targeted acquisitions , we grew our annual origination volume from $ 1.4 billion for the year ended december 31 , 2007 to $ 35.3 billion for the year ended december 31 , 2020 and grew our servicing portfolio from $ 2.5 billion of upb as of december 31 , 2007 to $ 60.0 billion of upb as of december 31 , 2020. unless otherwise indicated , the upb of our servicing portfolio excludes any subserviced loans . the historical information below is provided to show compounded annual growth since 2007 , when guild mortgage company was purchased from its founder by a management-led partnership that included a majority investment from mcmi . guild 's annual origination volume and market share source : inside mortgage finance publications , inc. copyright © 2020. used with permission . ( 1 ) cagr is equal to the compound annual growth rate of guild 's annual origination volume for the year ended december 31 , 2007 through the year ended december 31 , 2020 . 23 servicing portfolio growth ( upb as of period end ) ( 1 ) ( 1 ) excludes subservicing portfolio of $ 844.6 million as of december 31 , 2020. executive summary of results of operations for periods presented year ended december 31 , 2020 summary for the year ended december 31 , 2020 , we originated $ 35.3 billion of mortgage loans compared to $ 21.8 billion for the year ended december 31 , 2019 , representing an increase of $ 13.5 billion or 61.4 % . this increase was primarily due to decreased interest rates , which led to an increase in origination volume across the u.s. mortgage market . our servicing portfolio as of december 31 , 2020 was $ 60.0 billion of upb compared to $ 49.3 billion of upb as of december 31 , 2019 , with the average size of the portfolio increasing 15.3 % over that time . we generated $ 370.6 million of net income for the year ended december 31 , 2020 compared to $ 5.6 million for the year ended december 31 , 2019. we generated $ 523.8 million of adjusted net income for the year ended december 31 , 2020 compared to $ 139.1 million for the year ended december 31 , 2019 , representing a 276.6 % increase , and we generated $ 714.3 million of adjusted ebitda for the year ended december 31 , 2020 compared to $ 201.5 million for the year ended december 31 , 2019 , representing a 254.5 % increase . please see “ — non-gaap financial measures ” for further information regarding our use of adjusted net income and adjusted ebitda , including limitations related to such non-gaap measures and a reconciliation of such measures to net income , the nearest comparable financial measure calculated and presented in accordance with accounting principles generally accepted in the united states of america ( “ gaap ” ) . the above-described increase in adjusted net income and adjusted ebitda was primarily due to the increase in loan origination fees and gain on sale of loans , net of $ 939.1 million for the year ended december 31 , 2020 compared to the year ended december 31 , 2019. the increase in loan origination fees and gain on sale of loans , net was driven by the increase in origination volume described above , as well as an increase in gain on sale margins on originated loans , which increased 122 basis points or 32.3 % for the year ended december 31 , 2020 compared to the year ended december 31 , 2019. this increase in gain on sale margins was primarily due to an increase in the secondary marketing spread because of market volatility and low interest rates , which caused industry capacity constraints . our increased origination volume also resulted in an increase in variable salaries , incentive compensation and benefits expense of $ 375.6 million or 65.0 % for the year ended december 31 , 2020 compared to the year ended december 31 , 2019. net income includes a loss of $ 296.3 million due to a decrease in the fair value of our msrs resulting from a decrease in projected duration of cash flow collections during the period . story_separator_special_tag increased liquidity during 2020 , to support our increased loan origination volume , we increased the capacity of our existing loan funding facilities by $ 905.0 million , of which $ 180.0 million represented a temporary increase in capacity . we 25 added one additional loan funding facility during the second quarter of 2020 with a total facility size of $ 100.0 million , for which we subsequently increased the capacity by $ 100.0 million during the third quarter of 2020. as of december 31 , 2020 , the aggregate available amount under our loan facilities was approximately $ 3.0 billion . in january 2021 , we added one additional loan funding facility with a total facility size of $ 250.0 million . during 2020 , we renewed two of our msr notes payable and increased the aggregate committed amounts under those msr notes payable by $ 42.0 million . see “ — liquidity , capital resources and cash flows ” for further information regarding our funding facilities . the extent to which the covid-19 pandemic affects our business , results of operations and financial condition will ultimately depend on future developments , which are highly uncertain and can not be predicted , including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic . see “ risk factors—the covid-19 pandemic has had , and will likely continue to have , an adverse effect on our business , and its ultimate effect on our business and financial results will depend on future developments , which are highly uncertain and can not be predicted , including the scope and duration of the pandemic and actions taken or to be taken by government authorities in response to the pandemic. ” description of certain components of financial data the primary components of our revenue and expenses are described below . our components of revenue loan origination fees and gain on sale of loans , net — this represents all income recognized from the time when a loan is originated until the time when a loan is subsequently sold to an investor and includes cash and non-cash components . each component is described below : gain ( loss ) on sale of loans — net proceeds from the difference between the quoted loan price committed to the client and the price received from the investor at loan sale , net of miscellaneous investor fees charged . loan origination fees — fees collected from the client , which typically include processing , underwriting , funding , credit report , tax service , flood certification and appraisal fees , net of any associated third-party costs . the fair value of the msrs at time of sale — after a loan for which we continue to act as the servicer is sold to an investor , we record the value of the msr at fair value . fair value is estimated based on the present value of future cash flows . we utilize a third-party valuation service to determine this estimated value based on variables such as contractual servicing fees , ancillary fees , estimated prepayment speeds , discount rate and the cost to service . changes in the fair value of irlc and mlhs — when the client accepts an interest rate lock , we record the estimated fair value of the loan . we also evaluate several factors to determine the likelihood of the loan closing and discount the value of any interest rate lock commitments ( “ irlcs ” ) we consider having a lower probability of closing . the probability of the loan ultimately closing changes as the stage of the loan progresses from application to underwriting submission , loan approval and funding . loans that close and are held for sale are commonly referred to as mortgage loans held for sale or “ mlhs. ” mlhs are also recorded at fair value . we typically determine the fair value of our mlhs based on investor committed pricing ; however , we determine the fair value of any mlhs that is not allocated to a commitment based on current delivery trade prices . changes in the fair value of forward delivery commitments — we enter into forward delivery commitments to hedge against changes in the interest rates associated with our irlcs and mlhs . our hedging policies are set by our risk management function and are monitored daily . typically , when the fair value of an irlc or mlhs increases , the fair value of any related forward contract decreases . provision for investor reserves — at the time a loan is sold to an investor , we make certain representations and warranties . if defects are subsequently discovered in these representations and warranties that cause a loan to no longer satisfy the applicable investor eligibility requirements , we may be required to repurchase that loan . we are also required to indemnify several of our investors for borrowers ' prepayments and defaults . we estimate the potential for these losses based on our recent and historical loan repurchase and indemnification experience and our success rate on appeals . we also screen market conditions for any indications of a rise in delinquency rates , which may result in a heightened exposure to loss . early pay-off fees – the amount of gain on sale premium received from the investors who purchase our loans that we must return to those investors when loans sold to them are repaid before a specified point in time . loan servicing and other fees — loan servicing and other fees consist of : loan servicing income — this represents the contractual fees that we earn by servicing loans for various investors . fees are calculated based on a percentage of the outstanding principal balance and are recognized into revenue as related payments are received . other ancillary fees — we may also collect other ancillary fees from the client , such as late fees and nonsufficient funds fees .
| summary of expenses : replace_table_token_10_th 33 salaries , incentive compensation and benefits a breakdown of the components of salaries , incentive compensation and benefits expense is provided below . replace_table_token_11_th salaries , incentive compensation and benefits expense increased by $ 375.6 million or 65.0 % for the year ended december 31 , 2020 compared to the year ended december 31 , 2019. incentive compensation expense increased by $ 254.5 million or 83.8 % for the year ended december 31 , 2020 compared to the year ended december 31 , 2019 due to an increase in variable incentive compensation paid to sales teams based on the increase in our origination volume during that period . salaries expense increased by $ 67.6 million or 31.9 % for the year ended december 31 , 2020 compared to the year ended december 31 , 2019. this is primarily because we hired additional permanent and temporary employees and paid increased variable bonus and overtime to support the increase in our origination and servicing volumes during the year . benefits expense increased by $ 53.5 million or 85.5 % for the year ended december 31 , 2020 compared to the year ended december 31 , 2019 , primarily due to an increase in the fair value of the deferred compensation plan for certain executive employees of the company of $ 30.3 million . prior to becoming a public company , this deferred compensation plan was tied to the company 's net worth , which increased from $ 406.0 million at december 31 , 2019 to $ 688.9 million at september 30 , 2020. additionally , employee profit sharing , a portion of which is tied to the company 's net income , increased $ 9.5 million . lastly , employment taxes increased due to increased personnel expenses . general and administrative a breakdown of general and administrative expense is provided below .
| 7,429 |
the company did not have any potentially dilutive securities outstanding during the years ended december 31 , 2016 , december 31 , 2015 , or december 31 , 2014. holders of unvested shares of the company 's issued and outstanding restricted common stock are eligible to receive non-forfeitable dividends . as such , these unvested shares are considered participating securities as per asc topic 260-10 and therefore are included in the computation of basic net income ( loss ) per common share using the two-class method . upon vesting , restrictions on transfer expire on each share of restricted stock , and each such share of restricted stock represents one unrestricted share of common stock . because the company 's 8.50 % series a cumulative redeemable preferred stock ( the “ series a preferred stock ” ) and 7.625 % series b cumulative redeemable preferred stock ( the “ series b preferred stock ” ) are redeemable at the company 's option for cash only and may convert into shares of common stock only upon a story_separator_special_tag the following discussion should be read in conjunction with our financial statements and the related notes included in item 8 , `` financial statements and supplementary data ” in this annual report on form 10-k. this discussion contains forward-looking statements that involve risks and uncertainties . our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors including , but not limited to , those disclosed in item 1a , “ risk factors ” elsewhere in this annual report on form 10-k and in other documents filed with the sec and otherwise publicly disclosed . please refer to “ forward-looking statements ” contained within this item 7 for additional information . this discussion also contains non-gaap financial measures . please refer to item 6 of this annual report on form 10-k for reconciliations of these non-gaap measures and additional information about why management believes these non-gaap measures are useful for shareholders . for a complete description of our business including our operating policies , investment philosophy and strategy , financing and hedging strategies , and other important information , please refer to item 1 of part 1 of this annual report on form 10-k. executive overview the company and u.s. fixed income markets as a whole faced another challenging environment during 2016. the year began with significant market volatility primarily as a result of concerns over global growth , china 's slowing economy , and plunging oil prices , among other factors . the concerns over economic growth , the impact of the increase of 0.25 % in the u.s. federal funds rate announced in late december 2015 , and the efficacy of central bank stimulus measures caused risk premiums to widen which drove declines in asset prices , including mbs , during the first quarter of 2016. most of the second quarter of 2016 marked a calmer period of lower interest rates and reduced volatility in the credit markets . at the very end of the second quarter , however , markets reacted to unexpected results of the brexit vote , which resulted in a sharp rally of u.s. interest rates as the yield curve flattened . yields on many assets remained at or near their all-time lows . once again , as initial market shocks from the brexit vote subsided , the markets calmed , and most of the third quarter saw a period of increasing interest rates and tightening credit spreads . market conditions during the fourth quarter of 2016 reflected the unexpected results of the u.s. presidential election , which initially roiled the markets , but eventually resulted in a stock market rally as investors anticipated deregulation , lower taxes , inflation , and infrastructure spending . in addition , the federal open market committee ( `` fomc '' ) announced another increase of 0.25 % in the u.s. federal funds rate effective in december 2016 , citing higher home prices , low unemployment , and improving confidence in the economy as signals of a growing u.s. economy . as a result , 2016 ended with interest rates near a twelve-month high and tighter credit spreads overall relative to december 31 , 2015 . 30 the chart below shows the highest and lowest rates during the year ended december 31 , 2016 as well as the rates as of december 31 , 2016 for the indicated u.s. treasury securities : the table below shows examples of credit spreads in basis points for certain investment types in our mbs portfolio as of the end of each quarter since december 31 , 2015 : replace_table_token_8_th in response to the market events discussed above , management made certain decisions regarding leverage , liquidity , and reinvestment throughout 2016. during the first half of 2016 , we focused on building capital in lieu of reinvestment and reducing balance sheet leverage . we also sold certain mbs with significant price volatility that we believed would underperform in the current interest rate environment . as the second half of 2016 began to show more stability , we began selectively reinvesting some of our capital , primarily into agency cmbs and cmbs io , as the yields on these assets rose and the assets exhibited more attractive risk-adjusted returns relative to earlier in 2016. as a result , we increased our leverage during the fourth quarter of 2016 , though it remained lower at 6.3 times shareholders ' equity as of december 31 , 2016 versus 6.5 as of december 31 , 2015. we kept our leverage relatively low , given our perception that the market environment would remain unpredictable and subject to heightened volatility . in addition , we repositioned our hedging portfolio by significantly reducing the average rate and notional amount of derivatives effective during 2017 while increasing hedges effective in 2018 and beyond at overall lower rates than were projected a year ago . story_separator_special_tag management reviews the assumptions and inputs utilized in the valuation techniques . examples of these observable inputs and assumptions include market interest rates , credit spreads , and projected prepayment speeds , among other things . the company compares the price received from its primary pricing service to other prices received from additional third party pricing services and multiple broker quotes for reasonableness . we typically receive a total of three to six bid-side prices from pricing services and brokers for each of our securities ; prices obtained from brokers are not binding on either the broker or us . management does not adjust the prices received , but , for securities on which we receive five or more prices , the high and low prices are excluded from the calculation of the average price . in addition , management reviews the prices received for each security by comparing those prices to actual purchase and sale transactions , our internally modeled prices that are calculated based on observable market rates and credit spreads , and the prices that our borrowing counterparties use in financing our securities . management reviews prices which vary significantly from the pricing service and may exclude such prices from its calculation of fair value . the decision to exclude any price from use in the calculation of the fair values used in our consolidated financial statements is reviewed and approved by management independent of the pricing process . the average of the remaining prices received is used for the fair values included in our consolidated financial statements . if the price of a security is obtained from quoted prices for similar instruments or model-derived valuations whose inputs are observable , the security is classified as a level 2 security . the security is classified as a level 3 security if the inputs are unobservable , resulting in an estimate of fair value based primarily on management 's judgment . as of december 31 , 2016 , less than 3 % of our non-agency mbs ( and less than 1 % of our total mbs ) are level 3 securities . please refer to note 7 of the notes to our consolidated financial statements contained within part ii , item 8 of this annual report on form 10-k for additional information on fair value measurements . amortization of investment premiums . we amortize premiums and accrete discounts associated with the purchase of our mbs into interest income over the projected lives of our securities , including contractual payments and estimated prepayments , using the effective yield method . if prepayments increase ( or are expected to increase ) , we will accelerate the rate of amortization ( accretion ) on the premiums ( discounts ) . conversely , if prepayments decrease ( or are expected to decrease ) , we will decelerate the rate of amortization ( accretion ) on the premiums ( discounts ) . estimates and judgments related to future levels of prepayments are critical to the determination of how much premium or discount to amortize or accrete , and the determination of the rate of amortization or accretion and future levels of prepayment are difficult for management to predict . with respect to both rmbs and cmbs , mortgage prepayment expectations can change based on how changes in current and projected interest rates impact a borrower 's likelihood of refinancing as well as other factors , including but not limited to real estate prices , borrowers ' credit quality , changes in the stringency of loan underwriting practices , and lending industry capacity constraints . with respect to rmbs , modifications to existing government refinance programs , or the implementation of new programs can have a significant impact on the rate of prepayments . further , gse buyouts of loans in imminent risk of default , loans that have been modified , or loans that have defaulted will generally be reflected as prepayments on our securities and increase the uncertainty around management 's estimates . we utilize various third party services to assist in estimating projected prepayments on our mbs . we review these estimates monthly and compare the results to any available market consensus prepayment speeds . we also consider historical prepayment rates and current market conditions to assess the reasonableness of the prepayment rates estimated by the third party service . actual and anticipated prepayment experience is reviewed monthly and effective yields are adjusted for differences between the previously estimated future prepayments and the amounts actually received as well as changes in estimated future prepayments . other-than-temporary impairments . when the fair value of an available-for-sale security is less than its amortized cost as of the reporting date , the security is considered impaired . we assess our securities for impairment on at least a quarterly basis and determine if the impairments are either temporary or other-than-temporary . we assess our ability to hold any agency mbs or non-agency mbs with an unrealized loss until the recovery in its value . our ability to hold any such mbs is based on our current investment strategy and significance of the related investment as well as our current leverage and anticipated liquidity . although fannie mae and freddie mac are not explicitly backed by the full faith and credit of the united states , given their 33 guarantee and commitments for support received from the treasury as well as the credit quality inherent in agency mbs , we do not typically consider any of the unrealized losses on our agency mbs to be credit-related . for our non-agency mbs , we review the credit ratings of these mbs and the seasoning of the mortgage loans collateralizing these securities as well as the estimated future cash flows , which include any projected losses , in order to evaluate whether we believe any portion of the unrealized loss at the reporting date is related to credit losses .
| results of operations the discussions below include both gaap and non-gaap financial measures which management utilizes in its internal analysis of financial and operating performance . please read the section `` non-gaap financial measures '' in item 6 of this annual report on form 10-k for additional important information and for reconciliations of these measures to gaap measures . for the year ended december 31 , 2016 , we recorded comprehensive income of $ 14.1 million , which consisted of net income to common shareholders of $ 33.9 million and other comprehensive loss of $ ( 19.8 ) million . net income to common shareholders consisted substantially of net interest income of $ 66.7 million , loss on sale of investments , net of $ ( 4.2 ) million , loss on derivative instruments , net of $ ( 5.6 ) million , general and administrative expenses of $ ( 14.7 ) million , and preferred dividends of $ ( 9.2 ) million . core net operating income to common shareholders , a non-gaap measure management uses as an estimate of the net interest earnings of the company 's portfolio after operating expenses , was $ 40.9 million for the year ended december 31 , 2016 , which consisted substantially of adjusted net interest income , a non-gaap measure , of $ 64.0 million , general and administrative expenses of $ ( 14.7 ) million , and preferred dividends of $ ( 9.2 ) million . the following sections provide more information on these items and others on our consolidated statements of comprehensive income ( loss ) . net interest income and net interest spread the tables below present gaap net interest income and related net interest spread for our interest-earning assets and interest-bearing liabilities and also present adjusted net interest income and adjusted net interest spread , which are non-gaap measures .
| 7,430 |
prior to the exercise of its option , sylvan ventures had acquired a 41 % stake in walden for $ story_separator_special_tag the statements contained herein include forward-looking statements . forward-looking statements include information about possible or assumed results of operations , business strategies , financing plans , competitive position and potential growth opportunities . forward-looking statements include all statements that are not historical facts and are generally accompanied by words such as may , will , intend , anticipate , believe , estimate , expect , should or similar expressions . these statements also relate to the company 's contingent payment obligations relating to acquisitions , future capital requirements , potential acquisitions and the company 's future development plans and are based on current expectations . forward-looking statements involve various risks , uncertainties and assumptions . the company 's actual results may differ materially from those expressed in these forward-looking statements . future events and actual results could differ materially from those set forth in the forward-looking statements as a result of many factors . these factors may include , without limitation : the company 's ability to continue to make acquisitions and to successfully integrate and operate acquired businesses ; changes in student enrollment ; the development and expansion of the franchise system and the effect of new technology applications in the educational services industry ; failure to maintain or renew required regulatory approvals , accreditations or authorizations ; the company 's ability to effectively manage business growth ; possible increased competition from other educational service providers ; the effect on the business and results of operations of fluctuations in the value of foreign currencies ; and the many risks associated with the operation of an increasingly global business , including complex legal structures , foreign currency , legal , tax and economic risks and the risk of changes in the business climates in the markets where the company operates . these forward-looking statements are based on estimates , projections , beliefs and assumptions of management and speak only as of the date made and are not guarantees of future performance . overview the company continued to grow during 2002 through focusing on expanding opportunities in the educational services industry . the company increased its activity in the post secondary market with the integration and expansion of universities acquired in 2000 , 2001 and 2002. the international universities segment continues to operate the largest global network of international universities with full local accreditation through its network of six universities . growth in online higher education occurred through increased canter enrollments and the continued integration with walden e-learning , inc. the company 's k-12 education services segment also displayed continued strong growth with the expansion of the learning centers network and the addition of contracts and services within education solutions . the company also continued to focus on opportunities created by technology applications in the education and instruction marketplaces through the investments and operations of sylvan ventures . critical accounting policies and estimates the company 's accounting policies are more fully described in note 2 of notes to consolidated financial statements . as disclosed in note 1 of notes to consolidated financial statements , the preparation of financial statements in conformity with accounting principles generally accepted in the united states requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes . future events and their effects can not be determined with absolute certainty . therefore , the determination of estimates requires the exercise of judgment . actual results inevitably will differ from those estimates , and such differences may be material to the financial statements . the company believes the following key accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements and are critical to its business operations and the understanding of its results of operations . revenue recognition . revenue from the sale of educational products is generally recognized when shipped . revenue from educational services are recognized in the period services are provided . as the company continues to integrate educational product and service businesses , the resulting business structure may impact the revenue recognition of product sales to affiliated educational service providers . educational services provided by the company include results-oriented english language instruction modules that are based on desired proficiency levels . the related revenue is recognized ratably over the estimated period required to complete the modules , which ranges from 8 months to 11 months , depending on the location that the services are provided . the company estimates the period of instruction based on an analysis of actual historical activity by location . if the historical data the company uses to calculate these estimates does not properly reflect future usage , revenue recognized by 21 the company may be negatively impacted . additionally , if usage trends change over time , the company may have significant fluctuations in recognized revenues in the future . a portion of the company 's revenue is derived from fixed-price contracts with school districts , which are accounted for under the proportional performance method . contract revenue is recognized ratably over the term of the contract and expenses are recognized in an amount equal to the ratio of estimated total expenses to the total contract value . if the company does not accurately estimate the resources required , does not manage its contracts properly within the planned periods of time , or does not satisfy its obligations under the contracts , future margins may be negatively impacted or losses on existing contracts may need to be recognized . goodwill and other intangible assets . during each of the years presented , the company acquired certain businesses accounted for using the purchase method of accounting . a portion of the purchase prices for these businesses was allocated to identifiable tangible and intangible assets and assumed liabilities based on estimated fair values at the dates of acquisitions . story_separator_special_tag accounts and notes receivable . the company 's accounts receivable consist primarily of installment payments due from parents and students for tuition at learning centers and universities ; related fees that are payable over the course of payment plans of up to nine months ; and amounts due from franchisees for franchise fees , franchise royalties and didactic material purchases . notes receivable consist primarily of loans to franchisees , which are generally collateralized . the company routinely makes estimates of the collectibility of its accounts and notes receivable . the company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers and franchisees to make required payments . the company estimates the amount of the required allowance by reviewing the status of past-due receivables and analyzing historical bad debt trends . actual collection experience has not varied significantly from estimates , due primarily to credit policies , collection experience , and a lack of concentration of amount receivable . if the financial condition of the company 's customers and franchisees were to deteriorate , resulting in an impairment of their ability to make payments , additional allowances may be required . story_separator_special_tag $ 20.4 million ) , ntu ( $ 1.8 million ) , esylvan ( $ 2.7 million ) , and connections academy ( $ 0.7 million ) . in comparison , the 2001 fiscal year revenues were generated solely by esylvan . walden 's revenues represent 11 months of activity as sylvan ventures increased its equity interest in walden to a majority stake in february 2002. prior to february 2002 , walden was accounted for under the equity method . ntu 's revenues represent two months of revenues as the ntu purchase closed in november 2002. operating revenues for sylvan ventures represents 4 % of total revenues of the company for the 2002 fiscal year . direct costs . total direct costs of revenues increased $ 111.9 million , or 26 % , to $ 541.3 million for the 2002 fiscal year from $ 429.4 million for the 2001 fiscal year . excluding the impact of goodwill amortization in the 2001 fiscal year of $ 11.8 million , direct costs increased $ 123.6 million , or 30 % , for the 2002 fiscal year . direct costs as a percentage of total revenues increased to 90 % in the 2002 fiscal year from 88 % in the 2001 fiscal year . excluding the impact of goodwill amortization , direct costs as a percentage of revenues were 86 % in the 2001 fiscal year . k-12 education services expenses increased $ 24.0 million to $ 173.1 million , or 80 % of k-12 education services revenue for the 2002 fiscal year , compared to $ 149.1 million , or 81 % of k-12 education services revenue for the 2001 fiscal year . approximately $ 20.6 million of the 2002 fiscal year increase related to expenses incurred in company-owned learning centers due to the acquisition of 36 franchised learning centers , the opening of 2 new centers and costs associated with higher revenues at existing company-owned centers . international expenses , primarily related to schülerhilfe , increased by $ 2.4 million . additionally , there was a $ 3.8 million increase in franchise services support costs in the 2002 fiscal year as a result of growth in franchised centers from the 2001 fiscal year , costs related to ivy prep and increased costs related to international development . these expense increases were partially offset by a decrease in contract-based expenses of $ 1.6 million in the 2002 fiscal year compared to the 2001 fiscal year , primarily due to improved cost controls on existing business and a lower number of public school contracts . online higher education expenses increased by $ 2.8 million to $ 38.0 million , or 72 % of online higher education revenue for the 2002 fiscal year , compared to $ 35.2 million , or 79 % of online higher education revenue for the 2001 fiscal year . the decrease in expenses as a percentage of revenue for the 2002 year was primarily due to the adoption of statement no . 142 in 2002 , which discontinued the amortization of goodwill . the amortization of goodwill related to the canter acquisition was $ 3.1 million in the 2001 fiscal year , or 7 % of online higher education revenue for the 2001 fiscal year . this decrease in expenses as a percentage of revenue was partially offset by an increase in expenses as a percentage of revenue due to the inclusion of operating results of onlinelearning.net , inc. in the 2002 fiscal year . the acquisition of onlinelearning.net , inc. , effective july 1 , 2001 , resulted in lower margin revenue in the fiscal 2002 year . 25 international universities expenses increased by $ 59.4 million to $ 271.0 million , or 89 % of international universities revenue for the 2002 fiscal year , compared to $ 211.6 million , or 89 % of international universities revenue for the 2001 fiscal year . the increase in expenses reflects i ) higher expenses , particularly labor and marketing expenses given the higher volume of enrollments and operating activities at the universities compared to the 2001 fiscal year , ii ) the full year effect of the acquisition of the controlling interest in esce , which occurred in the fourth quarter of 2001 and the acquisitions of controlling interests in marbella and glion , which occurred in the first and third quarters of 2002 , respectively , and iii ) an increase in overhead costs , including staffing expenses , as a result of the increase in the university business . included in the fiscal 2002 expenses was the write-off of $ 3.5 million of deferred costs related to the terminated initial public offering of the international universities segment and one terminated international universities acquisition . excluding these charges , international universities expenses represented 88 % of international universities revenues for the 2002 fiscal year .
| results of operations revenues generated by sylvan 's five business segments are described as follows : k-12 education services primarily earns franchise royalties , franchise sales fees , company-owned learning center revenues and contract-based revenues from providing supplemental remedial education services to public and non-public schools ; online higher education primarily earns revenues from providing teacher training products and distance-learning instructional services ; international universities earns tuition and related fees paid by the students at its universities , in addition to franchise royalties , company-owned center revenues and franchise sales fees related to wsi operations outside of spain ; english language instruction-spain earned franchise royalties , company-owned center revenues and franchise sales fees related to the wsi business in spain prior to the sale of the segment ; and sylvan ventures primarily earns tuition and related fees from the students of walden , ntu and esylvan . 23 the following table sets forth the percentage relationships of operating revenues and direct costs for each segment , as well as certain income statement line items expressed as a percentage of total revenues for the years ended december 31 : replace_table_token_5_th comparison of results for the year ended december 31 , 2002 to results for the year ended december 31 , 2001. revenues . total revenues increased by $ 118.7 million , or 24 % , to $ 604.0 million for the year ended december 31 , 2002 ( the 2002 fiscal year ) from $ 485.3 million for the year ended december 31 , 2001 ( the 2001 fiscal year ) . this revenue increase was primarily driven by increases in tuition and enrollment at universities in the international universities segment , as well as acquisitions of learning centers and same center revenue growth in the k-12 education services segment . k-12 education services revenue increased by $ 30.8 million , or 17 % , to $ 215.3 million for the 2002 fiscal year compared to the 2001 fiscal year .
| 7,431 |
see “ forward-looking statements ” at the beginning of this annual report on form 10-k. in this document , the words “ we , ” “ our , ” “ ours ” and “ us ” refer only to hollyfrontier and its consolidated subsidiaries or to hollyfrontier or an individual subsidiary and not to any other person with certain exceptions . generally , the words “ we , ” “ our , ” “ ours ” and “ us ” include hep and its subsidiaries as consolidated subsidiaries of hollyfrontier , unless when used in disclosures of transactions or obligations between hep and hollyfrontier or its other subsidiaries . this document contains certain disclosures of agreements that are specific to hep and its consolidated subsidiaries and do not necessarily represent obligations of hollyfrontier . when used in descriptions of agreements and transactions , “ hep ” refers to hep and its consolidated subsidiaries . overview we are principally an independent petroleum refiner that produces high-value refined products such as gasoline , diesel fuel , jet fuel , specialty lubricant products , and specialty and modified asphalt . we own and operate refineries having a combined nameplate crude oil processing capacity of 457,000 barrels per day that serve markets throughout the mid-continent , southwest and rocky mountain regions of the united states . our refineries are located in el dorado , kansas ( the el dorado refinery ) , tulsa , oklahoma ( the tulsa refineries ) , which comprise two production facilities , the tulsa west and east facilities , artesia , new mexico , which operates in conjunction with crude , vacuum distillation and other facilities situated 65 miles away in lovington , new mexico ( collectively , the navajo refinery ) , cheyenne , wyoming ( the cheyenne refinery ) and woods cross , utah ( the woods cross refinery ) . on october 29 , 2016 , our wholly-owned subsidiary , 9952110 canada inc. , entered into a share purchase agreement with suncor to acquire 100 % of the outstanding capital stock of pcli . the acquisition closed on february 1 , 2017. cash consideration paid was $ 862.1 million , or $ 1.125 billion in canadian dollars . pcli is a canadian-based producer of base oils with a plant having 15,600 bpd of lubricant production capacity that is located in mississauga , ontario . the facility is downstream integrated from base oils to finished lubricants and produces a broad spectrum of specialty lubricants and white oils that are distributed to end customers worldwide through a global sales network with locations in canada , the united states , europe and china . for the year ended december 31 , 2017 , net income attributable to hollyfrontier stockholders was $ 805.4 million compared to a net loss of $ 260.5 million and net income $ 740.1 million for the years ended december 31 , 2016 , and 2015 , respectively . overall gross refining margins per barrel sold for 2017 increased 42 % over the year ended december 31 , 2016 , which was due principally to higher crack spreads throughout 2017. included in our financial results for the current year was a long-lived asset impairment charge , offset by an inventory reserve adjustment . pursuant to the 2007 energy independence and security act , the epa promulgated the rfs regulations , which increased the volume of renewable fuels mandated to be blended into the nation 's fuel supply . the regulations , in part , require refiners to add annually increasing amounts of “ renewable fuels ” to their petroleum products or purchase credits , known as rins , in lieu of such blending . compliance with rfs regulations significantly increases our cost of products sold , with rins costs totaling $ 288.4 million for the year ended december 31 , 2017 , which is net of the $ 57.7 million cost reduction resulting from reinstatement of 2016 rins as described in note 8 “ inventories ” in the notes to consolidated financial statements . outlook the profitability of our refining business is largely driven by our operational reliability and crack spreads ( the price difference between refined products and inputs such as crude oil ) , which are driven by the supply and demand of refined product markets . in 2017 , crack spreads showed material improvement over 2016 as global and north american refined product market supply and demand tightened . going into 2018 , we are anticipating continued demand growth for refined products and are optimistic about margins . additionally , we expect to benefit from widening crude differentials on some of our key inputs in the refining segment : cushing-based crude oils and canadian heavy crude oils . our lubricants business is driven by secular demand for higher quality lubricants and greases , cyclical macroeconomic factors and our own operational reliability . in 2017 , we acquired and integrated the petro-canada lubricants business into our business and going into 2018 , we anticipate strong earnings growth based on continued economic growth as well as the execution of our organic growth strategy . 36 table of content hep 's business is largely driven by the operational reliability of our refineries and contractual tariff increases . based on our volume forecasts , we expect hep to be able to grow its limited partner distribution approximately 4 % with a distribution coverage ratio of roughly 1.0x . a more detailed discussion of our financial and operating results for the years ended december 31 , 2017 , 2016 and 2015 is presented in the following sections . results of operations financial data replace_table_token_15_th 37 table of content other financial data replace_table_token_16_th ( 1 ) earnings before interest , taxes , depreciation and amortization , which we refer to as “ ebitda , ” is calculated as net income ( loss ) attributable to hollyfrontier stockholders plus ( i ) interest expense , net of interest income , ( ii ) income tax provision , and ( iii ) depreciation and amortization . story_separator_special_tag results of operations – year ended december 31 , 2017 compared to year ended december 31 , 2016 summary net income attributable to hollyfrontier stockholders for the year ended december 31 , 2017 was $ 805.4 million ( $ 4.54 per basic and $ 4.52 per diluted share ) , a $ 1,065.8 million increase compared to a net loss attributable to hollyfrontier stockholders of $ 260.5 million ( $ 1.48 per basic and diluted share ) for the year ended december 31 , 2016 . net income increased due principally to an increase in refining segment sales volumes and gross refining margins and the inclusion of earnings attributable to the operations of our recently acquired petro-canada lubricants business . additionally , we recorded long-lived asset impairment charges totaling $ 23.2 million for the year ended december 31 , 2017 compared to goodwill and long-lived asset impairment charges totaling $ 654.1 million for the year ended december 31 , 2016 . for the year ended december 31 , 2017 , lower of cost or market inventory reserve adjustments increased pre-tax earnings by $ 108.7 million compared to $ 291.9 million for the year ended december 31 , 2016 . refinery gross margins for the year ended december 31 , 2017 increased to $ 11.56 per barrel sold from $ 8.16 for the year ended december 31 , 2016 . during 2017 , our cheyenne refinery and woods cross refinery were each granted a one-year small refinery exemption from the epa at which time we recorded a $ 30.5 million and $ 27.3 million , respectively , decrease to our cost of products sold , reflecting the reinstatement of rins previously expensed in 2016. the tax cut and jobs act was enacted on december 22 , 2017 , resulting in a tax benefit of $ 307.1 million for the year ended december 31 , 2017 . 40 table of content sales and other revenues sales and other revenues increased 35 % from $ 10,535.7 million for the year ended december 31 , 2016 to $ 14,251.3 million for the year ended december 31 , 2017 due to a year-over-year increase in sales prices and higher product sales volumes . sales and other revenues for the years ended december 31 , 2017 and 2016 include $ 77.2 million and $ 68.9 million , respectively , in hep revenues attributable to pipeline and transportation services provided to unaffiliated parties . additionally , the operations of our petro-canada lubricants business contributed $ 1,125.3 million in sales and other revenues to our lubricants and specialty products segment for the year ended december 31 , 2017 . cost of products sold total cost of products sold increased 34 % from $ 8,474.0 million for the year ended december 31 , 2016 to $ 11,359.1 million for the year ended december 31 , 2017 , due principally to higher crude oil costs and higher sales volumes of products . additionally , cost of products sold reflects a $ 108.7 million benefit that is attributable to a decrease in the lower of cost or market reserve for the year ended december 31 , 2017 , a $ 183.3 million decrease compared to $ 291.9 million for the same period of last year . the reserve at december 31 , 2017 is based on market conditions and prices at that time . additionally , we recorded a $ 30.5 million and $ 27.3 million rins cost reduction during 2017 as a result of the reinstatement of previously utilized rins following our cheyenne refinery and woods cross refinery small refinery exemptions , respectively . gross refinery margins gross refinery margin per barrel sold increased 42 % from $ 8.16 for the year ended december 31 , 2016 to $ 11.56 for the year ended december 31 , 2017 . this was due to the effects of an increase in the average per barrel sold sales price , partially offset by increased crude oil and feedstock prices during the current year . gross refinery margin does not include the non-cash effects of lower of cost or market inventory valuation adjustments , goodwill and asset impairment charges or depreciation and amortization . see “ reconciliations to amounts reported under generally accepted accounting principles ” following item 7a of part ii of this form 10-k for a reconciliation to the income statement of sale prices of products sold and cost of products purchased . operating expenses operating expenses , exclusive of depreciation and amortization , increased 27 % from $ 1,018.8 million for the year ended december 31 , 2016 to $ 1,294.2 million for the year ended december 31 , 2017 due principally to $ 208.7 million in costs attributable to the operations of our petro-canada lubricants business and higher purchased fuel costs compared to 2016 . for the years ended december 31 , 2017 and 2016 , operating expenses include $ 137.6 million and $ 90.4 million , respectively , in costs attributable to hep operations . selling , general and administrative expenses selling , general and administrative expenses increased 111 % from $ 125.6 million for the year ended december 31 , 2016 to $ 264.9 million for the year ended december 31 , 2017 , due principally to $ 127.7 million in costs attributable to the operations of our petro-canada lubricants business and related acquisition and integration costs . incremental direct acquisition and integration costs of our petro-canada lubricants business totaled $ 27.9 million and $ 13.4 million for the years ended december 31 , 2017 and 2016 , respectively . for the years ended december 31 , 2017 and 2016 , selling , general and administrative expenses include $ 11.9 million and $ 10.1 million , respectively , in costs attributable to hep operations . depreciation and amortization expenses depreciation and amortization increased 13 % from $ 363.0 million for the year ended december 31 , 2016 to $ 409.9 million for the year ended december 31 , 2017 .
| summary net loss attributable to hollyfrontier stockholders for the year ended december 31 , 2016 was $ 260.5 million ( $ 1.48 per basic and diluted share ) , a $ 1,000.6 million decrease compared to net income attributable to hollyfrontier stockholders of $ 740.1 million ( $ 3.91 per basic and $ 3.90 per diluted share ) for the year ended december 31 , 2015 . net income decreased due principally to non-cash goodwill and long-lived asset impairment charges of $ 309.3 million and $ 344.8 million , respectively , and a year-over-year decrease in refining margins and sales volumes , net of the effects of a year-over-year change in lower of cost or market inventory reserve adjustments . for the year ended december 31 , 2016 , lower of cost or market inventory reserve adjustments increased pre-tax earnings by $ 291.9 million compared to a pre-tax earnings decrease of $ 227.0 million for the year ended december 31 , 2015 . collectively , the impairment charges , net of the lower of cost or market valuation benefit , reduced 2016 pre-tax income by $ 362.1 million . refinery gross margins for the year ended december 31 , 2016 decreased to $ 8.16 per barrel sold from $ 15.88 for the year ended december 31 , 2015 . sales and other revenues sales and other revenues decreased 20 % from $ 13,237.9 million for the year ended december 31 , 2015 to $ 10,535.7 million for the year ended december 31 , 2016 due to a year-over-year decrease in sales prices and lower product sales volumes . sales and other revenues for the years ended december 31 , 2016 and 2015 include $ 68.9 million and $ 66.7 million , respectively , in hep revenues attributable to pipeline and transportation services provided to unaffiliated parties .
| 7,432 |
77 the change in presentation and the reclassification for the years ended december 31 , 2017 and 2016 had no impact on operating income or net income and are summarized below ( in millions ) : replace_table_token_33_th reclassification of investments story_separator_special_tag the following discussion should be read in conjunction with our consolidated financial statements , including the notes to those statements , included elsewhere in this annual report on form 10-k , and the section entitled `` special note regarding forward-looking statements '' in this annual report on form 10-k. as discussed in more detail in the section entitled `` special note regarding forward-looking statements , '' this discussion contains forward-looking statements which involve risks and uncertainties . our actual results may differ materially from the results discussed in the forward-looking statements . factors that might cause those differences include those discussed in `` risk factors '' and elsewhere in this annual report on form 10-k. we evaluate certain operating and financial measures on both an as-reported and constant-currency basis . we calculate constant currency by converting our current-year period financial results for transactions recorded in currencies other than u.s. dollars using the corresponding prior-year period monthly average exchange rates rather than the current-year period monthly average exchange rates . overview our mission is to help people experience the world . we aim to achieve our mission to help people experience the world through global leadership in online travel and restaurant reservation and related services by : providing consumers with the best choices and prices at any time , in any place , on any device ; making it easy for people to find , book and experience their travel desires ; and providing platforms , tools and insights to our business partners to help them be successful . we operate six primary brands : booking.com - the world 's leading brand for booking online accommodation reservations , based on room nights booked . kayak - a leading online meta-search service allowing consumers to easily search and compare travel itineraries and prices , including airline ticket , accommodation and rental car reservation information , from hundreds of travel websites at once . priceline - a leading hotel , rental car , airline ticket and vacation package online reservation service in north america . agoda - a leading online accommodation reservation service catering primarily to consumers in the asia-pacific region . rentalcars.com - a leading online worldwide rental car reservation service . opentable - a leading online provider of restaurant reservation and information services to consumers and restaurant reservation management and customer acquisition services to restaurants . our results include the momondo group , fareharbor and hotelscombined since they were acquired in july 2017 , april 2018 and november 2018 , respectively . we refer to our company and all of our subsidiaries and brands collectively as `` booking holdings , '' the `` company , '' `` we , '' `` our '' or `` us . '' our business is driven primarily by international results , which consist of the results of booking.com , agoda and rentalcars.com and the international businesses of kayak and opentable . this classification is independent of where the consumer resides , where the consumer is physically located while using our services or the location of the travel service provider or restaurant . for example , a reservation made through booking.com at a hotel in new york by a consumer in the united states is part of our international results . during the year ended december 31 , 2018 , our international business ( the substantial majority of which is generated by booking.com ) represented approximately 89 % of our consolidated revenues . a significant majority of our revenues , including a significant majority of our international revenues , is earned in connection with facilitating accommodation reservations . see note 16 to the consolidated financial statements for more geographic information . we derive substantially all of our revenues and , prior to january 1 , 2018 , gross profit from the following sources : commissions earned from facilitating reservations of accommodations , rental cars and other travel services on an agency basis ; travel reservation commissions and transaction net revenues , credit card processing rebates and customer processing fees , in each case in connection with our merchant transactions ; 36 advertising revenues primarily earned by kayak from sending referrals to online travel companies ( `` otcs '' ) and travel service providers , as well as from advertising placements on kayak 's platforms ; reservation revenues paid by restaurants for diners seated through opentable 's online reservation services , subscription fees for restaurant reservation management services provided by opentable ; and ancillary revenues including travel insurance-related revenues and global distribution system ( `` gds '' ) reservation booking fees , in each case related to certain of our travel services . our priceline brand offers merchant name your own price ® opaque travel services , which were previously recorded in revenue on a `` gross '' basis with the amount remitted to the travel service providers reported as cost of revenues . under the current revenue recognition accounting standard ( `` the current revenue standard '' ) , name your own price ® revenues are reported on a net basis with the amount remitted to the travel service providers recorded as an offset in merchant revenues . therefore , for periods beginning after december 31 , 2017 , we no longer present `` cost of revenues '' or `` gross profit '' in our consolidated statements of operations . total revenues for periods beginning after december 31 , 2017 are comparable to gross profit reported in prior periods . for further information on the adoption of the current revenue standard , see note 2 to the consolidated financial statements . trends over the last several years we have experienced significant growth in our accommodation reservation services . story_separator_special_tag we believe that adding these types of service offerings will benefit our customers and partners , as well as our gross bookings , room night and earnings growth rates . however , this results in additional expenses for personnel , payment processing , customer chargebacks ( including those related to fraud ) and other expenses related to these transactions , which are recorded in `` personnel '' and `` sales and other expenses '' in our statements of operations , as well as associated incremental revenues in the form of credit card rebates , for example , which are recorded in `` merchant revenues . '' as this business continues to grow , we may experience a significant increase in these expenses that may not be fully offset by an increase in associated incremental revenues , which would negatively impact our operating margins . we compete globally with both online and traditional providers of travel and restaurant reservation and related services . the markets for the services we offer are intensely competitive , constantly evolving and subject to rapid change , and current and new competitors can launch new services at relatively low cost . some of our current and potential competitors , such as google , apple , alibaba , tencent , amazon and facebook , have significantly more customers or users , consumer data and financial and other resources than we do , and they may be able to leverage other aspects of their businesses ( e.g. , search or mobile device businesses ) to enable them to compete more effectively with us . for example , google has entered various aspects of the online travel market , including by establishing a flight meta-search product ( google flights ) and a hotel meta-search product ( google hotel ads ) that are growing rapidly , as well as its `` book on google '' reservation functionality and its google trips app . our markets are also subject to rapidly changing conditions , including technological developments , consumer behavior changes , regulatory changes and travel service provider consolidation . we expect these trends to continue . for example , we have experienced a significant shift of both direct and indirect business to mobile platforms and our advertising partners are also seeing a rapid shift of traffic to mobile platforms . advertising and distribution opportunities may be more limited on mobile devices given their smaller screen sizes . in addition , the revenue earned on a mobile transaction may be less than a typical desktop transaction due to different consumer purchasing patterns . for example , accommodation reservations made on a mobile device typically are for shorter lengths of stay , have lower adrs and are not made as far in advance . for more detail regarding the competitive trends and risks we face , see part i item 1 business - `` competition , '' part i item 1a risk factors - `` intense competition could reduce our market share and harm our financial performance. `` and `` consumer adoption and use of mobile devices creates new challenges and may enable device companies such as google and apple to compete directly with us. `` and `` we may not be able to keep up with rapid technological or other market changes. `` although we believe that providing an extensive collection of properties , excellent customer service and an intuitive , easy-to-use consumer experience are important factors influencing a consumer 's decision to make a reservation , for many consumers , particularly in certain markets , the price of the travel service is the primary factor determining whether a consumer will book a reservation . as a result , it is increasingly important to offer travel services , such as accommodation reservations , at competitive prices , whether through discounts , coupons , closed-user group rates or loyalty programs , or otherwise . these initiatives may result in lower revenue as a percentage of gross bookings . discounting and couponing coupled with a high degree of consumer shopping behavior is particularly common in asian markets . in some cases , our competitors are willing to make little or no profit on a transaction , or offer travel services at a loss , in order to gain market share . we have established widely used and recognized e-commerce brands through marketing and promotional campaigns . both our performance and brand marketing expenses have increased significantly in recent years , and we expect our performance and brand marketing expenses to continue to increase . for the years ended december 31 , 2018 , 2017 and 2016 , our total performance marketing expense was approximately $ 4.4 billion , $ 4.2 billion and $ 3.5 billion , respectively , primarily related to the use of online search engines ( primarily google ) , meta-search and travel research services and affiliate marketing to generate traffic to our websites . growth of some of these channels has slowed . we also invested $ 509 million , $ 435 million 38 and $ 327 million in brand marketing for the years ended december 31 , 2018 , 2017 and 2016 , respectively , primarily related to costs associated with producing and airing television advertising , online video advertising ( for example , on youtube and facebook ) , online display advertising and other brand marketing . we intend to continue a strategy of promoting brand awareness through both online and offline marketing efforts , including by expanding brand campaigns into additional markets , which may significantly increase our brand marketing expenses . we have observed increased brand marketing by otcs , meta-search services and travel service providers , which may make our brand marketing efforts more expensive and less effective .
| results of operations year ended december 31 , 2017 compared to year ended december 31 , 2016 operating and statistical metrics gross bookings resulting from reservations of accommodation room nights , rental car days and airline tickets made through our agency and merchant models for the years ended december 31 , 2017 and 2016 were as follows ( numbers may not total due to rounding ) : replace_table_token_14_th gross bookings increased by 19.3 % for the year ended december 31 , 2017 , compared to the year ended december 31 , 2016 ( growth on a constant-currency basis was approximately 19 % ) , almost entirely due to growth of 20.9 % in accommodation room night reservations . accommodation adrs on a constant-currency basis were relatively unchanged for the year ended december 31 , 2017 , compared to the year ended december 31 , 2016. for the year ended december 31 , 2017 , compared to the year ended december 31 , 2016 , foreign exchange rate fluctuations slightly benefited gross bookings growth in u.s. dollars . we believe that unit growth rates and total gross bookings on a constant-currency basis , which excludes the impact of foreign exchange rate fluctuations , are important measures to understand the fundamental performance of the business . agency gross bookings are derived from travel-related transactions where we do not receive payments from travelers for the travel services provided . agency gross bookings increased by 18.9 % for the year ended december 31 , 2017 , compared to the year ended december 31 , 2016 , almost entirely due to the growth in gross bookings from booking.com agency retail accommodation room night reservations . merchant gross bookings are derived from services where we receive payments from travelers for the travel services provided .
| 7,433 |
as previously disclosed , as a result of the market disruptions experienced related to the unprecedented conditions arising in connection with the onset of the covid-19 pandemic in early 2020 , during the first and second quarters of 2020 we engaged in asset sales and took other actions that significantly changed our asset composition . in particular , we sold all of our agency and legacy non-agency mbs investments , and substantially reduced our investments in msr-related assets , rpl/npl mbs and crt securities . as a result of these actions , our primary investment assets as of december 31 , 2020 , are comprised of our residential whole loans . during the second quarter , to further help stabilize our financial position and liquidity , we entered into a $ 500 million senior secured credit agreement . in addition , during the second quarter , in conjunction with our previously disclosed exit from forbearance arrangements with lenders , we entered into several new asset-backed financing arrangements and renegotiated financing arrangements for certain assets with existing lenders , which together resulted in us essentially refinancing the majority of our investment portfolio . during the third and fourth quarters of 2020 , we continued to make significant progress on initiatives to lower the cost of financing our investments with more durable forms of borrowing . for example , we completed a $ 390 million securitization transaction of non-qm assets in early september , which generated $ 92.7 million of additional liquidity and lowered the funding rate for the associated assets by approximately 165 basis points . in addition , during the fourth quarter we completed two non-qm securitizations totaling $ 951.6 million , which generated $ 214.6 million of additional liquidity and lowered the funding rate for the associated assets by approximately 193 basis points . additionally , during the fourth quarter we undertook steps to reduce our exposure to higher cost forms of financing that we had obtained in connection with our exit from forbearance in the second quarter . on october 9 , 2020 , we repaid $ 400 million of the principal outstanding on the senior secured loan , and the remaining balance of this facility of $ 81.25 million was repaid on october 30 , 2020. the repayments were made without penalty or yield maintenance . subsequent to the end of the fourth quarter , we completed a securitization solely consisting of $ 217.5 million of business purpose rental loans , generating approximately $ 48.4 million of additional liquidity . as the weighted average coupon of the bonds sold was approximately 1.06 % , this transaction is expected to lower the funding rate of the underlying assets by more than 150 basis points . in addition , on january 6 , 2021 , we redeemed all of our outstanding $ 100 million aggregate principal amount of 8.00 % senior notes due 2042. in connection with this redemption , we recorded in our fourth quarter interest expense a non-cash charge of approximately $ 3.1 million representing remaining unamortized deferred expenses incurred when the senior notes were originally issued in 2012. at december 31 , 2020 , we had total assets of approximately $ 6.9 billion , of which $ 5.3 billion , or 77 % , represented residential whole loans acquired through interests in certain trusts established to acquire the loans . our purchased performing loans , which as of december 31 , 2020 comprised approximately 65 % of our residential whole loans , include : ( i ) loans to finance ( or refinance ) one-to four-family residential properties that are not considered to meet the definition of a “ qualified mortgage ” in accordance with guidelines adopted by the consumer financial protection bureau ( or non-qm loans ) , ( ii ) short-term business purpose loans collateralized by residential properties made to non-occupant borrowers who intend to rehabilitate and sell the property for a profit ( or rehabilitation loans or fix and flip loans ) , ( iii ) loans to finance ( or refinance ) non-owner occupied one-to four-family residential properties that are rented to one or more tenants ( or single-family rental loans ) , and ( iv ) previously originated loans secured by residential real estate that is generally owner occupied ( or seasoned performing loans ) . in addition , at december 31 , 2020 , we had approximately $ 161.0 million in investments in residential mortgage securities , which represented approximately 2 % of our total assets . at such date , our portfolio included $ 104.2 million of crt securities and $ 56.8 million of non-agency mbs which were primarily comprised of rpl/npl mbs . at december 31 , 2020 , our investments in msr-related assets were $ 239.0 million , or 3 % of our total assets . our msr-related assets include term notes whose cash flows are considered to be largely dependent on msr collateral and loan participations to provide financing to mortgage originators that own msrs . our remaining investment-related assets , which represent approximately 5 % of our total assets at december 31 , 2020 , were primarily comprised of reo , capital contributions made to loan origination partners and mbs and loan-related receivables . 39 the results of our business operations are affected by a number of factors , many of which are beyond our control , and primarily depend on , among other things , the level of our net interest income and the market value of our assets , which is driven by numerous factors , including the supply and demand for residential mortgage assets in the marketplace , the terms and availability of adequate financing , general economic and real estate conditions ( both on a national and local level ) , the impact of government actions in the real estate and mortgage sector , and the credit performance of our credit sensitive residential mortgage assets . story_separator_special_tag for the year ended december 31 , 2020 , the weighted average cpr on our non-qm loan portfolio was 22.5 % . 40 it is generally our business strategy to hold our residential mortgage assets as long-term investments . on at least a quarterly basis , excluding investments for which the fair value option has been elected or for which specialized loan accounting is otherwise applied , we assess our ability and intent to continue to hold each asset and , as part of this process , we monitor our residential mortgage securities and msr-related assets that are designated as afs for impairment . a change in our ability and or intent to continue to hold any of these securities that are in an unrealized loss position , or a deterioration in the underlying characteristics of these securities , could result in our recognizing future impairment charges or a loss upon the sale of any such security . our residential mortgage investments have longer-term contractual maturities than our financing liabilities . even though the majority of our investments have interest rates that adjust over time based on short-term changes in corresponding interest rate indices ( typically following an initial fixed-rate period for our hybrids ) , the interest rates we pay on our borrowings will typically change at a faster pace than the interest rates we earn on our investments . in order to reduce this interest rate risk exposure , we may enter into derivative instruments , which in the past have generally been comprised of swaps . the majority of our swap derivative instruments have generally been designated as cash-flow hedges against a portion of our then current and forecasted libor-based repurchase agreements . following the significant interest rate decreases that occurred late in the first quarter of 2020 , we unwound all of our swap transactions at the end of the first quarter . recent market conditions and our strategy at december 31 , 2020 , our residential mortgage asset portfolio , which includes residential whole loans and reo , residential mortgage securities and msr-related assets , was approximately $ 6.0 billion compared to $ 13.1 billion at december 31 , 2019. as previously disclosed , we engaged in asset sales and took other actions during 2020 related to the impact of the unprecedented conditions created by the covid-19 pandemic , that significantly changed our asset composition . as a result of these actions , our primary investment asset as of december 31 , 2020 is our residential whole loan portfolio . the following table presents the activity for our residential mortgage asset portfolio for the year ended december 31 , 2020 : replace_table_token_2_th ( 1 ) primarily includes principal repayments , cash collections on purchased credit deteriorated loans and sales of reo . ( 2 ) primarily includes changes in fair value and adjustments to record lower of cost or estimated fair value adjustments on reo . at december 31 , 2020 , our total recorded investment in residential whole loans and reo was $ 5.6 billion , or 93.3 % of our residential mortgage asset portfolio . of this amount , ( i ) $ 4.2 billion is presented as residential whole loans , at carrying value ( of which $ 3.5 billion were purchased performing loans and $ 673.7 million were purchased credit deteriorated loans ) , and ( ii ) $ 1.2 billion is presented as residential whole loans , at fair value , in our consolidated balance sheets . for the year ended december 31 , 2020 , we recognized approximately $ 258.8 million of income on residential whole loans , at carrying value in interest income on our consolidated statements of operations , representing an effective yield of 4.91 % ( excluding servicing costs ) , with purchased performing loans generating an effective yield of 4.90 % and purchased credit deteriorated loans generating an effective yield of 4.99 % . in addition , we recorded a net gain on residential whole loans measured at fair value through earnings of $ 94.2 million in other income , net in our consolidated statements of operations for the year ended december 31 , 2020. at december 31 , 2020 and 2019 , we had reo with an aggregate carrying value $ 249.7 million and $ 411.7 million , respectively , which is included in other assets on our consolidated balance sheets . during 2020 , we sold non-qm loans with an amortized cost of $ 1.8 billion , realizing losses of $ 273.0 million and sold residential whole loans , at fair value with an aggregate unpaid principal balance of $ 24.1 million , realizing net losses of $ 0.8 million . during 2020 , economic conditions were negatively impacted by the unprecedented conditions resulting from the covid-19 pandemic . in response to the financial impact of the covid-19 pandemic on borrowers , and in compliance with various federal and state guidelines , starting in the first quarter of 2020 we offered short-term relief to certain borrowers who were contractually current at the time the pandemic started to impact the economy . under the terms of such plans , for certain borrowers a deferral plan was entered into where missed payments were deferred to the maturity of the related loan , with a corresponding change to the loan 's next payment due date . in addition , certain borrowers were granted up to a seven-month 41 “ zero pay ” forbearance with payments required to resume at the conclusion of the plan . for these borrowers , delinquent payments were permitted to be placed on specified repayment plans . while the majority of the borrowers granted relief have resumed making payments at the conclusion of such deferral and forbearance periods , certain borrowers , particularly in our non-qm loan portfolio , continue to be impacted financially by the covid-19 pandemic and have not yet resumed payments . when these borrowers became more than 90 days delinquent on payments , any interest income receivable related to the associated loans was reversed in accordance with our non-accrual policies .
| results of operations in this section , we discuss the results of our operations for the year ended december 31 , 2020 compared to the year ended december 31 , 2019. for a discussion related to our results of operations for the year ended december 31 , 2019 compared to the year ended december 31 , 2018 , please refer to part ii , item 7. , “ management 's discussion and analysis of financial condition and results of operation s ” in our annual report on form 10-k for the year ended december 31 , 2019 , which was filed with the sec on february 21 , 2020 , and is available on the sec 's website at www.sec.gov and on our website at www.mfafinancial.com . year ended december 31 , 2020 compared to the year ended december 31 , 2019 general for 2020 , we had a net loss available to our common stock and participating securities of $ 709.2 million , or $ 1.57 per basic and diluted common share , compared to net income available to common stock and participating securities for 2019 of $ 363.1 million , or $ 0.80 per basic and $ 0.79 per diluted common share . following the unprecedented disruption in residential mortgage markets due to concerns related to the covid-19 pandemic that was experienced late in the first quarter and into the second quarter of 2020 , management was focused on taking actions to bolster and stabilize our balance sheet , improve our liquidity position and renegotiate the financing associated with our remaining investments . the actions included disposing our agency and legacy non-agency mbs portfolios , substantially reducing our investments in msr-related assets , rpl/npl mbs and crt securities and sales of certain residential whole loans . these disposals resulted in net realized losses for the year totaling $ 188.9 million .
| 7,434 |
no impairment was recorded in the year ended december 31 , 2014. during the year ended december 31 , 2013 , an impairment of $ 87,340 was recorded to reduce the value of customer contacts intangible assets of sumner as management had planned to discontinue servicing the related contracts in 2014. f- 7 recently enacted accounting standards – the fasb established the accounting standards codification ( “ codification ” or “ asc ” ) as the source of authoritative accounting principles recognized by the fasb to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the united states ( “ gaap ” ) . rules and interpretive releases of the securities and exchange commission ( “ sec ” ) issued under authority of federal securities laws are also sources of gaap for sec registrants . recent accounting standards updates ( “ asu ” ) through asu no . 2014-16 contain technical corrections to existing guidance or affects guidance to specialized industries . these updates have no current applicability to the company or their effect on the financial statements would not have been significant . cash equivalents - the company considers all highly liquid investments with an original maturity of three months or less at date of purchase to be cash equivalents . concentration of credit risk - the company maintains its cash in bank deposit accounts , which , at times , may exceed federally insured limits . the company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents . organization expenditures – organizational expenditures are expensed as incurred for sec filings , but capitalized and amortized for income tax purposes . stock based compensation – the company recognizes compensation costs to employees under asc topic no . 718 , “ compensation – stock compensation . ” under asc topic no . 718 , companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services . share based compensation arrangements may include stock options , grants of shares of common stock with and without restrictions , performance based awards , share appreciation rights and employee share purchase plans . as such , compensation cost is measured on the date of grant at its fair value . such compensation amounts , if any , are amortized over the respective vesting periods of the option or stock grants . unvested option or stock grant for compensation are included in the statement of shareholders equity as a contra-equity account as “ deferred compensation ” . equity instruments issued to non-employees are recorded on the basis of the fair value of the instruments , as required by asc topic no . 505 , “ equity based payments to non-employees . ” in general , the measurement date is either ( a ) when a performance commitment , as defined , is reached or ( b ) the earlier of the date that ( i ) the non-employee performance requirement is complete or ( ii ) the instruments are vested . the measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the fasb accounting standards codification . f- 8 amortization - utility patents are amortized over a 17 year period . patents which are pending are not amortized . the customer contacts intangible asset was being amortized over a 3 year period . accounting estimates - the preparation of financial statements in conformity with generally accepted accounting principles in the united states requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities , the disclosures of contingent assets and liabilities at the date of the financial statements , and the reported amounts of revenues and expenses during the reporting period . actual results could differ from those estimated by management . significant accounting estimates that may materially change in the near future are impairment of long-lived assets , values of stock compensation awards and stock equivalents granted as offering costs , and allowances for bad debts and inventory obsolescence . revenue recognition – the company 's revenue is derived primarily from providing services under contracts . the company recognizes revenue in accordance with asc topic no . 605 based on the following criteria : persuasive evidence of an arrangement exists , services have been rendered , the price is fixed or determinable , and collectability is reasonably assured . in general , the company recognizes service revenue as significant services under the relevant arrangement have been performed . deferred stock offering costs – costs related to proposed stock offerings if any are deferred and will be offset against the proceeds of the offering in additional paid-in capital . in the event a stock offering is unsuccessful , the costs relating to the offering will be written-off directly to expense . inventory – inventories consist of raw materials used in the production of customized parts totaling $ 11,242 and work in process components totaling $ 44,933 which will be sold to customers . inventories are valued at the lower of cost or market . research and development – research and development costs are expensed as they are incurred . research and development costs for the years ended december 31 , 2014 and 2013 were $ 219,132 story_separator_special_tag critical accounting policies the preparation of financial statements in conformity with accounting principles generally accepted in the united states requires management to make estimates and assumptions that affect the reported assets , liabilities , sales and expenses in the accompanying financial statements . critical accounting policies are those that require the most subjective and complex judgments , often employing the use of estimates about the effect of story_separator_special_tag no impairment was recorded in the year ended december 31 , 2014. during the year ended december 31 , 2013 , an impairment of $ 87,340 was recorded to reduce the value of customer contacts intangible assets of sumner as management had planned to discontinue servicing the related contracts in 2014. f- 7 recently enacted accounting standards – the fasb established the accounting standards codification ( “ codification ” or “ asc ” ) as the source of authoritative accounting principles recognized by the fasb to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the united states ( “ gaap ” ) . rules and interpretive releases of the securities and exchange commission ( “ sec ” ) issued under authority of federal securities laws are also sources of gaap for sec registrants . recent accounting standards updates ( “ asu ” ) through asu no . 2014-16 contain technical corrections to existing guidance or affects guidance to specialized industries . these updates have no current applicability to the company or their effect on the financial statements would not have been significant . cash equivalents - the company considers all highly liquid investments with an original maturity of three months or less at date of purchase to be cash equivalents . concentration of credit risk - the company maintains its cash in bank deposit accounts , which , at times , may exceed federally insured limits . the company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents . organization expenditures – organizational expenditures are expensed as incurred for sec filings , but capitalized and amortized for income tax purposes . stock based compensation – the company recognizes compensation costs to employees under asc topic no . 718 , “ compensation – stock compensation . ” under asc topic no . 718 , companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services . share based compensation arrangements may include stock options , grants of shares of common stock with and without restrictions , performance based awards , share appreciation rights and employee share purchase plans . as such , compensation cost is measured on the date of grant at its fair value . such compensation amounts , if any , are amortized over the respective vesting periods of the option or stock grants . unvested option or stock grant for compensation are included in the statement of shareholders equity as a contra-equity account as “ deferred compensation ” . equity instruments issued to non-employees are recorded on the basis of the fair value of the instruments , as required by asc topic no . 505 , “ equity based payments to non-employees . ” in general , the measurement date is either ( a ) when a performance commitment , as defined , is reached or ( b ) the earlier of the date that ( i ) the non-employee performance requirement is complete or ( ii ) the instruments are vested . the measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the fasb accounting standards codification . f- 8 amortization - utility patents are amortized over a 17 year period . patents which are pending are not amortized . the customer contacts intangible asset was being amortized over a 3 year period . accounting estimates - the preparation of financial statements in conformity with generally accepted accounting principles in the united states requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities , the disclosures of contingent assets and liabilities at the date of the financial statements , and the reported amounts of revenues and expenses during the reporting period . actual results could differ from those estimated by management . significant accounting estimates that may materially change in the near future are impairment of long-lived assets , values of stock compensation awards and stock equivalents granted as offering costs , and allowances for bad debts and inventory obsolescence . revenue recognition – the company 's revenue is derived primarily from providing services under contracts . the company recognizes revenue in accordance with asc topic no . 605 based on the following criteria : persuasive evidence of an arrangement exists , services have been rendered , the price is fixed or determinable , and collectability is reasonably assured . in general , the company recognizes service revenue as significant services under the relevant arrangement have been performed . deferred stock offering costs – costs related to proposed stock offerings if any are deferred and will be offset against the proceeds of the offering in additional paid-in capital . in the event a stock offering is unsuccessful , the costs relating to the offering will be written-off directly to expense . inventory – inventories consist of raw materials used in the production of customized parts totaling $ 11,242 and work in process components totaling $ 44,933 which will be sold to customers . inventories are valued at the lower of cost or market . research and development – research and development costs are expensed as they are incurred . research and development costs for the years ended december 31 , 2014 and 2013 were $ 219,132 story_separator_special_tag critical accounting policies the preparation of financial statements in conformity with accounting principles generally accepted in the united states requires management to make estimates and assumptions that affect the reported assets , liabilities , sales and expenses in the accompanying financial statements . critical accounting policies are those that require the most subjective and complex judgments , often employing the use of estimates about the effect of
| results of operations year ended december 31 , 2014 compared to the year ended december 31 , 2013. we expect to generate revenues primarily by direct sales or licensing our manufacturing and materials technologies to businesses that seek to improve their manufacturing production processes and or manipulate and improve the most functional characteristics of the materials and other input components used in their business operations . however , we presently make no sales of these technologies . during the fiscal year ended december 31 , 2014 ( “ fiscal 2014 ” ) , b6 sigma and sumner associates generated an aggregate of $ 548,723 in revenues , as compared to an aggregate of $ 1,071,439 in revenues that were generated by b6 sigma and sumner associates during the fiscal year ended december 31 , 2013 ( “ fiscal 2013 ” ) . the decrease in revenues was primarily caused by the fact that a contract held by sumner associates was not renewed in 2014 , as well as the unanticipated delay in the commencement of our work in 2014 with respect to the below-described contracts from honeywell aerospace , edison welding institute and general electric ( ge ) aviation . we generated revenues and financed our operations in fiscal 2014 and fiscal 2013 primarily from engineering consulting services we provided during these periods and through private sales of our common stock . in fiscal 2014 , b6 sigma along with sumner associates generated an aggregate of $ 548,723 in revenues from consulting and other contracts . sumner associates generated $ 11,312 of such revenues .
| 7,435 |
the assets and liabilities of triumph instruments story_separator_special_tag the following discussion should be read in conjunction with the consolidated financial statements and notes thereto contained elsewhere herein . overview we are a major supplier to the aerospace industry and have three operating segments : ( i ) triumph aerostructures group , whose companies ' revenues are derived from the design , manufacture , assembly and integration of metallic and composite aerostructures and structural components for the global aerospace original equipment manufacturers , or oem , market ; ( ii ) triumph aerospace systems group , whose companies design , engineer and manufacture a wide range of proprietary and build-to-print components , assemblies and systems also for the oem market ; and ( iii ) triumph aftermarket services group , whose companies serve aircraft fleets , notably commercial airlines , the u.s. military and cargo carriers , through the maintenance , repair and overhaul of aircraft components and accessories manufactured by third parties . effective march 18 , 2013 , a wholly-owned subsidiary of the company , triumph engine control systems , llc , acquired the assets of goodrich corporation ( goodrich pump & engine control systems ) ( `` gpecs '' ) , a leading independent aerospace fuel system supplier for the commercial , military , helicopter and business jet markets . the acquisition of gpecs provides new capabilities in a market where we did not previously participate and further diversifies our customer base in electronic engine controls , fuel metering units and main fuel pumps for both oem and aftermarket/spares end markets . the results for triumph engine control systems , llc are included in the aerospace systems group segment from the date of acquisition . effective december 19 , 2012 , the company acquired all of the outstanding shares of embee , inc. ( `` embee '' ) , renamed triumph processing - embee division , inc. , which is a leading commercial metal finishing provider offering more than seventy metal finishing , inspecting and testing processes primarily for the aerospace industry . the acquisition of embee expands our current capabilities to provide comprehensive processing services on precision engineered parts for hydraulics , landing gear , spare parts and electronic actuation systems . the results for triumph processing - embee division , inc. are included in the aerospace systems group segment from the date of acquisition . the acquisitions of gpecs and embee are collectively referred to hereafter as the `` fiscal 2013 acquisitions . '' financial highlights for the fiscal year ended march 31 , 2013 include : net sales for fiscal 2013 increased 8.6 % to $ 3.70 billion , including an 8.0 % increase due to organic growth . operating income in fiscal 2013 increased 3.2 % to $ 531.2 million . non-gaap operating income excluding curtailments and early retirement incentives for fiscal 2013 was $ 565.7 million compared to $ 474.3 million for fiscal 2012 , increase of $ 91.4 million , or 19.2 % . net income for fiscal 2013 increased 5.9 % to $ 297.3 million . backlog increased 5.2 % over the prior year to $ 4.53 billion . for the fiscal year ended march 31 , 2012 , backlog increased substantially from what we had previously reported . during our fiscal fourth quarter , we detected an inadvertent error in how one portion of our 24-month backlog was being reported . for the fiscal year ended march 31 , 2013 , net sales totaled $ 3.70 billion , an 8.6 % increase from fiscal year 2012 net sales of $ 3.41 billion . net income for fiscal year 2013 increased 5.9 % to $ 297.3 million , or $ 5.67 per diluted common share , versus $ 280.9 million , or $ 5.41 per diluted common share , for fiscal year 2012 . as discussed in further detail below under `` results of operations , '' the increase in net income is attributable to the increase in sales offset by the curtailments and early retirement incentives of $ 34.5 million . our working capital needs are generally funded through cash flows from operations and borrowings under our credit arrangements . for the fiscal year ended march 31 , 2013 , we generated $ 320.9 million of cash flows from operating activities , used $ 467.4 million in investing activities and received $ 148.6 million from financing activities . cash flows from operating activities in fiscal year 2013 included $ 109.8 million in pension contributions versus $ 122.2 million in fiscal year 2012. we continue to remain focused on growing our core businesses as well as growing through strategic acquisitions . our organic sales increased in fiscal 2013 due to continuing improvement to the overall economy , increased build rates by boeing and airbus , increased passenger traffic from previously depressed levels and mro market share gain . our company has an aggressive but selective acquisition approach that adds capabilities and increases our capacity for strong and consistent internal growth . 30 congress and the administration failed to change or further delay the sequestration of appropriations in government fiscal year ( gfy ) 2013 imposed by budget control act of 2011 ( budget act ) and sequestration went into effect on march 1 , 2013. our customers ' budgets will be reduced significantly and there may be a direct significant reduction in our customers ' contract awards . while we understand customers have started to plan for sequestration , the specific effects of sequestration are not yet available and can not be determined by us . the automatic across-the-board cuts from sequestration will approximately double the amount of the ten-year $ 487 billion reduction in defense spending that began in gfy 2012 already required by the budget act , including the budget for overseas contingencies operations and any unobligated balances from prior years , and would have significant consequences to our business and industry . non-dod agencies could also have significantly reduced budgets . story_separator_special_tag in addition , investors , securities analysts and others have regularly relied on adjusted ebitda to provide a financial measure by which to compare our operating performance against that of other companies in our industry . set forth below are descriptions of the financial items that have been excluded from our income from continuing operations to calculate adjusted ebitda and the material limitations associated with using this non-gaap financial measure as compared to income from continuing operations : curtailments and early retirement incentives may be useful for investors to consider because it represents the current period impact of the change in the defined benefit obligation due to the reduction in future service costs as well as the incremental cost of retirement incentive benefits paid to participants . we do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations . amortization of acquired contract liabilities may be useful for investors to consider because it represents the non-cash earnings on the fair value of off-market contracts acquired through acquisitions . we do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations . amortization expense may be useful for investors to consider because it represents the estimated attrition of our acquired customer base and the diminishing value of product rights and licenses . we do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure . depreciation may be useful for investors to consider because it generally represents the wear and tear on our property and equipment used in our operations . we do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure . the amount of interest expense and other we incur may be useful for investors to consider and may result in current cash inflows or outflows . however , we do not consider the amount of interest expense and other to be a representative component of the day-to-day operating performance of our business . income tax expense may be useful for investors to consider because it generally represents the taxes which may be payable for the period and the change in deferred income taxes during the period and may reduce the amount of funds otherwise available for use in our business . however , we do not consider the amount of income tax expense to be a representative component of the day-to-day operating performance of our business . management compensates for the above-described limitations of using non-gaap measures by using a non-gaap measure only to supplement our gaap results and to provide additional information that is useful to gain an understanding of the factors and trends affecting our business . 32 the following table shows our adjusted ebitda reconciled to our income from continuing operations for the indicated periods ( in thousands ) : replace_table_token_5_th the following tables show our adjusted ebitda by reportable segment reconciled to our operating income for the indicated periods ( in thousands ) : replace_table_token_6_th replace_table_token_7_th replace_table_token_8_th 33 the fluctuations from period to period within the amounts of the components of the reconciliations above are discussed further below within results of operations . story_separator_special_tag 2012 from $ 57.8 million for the fiscal year ended march 31 , 2011. corporate expenses decreased primarily due to $ 40.4 million in defined benefit pension plan curtailment gain , net of special termination benefits associated with amendments made to certain defined benefit plans . corporate expenses also included $ 6.3 million in acquisition-related transaction and integration costs associated with the acquisition of vought for the fiscal year ended march 31 , 2012 , as compared to $ 20.9 million for the fiscal year ended march 31 , 2011. absent the aforementioned improvements to corporate expenses were increases due to increased compensation and benefits ( $ 4.9 million ) due to increased corporate head count as a result of growth as compared to the prior year , and an increase of $ 1.9 million of costs related to our mexican facility compared to the prior-year period . interest expense and other decreased by $ 2.4 million , or 3.0 % , to $ 77.1 million for the fiscal year ended march 31 , 2012 compared to $ 79.6 million for the prior year . this decrease was due to lower average debt outstanding during the fiscal year ended march 31 , 2012 due to the extinguishment of the term loan credit agreement ( the `` term loan '' ) in april 2011 , along with lower interest rates on our revolving credit facility . interest expense and other includes the write-off of $ 7.7 million of unamortized discounts and deferred financing fees associated with the extinguishment of the term loan , offset by a $ 2.9 million favorable fair value adjustment due to the reduction of the fair value of a contingent earnout liability associated with a prior acquisition due to reductions in the projected earnings over the respective earnout periods . the company also considered these changes in projected earnings to be an indicator of impairment of the long-lived assets directly related to this acquisition and , as a result , tested these long-lived assets for recoverability and concluded that the assets were recoverable . the fiscal year ended march 31 , 2011 also included an additional $ 4.0 million for amortization of discount on the convertible notes . the discount on the convertible notes was fully amortized as of september 30 , 2011. the effective tax rate was 35.6 % for the fiscal year ended march 31 , 2012 and 35.0 % for the fiscal year ended march 31 , 2011. the income tax provision for the fiscal year ended march 31 , 2012 included $ 1.6 million of tax expense due to the recapture of domestic production deductions taken in prior carryback periods , offset by a $ 1.2 million net tax benefit related to provision to return adjustments upon filing our fiscal 2011 tax return .
| fiscal year ended march 31 , 2013 compared to fiscal year ended march 31 , 2012 replace_table_token_9_th net sales increased by $ 294.8 million , or 8.6 % , to $ 3.7 billion for the fiscal year ended march 31 , 2013 from $ 3.4 billion for the fiscal year ended march 31 , 2012 . the results for fiscal 2013 included an increase in organic sales of $ 272.6 million , or 8.0 % , due to the expected increase in commercial production rates of various customer programs . the fiscal 2013 acquisitions contributed $ 22.2 million in increased net sales . cost of sales increased by $ 198.5 million , or 7.7 % , to $ 2.8 billion for the fiscal year ended march 31 , 2013 from $ 2.6 billion for the fiscal year ended march 31 , 2012 . this increase in cost of sales resulted from the increase in sales . gross margin for the fiscal year ended march 31 , 2013 was 25.4 % compared with 24.7 % for the fiscal year ended march 31 , 2012 . gross margin was favorably impacted by decreased pension and other postretirement benefit expense ( $ 14.6 million ) , changes in the overall sales mix , as well as the margin on nonrecurring customer settlements ( $ 9.5 million ) . these favorable items were partially offset by the net unfavorable cumulative catch-up adjustments on long-term contracts discussed further below . segment operating income increased by $ 93.1 million , or 17.7 % , to $ 618.4 million for the fiscal year ended march 31 , 2013 from $ 525.3 million for the fiscal year ended march 31 , 2012 . the segment operating income increase was a direct result of the sales volume increases and contribution from the fiscal 2013 acquisitions ( $ 5.0 million ) .
| 7,436 |
in accordance with the scaled disclosure requirements , the following discussion generally covers the change in financial condition , results of operations and cash flows for the year ended december 31 , 2020 compared to the year ended december 31 , 2019 and should be read in conjunction with the selected financial data and consolidated financial statements and notes which accompany this report . please refer to our note regarding forward looking statements on page 4 of this report . the national security group , inc. operates in ten states with 64.2 % of total premium revenue generated in the states of alabama , georgia and mississippi . we operate in two business segments summarized as follows : the property and casualty ( p & c ) segment is the most significant segment , accounting for 91.5 % of gross earned premium in 2020. the p & c segment operates in the states of alabama , arkansas , georgia , louisiana , mississippi , oklahoma , south carolina , and tennessee . the life segment accounted for 8.5 % of gross premium revenue in 2020. the life segment is licensed to underwrite life and accident and health insurance in alabama , florida , georgia , mississippi , south carolina , tennessee and texas . the p & c segment operations are conducted through national security fire & casualty company ( nsfc ) , a wholly owned subsidiary of the company organized in 1959 , and omega one insurance company ( omega ) , a wholly owned subsidiary of nsfc organized in 1992. omega produces no direct written premium and is authorized to underwrite lines of business similar to nsfc ; therefore , all references to nsfc or p & c segment in the remainder of this discussion will include the insurance operations of both nsfc and omega . the life segment operations are conducted through national security insurance company ( nsic ) , a wholly owned subsidiary of the company organized in 1947. all references to nsic or life segment in the remainder of this management discussion and analysis will refer to the combined life , accident and health insurance operations . our income is principally derived from net underwriting profits and investment income . net underwriting profit is principally derived from earned premiums received less claims paid , sales commissions to agents , costs of underwriting and insurance taxes and fees . investment income includes interest and dividend income and gains and losses on investment holdings . all of the insurance subsidiaries are alabama domiciled insurance companies ; therefore , the alabama department of insurance is the primary insurance regulator . however , each subsidiary is subject to regulation by the respective insurance regulators of each state in which it is licensed to transact business . insurance rates charged by each of the insurance subsidiaries are typically subject to review and approval by the insurance department for the respective state in which the rates will apply . all of our insurance companies have been assigned ratings by a.m. best co ( best ) . on april 21 , 2020 , a.m. best affirmed the financial strength rating ( fsr ) of b++ ( good ) and the long-term issuer credit rating ( long-term icr ) of `` bbb '' of nsfc . in addition , a.m. best affirmed the fsr of b+ ( good ) and long-term icr of `` bbb- '' of omega . the a.m. best outlook for the ratings is `` stable '' for nsfc and omega . a.m. best upgraded the fsr to b++ ( good ) and the long-term icr to `` bbb '' for nsic . the outlook for the ratings of nsic is `` stable '' . a.m. best also affirmed the long-term icr of `` bb '' of the parent holding company , nsec , with a `` stable '' outlook . the property and casualty subsidiaries have been assigned ratings by demotech , inc. on december 12 , 2020 , demotech affirmed a financial stability rating of a ( exceptional ) for both nsfc and omega . the earnings in the property and casualty segment have seasonal volatility due to severe storm activity resulting in incurred losses and loss adjustment expenses from hurricane , tornado , wind and hail related insurance claims . these storm systems or other natural disasters are classified as catastrophes ( referred to as `` catastrophe '' or `` cat '' events/losses throughout the remainder of this document ) by property claim service ( pcs ) when an individual event causes $ 25 million or more in industry wide direct insured losses and affect a significant number of policyholders and insurers . 23 a primary process utilized by management to review financial performance is evaluating the operating performance of each segment before intercompany eliminations . by performing the evaluation in this manner , management can better assess the profitability of each segment on a standalone basis . to provide information similar to that utilized by management , industry segment information presented in this discussion is presented on a pretax basis by segment before eliminations . note 15 to the consolidated financial statements in this form 10-k contains a reconciliation of the net income by segment to consolidated net income . in order to present information as analyzed by company management , the p & c segment combined ratio in this management discussion and analysis is presented before certain intercompany eliminations . these intercompany eliminations , which are presented in note 15 to the consolidated financial statements , primarily include management and service fees paid by each subsidiary to nsec , along with fees and expenses of the company 's employee claims adjusters . claims adjusters are employees of nsic but provide claim adjustment services to nsfc at rates comparable to those paid to independent ( non-employee ) adjusters utilized by nsfc . management believes that the analysis of the p & c segment combined ratio prior to elimination of the intercompany transactions provides a more realistic view of performance and is consistent with our internal evaluation of operating performance . story_separator_special_tag % of consolidated assets . the majority of these assets consist of fixed maturity investments . net investment income had a 3.5 % decrease , at $ 2,583,000 for the year ended december 31 , 2020 compared to $ 2,677,000 for the same period last year . lower reinvestment yields on fixed maturity investments due to the declining interest rate environment experienced in 2020 was the primary factor contributing to the moderate decline in interest income . 28 the table below provides investment gains and losses for the year ended december 31 , 2020 and 2019 : replace_table_token_18_th nsic net investment gains , for the year ended december 31 , 2020 , were $ 567,000 compared to net investment gains of $ 861,000 for the same period last year ; a decrease of $ 294,000. net investment gains and losses are highly dependent on numerous internal and external factors including but not limited to market conditions , tax position and liquidity needs of the company and can vary significantly from period to period . a primary factor contributing to the decrease in net investment gains , in 2020 , was an decrease in the change in value of equity securities held for investment to a gain of $ 104,000 compared to a gain of $ 589,000 in the prior year . another factor contributing to the lower investment gains , in 2020 , was a $ 233,000 realized gain , in 2019 , primarily from our minority stake in privately held trinity bancorp , which merged with privately held river financial corporation , in october of 2019 , in a cash and stock transaction . other income was $ 1,242,000 in 2020 compared to $ 853,000 for the same period last year ; an increase of $ 389,000. other income consists primarily of adjuster fees paid to nsic from the p & c segment . as a percent of net earned premium , other income was 21.8 % in 2020 and 14.5 % in 2019. the primary reason for the increase in other income , in 2020 compared to 2019 , was an increase in claims from storm activity in the p & c segment leading to an increase in adjuster fees paid from nsfc to nsic . claims were $ 5,215,000 through december 31 , 2020 compared to $ 5,027,000 through december 31 , 2019 ; an increase of $ 188,000 or 3.7 % . the primary reason for the increase was elevated claim payments , in 2020 , due to an increase in ordinary life related claims . deferred policy acquisition cost amortization and commission expenses increased $ 138,000 for the year ended december 31 , 2020 at $ 1,155,000 compared to $ 1,017,000 for the same period last year ; an increase of 13.6 % . as a percent of net premiums earned , policy acquisition cost amortization and commission expense was 20.2 % in 2020 compared to 17.3 % in 2019. general and administrative expenses were down slightly at $ 1,923,000 , in 2020 , compared to $ 1,948,000 , in 2019. as a percent of earned premium , general and administrative expenses were 33.7 % and 33.2 % at december 31 , 2020 and 2019 , respectively . the $ 25,000 decrease in general and administrative expenses , in 2020 compared to 2019 , was primarily due to a decline in actuarial and consulting fees of $ 39,000. for the year ended december 31 , 2020 and 2019 , insurance taxes , licenses and fees were $ 216,000 and $ 285,000 , respectively . as a percent of earned premium , insurance taxes , licenses and fees were 3.8 % in 2020 and 4.9 % in 2019. the primary reason for the decrease in , 2020 compared to 2019 , was the payment of expenses associated with our alabama department of insurance examination , in 2019 , which were not incurred in 2020. interest expense was $ 41,000 for the year ended december 31 , 2020 compared to $ 43,000 for the year ended december 31 , 2019. interest expense in nsic is associated with interest payments on insurance policies with a deposit fund . deposit fund balances declined in 2020 leading to the slight reduction in interest expense . for the year ended december 31 , 2020 , the life segment had pretax income of $ 1,551,000 compared to a pretax income of $ 1,935,000 for the same period last year . the $ 155,000 decrease in life segment revenues , coupled with the $ 188,000 increase in policyholder claims were the primary factors contributing to the $ 384,000 decrease in pretax income . 29 property & casualty operations : pretax income for the p & c segment for the year ended december 31 , 2020 and 2019 is summarized below : replace_table_token_19_th year ended december 31 , 2020 compared to year ended december 31 , 2019 : net premiums earned in the p & c segment is primarily driven by our dwelling fire and homeowner lines of business . the following table provides premiums earned by line of business : replace_table_token_20_th property and casualty segment net premiums earned for 2020 were $ 55,101,000 compared to $ 54,019,000 for the same period last year . the primary reason for the increase , in 2020 compared to 2019 , was a 4.2 % increase in gross earned premium revenue in our dwelling fire program primarily driven by rate increases in the program over the last twelve months . the primary source of premium revenue growth in the p & c segment was primarily the states of alabama and georgia . premium revenue in alabama increased 7.6 % , in 2020 , while policy counts decreased 1.7 % compared to december 31 , 2019. increased rates were implemented in alabama which lead to the year over year increase in premium revenue in the state . in addition , georgia premium revenue increased 6.8 % in 2020 , while policy counts decreased 4.4 % .
| summary for the year ended december 31 , 2020 , the company had a net loss of $ 8,619,000 , $ 3.41 loss per share , compared to a net income of $ 4,067,000 , $ 1.61 income per share , for the year ended december 31 , 2019. the year to date pretax loss from operations , in 2020 , totaled $ 12,641,000 compared to a pretax income from operations of $ 1,525,000 in 2019. the primary reason for the significant loss in 2020 , compared to the same period in 2019 , was a $ 15,332,000 increase in policyholder benefits ; primarily driven by a significant increase in catastrophe claims in the p & c segment . results for 2020 were also impacted by investment gains of $ 1,623,000 compared to investment gains of $ 3,055,000 in 2019. for the twelve months ended december 31 , 2020 , the company had insured claims ( net of reinsurance recoveries ) totaling $ 53,930,000 compared to $ 38,598,000 for the same period last year . the p & c segment was the primary source of this increase with claims up $ 15,446,000 in 2020 , compared to 2019. the primary component of this increase was claims reported from catastrophe events which increased $ 17,573,000 , in 2020 , compared to the same period in 2019. for the twelve months ended december 31 , 2020 , the company had investment gains of $ 1,623,000 compared to investment gains of $ 3,055,000 for the same period in 2019 ; a decrease of $ 1,432,000. the primary reason for the investment gains in 2020 was a $ 1,361,000 gain on fixed maturities . in 2019 , we had a gain on our coli investment totaling $ 1,792,000 which was the primary contributor to investment gains in 2019 .
| 7,437 |
overview surmodics is a leading provider of medical device and in vitro diagnostic technologies to the healthcare industry . in fiscal 2015 , our business performance continued to be driven by growth from our two core businesses : medical device , including surface modification coating technologies , and in vitro diagnostics ( ivd ) . revenues in the medical device business are driven by hydrophilic coatings royalty revenue , product sales and contract coating services included in research and development revenue . our in vitro diagnostics business is driven by product sales of diagnostic technology . since fiscal 2013 , with our investment in our dcb platform , we have been focused on a strategy to transform our medical device business from being a provider of coating technologies to offering whole-product solutions to our medical device customers . this transformation will greatly increase our relevance in the industry , and is key to our future growth and profitability , given the ability to capture more revenue with whole-product solutions . our transformation does not change our focus on our core medical device coatings and ivd businesses . our aim is to provide customers earlier access to strongly differentiated products that address unmet clinical needs , and partner with them on successful commercialization . 27 a key step in our medical device transformation strategy is the acquisition of state-of-the-art device design , development and manufacturing capabilities to complement our leadership in coating technologies . in november 2015 , we announced the acquisition of creagh . this acquisition brings a state-of-the-art r & d and manufacturing facility offering robust extrusion , balloon-forming , top-assembly , packaging and regulatory capabilities focused on balloon catheters . we believe creagh will be a strong complement to our capabilities to become a world-class medical device innovator , developer and manufacturer . with the acquisition of creagh subsequent to fiscal year 2015 , we no w engage in contract research and development , as well as manufacturing of balloons catheters used for a variety of interventional cardiology applications . operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker , or decision making group , in deciding how to allocate resources and in assessing performance . for financial accounting and reporting purposes , we report our results for the two reportable segments as follows : ( 1 ) the medical device unit , which is comprised of surface modification coating technologies to improve access , deliverability , and predictable deployment of medical devices , as well as drug delivery coating technologies to provide site-specific drug delivery from the surface of a medical device , with end markets that include coronary , peripheral , and neurovascular , and urology , among others , and ( 2 ) the in vitro diagnostics unit , which consists of component products and technologies for diagnostic immunoassay and molecular tests and biomedical research applications , with products that include protein stabilization reagents , substrates , antigens and surface coatings . we made this determination based on how we manage our operations and the information provided to our chief operating decision maker who is our chief executive officer . we derive our revenue from three primary sources : ( 1 ) royalties and license fees from licensing our proprietary surface modification and device drug delivery technologies and in vitro diagnostic formats to customers ; the vast majority ( typically in excess of 90 % ) of revenue in the “ royalties and license fees ” category is in the form of royalties ; ( 2 ) the sale of reagent chemicals to licensees and the sale of stabilization products , antigens , substrates and surface coatings to the diagnostic and biomedical research markets ; and ( 3 ) research and commercial development fees generated on customer projects . revenue fluctuates from quarter to quarter depending on , among other factors : our customers ' success in selling products incorporating our technologies ; the timing of introductions of licensed products by our customers ; the timing of introductions of products that compete with our customers ' products ; the number and activity level associated with customer development projects ; the number and terms of new license agreements that are finalized ; and the value of reagent chemicals and other products sold to our customers . we have several u.s. and international issued patents and pending international patent applications protecting various aspects of these technologies , including compositions , methods of manufacture and methods of coating devices . the expiration dates for these patents and the anticipated expiration dates of the patent applications range from 2015 to 2033. among these , the third generation of our photolink ® hydrophilic technology is protected by a family of patents that expired in november 2015 ( in the u.s. ) and are expected to expire in october 2016 ( in certain other countries ) . the royalty revenue associated with our third generation technology that has not yet converted , or that is not in the process of converting , to one of our advanced generation technologies was approximately 18 % of our fiscal 2015 revenue . of the revenue generated by the early generation technology , approximately 81 % revenue from this earlier generation ) will continue to generate royalty revenue at a reduced royalty rate beyond the expiration of these patents . the royalty obligation for these customer products extends beyond the expiration of these patents because the license also includes rights to our know-how or other proprietary rights . while we are actively seeking to convert our customers to one of our advanced generations of our hydrophilic coating technology , there can be no assurance that we will be successful in doing so , or that those customers that have converted , or will convert , will sell products utilizing our technology which will generate earned royalty revenue for us . story_separator_special_tag revenue is recognized when all of the following criteria are met : ( 1 ) persuasive evidence of an arrangement exists ; ( 2 ) shipment has occurred or delivery has occurred if the terms specify destination ; ( 3 ) the sales price is fixed or determinable ; and ( 4 ) collectability is reasonably assured . when there are additional performance requirements , revenue is recognized when all such requirements have been satisfied . under revenue arrangements with multiple deliverables , we recognize each separable deliverable as it is earned . we license technology to third parties and collect royalties . royalty revenue is generated when a customer sells products incorporating our licensed technologies . royalty revenue is recognized as our licensees report it to us , and payment is typically submitted concurrently with the report . for stand-alone license agreements , up-front license fees are recognized over the term of the related licensing agreement . minimum royalty fees are recognized in the period earned . revenue related to a performance milestone is recognized upon the achievement of the milestone and meeting specific revenue recognition criteria . product sales to third parties are recognized at the time of shipment , provided that an order has been received , the price is fixed or determinable , collectability of the resulting receivable is reasonably assured and returns can be reasonably estimated . our sales terms provide no right of return outside of our standard warranty policy . payment terms are generally set at 30-45 days . generally , revenue for research and development is recorded as performance progresses under the applicable contract . product sales to third parties consist of direct and distributor sales and are recognized at time of shipment . our sales terms provide no right of return outside of our standard warranty policy . payment terms are generally set at 30-45 days . 29 multiple deliverable revenue arrangements require us to : ( i ) disclose whether multiple deliverables exist , how the deliverables in an arrangement should be separated , and how the consideration should be allocated ; ( ii ) allocate revenue in an arrangement using estimated selling prices ( “ esp ” ) of deliverables if a vendor does not have vendor-specific objective evidence of selling price ( “ vsoe ” ) or third-party evidence of selling price ( “ tpe ” ) ; and ( iii ) eliminate the use of the residual method and require an entity to allocate revenue using the relative selling price method . we account for revenue using a multiple attribution model in which consideration allocated to r & d activities is recognized as performed , and milestone payments are recognized when the milestone events are achieved , when such activities and milestones are deemed substantive . accordingly , in situations where a unit of accounting includes both a license and r & d activities , and when a license does not have stand-alone value , we apply a multiple attribution model in which consideration allocated to the license is recognized ratably , consideration allocated to r & d activities is recognized as performed and milestone payments are recognized when the milestone events are achieved , when such activities and milestones are deemed substantive . we enter into license and development arrangements that may consist of multiple deliverables which could include a license ( s ) to our technology , r & d activities , manufacturing services , and product sales based on the customer needs . for example , a customer may enter into an arrangement to obtain a license to our intellectual property which may also include r & d activities , and supply of products manufactured by us . for these services provided , we could receive upfront license fees upon signing of an agreement and granting the license , fees for r & d activities as such activities are performed , milestone payments contingent upon advancement of the product through development and clinical stages to successful commercialization , fees for manufacturing services and supply of product , and royalty payments based on customer sales of product incorporating our technology . our license and development arrangements generally do not have refund provisions if the customer cancels or terminates the agreement . typically all payments made are non-refundable . we are required to evaluate each deliverable in a multiple element arrangement for separability . we are then required to allocate revenue to each separate deliverable using a hierarchy of vsoe , tpe , or esp . in many instances , we are not able to establish vsoe for all deliverables in an arrangement with multiple elements . this may be a result of us infrequently selling each element separately or having a limited history with multiple element arrangements . when vsoe can not be established , we attempt to establish a selling price of each element based on tpe . tpe is determined based on competitor prices for similar deliverables when sold separately . when we are unable to establish a selling price using vsoe or tpe , we use esp in our allocation of arrangement consideration . the objective of esp is to determine the price at which surmodics would transact a sale if the product or service were sold on a stand-alone basis . esp is generally used for highly customized offerings . we determine esp for undelivered elements by considering multiple factors including , but not limited to , market conditions , competitive landscape and past pricing arrangements with similar features . the determination of esp is made through consultation with management , taking into consideration the marketing strategies for each business unit . customer advances are accounted for as a liability until all criteria for revenue recognition have been met . valuation of long-lived assets . accounting guidance requires us to evaluate periodically whether events and circumstances have occurred that may affect the estimated useful life or the recoverability of the remaining balance of long-lived assets , such as property and equipment and intangibles with finite lives .
| segment operating results operating income for each of our reportable segments was as follows : replace_table_token_8_th medical device . operating income was $ 21.2 million , $ 22.6 million and $ 21.2 million in fiscal 2015 , 2014 and 2013 , respectively . operating income decreased by 6 % in fiscal 2015 from fiscal 2014. the decrease was primarily the result of $ 4.2 million in higher expenses , partially offset by a $ 2.9 million increase in revenue . the largest increases to expenses in fiscal 2015 compared to fiscal 2014 resulted from a $ 2.5 million claim settlement ( for further information refer to note 12 of the consolidated financial statements ) , $ 0.6 million in higher compensation costs , $ 0.6 million in higher planned spending on r & d primarily related to drug-coated balloon activities and a $ 0.4 million higher cost of sales as a result of increased revenue . the increase in revenue in fiscal 2015 was generated by each of our revenue categories with increased royalty and licensing revenue of $ 1.5 million , of which $ 0.6 million was from a one-time catch up payment related to periods prior to fiscal 2015 , as well as increased customer demand resulting in increases in r & d revenue of $ 0.8 million and reagent product sales of $ 0.5 million . operating income increased by 7 % in fiscal 2014 from fiscal 2013 primarily the result of $ 0.8 million of higher reagent product sales , $ 0.7 million of higher r & d revenue and $ 0.4 million of higher royalty and license fee revenue resulting from increased customer demand .
| 7,438 |
41 in exchange for substantially all the benefits derived from tax credits , wf contributed $ 6.0 million and jpm contributed $ 10.7 million into each respective project . these amounts are included within other non-current liabilities on our consolidated balance sheets . direct and incremental costs incurred in structuring these arrangements have been deferred and will be recognized in proportion to the recognition of the related profits . these costs amounted to $ 4.5 million and are included in other non-current assets on our consolidated balance sheets . variable-interest entities were created as a result of the structure of these transactions , which have been included within our consolidated financial statements as the banks do not have a material interest in the underlying economics of the projects . litigation . the company is a party to various legal proceedings incidental to its normal operating activities . in particular , like others in the construction supply and services industry , the company 's construction supply and services businesses are routinely involved in various disputes and claims arising out of construction projects , sometimes involving significant monetary damages or product replacement . the company is subject to litigation arising out of general liability , employment practices , workers ' compensation and automobile claims . although it is very difficult to accurately predict the outcome of such proceedings , facts currently available indicate that no such claims will result in losses that would have a material adverse effect on the results of operations , cash flows or financial condition of the company . 12. shareholders ' equity a class of 200,000 shares of junior preferred stock with a par value of $ 1.00 is authorized , but unissued . share repurchases during fiscal 2004 , the board of directors authorized a share repurchase program of 1,500,000 shares of common stock . the board of directors subsequently increased this authorization by 750,000 shares in fiscal 2008 ; by 1,000,000 shares in fiscal 2009 ; and by another 1,000,000 shares in fiscal 2016. we repurchased 250,001 shares under the program during fiscal 2017 , for a total cost of $ 10.8 million . we repurchased 575,000 shares under the program , for a total cost of $ 24.9 million , in fiscal 2016 and 203,509 shares under the program , for a total cost of $ 6.9 million , in fiscal 2015 . the company has repurchased a total of 3,307,633 shares , at a total cost of $ 72.3 million , since the inception of this program . we have remaining authority to repurchase 942,367 shares under this program , which has no expiration date . in addition to the shares repurchased under this repurchase plan , during fiscal 2017 , 2016 and 2015 , the company also withheld $ 2.6 story_separator_special_tag forward-looking statements this discussion contains “ forward-looking statements ” within the meaning of the private securities litigation reform act of 1995. these statements reflect our current views with respect to future events and financial performance . the words “ believe , ” “ expect , ” “ anticipate , ” “ intend , ” “ estimate , ” “ forecast , ” “ project , ” “ should ” and similar expressions are intended to identify “ forward-looking statements ” within the meaning of the private securities litigation reform act of 1995. all forecasts and projections in this document are “ forward-looking statements , ” and are based on management 's current expectations or beliefs of the company 's near-term results , based on current information available pertaining to the company , including the risk factors noted under item 1a in this form 10-k. from time to time , we also may provide oral and written forward-looking statements in other materials we release to the public , such as press releases , presentations to securities analysts or investors , or other communications by the company . any or all of our forward-looking statements in this report and in any public statements we make could be materially different from actual results . accordingly , we wish to caution investors that any forward-looking statements made by or on behalf of the company are subject to uncertainties and other factors that could cause actual results to differ materially from such statements . these uncertainties and other risk factors include , but are not limited to , the risks and uncertainties set forth under item 1a in this form 10-k. we wish to caution investors that other factors might in the future prove to be important in affecting the company 's results of operations . new factors emerge from time to time ; it is not possible for management to predict all such factors , nor can it assess the impact of each such factor on the business or the extent to which any factor , or a combination of factors , may cause actual results to differ materially from those contained in any forward-looking statements . we undertake no obligation to update publicly or revise any forward-looking statements , whether as a result of new information , future events or otherwise . overview we are a world leader in certain technologies involving the design and development of value-added glass products and services . our four reporting segments are : architectural glass , architectural framing systems , architectural services and large-scale optical technologies ( lso ) . story_separator_special_tag we are unable to reasonably estimate in which future periods the remaining unrecognized tax benefits and environmental liabilities will ultimately be settled . at march 4 , 2017 , we had ongoing letters of credit of $ 23.5 million related to industrial revenue bonds and construction contracts that expire in fiscal 2018 and that reduce availability of funds under our committed credit facility . in addition to the above standby letters of credit , we are required , in the ordinary course of business , to provide surety or performance bonds that commit payments to our customers for any non-performance by us . at march 4 , 2017 , $ 96.2 million of our backlog was bonded by performance bonds with a face value of $ 343.7 million . performance bonds do not have stated expiration dates , 19 as we are released from the bonds upon completion of the contracts . we have never been required to make any payments related to these performance bonds with respect to any of our current portfolio of businesses . we had total cash and short-term marketable securities of $ 20.0 million , and $ 106.5 million available under our committed revolving credit facility , at march 4 , 2017 . due to our ability to generate strong cash from operations and borrowing capability under our committed revolving credit facility , we believe that our sources of liquidity will continue to be adequate to fund our working capital requirements , planned capital expenditures and dividend payments for at least the next 12 months . off-balance sheet arrangements . with the exception of operating leases , we had no off-balance sheet financing arrangements at march 4 , 2017 or february 27 , 2016 . outlook the following statements are based on our current expectations for fiscal 2018 results . these statements are forward-looking , and actual results may differ materially . revenue growth of approximately 10 percent over fiscal 2017 . gross margin of approximately 28 percent and operating margin of approximately 12.5 percent . earnings per diluted share of $ 3.35 to $ 3.55. capital expenditures of approximately $ 50 to $ 60 million . recently issued accounting pronouncements see note 1 of the notes to consolidated financial statements within item 8 of this form 10-k for information pertaining to recently issued accounting pronouncements , incorporated herein by reference . critical accounting policies our analysis of operations and financial condition is based on our consolidated financial statements prepared in accordance with u.s. gaap . preparation of these consolidated financial statements requires us to make estimates and assumptions affecting the reported amounts of assets and liabilities at the date of the consolidated financial statements , reported amounts of revenues and expenses during the reporting period and related disclosures of contingent assets and liabilities . in developing these estimates and assumptions , a collaborative effort is undertaken involving management across the organization including finance , sales , project management , quality , risk , legal and tax , as well as outside advisors such as consultants , engineers , lawyers and actuaries . our estimates are evaluated on an ongoing basis and are drawn from historical experience and other assumptions that we believe to be reasonable under the circumstances . actual results could differ under other assumptions or circumstances . the following items in our consolidated financial statements require significant estimation or judgment : revenue recognition . we recognize revenue when title has transferred , except within our architectural services segment and for one business within our architectural framing systems segment , which enter into fixed-price contracts for projects typically performed over a 12- to 24-month timeframe . the contracts clearly specify the enforceable rights of the parties , the consideration and the terms of settlement , and both parties can be expected to satisfy all obligations under the contract . we record revenue for these contracts on a percentage-of-completion basis as we are able to reasonably estimate total contract revenue and total contract costs . we compare the total costs incurred to date to the total estimated costs for the contract , and record that proportion of the total contract revenue in the period . contract costs include materials , labor and other direct costs related to contract performance . we believe utilizing the cost-to-cost method for revenue recognition provides the greatest degree of accuracy in measuring revenue throughout the contract period . provisions are established for estimated losses , if any , on uncompleted contracts in the period in which such losses are determined . amounts representing contract change orders , claims or other items are included in contract revenue only upon customer approval . recognizing revenue under the percentage-of-completion method of accounting requires significant estimates , including total costs and the percentage complete on the contract , as well as any potential losses or contract overruns . during fiscal 2017 , approximately 26 percent of our consolidated sales were recorded on a percentage-of-completion basis . goodwill impairment . we evaluate goodwill for impairment annually at our year-end , or more frequently if impairment indicators exist . this year we elected 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 ( commonly referred to as “ step 0 ” ) . if , after assessing all events and circumstances , it is determined that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount , then the two-step goodwill impairment assessment is unnecessary . if we proceed in the goodwill analysis , step 1 of the process compares the fair value of each of our reporting units to carrying value , including goodwill . if the fair value exceeds the carrying value , goodwill impairment is not indicated . each of our business units represents a reporting unit for the goodwill 20
| highlights for fiscal 2017 : consolidated net sales increased to $ 1.1 billion , or 14 percent over fiscal 2016. operating income increased to $ 122 million , or 25 percent over the prior year . 15 diluted eps was $ 2.97 , compared to $ 2.22 in the prior year , for growth of 34 percent . we acquired the assets of sotawall , inc. , a canadian privately-held designer and fabricator of high-performance , unitized curtainwall systems for commercial construction projects , for approximately $ 138 million on december 14 , 2016. sotawall 's results since the date of acquisition have been included in the consolidated financial statements and within the architectural framing systems segment . results of operations net sales replace_table_token_5_th fiscal 2017 compared to fiscal 2016 net sales in fiscal 2017 increased by 13.6 percent compared to fiscal 2016 , due to gains in volume across all three architectural segments . volume growth was driven by continued strength in non-residential construction end-markets and success in our strategies to expand geographically and introduce new products . the architectural framing systems segment drove nearly 60 percent of our growth this year . the acquisition of sotawall in the fourth quarter , included in this segment , contributed 13 percent of our overall growth . the architectural glass segment drove approximately 22 percent of our growth and the architectural services segment contributed nearly all of the remainder . currency did not have a meaningful impact on our consolidated sales as compared to the prior year . fiscal 2016 compared to fiscal 2015 net sales increased by 5.1 percent , or 7.0 percent on a constant currency basis , over fiscal 2015. this was mainly due to pricing and volume growth resulting from strong commercial construction activity in the u.s , partially offset by declines in the commercial construction markets in brazil and canada .
| 7,439 |
94 medallia , inc. notes to consolidated financial statements the company applied a practicable expedient allowing it story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this annual report on form 10-k. this discussion contains forward-looking statements that involve risks and uncertainties as discussed in “ special note regarding forward-looking statements ” included in this annual report on form 10-k. 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 ” under part ii , item 1a in this annual report on form 10-k. our fiscal year ends january 31. overview medallia , inc. was founded in 2001 to help the world 's largest companies understand and improve customer experiences at scale . in doing so , we created a new category of enterprise software , experience management . our saas ( software-as-a-service ) platform , the medallia experience cloud , is built on modern technology and open architecture , utilizing ai ( artificial intelligence ) and machine learning to analyze massive amounts of data . we capture experience data from the expanding signal fields emitted by customers , employees , citizens , and patients on their daily journeys so that our customers can understand and manage omni-channel experiences . we utilize our proprietary in-memory analytics , dynamic organizational hierarchy management , and ai technology to 54 analyze the structured and unstructured data at great scale with enterprise grade security and privacy deriving themes and predictive insights that drive action in live time . using our technology , enterprises reduce churn , turn detractors into promoters and buyers , create in-the-moment cross-sell and up-sell opportunities , and drive revenue-impacting business decisions , providing clear and potent returns on investment . our platform captures and analyzes over 7.5 billion experiences annually . our products have high adoption rates and are used extensively from the front line to the c-suite ; approximately 50 % of our customers have more than 1,000 employees using our platform . our platform is deeply embedded in an enterprise 's tech stack , with enterprises integrating medallia with an average of 25 other business applications , and our platform is becoming the experience system of record that makes all other applications customer and employee aware . we believe this is significantly higher adoption than other experience management solutions available in the market . we offer our platform through a saas business model . we use a “ land and expand ” model , whereby once customers have deployed our platform , they often increase the number of end-users through expansion to additional business units and geographies , and they also purchase more modules . we focus our selling efforts on both business leaders who are often making a strategic purchase of our platform with the potential for broad use throughout their enterprises , as well as functional leaders purchasing for their teams . we price our subscriptions based on the functionality and capacity needs of our customers . subscription periods for our customers generally range from one to three years and we customarily invoice customers in advance in annual installments . in december 2019 a novel strain of coronavirus disease ( covid-19 ) was reported and in january 2020 the world health organization ( who ) declared the outbreak a “ public health emergency of international concern. ” in february 2020 the who raised the covid-19 threat level from high to very high at a global level and in march 2020 the who characterized the covid-19 as a pandemic . the covid-19 pandemic has impacted our business , and its full impact is still uncertain and may negatively affect our subscription bookings and results of operations in future periods . the extent to which the covid-19 pandemic may impact our future financial condition or results of operations remains uncertain . also , we may experience curtailed customer demand for our platform , reduced customer spending or contract duration or lengthened payment terms that could materially adversely impact our business , results of operations and overall financial performance in future periods . while our subscription revenue is relatively predictable , the effect of the covid-19 pandemic , along with the seasonality we historically experience , may not be fully reflected in our results of operations and overall financial performance until future periods . the extent and continued impact of the covid-19 pandemic on our operational and financial performance will depend on certain developments , including the duration and spread of the outbreak ; government responses to the pandemic ; impact on our customers ' and our sales cycles ; impact on our customer , industry or employee events ; extent of delays in hiring and onboarding new employees ; how quickly and to what extent normal economic and operating activities can resume ; and effect on our partners and vendors , all of which are uncertain and difficult to predict . in response to the covid-19 pandemic , we have temporarily closed most of our offices ( including our headquarters ) , mandated our employees to work remotely , implemented travel restrictions for all non-essential business , and shifted certain of our customer , industry , analyst , investor , and employee events , including our medallia experience conference , to virtual-only , and we may similarly alter , postpone or cancel events in the future . these changes remained in effect in the fourth quarter of fiscal 2021 and could extend into future quarters . the impact , if any , of these and any additional operational changes we may implement is uncertain but changes we have implemented have not affected and are not expected to affect our ability to maintain operations , including financial reporting systems , internal control over financial reporting and disclosure controls and procedures . story_separator_special_tag if our dollar-based net revenue retention rate for a period exceeds 100 % , this means that the subscription revenue retained during the period , which includes up-sells and cross-sells , more than offset the subscription revenue lost from customers that did not renew all or a portion of their contracts with us during that period . our use of dollar-based net revenue retention rate may have certain limitations as an analytical tool and should not be considered in isolation or as a substitute for revenue or an analysis of our results as reported under gaap . for example , other companies , including companies in our industry , may calculate dollar-based net revenue retention rate differently , which could reduce its usefulness as a comparative measure . components of results of operations revenue we generate revenue from sales of subscriptions and related professional services . professional services include managed services and implementation and other services . for all periods presented , we have relied on sales of our platform to large enterprises for a significant majority of our revenue . subscription revenue is recognized ratably over the related contractual term , generally beginning on the date that our platform is made available to a customer . in general , our agreements are non-cancellable and we primarily bill in advance annually for our multi-year contracts . amounts that have been billed are initially recorded as deferred revenue until the revenue is recognized . subscription revenue as a percentage of total revenue may vary from period to period . professional services revenue includes fees associated with managed services and one-time implementation and other services . managed services support our customers by providing a range of ongoing services , including program design , launch , enhancements , expansion and analytics . managed services are typically sold on a fixed-fee recurring basis . managed services are a stand-ready obligation to perform these services over the term of the arrangement and as a result , revenue is recognized ratably over the term of the arrangement . 57 implementation and other services are sold on a fixed-fee or time-and-materials basis and consist primarily of initial design , integration and configuration services . in addition , we provide advisory services that enable customers to gain insightful business information through data analysis and our institute training programs . implementation and other services revenue are recognized as services are performed . as we continue to increase the number of partners that provide implementation and advisory services , we generally expect professional services revenue to decrease as a percentage of total revenue in the long term , although this percentage may vary from period to period . cost of revenue , gross profit and gross margin cost of subscription revenue cost of subscription revenue primarily consists of software , hardware and hosting costs , personnel-related expenses including stock-based compensation expense , travel expense and allocated overhead costs for our subscription operations , third-party costs and security and customer support departments including outside services . cost of professional services revenue cost of professional services revenue primarily consists of personnel-related expenses including stock-based compensation expense , travel expense and allocated overhead costs associated with the delivery of managed services , implementation and other service offerings , facility costs , sub-contractor costs and outside services . we expect our cost of revenue will increase in absolute dollars in future periods as we continue to invest in our business and may vary from period to period as a percentage of revenue . gross profit and gross margin gross profit is total revenue less cost of revenue . gross margin is gross profit expressed as a percentage of revenue . our gross margin may vary from period to period as our mix or cost of revenue fluctuates . our gross margin on subscription revenue is significantly higher than our gross margin on professional services revenue , which is close to break-even . in addition , we may experience changes in our professional services gross margin due to the timing of delivery of implementation and other services . we expect our gross margin may vary from period to period and increase modestly in the long term . operating expenses research and development research and development expenses primarily consists of personnel-related expenses including stock-based compensation expense , travel expense and allocated overhead costs , facility costs , software and hardware costs and depreciation . our research and development efforts focus on maintaining and enhancing functionality of existing services and adding new products and features . we believe that continued investment in our platform is important for our growth . although we expect our research and development expenses will increase in absolute dollars in future periods and may vary from period to period as a percentage of revenue in the near term , we expect that research and development expenses will decline as a percentage of revenue in the long term . sales and marketing sales and marketing expenses primarily consists of personnel-related expenses including stock-based compensation expense , travel expense and allocated overhead expenses and marketing and promotional activities expenses including our annual experience conference , advertising , facility and training costs . sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer and are deferred and amortized on a straight-line basis over the expected period of benefit . we intend to continue to 58 invest in sales and marketing to help drive the growth of our business . during the short term we expect to see a decline in travel expenses as well as certain of our marketing costs such as the experience conference due to the covid-19 pandemic as we focus our marketing and sales events on virtual platforms . however , we expect our sales and marketing expenses will increase in future periods as we ramp up our sales efforts . general and administrative general and administrative expenses primarily consist of personnel-related expenses including stock-based compensation expense , travel expense and overhead costs , and facility costs and outside services .
| results of operations the following table sets forth our consolidated statements of operations data for the periods indicated ( in thousands ) : replace_table_token_5_th ( 1 ) includes stock-based compensation expense as follows ( in thousands ) : replace_table_token_6_th 60 the following table sets forth our consolidated statements of operations data expressed as a percentage of total revenue for the periods indicated : replace_table_token_7_th fiscal years ended january 31 , 2021 , 2020 and 2019 revenue replace_table_token_8_th t otal revenue was $ 477.2 million for the year ended january 31 , 2021 compared to $ 402.5 million for the year ended january 31 , 2020 , which is an increase of $ 74.8 million , or 19 % . subscription revenue accounted for 80 % of total revenue the year ended january 31 , 2021 and 78 % of total revenue for the year ended january 31 , 2020 , respectively . subscription revenue increased by $ 70.4 million , or 23 % , for the year ended january 31 , 2021 compared to the year ended january 31 , 2020. the increases were primarily due to cross-sell with existing customers and expansions as reflected in our dollar-based net revenue retention rate of 115 % for the year ended january 31 , 2021. the increases were also driven by revenue from new customers , as the number of enterprise customers increased to 1,077 as of january 31 , 2021 from 757 as of january 31 , 2020 , representing a 42 % increase . the expansions and cross-sell with existing customers and revenue from new customers , including our 700 small and mid-market customers , also helped drive growth in our subscription billings , which increased to $ 411.5 million for the year ended january 31 , 2021 from $ 360.8 million for the year ended january 31 , 2020 , representing a 14 % increase .
| 7,440 |
stock compensation expense is primarily related to our performance stock units ( psus ) , restricted stock units ( rsus ) and stock options , granted or outstanding under the company 's third amended and restated stock and incentive plan ( the “ 1994 plan ” ) and 2019 stock and incentive plan ( the story_separator_special_tag this management 's discussion and analysis of results of operations and financial condition ( md & a ) should be read in conjunction 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. ” the various sections of this md & a 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 filing , including part i , “ item 1a : risk factors. ” our actual results may differ materially from those described in any such forward-looking statement . business overview and environment tessco technologies incorporated ( “ tessco ” , “ we ” , “ our ” , “ us ” , or the “ company ” ) architects and delivers innovative product and value chain solutions to support wireless systems . although we sell products to customers in almost 100 countries , approximately 96 % of our sales are to customers in the united states . we have operations and office facilities in timonium and hunt valley , maryland , reno , nevada and san antonio , texas . the company evaluates its business within two segments : commercial and retail . the commercial segment consists of the following customer markets : ( 1 ) public carriers that are generally responsible for building and maintaining the infrastructure system and provide airtime service to individual subscribers ; ( 2 ) value-added resellers and integrators , which includes value-added resellers , government channels and private system operator markets . the retail segment includes retailers , independent dealer agents and carriers . retail inventory typically has a shorter more defined life cycle and is , typically , ultimately used by individual end users . commercial inventory typically has a life cycle that tends to be tied to changes in regulation or technology and includes products typically used by business entities or governments . we offer a wide range of products that are classified into four categories : base station infrastructure ; network systems ; installation , test and maintenance ; and mobile devices and accessories . base station infrastructure products are used to build , repair and upgrade wireless telecommunications . sales of traditional base station infrastructure products , such as base station radios , cable and transmission lines and antennas are in part dependent on capital spending in the wireless communications industry . network systems products are used to build and upgrade computing and internet networks . in this category , we have also been growing our offering of wireless broadband , network equipment , security and surveillance products , which are not as dependent on the overall capital spending of the industry . installation , test and maintenance products are used to install , tune , and maintain wireless communications equipment . this category is made up of sophisticated analysis equipment and various frequency- , voltage- and power-measuring devices , replacement parts and components as well as an assortment of tools , hardware and supplies required by service technicians . mobile devices and accessory products include cellular phone and data device accessories . our customers generally have the ability to purchase from any of our product categories . the wireless communications distribution industry is competitive and fragmented , and is comprised of several national distributors . in addition , many manufacturers sell direct . barriers to entry for distributors are relatively low , particularly in the mobile devices and accessory market , and the risk of new competitors entering the market is high . consolidation of larger wireless carriers has and will most likely continue to impact our current and potential customer base . in addition , the agreements or arrangements with our customers or suppliers looking to us for product and supply chain solutions are typically of limited duration and are terminable by either party upon several months or otherwise short 31 notice . our ability to maintain these relationships is subject to competitive pressures and challenges . we believe , however , that our strength in service , the breadth and depth of our product offering , our information technology system , our large customer base and our purchasing relationships with approximately 350 manufacturers provide us with a significant competitive advantage over new entrants to the market . story_separator_special_tag remain open and our office workers are largely working remotely . however , the covid-19 pandemic has primarily impacted our retail segment as a result of store closures and lower foot traffic due to “ stay at home ” or similar orders in various states . our commercial segment has also been impacted , but to a much lesser extent , due to delays in non-essential projects or inability of our customers to access project venues or locations . we have recorded incremental reserves in accounts receivable , inventory and sales returns , totaling approximately $ 6.1 million during the fourth quarter of fiscal 2020. we expect the covid-19 pandemic to continue to have an impact on our revenues and gross profit , particularly in the retail segment for at least the first half of fiscal 2020 , and possibly into future periods . 33 our ongoing ability to earn revenues and gross profits from customers and suppliers looking to us for product and supply chain solutions is dependent upon a number of factors . the terms , and accordingly the factors , applicable to each relationship often differ . story_separator_special_tag the growth was partially offset by a decline in the value-added resellers and integrators market by 3.2 % for fiscal year 2019 as compared to fiscal year 2018. the revenue growth within our commercial segment was partially offset by a 3.5 % decrease in our retail segment revenue for fiscal year 2019 as compared to fiscal year 2018. this decrease was due in part to lower sales of key phone launches and less retail store traffic . cost of goods sold . cost of goods sold for fiscal year 2019 increased by 5.5 % as compared to fiscal year 2018. in the commercial segment , cost of goods sold increased by 10.0 % for fiscal year 2019 as compared to fiscal year 2018. cost of goods sold in our public carrier market increased by 39.0 % for fiscal year 2019 as compared to fiscal year 2018 , largely due to increased spending among our tier 1 public carrier and contractors customers . the growth was partially offset by a decline in the value-added resellers and integrators market of 3.9 % for fiscal year 2019 as compared to fiscal year 2018. the cost of goods sold growth within our commercial segment was partially offset by a 3.1 % decrease in our retail segment cost of goods sold for fiscal year 2019 as compared to fiscal year 2018. this decrease was due in part to lower sales of key phone launches and less retail store traffic . gross profit . gross profit increased by 0.9 % in fiscal year 2019 as compared to fiscal year 2018. in the commercial segment , gross profit increased by 3.8 % . this increase was primarily driven by increases in our public carrier market of 21.4 % and was offset by a decrease in value-added resellers and integrators market of 0.8 % . we experienced margin compression within our public carrier market primarily due to a change in customer mix , with increased sales going to larger customers which required better pricing . within the retail segment , gross profit decreased by 5.0 % in fiscal year 2019 as compared to fiscal year 2018. this decrease in gross margin was a result of product mix and the decrease in sales . overall gross profit margin decreased to 20.0 % in fiscal year 2019 , compared to 20.7 % in fiscal year 2018 , primarily due to changes in customer mix , including the increase in lower margin sales in the public carrier market . selling , general , administrative and restructuring expenses . total selling , general , administrative and restructuring expenses increased 0.8 % during fiscal year 2019 as compared to fiscal year 2018. total selling , general , administrative and restructuring expenses as a percentage of revenues decreased from 19.4 % in fiscal year 2018 to 18.7 % in fiscal year 2019. the following are descriptions of changes in significant components of selling , general , administrative and restructuring expenses . · performance bonus expense ( including both cash and equity plans ) decreased by $ 1.1 million in fiscal year 2019 as compared to fiscal year 2018. our bonus programs are typically based on achieving annual performance targets . the relationship between expected performance and actual performance led to lower bonus expenses in fiscal 2019 , as compared to fiscal 2018 . · compensation and benefits expenses decreased by $ 0.9 million in fiscal year 2019 as compared to fiscal year 2018 , mainly due to $ 0.8 million in severance costs related to a restructuring of our sales and product teams in fiscal year 2018 . · freight out expense increased by $ 1.7 million in fiscal year 2019 as compared to fiscal year 2018 , due to our increased sales and higher freight costs from freight service providers . 35 · expenses related to information technology increased by $ 1.3 million in fiscal year 2019 as compared to fiscal year 2018 primarily due to increased cost to support our sales initiatives and to build more efficient and effective systems . we continually evaluate the credit worthiness of our existing customer receivable portfolio and provide an appropriate reserve based on this evaluation . we also evaluate the credit worthiness of prospective and current customers and make decisions regarding extension of credit terms to such customers based on this evaluation . accordingly , we recorded a provision for bad debts of $ 1,721,200 and $ 797,100 for fiscal year 2019 and fiscal year 2018 , respectively . interest , net . net interest expense increased from $ 429,100 in fiscal year 2018 to $ 853,800 in fiscal year 2019. the increase is primarily related to higher borrowing levels on our secured revolving credit facility . refer to note 6 the financial statements included as part of this annual report on form 10-k for additional information on our borrowings . income taxes , net income and diluted earnings per share . the effective tax rates in fiscal year 2019 and 2018 were 23.9 % and 30.5 % , respectively . the effective tax rate was lower for fiscal 2019 , primarily due to the tax cuts & jobs act which was signed into law in december 2017 ( the “ 2017 tax act ” ) and went into effect in the third quarter of fiscal 2018. as a result of the factors discussed above , net income and diluted earnings per share for fiscal year 2019 increased 6.7 % and 6.6 % , respectively , compared with fiscal year 2018. liquidity and capital resources in summary , our cash flows were as follows : replace_table_token_5_th we generated $ 0.9 million of net cash from operating activities during fiscal year 2020. this inflow was driven by net loss ( net of depreciation and amortization , goodwill impairment loss , and non-cash stock compensation expense ) and a decrease in accounts receivable , partially offset by an increase in prepaid expenses and an increase in deferred income taxes .
| results of operations the following tables summarize the results of our operations for fiscal years 2020 , 2019 and 2018 : replace_table_token_4_th 32 fiscal year 2020 compared to fiscal year 2019 revenues . revenue for fiscal year 2020 decreased by 11.0 % as compared to fiscal year 2019. in the commercial segment , revenue decreased by 2.4 % . revenue in our public carrier market and value-added resellers and integrators market decreased by 0.4 % and 3.6 % , respectively . the decline in the commercial segment was primarily because we are not yet realizing the full benefits of our sales strategy refinements in the value-added resellers and integrators market . revenues in our retail segment decreased by 30.1 % . this decrease was largely driven by a combination of continued overall softness in our retail segment , significantly lower revenues from one of our more significant retail customers following its change in business model and subsequent transition of its business elsewhere , and the impact of covid-19 in the fourth quarter of fiscal year 2020 that affected both of our business segments . we expect the challenges we have been facing in our retail segment to continue for the foreseeable future . we also expect the challenges we have been facing in our commercial segment to continue for the foreseeable future , but to a much lesser extent . cost of goods sold . cost of goods sold for fiscal year 2020 decreased by 7.6 % as compared to fiscal year 2019. in the commercial segment , cost of goods sold decreased by 1.6 % . cost of goods sold in our value-added resellers and integrators market decreased by 3.2 % , partially offset by cost of goods sold increase in our public carrier market of 0.7 % , the decline in the commercial segment was primarily due to a decrease in related revenue in the value-added resellers and integrators market .
| 7,441 |
however , the company concluded that it was necessary to perform the two step test for the vf reporting unit in accordance with topic 350. in performing step one of the impairment analysis , to estimate the fair value of the vf reporting unit , the company used both : ( i ) the income approach - discounted cash flows , and ( ii ) the market approach - comparable company analysis . the income approach involved determining the present value of future cash flows from the story_separator_special_tag overview and outlook lydall , inc. and its subsidiaries ( collectively , the “ company ” or “ lydall ” ) design and manufacture specialty engineered filtration media , industrial thermal insulating solutions , automotive thermal and acoustical barriers , medical filtration media and devices and biopharmaceutical processing components for filtration/separation , thermal/acoustical , and bio/medical applications . lydall principally conducts its business through two reportable segments : performance materials and thermal/acoustical , with sales globally . the performance materials segment includes filtration media solutions for air , fluid power , and industrial applications ( “ industrial filtration ” ) , air and liquid life science applications ( “ life sciences filtration ” ) , and industrial thermal insulation solutions for building products , appliances , and energy and industrial markets ( “ industrial thermal insulation ” ) . the thermal/acoustical segment offers a full line of innovative engineered products to assist in noise and heat abatement within the transportation sector . lydall products are found in the interior ( dash insulators ) , underbody ( wheel well , fuel tank , exhaust ) and under hood ( engine compartment ) of cars , trucks , suv 's , heavy duty trucks and recreational vehicles . lydall 's patented products include organic and inorganic fiber composites ( fiber parts ) as well as metal combinations ( metal parts ) . included in ops is the life sciences vital fluids business . life sciences vital fluids offers specialty products for blood filtration devices , blood transfusion single-use containers and bioprocessing single-use containers and products for containment of media , buffers and bulk intermediates used in biotech , pharmaceutical and diagnostic reagent manufacturing processes . on june 29 , 2011 , the company sold its affinity business . affinity designed and manufactured high precision , specialty engineered temperature-control equipment for semiconductor , pharmaceutical , life sciences and industrial applications . the consolidated financial statements have been retroactively restated to reflect affinity as a discontinued operation for all periods presented . highlights below are financial highlights comparing lydall 's 2011 results to its 2010 results : · consolidated net sales increased by $ 67.5 million , or 21.3 % , to a record annual amount of $ 383.6 million ; · gross margin increased to 17.6 % compared to 17.0 % ; · selling , product development and administrative expenses as a percentage of net sales decreased from 16.7 % to 13.8 % , or 290 basis points ; · consolidated operating income from continuing operations was $ 16.2 million , or 4.2 % of net sales , compared to $ 3.5 million , or 1.1 % of net sales ; · income from discontinued operations , net of tax , was $ 4.7 million ( including gain on sale of $ 3.9 million ) compared to $ 0.7 million ; · net income was $ 13.8 million ( including gain on sale of $ 3.9 million ) , or $ 0.82 per diluted share , compared to $ 2.6 million , or $ 0.16 per diluted share ; · cash and short-term term investments were $ 42.9 million at december 31 , 2011 compared to $ 25.0 million at december 31 , 2010. operational and financial overview lydall reported record net sales in 2011 of $ 383.6 million and its highest operating income from continuing operations since 2007. sales growth was reported in both the performance materials and thermal/acoustical segments . the improvement in operating income was primarily attributable to the thermal/acoustical segment due to an increase in net sales of $ 57.7 million , or 32.2 % , and operating income improvement of $ 12.4 million . contributing to this increase was the implementation of a comprehensive plan which began to improve the financial results for fiber automotive parts in the thermal/acoustical segment . 17 the company closely managed its selling , product development and administrative expenses in 2011 , reporting 13.8 % as a percentage of net sales compared to 16.7 % in 2010. expenses were essentially flat in 2011 compared to 2010 as increased selling costs as a result of higher net sales were offset by lower administrative expenses . during 2011 , the company continued to evaluate the fit and growth potential of its existing businesses . during the second quarter of 2011 , the company divested of its affinity business , previously included in ops , and recorded a gain on sale of $ 3.9 million , net of tax . in 2012 , the company will continue to evaluate each of its businesses for growth potential and its ability to maximize shareholder value . lydall ended 2011 with cash and cash equivalents and short-term investments of $ 42.9 million compared to $ 25.0 million at december 31 , 2010. other than capital lease obligations , the company does not have any significant debt outstanding . the company is selective in making capital investments and invests in equipment to support strategic growth markets as well as improving the company 's manufacturing efficiency . story_separator_special_tag included in these figures is foreign currency translation , which increased net sales by $ 6.6 million , or 2.1 % , for the current year , compared with 2010 , impacting the thermal/acoustical segment by $ 4.6 million and the performance materials segment by $ 2.0 million . the increase in 2010 net sales of $ 76.4 million , or 31.9 % , compared with 2009 , was primarily attributable to higher sales volumes from the thermal/acoustical segment of $ 51.3 million , or 40.1 % , and the performance materials segment of $ 25.1 million , or 25.6 % . net sales of ops increased by $ 1.0 million or 6.6 % . included in these figures is foreign currency translation , which decreased net sales by $ 6.6 million , or 2.8 % , in 2010 compared to 2009 , impacting the thermal/acoustical segment by $ 4.5 million and the performance materials segment by $ 2.1 million . gross profit replace_table_token_5_th the increase in gross margin in 2011 compared to 2010 was attributable to the thermal/acoustical segment . improved absorption of fixed costs due to higher net sales of $ 57.7 million and realized manufacturing efficiency improvements and other cost savings associated with fiber parts of the na auto facility contributed to increased gross margin for the thermal/acoustical segment . the performance materials segment reported essentially flat gross margin in 2011 compared to 2010 , while gross margin for ops was lower in 2011 compared to 2010 due to a reduction in net sales resulting in lower absorption of fixed costs . the increase in gross margin in 2010 compared to 2009 was attributable to improved gross margin from both the performance materials and thermal/acoustical segments . the performance materials segment reported improved gross margin primarily due to significantly higher net sales and the resulting improved absorption of fixed costs . the 2009 gross margin was negatively impacted by restructuring related charges of $ 5.7 million , or 230 basis points , associated with the na auto consolidation , included in the thermal/acoustical segment . excluding these restructuring charges in 2009 , the thermal/acoustical segment gross margin percentage increased marginally in 2010 compared to 2009 due to improvements in gross margin for worldwide non-fiber based products from higher sales partially offset by higher per unit costs for fiber-based products at its na auto facility . selling , product development and administrative expenses replace_table_token_6_th 20 selling , product development and administrative expenses in 2011 were essentially flat with 2010. reductions in legal expenses of $ 0.9 million and severance related charges of $ 1.0 million were offset by increases in sales commission expense of $ 0.8 million , workers compensation charges of $ 0.5 million and salaries and wages expense of $ 0.3 million , as well as increases in other discretionary spending . higher legal expenses in 2010 were primarily related to litigation and settlement costs with a former employee . the increase in net sales in 2011 , compared to 2010 , caused the increase in sales commission expense in 2011. higher salaries and wages expense were primarily caused by annual rate increases . selling , product development and administrative expenses increased in 2010 by $ 4.4 million , or 9.1 % , compared to 2009. however , as a percentage of net sales , selling , product development and administrative expenses decreased by 350 basis points in 2010 compared to 2009. the increase in 2010 expenses was primarily due to higher incentive compensation expense of $ 1.6 million , sales commission expense of $ 0.8 million , legal expenses of $ 0.8 million , primarily associated with a matter with a former employee , salaries and wages expense of $ 0.4 million , severance-related expenses of $ 0.4 million and research and development trial expenses of $ 0.4 million . because certain businesses met 2010 bonus plan targets , the company recorded incentive compensation in 2010 , while in 2009 the company did not record any incentive compensation expense . a significant increase in net sales in 2010 , compared to 2009 , caused the increase in sales commission expense in 2010. higher salaries and wages expense was primarily caused by higher headcount in 2010 compared to 2009 to support the increase in net sales in 2010 and strategic initiatives for the company , and , to a lesser extent , the reinstatement of the matching contribution to its sponsored 401 ( k ) plan in july 2010 , for all non-union domestic employees . gain on sale of product line , net in thousands of dollars 2011 2010 2009 gain on sale of product line , net $ 1,619 $ 2,542 $ - on june 30 , 2010 , the company divested its electrical papers product line business for total consideration of $ 5.8 million , of which $ 4.8 million was paid on june 30 , 2010. this transaction contained multiple deliverables , some of which were delivered on june 30 , 2010 , while others have been , and will continue to be , delivered in subsequent periods . the company deferred $ 3.2 million of the gain from this sale related to undelivered elements of the transaction at june 30 , 2010. as part of the sale transaction , the company entered into a manufacturing agreement and a license agreement with the buyer . under the manufacturing agreement , the company is obligated to manufacture and sell electrical paper products to the buyer for a two-year period . pursuant to the license agreement , treated as a separate unit of accounting , the company granted the buyer the right to use certain process technology and agreed to provide certain services to the buyer to facilitate the transfer of know-how for the manufacture of electrical paper products . under the license agreement , the buyer is obligated to pay the company the additional $ 1.0 million on the earlier of june 30 , 2012 or completion by lydall of its obligations to provide services to the buyer .
| segment results replace_table_token_9_th replace_table_token_10_th performance materials segment segment net sales increased by $ 10.9 million , or 8.9 % , in 2011 compared to 2010 primarily from volume growth , and to a lesser extent , marginal increases in prices of certain products . net sales of industrial filtration products increased by $ 1.4 million , or 2.0 % , in 2011 compared to 2010 , due to foreign currency translation of $ 1.7 million . beginning in the fourth quarter of 2011 , the segment began to see a reduction in demand from the european and asian industrial filtration markets as oems cautiously managed inventory levels as they evaluated their markets and demand for their products during a period of economic uncertainty . as a result , net sales of industrial filtration products decreased by $ 4.1 million in the fourth quarter of 2011 compared to the fourth quarter of 2010. net sales of industrial thermal insulation products increased by $ 8.3 million , or 21.4 % , in 2011 compared to 2010 , primarily from improvement in capital project investments across all markets , resulting in increased demand for the company 's products . net sales of life sciences filtration products increased by $ 1.2 million , or 9.2 % , in 2011 compared to 2010 , primarily due to increased volumes of products sold for respiration and life protection applications . the performance materials segment reported operating income of $ 18.2 million in 2011 , or 13.6 % of net sales , compared to operating income of $ 17.2 million , or 14.0 % of net sales in 2010. excluding the impact of the gain on sale from the electrical papers product line of $ 1.6 million in 2011 and $ 2.5 million in 2010 , operating income in 2011 increased $ 1.9 million and was 12.4 % and 11.9 % of net sales , respectively .
| 7,442 |
term loan on october 21 , 2016 , qumu corporation ( the “ company ” ) and its wholly-owned subsidiary , qumu , inc. , entered into a term loan credit agreement ( the “ credit agreement ” ) with hcp-fvd , llc as lender and hale capital partners , lp as administrative agent ( the “ administrative agent ” ) . hcp-fvd , llc is an affiliate of hale capital partners , lp . pursuant to the credit agreement , the company borrowed $ 8.0 million as a term loan story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read together with the section titled “ selected financial data ” and our audited financial statements and related notes which are included elsewhere in this annual report on form 10-k. our actual results could differ materially from those anticipated in the forward-looking statements included in this discussion as a result of certain factors , including , but not limited to , those discussed in “ risk factors ” included elsewhere in this annual report on form 10-k. overview qumu corporation ( `` qumu '' or the `` company '' ) provides the software applications businesses use to create , manage , secure , deliver and measure the success of their videos . the company 's innovative solutions release the power in video to engage and empower employees , partners and clients , allowing organizations around the world to realize the greatest possible value from video they create and publish . whatever the audience size , viewer device or network configuration , the company 's solutions are how business does video . the company generates revenue through the sale of enterprise video content management software solutions , hardware , maintenance and support , and professional and other services . software sales may take the form of a perpetual software license , a term software license or a cloud-hosted software as a service ( saas ) . software licenses and appliances revenue includes sales of perpetual software licenses and hardware . service revenue includes term software licenses , saas , maintenance and support , and professional and other services . for the years ended december 31 , 2016 , 2015 and 2014 , the company generated revenues of $ 31.7 million , $ 34.5 million and $ 26.5 million , respectively . subscription , maintenance and support revenue , which is included in service revenue in the company 's consolidated statements of operations , increased 14 % in 2016 to $ 21.4 million from $ 18.8 million in 2015 as the company continues to advance its transition to more revenue that is recurring in nature from primarily perpetual software license revenue . history the company was founded in 1978 , incorporated as ixi , inc. in minnesota in february 1987 and changed its name to rimage corporation in april 1988. from 1995 to 2011 , the company focused its business on the development and sale of its cd recordable publishing systems and dvd recordable publishing systems . in response to declines in the disc publishing business due to technology substitutions and the rise of video as a communication and collaboration platform , in october 2011 , the company acquired qumu , inc. , a leader in the enterprise video content management software market and changed its name to qumu corporation in september 2013. qumu completed the transition to enterprise video content management software company in july 2014 , when the company closed on the sale of its disc publishing assets to equus holdings , inc. and redwood acquisition , inc. ( now known as rimage corporation ) . as a result , the disc publishing business was classified as held for sale and qualified for presentation as discontinued operations effective with the reporting of the company 's financial results for the second quarter of 2014. on october 3 , 2014 , the company acquired kulu valley ltd. , a private limited company incorporated and operating in england and wales , subsequently renamed qumu ltd ( “ kulu valley ” ) . the acquisition was made to expand qumu 's addressable market through the offering of kulu valley 's best-in-class video content creation capabilities and easy-to-deploy pure cloud solution , and provides kulu valley 's customers with access to industry-leading video content management and delivery capability . the results of the discontinued disc publishing business and associated financial impacts from the sale of this business have been presented as discontinued operations for the years ended december 31 , 2016 , 2015 and 2014. no general corporate charges were allocated to the discontinued business . the assets and liabilities of the discontinued business are presented on the consolidated balance sheets as assets and liabilities from discontinued operations . other than consolidated amounts reflecting operating results and balances for both the continuing and discontinued operations , all remaining amounts presented in the accompanying consolidated financial statements reflect the financial results and financial position of the company 's continuing enterprise video content management software business . the following discussion of year-to-year changes and trends in financial statement results under `` management 's discussion and analysis of financial condition and results of operations ” aligns with the financial statement presentation described above . 22 critical accounting policies the discussion of the company 's financial condition and results of operations is based upon its financial statements , which are prepared in accordance with accounting principles generally accepted in the united states of america , or gaap . the preparation of these financial statements requires management to make estimates , judgments and assumptions that affect the reported amounts of assets , liabilities , revenues , costs and expenses and related disclosures . on an ongoing basis , management evaluates its estimates and assumptions . management bases its estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that management believes to be reasonable . the company 's actual results may differ from these estimates under different assumptions or conditions . story_separator_special_tag the warrant was determined to be ineligible for equity classification because of provisions that allow the holder under certain circumstances , essentially the sale of the company as defined in the warrant agreement , to elect to receive a minimum cash payment in lieu of the company 's common shares . the warrant liability was recorded in the company 's consolidated balance sheets at its fair value on the date of issuance and is revalued on each subsequent balance sheet date until such instrument is exercised or expires , with any changes in the fair value between reporting periods recorded as other income or expense . the company estimates the fair value of this liability using an option pricing model that is based on the individual characteristics of the warrant on the valuation date , which includes assumptions for expected volatility , expected life and risk-free interest rate , as well as the present value of the minimum cash payment component of the instrument . changes in the assumptions used could have a material impact on the resulting fair value . the primary input affecting the value of the warrant liability is the company 's stock price . generally , increases ( decreases ) in the fair value of the underlying stock would result in a corresponding increase ( decrease ) in the fair value of the warrant liability . stock-based compensation stock-based compensation is measured at the grant date , based on the fair value of the award , and is recognized ratably as an expense over the vesting period of the award . determining the appropriate fair value model and calculating the fair value of stock-based payment awards require the use of subjective assumptions , including the expected life of the stock-based payment awards and stock price volatility . management uses the black-scholes option pricing model to value award grants and determine the related compensation expense . the assumptions used in calculating the fair value of stock-based payment awards represent management 's best estimates , but the estimates involve inherent uncertainties and the application of management judgment . as a result , if factors change and management uses different assumptions , the company 's stock-based compensation expense could be materially different in the future . the company expects to continue to grant stock-based awards in the future , and to the extent that the company does , its actual stock-based compensation expense recognized in future periods will likely increase . royalties for third-party technology royalties for third-party technology are either paid in advance and capitalized as prepaid royalties or are accrued as incurred and subsequently paid . these royalties are generally expensed to cost of revenue generally at the greater of a rate based on the contractual or estimated term or an effective royalty rate based on the total projected net revenue for contracts with guaranteed minimums . each quarter , the company also evaluates the expected future realization of its prepaid royalties , as well as any minimum commitments not yet paid to determine amounts it deems unlikely to be realized through product sales . any impairments or losses determined before the launch of a product are generally charged to general and administrative expense , and any impairments or losses determined post-launch are charged to cost of revenue . unrecognized minimum royalty-based commitments are accounted for as executory contracts , and therefore , any losses on these commitments are recognized when the underlying intellectual property is abandoned ( i.e. , cease use ) or the contractual rights to use the intellectual property are terminated . income taxes significant judgment is required in determining the realizability of deferred tax assets . management must assess the likelihood that the company 's net deferred tax assets will be recovered from future taxable income , and to the extent management believes that recovery is not likely , the company must establish a valuation allowance . considerations for determining the realizability of the company 's deferred tax assets primarily involve cumulative pre-tax income for financial reporting purposes , cumulative taxable income for the past three years , estimated future pre-tax income for financial reporting purposes and estimated future 24 taxable income from the company 's core business . management also considers the expiration dates and amounts of net operating loss carryforwards and other tax credits , and estimate the impact of future tax deductions from the exercise of stock options . these estimates are projected through the life of the related deferred tax assets based on assumptions which management believes to be reasonable and consistent with current operating results . since 2012 , the company has maintained a full valuation allowance against the company u.s. deferred tax assets . if pretax results improve in future periods , the company may be able to reverse the valuation allowance , which would positively impact earnings . as of december 31 , 2016 , the company had $ 78.1 million of net operating loss carryforwards for u.s. federal tax purposes and $ 63.9 million of net operating loss carryforwards for various states . results of operations the percentage relationships to revenues of certain income and expense items for the years ended december 31 , 2016 , 2015 and 2014 , and the percentage changes in these income and expense items between years , are contained in the following table ( all amounts presented reflect only the financial results of the company 's continuing enterprise video content management software business ) : replace_table_token_7_th revenues the company generates revenue through the sale of enterprise video content management software solutions , hardware , maintenance and support , and professional and other services . software sales may take the form of a perpetual software license , a term software license or a cloud-hosted software as a service ( saas ) . software licenses and appliances revenue includes sales of perpetual software licenses and hardware . service revenue includes term software licenses , saas , maintenance and support , and professional and other services .
| resulted from a $ 2.6 million increase in subscription , maintenance and support revenues driven primarily from growth in the customer base and $ 1.2 million of previously deferred subscription , maintenance and support revenue contingent on a customer 's acceptance , which was received in the fourth quarter of 2016. partially offsetting the growth in subscription , maintenance and support revenues was an approximately $ 1.8 million decrease in professional services revenues . the decrease in professional services revenues , which generally move directionally with changes in perpetual license sales , was driven by the decrease in the value of perpetual product license contracts entered into in 2016 , partially offset by the recognition of $ 0.4 million of previously deferred professional service revenue contingent on a customer 's acceptance , which was received in the fourth quarter of 2016. the $ 7.9 million increase in total revenues from 2014 to 2015 reflects a $ 9.8 million increase in service revenues , partially offset by a $ 1.9 million decrease in software licenses and appliances revenues . the decrease in software license revenues in 2015 was largely impacted by a decrease in the value of perpetual product license contracts entered into in 2015 and converted to revenue . the $ 9.8 million increase in service revenues from 2014 to 2015 resulted from a $ 6.6 million increase in subscription , maintenance and support revenues driven primarily from growth in the customer base , including the favorable impact of saas revenues from qumu 's acquisition of kulu valley effective october 3 , 2014. also contributing to the growth in services revenue was an approximately $ 3.3 million increase in professional services revenues as qumu assists its customers in the deployment of its growing base of enterprise video solutions .
| 7,443 |
our reportable operating segments are americas outdoor advertising ( “ americas ” ) and international outdoor advertising ( “ international ” ) . our americas and international segments provide outdoor advertising services in their respective geographic regions using various digital and traditional display types . we manage our operating segments primarily focusing on their operating income , while corporate expenses , other operating income ( expense ) , net , interest expense , interest income on due from iheartcommunications , equity in earnings ( loss ) of nonconsolidated affiliates , other income , net and income tax benefit ( expense ) are managed on a total company basis and are , therefore , included only in our discussion of consolidated results . during the first quarter of 2018 , we reevaluated our segment reporting and determined that our latin america operations should be managed by our international outdoor leadership team . as such , beginning january 1 , 2018 , our latin american operations will be included in our international outdoor segment . certain prior period amounts have been reclassified to conform to the 2017 presentation . description of our business our revenue is derived from selling advertising space on the displays we own or operate in key markets worldwide , consisting primarily of billboards , street furniture and transit displays . part of our long-term strategy is to pursue the technology of digital displays , including flat screens , lcds and leds , as additions to traditional methods of displaying our clients ' advertisements . we are currently installing these technologies in certain markets , both domestically and internationally . management typically monitors our business by reviewing the average rates , average revenue per display , occupancy , and inventory levels of each of our display types by market . we own the majority of our advertising displays , which typically are located on sites that we either lease or own or for which we have acquired permanent easements . our advertising contracts with clients typically outline the number of displays reserved , the duration of the advertising campaign and the unit price per display . the significant expenses associated with our operations include direct production , maintenance and installation expenses as well as site lease expenses for land under our displays including revenue-sharing or minimum guaranteed amounts payable under our billboard , street furniture and transit display contracts . our direct production , maintenance and installation expenses include costs for printing , transporting and changing the advertising copy on our displays , the related labor costs , the vinyl costs , electricity costs and the costs for cleaning and maintaining our displays . vinyl costs vary according to the complexity of the advertising copy and the quantity of displays . our site lease expenses include lease payments for use of the land under our displays , as well as any revenue-sharing arrangements or minimum guaranteed amounts payable that we may have with the landlords . the terms of our site leases and revenue-sharing or minimum guaranteed contracts generally range from one to 20 years . americas our advertising rates are based on a number of different factors including location , competition , type and size of display , illumination , market and gross ratings points . gross ratings points are the total number of impressions delivered by a display or group of displays , expressed as a percentage of a market population . the number of impressions delivered by a display is measured by the number of people passing the site during a defined period of time . for all of our billboards in the united states , we use independent , third-party auditing companies to verify the number of impressions delivered by a display . client contract terms typically range from four weeks to one year for the majority of our display inventory in the united states . generally , we own the street furniture structures and are responsible for their construction and maintenance . contracts for the right to place our street furniture and transit displays and sell advertising space on them are awarded by municipal and transit authorities in competitive bidding processes governed by local law or are negotiated with private transit operators . generally , these contracts have terms ranging from 10 to 20 years . 33 international similar to our americas business , advertising rates generally are based on the gross ratings points of a display or group of displays . the number of impressions delivered by a display , in some countries , is weighted to account for such factors as illumination , proximity to other displays and the speed and viewing angle of approaching traffic . in addition , because our international advertising operations are conducted in foreign markets , including europe and asia , management reviews the operating results from our foreign operations on a constant dollar basis . a constant dollar basis allows for comparison of operations independent of foreign exchange movements . our international display inventory is typically sold to clients through network packages , with client contract terms typically ranging from one to two weeks with terms of up to one year available as well . internationally , contracts with municipal and transit authorities for the right to place our street furniture and transit displays typically provide for terms ranging up to 15 years . the major difference between our international and americas street furniture businesses is in the nature of the municipal contracts . in our international business , these contracts typically require us to provide the municipality with a broader range of metropolitan amenities in exchange for which we are authorized to sell advertising space on certain sections of the structures we erect in the public domain . a different regulatory environment for billboards and competitive bidding for street furniture and transit display contracts , which constitute a larger portion of our business internationally , may result in higher site lease costs in our international business . story_separator_special_tag on august 14 , 2017 , clear channel international b.v. ( `` ccibv '' ) , our indirect subsidiary , issued $ 150.0 million in aggregate principal amount of 8.75 % senior notes due 2020 ( the `` new ccibv notes '' ) , as additional notes under the indenture governing ccibv 's existing 8.75 % senior notes due 2020. on november 29 , 2017 , the “ due from iheartcommunications ” note was amended to extend its maturity from december 15 , 2017 to may 15 , 2019. the note 's interest rate was also amended and increased from 6.5 % to 9.3 % . in october 2017 , we made demands for repayment of $ 50.0 million outstanding under the due from iheartcommunications note and simultaneously paid special cash dividends of $ 50.0 million . revenues and expenses “ excluding the impact of foreign exchange movements ” in this management 's discussion & analysis of financial condition and results of operations is presented because management believes that viewing certain financial results without the impact of fluctuations in foreign currency rates facilitates period to period comparisons of business performance and provides useful information to investors . revenues and expenses “ excluding the impact of foreign exchange movements ” are calculated by converting the current period 's revenues and expenses in local currency to u.s. dollars using average foreign exchange rates for the prior period . 35 results of operations consolidated results of operations the comparison of our historical results of operations for the year ended december 31 , 2017 to the year ended december 31 , 2016 is as follows : replace_table_token_8_th consolidated revenue consolidated revenue decreased $ 97.6 million during 2017 compared to 2016 . excluding an $ 8.6 million impact from movements in foreign exchange rates , consolidated revenue decreased $ 106.2 million during 2017 compared to 2016 . the decrease in consolidated revenue is primarily due to the sales of our businesses in australia and turkey in 2016 and canada in 2017 , which generated revenue of $ 13.7 million and $ 149.4 million in the years ended december 31 , 2017 and 2016 , respectively . this decrease was partially offset by revenue growth in our international business as a result of new contracts and digital expansion . consolidated direct operating expenses consolidated direct operating expenses decreased $ 19.3 million during 2017 compared to 2016 . excluding the $ 4.0 million impact from movements in foreign exchange rates , consolidated direct operating expenses decreased $ 23.3 million during 2017 compared to 2016 due to the sales of our businesses in australia and turkey in 2016 and canada in 2017. this decrease was partially offset by higher site lease expense related to new contracts . consolidated selling , general and administrative ( “ sg & a ” ) expenses consolidated sg & a expenses decreased $ 6.6 million during 2017 compared to 2016 . excluding the $ 2.8 million impact from movements in foreign exchange rates , consolidated sg & a expenses decreased $ 9.4 million during 2017 compared to 2016 . sg & a expenses were lower primarily due to the sales of our businesses in australia and turkey in 2016 and canada in 2017. corporate expenses corporate expenses increased $ 26.2 million during 2017 compared to 2016 . excluding the $ 1.4 million impact from movements in foreign exchange rates , corporate expenses increased $ 27.6 million during 2017 compared to 2016 primarily due to the $ 36.7 million trademark license fee paid to iheartmedia , inc. ( see note 6 to our consolidated financial statements located 36 in part ii of this annual report on form 10-k ) . the increase in corporate expenses is partially offset by a decrease in executive and share-based compensation expense . revenue and efficiency initiatives included in the amounts for direct operating expenses , sg & a and corporate expenses discussed above are expenses of $ 11.2 million and $ 13.0 million incurred in 2017 and 2016 , respectively , in connection with our strategic revenue and efficiency initiatives . the costs were incurred to improve revenue growth , enhance yield , reduce costs , and organize each business to maximize performance and profitability . these costs consist primarily of severance related to workforce initiatives , consolidation of locations and positions , consulting expenses and other costs incurred in connection with streamlining our businesses . these costs are expected to provide benefits in future periods as the initiative results are realized . of these costs for 2017 , $ 1.8 million are reported within direct operating expenses , $ 8.5 million are reported within sg & a and $ 0.9 million are reported within corporate expense . in 2016 , such costs totaled $ 2.7 million , $ 7.7 million , and $ 2.6 million , respectively . depreciation and amortization depreciation and amortization decreased $ 18.1 million during 2017 compared to 2016 primarily due to the sale of the australia and turkey businesses and assets becoming fully depreciated or fully amortized . impairment charges we perform our annual impairment test on our goodwill , billboard permits , and other intangible assets as of july 1 of each year . in addition , we test for impairment of property , plant and equipment whenever events and circumstances indicate that depreciable assets might be impaired . as a result of these impairment tests , during 2017 , we recorded an impairment charge of $ 1.6 million during 2017 related to goodwill in one international business . in addition , the company recognized an impairment of $ 2.6 million during 2017 in relation to advertising assets that were no longer usable in one country in our international segment . during 2016 , we recognized a $ 7.3 million impairment related to goodwill in one international business . please see note 2 to the consolidated financial statements included in item 8 of part ii of this annual report on form 10-k for a further description of the impairment charges .
| international results of operations our international operating results were as follows : replace_table_token_10_th international revenue decreased $ 75.5 million during 2017 compared to 2016 . excluding the $ 4.9 million impact from movements in foreign exchange rates , international revenue decreased $ 80.4 million during 2017 compared to 2016 . the decrease in revenue is due to a $ 117.8 million decrease in revenue resulting from the sale of our businesses in australia and turkey in 2016. this was partially offset by growth across other markets including spain , the united kingdom , switzerland and china , primarily from new contracts and digital expansion . international direct operating expenses decreased $ 23.1 million during 2017 compared to 2016 . excluding the $ 2.0 million impact from movements in foreign exchange rates , international direct operating expenses decreased $ 25.1 million during 2017 compared to 2016 . the decrease was driven by a $ 70.3 million decrease in direct operating expenses resulting from the 2016 sales of our businesses in australia and turkey , partially offset by higher site lease and production expenses primarily in countries experiencing revenue growth . international sg & a expenses decreased $ 0.6 million during 2017 compared to 2016 . excluding the $ 1.7 million impact from movements in foreign exchange rates , international sg & a expenses decreased $ 2.3 million during 2017 compared to 2016 . the decrease in sg & a expenses was primarily due to a $ 22.6 million decrease resulting from the sale of our businesses in australia and turkey , partially offset by higher spending related to growth in certain countries . included within sg & a expenses is $ 9.6 million recorded in the fourth quarter of 2017 to correct for accounting errors related to the misappropriation of cash identified at our china subsidiary .
| 7,444 |
see item 1a - risk factors . actual results might differ materially from results suggested by any forward-looking statements in this report . the company does not have an obligation to publicly update any forward-looking statements , whether as a result of the receipt of new information , the occurrence of future events or otherwise . the following is a discussion and analysis of the consolidated financial condition and results of operations , unless stated otherwise , for the company for the years ended december 31 , 2013 , 2012 and 2011 , and of certain factors that may affect the company 's prospective financial condition and results of operations . the following should be read in conjunction with the consolidated financial statements and related notes appearing elsewhere herein . 26 overview the company designs , manufactures and sells building construction products that are of high quality and performance , easy to use and cost-effective for customers . it operates in three business segments determined by geographic region ; north america , europe and asia/pacific . the north america segment sells both wood and concrete construction products and has been highly dependent on housing starts . the company has made efforts to be less dependent on new housing construction by expanding its line of concrete construction products . north america concrete construction product sales increased 46 % in 2013 from 2011 , partly due to recent acquisitions . the europe segment also sells both wood and concrete construction products and until recently relied primarily on wood construction products . europe concrete constructions products sales increased over 100 % in 2013 from 2011 , primarily due to recent acquisitions , partly offset by the loss of sales from exiting the heavy-duty mechanical anchor market . the asia/pacific segment also sells both wood and concrete construction products with concrete construction product sales increasing over 100 % in 2013 from 2011. the company continues to invest in its strategic initiatives , such as expanding its offering of concrete construction products , specialty chemicals and wood construction products , particularly truss plate and software offerings . in support of these initiatives , the company expects to hire additional personnel and commit additional resources in 2014. the company generally manufactures products and incurs costs in the areas where sales occur . therefore , for each of the company 's foreign operations the local currency is the functional currency and each foreign operation transacts primarily in its functional currency . the company does not currently plan to enter into foreign currency contracts to hedge its exposure to foreign exchange rates . the administrative & all other segment primarily includes expenses such as self-insured workers compensation claims for employees of the company 's venting business , which was sold in 2010 , stock-based compensation for certain members of management , interest expense , foreign exchange gains or losses and income tax expense , as well as revenues and expenses related to real estate activities , such as rental income and depreciation expense on the company 's facility in vacaville , california , which the company has leased to a third party for a 10-year term expiring in august 2020. from 2013 to 2011 , net sales increased to $ 706.3 million from $ 603.4 million . the company had net income of $ 51.0 million for 2013 compared to net income of $ 50.9 million for 2011. diluted net income per common share was $ 1.05 for 2013 compared to diluted net income of $ 1.04 per common share for 2011. income from operations increased 10.0 % to $ 81.5 million in 2013 from $ 74.1 million in 2011. net sales net sales increased to $ 706.3 million in 2013 from $ 603.4 million in 2011 , reflecting improved economic conditions primarily in north america . · segment net sales : · north america net sales increased to $ 572.8 million in 2013 from $ 474.7 million in 2011 with increases in all regions of the united states and an above-average rate of increase in the southeast region of the country . net sales increases in north america were mostly due to an increase in sales volume and partly due to the acquisitions of : · the assets of fox industries , inc. ( fox industries ) , a maryland company , in december 2011 : · the assets of automatic stamping , llc and automatic stamping auxiliary services , llc , both north carolina limited liability companies ( collectively automatic stamping ) , in december 2011 ; and · the tj® shear brace ( shear brace ) product line in february 2013 . · europe net sales decreased to $ 117.8 million in 2013 from $ 118.2 million 2011 , mostly due to exiting the heavy-duty mechanical anchor business and lower sales volumes due to a slowing economy , partly offset by the acquisitions of s & p clever reinforcement ag and s & p clever international ag , both companies incorporated under the laws of switzerland ( collectively s & p clever ) , in january 2012 . · asia/pacific net sales increased to $ 14.8 million in 2013 from $ 9.5 million 2011 partly due to new sales offices operating in new zealand , south africa and thailand and the expansion of the concrete construction product line . 27 · sales channels and products groups : · net sales to contractor distributors and lumber dealers increased significantly , while home center sales in 2013 decreased from 2011 , due to the loss of lowe 's as a customer in the second quarter of 2012. lowe 's accounted for $ 25.0 million in net sales in 2011. excluding lowe 's , net sales to home centers increased 5.5 % in 2013 compared to 2011 . · the home depot exceeded 10 % of the company 's net sales in the years ended december 31 , 2012 and 2011 ( see item 1a risk factors and note 14 to the company 's consolidated financial statements ) . story_separator_special_tag based on current information and subject to future events and circumstances , the company estimates that its 2014 effective tax rate will be between 37 % and 39 % . comparison of the years ended december 31 , 2012 and 2011 net sales increased 2.6 % to $ 657.2 million for 2012 from $ 603.4 million for 2011. net income decreased 17.9 % from $ 50.9 million in 2011 to $ 41.9 million in 2012. diluted net income per common share was $ 0.87 for 2012 compared to diluted net income of $ 1.04 per common share for 2011. income from operations decreased 16.7 % from $ 74.1 million in 2011 to $ 61.7 million in 2012. the following table shows the change in the company 's operations from 2011 to 2012 , and the increases or decreases for each category by segment . ( in thousands ) replace_table_token_10_th 32 net sales the following table shows net sales by segment for the years ended december 31 , 2011 and 2012 : ( in thousands ) replace_table_token_11_th the following table shows segment net sales as percentages of total net sales for the years ended december 31 , 2011 and 2012 : replace_table_token_12_th · segment net sales : · north america the 10.1 % increase in net sales accounted for 89.6 % of the overall increase and resulted from increased sales volume and the acquisitions of fox industries and automatic stamping , while average prices for the year were flat . · europe the 3.6 % increase in net sales accounted for 8.0 % of the overall increase and resulted from the acquisition of s & p clever and a slight price increase , partly offset by reduced sales volumes due to difficult economic conditions and unfavorable currency translations of approximately $ 5.8 million . · asia/pacific net sales , although relatively small , have increased as the company continued expanding its presence in the region . asia/pacific net sales were not materially affected by currency translations . · consolidated net sales channels and product groups : · net sales to contractor distributors and lumber dealers increased in 2012 , compared to 2011 , while net sales to home centers decreased , partly as a result of the loss of lowe 's as a customer in the second quarter of 2012. lowe 's accounted for $ 11.7 million in net sales in 2012 compared to $ 25.0 million in 2011 . · excluding lowe 's , net sales to home centers increased 9.6 % in 2012 compared to 2011 , while net sales to the company 's largest customer increased 9.0 % . · wood construction product sales , including connectors , truss plates , fastening systems , fasteners and shearwalls , represented 85 % of total company sales in 2012 , down from 89 % in 2011 . · concrete construction product sales , including adhesives , chemicals , mechanical anchors , powder actuated tools and reinforcing fiber materials , as a percentage of total sales were 15 % in 2012 and 11 % in 2011. gross profit the following table shows gross profit by segment for the years ended december 31 , 2011 and 2012 : ( in thousands ) replace_table_token_13_th 33 the following table shows gross profit percentages by segment for the years ended december 31 , 2011 and 2012 : replace_table_token_14_th the overall 2012 gross profit margins were negatively affected by increased sales of concrete construction products , which have lower profit margins . the gross profit margin differential between wood construction products and concrete construction products increased from 15 % in 2011 to 17 % in 2012 . · north america the north america segment accounted for 92.7 % of the overall increase in gross profit with wood construction products representing 87 % of the north america segment 's net sales in 2012 , down from 89 % in 2011. the decreased gross profit margin was due primarily to higher material costs as a percentage of net sales , increased concrete construction product sales , which have a lower gross profit margin than wood construction product sales , and greater price competition . · europe - wood construction product sales represented 80 % of the europe segment 's net sales in 2012 , down from 92 % in 2011. the decreased gross profit margin was primarily due to charges resulting from the decision to discontinue manufacturing heavy-duty mechanical anchors made at the company 's facility in ireland and selling those products in europe . the charges related to the closure of the irish facility and discontinuing the sale of heavy-duty anchor products in the europe segment . the charges included severance costs of $ 2.3 million , loss on sale of inventory of $ 1.0 million and accelerated depreciation of $ 0.2 million . research and development and other engineering expense research and development and other engineering expense increased 38.8 % to $ 35.9 million in 2012 from $ 25.9 million in 2011. the increase was primarily due to additional professional fees of $ 6.5 million for truss software development , personnel costs of $ 2.4 million for additional employees and pay rate increases and stock-based compensation of $ 0.4 million . · north america research and development and other engineering expense increased $ 10.3 million , including professional fees of $ 6.7 million and personnel costs of $ 2.3 million . · none of the changes in the other segments was individually material . selling expense selling expense increased 12.0 % to $ 82.4 million in 2012 from $ 73.6 million in 2011. the increase was primarily due to additional personnel costs of $ 5.0 million , resulting from the recent north american and european acquisitions and expansion in the asia/pacific segment , additional employees , increased pay rates and stock-based compensation of $ 1.3 million , legal and professional fees of $ 1.2 million and promotional costs of $ 1.1 million .
| results of operations the following table sets forth , for the years indicated , the percentage of net sales of specified items in the company 's consolidated statements of operations . replace_table_token_4_th 28 comparison of the years ended december 31 , 2013 and 2012 net sales increased 7.5 % to $ 706.3 million for 2013 from $ 657.2 million for 2012. the company had net income of $ 51.0 million for 2013 compared to net income of $ 41.9 million for 2012. diluted net income per common share was $ 1.05 for 2013 compared to diluted net income of $ 0.87 per common share for 2012. income from operations increased 32.0 % to $ 81.5 million in 2013 from $ 61.7 million in 2012. the following table shows the change in the company 's operations from 2012 to 2013 , and the increases or decreases for each category by segment . ( in thousands ) replace_table_token_5_th net sales the following table shows net sales by segment for the years ended december 31 , 2012 and 2013 : ( in thousands ) replace_table_token_6_th the following table shows segment net sales as percentages of total net sales for the years ended december 31 , 2012 and 2013 : replace_table_token_7_th · segment net sales : · north america the 9.5 % increase in net sales accounted for all of the overall increase and resulted from increased sales volume , including from the acquisitions of fox industries and automatic stamping , while average prices for the year were down 2.3 % . · europe the 3.9 % decrease in net sales resulted from the company exiting the heavy-duty mechanical anchor business , reduced sales volumes due to difficult economic conditions and a slight price decrease , partly offset by the acquisition of s & p clever . europe net sales were not materially affected by currency translations .
| 7,445 |
the primary purpose of our invoicing terms is to provide customers with simplified and predictable ways story_separator_special_tag forward-looking statements this document contains “ 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 that are not historical in nature and typically address future or anticipated events , trends , expectations or beliefs with respect to our financial condition , results of operations or business . forward-looking statements often contain words such as “ believes , ” “ expects , ” “ anticipates , ” “ foresees , ” “ forecasts , ” “ estimates , ” “ plans , ” “ intends , ” “ continues , ” “ may , ” “ will , ” “ should , ” “ projects , ” “ might , ” “ could ” or other similar words or phrases . similarly , statements that describe our business strategy , outlook , objectives , plans , intentions or goals also are forward-looking statements . we believe there is a reasonable basis for our forward-looking statements , but they are inherently subject to risks and uncertainties and actual results could differ materially from the expectations and beliefs reflected in the forward-looking statements . we presently consider the following to be among the important factors that could cause actual results to differ materially from our expectations and beliefs : ( 1 ) changes in the budgets or regulatory environments of our clients , primarily local and state governments , that could negatively impact information technology spending ; ( 2 ) our ability to protect client information from security breaches and provide uninterrupted operations of data centers ; ( 3 ) our ability to achieve growth or operational synergies through the integration of acquired businesses , while avoiding unanticipated costs and disruptions to existing operations ; ( 4 ) material portions of our business require the internet infrastructure to be adequately maintained ; ( 5 ) our ability to achieve our financial forecasts due to various factors , including project delays by our clients , reductions in transaction size , fewer transactions , delays in delivery of new products or releases or a decline in our renewal rates for service agreements ; ( 6 ) general economic , political and market conditions ; ( 7 ) technological and market risks associated with the development of new products or services or of new versions of existing or acquired products or services ; ( 8 ) competition in the industry in which we conduct business and the impact of competition on pricing , client retention and pressure for new products or services ; ( 9 ) the ability to attract and retain qualified personnel and dealing with the loss or retirement of key members of management or other key personnel ; and ( 10 ) costs of compliance and any failure to comply with government and stock exchange regulations . a detailed discussion of these factors and other risks that affect our business are described in item 1a , “ risk factors. ” we expressly disclaim any obligation to publicly update or revise our forward-looking statements . story_separator_special_tag style= '' line-height:120 % ; padding-bottom:12px ; padding-top:12px ; text-align : left ; font-size:10pt ; '' > as of december 31 , 2019 , the purchase price allocations for micropact and mycivic are complete . as of december 31 , 2019 , the purchase price allocation for cht is not yet complete , therefore the preliminary valuation estimates of fair value assumed at the acquisition date including intangible assets , receivables and deferred revenue are subject to change as the valuation is finalized . the operating results of all 2019 acquisitions are included with the operating results of the enterprise software segment since their date of acquisition . revenues from micropact included in tyler 's results of operations totaled approximately $ 63.0 million and the net loss was approximately $ 98,000 for the twelve months ended december 31 , 2019 . the impact of the mycivic and cht acquisitions , individually and in the aggregate , on our operating results , assets and liabilities is not material . our balance sheet as of december 31 , 2019 , reflects the allocation of the purchase price to the assets acquired based on their fair value at the date of each acquisition . the fair value of the assets and liabilities acquired are based on valuations using level iii , unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities . we monitor and analyze several key performance indicators in order to manage our business and evaluate our financial and operating performance . these indicators include the following : revenues – we derive our revenues from five primary sources : sale of software licenses and royalties ; subscription-based arrangements ; software services ; maintenance ; and appraisal services . subscriptions and maintenance are considered recurring revenue sources and comprised approximately 67 % of our revenue in 2019 . the number of new saas clients and the number of existing clients who convert from our traditional software arrangements to our saas model are a significant driver to our business , together with new software license sales and maintenance rate increases . in addition , we also monitor our customer base and churn as we historically have experienced very low customer turnover . during 2019 , based on our number of customers , turnover was approximately 2 % . cost of revenues and gross margins – our primary cost component is personnel expenses in connection with providing software implementation , subscription-based services , maintenance and support , and appraisal services to our clients . we can improve gross margins by controlling headcount and related costs and by expanding our revenue base , especially from those products and services that produce incremental revenue with minimal incremental cost , such as software licenses and royalties , subscription-based services , and maintenance and support . story_separator_special_tag we earn revenue from software licenses , royalties , subscription-based services , software services , post-contract customer support ( “ pcs ” or “ maintenance ” ) , hardware , and appraisal services . revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services . we determine revenue recognition through the following steps : identification of the contract , or contracts , with a customer identification of the performance obligations in the contract determination of the transaction price allocation of the transaction price to the performance obligations in the contract recognition of revenue when , or as , we satisfy a performance obligation most of our software arrangements with customers contain multiple performance obligations that range from software licenses , installation , training , and consulting to software modification and customization to meet specific customer needs ( services ) , hosting , and pcs . for these contracts , we account for individual performance obligations separately when they are distinct . we evaluate whether separate performance obligations can be distinct or should be accounted for as one performance obligation . arrangements that include software services , such as training or installation , are evaluated to determine whether the customer can benefit from the services either on their own or together with other resources readily available to the customer and whether the services are separately identifiable from other promises in the contract . many of our software arrangements involve “ off-the-shelf ” software . we recognize the revenue allocable to `` off-the-shelf '' software licenses and specified upgrades at a point in time when control of the software license transfers to the customer , unless the software is not considered distinct . we consider off-the-shelf software to be distinct when it can be added to an arrangement with minor changes in the underlying code , it can be used by the customer for the customer 's purpose upon installation , and remaining services such as training are not considered highly interdependent or highly interrelated to the product 's functionality . for arrangements that involve significant production , modification or customization of the software , or where software services are otherwise not considered distinct , we recognize revenue over time by measuring progress-to-completion . we measure progress-to-completion primarily using labor hours incurred as it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts . these arrangements are often implemented over an extended period and occasionally require us to revise total cost estimates . amounts recognized in revenue are calculated using the progress-to-completion measurement after giving effect to any changes in our cost estimates . changes to total estimated contract costs , if any , are recorded in the period they are determined . estimated losses on uncompleted contracts are recorded in the period in which we first determine that a loss is apparent . when software services are distinct , the fee allocable to the service element is recognized over the time we perform the services and is billed on a time and material or milestones basis . 24 subscription-based services consist of revenues derived from saas arrangements , which primarily utilize the tyler private cloud , and electronic filing transactions . revenue from subscription-based services is generally recognized over time on a ratable basis over the contract term , beginning on the date that our service is made available to the customer . for saas arrangements , we evaluate whether the customer has the contractual right to take possession of our software at any time during the hosting period without significant penalty and whether the customer can feasibly maintain the software on the customer 's hardware or enter into another arrangement with a third-party to host the software . we allocate contract value to each performance obligation of the arrangement that qualifies for treatment as a distinct element based on estimated ssp . we recognize saas arrangements ratably over the term of the arrangement , which range from one to ten but are typically for a period of three to five years . for software services associated with certain saas arrangements , we have concluded that the services are not distinct , and we recognize the revenue ratably over the remaining contractual period once we have provided the customer access to the software . we record amounts that have been invoiced in accounts receivable and in deferred revenue or revenues , depending on whether the revenue recognition criteria have been met . the transaction price is allocated to the separate performance obligations on a relative ssp basis . we determine the ssp based on our overall pricing objectives , taking into consideration market conditions and other factors , including the value of our contracts , the applications sold , customer demographics , and the number and types of users within our contracts . we use a range of amounts to estimate ssp when we sell each of the products and services separately and need to determine whether there is a discount to be allocated based on the relative ssp of the various products and services . in instances where ssp is not directly observable , such as when we do not sell the product or service separately , we determine ssp using the expected cost-plus margin approach . revenue is recognized net of allowances for sales adjustments and any taxes collected from customers , which are subsequently remitted to governmental authorities . typically , the structure of our arrangements does not give rise to variable consideration . however , in those instances whereby variable consideration exists , we include in our estimates additional revenue for variable consideration when we believe we have an enforceable right , the amount can be estimated reliably and its realization is probable . we maintain allowances for doubtful accounts , which are provided at the time the revenue is recognized .
| overview general we provide integrated information management solutions and services for the public sector , with a focus on local governments . we develop and market a broad line of software products and services to address the it needs of cities , counties , schools and other local government entities . in addition , we provide professional it services to our clients , including software and hardware installation , data conversion , training and for certain clients , product modifications , along with continuing maintenance and support for clients using our systems . we also provide subscription-based services such as software as a service ( “ saas ” ) , which primarily utilize the tyler private cloud , and electronic document filing solutions ( “ e-filing ” ) , which simplify the filing and management of court related documents . revenues for e-filing are derived from transaction fees and , in some cases , fixed fee arrangements . other transaction based fees primary relate to online payment services . we also provide property appraisal outsourcing services for taxing jurisdictions . our products generally automate eight major functional areas : ( 1 ) financial management and education , ( 2 ) courts and justice , ( 3 ) public safety , ( 4 ) property appraisal and tax , ( 5 ) planning , regulatory and maintenance , ( 6 ) land and vital records management , ( 7 ) data and insights and ( 8 ) case management and business process management . we report our results in two segments . the enterprise software ( `` es '' ) segment provides public sector entities with software systems and services to meet their information technology and automation needs for mission-critical “ back-office ” functions such as : financial management and education , courts and justice , public safety , planning , regulatory and maintenance , land and vital records management , data and insights and case management and business management processes .
| 7,446 |
the fair value of story_separator_special_tag the following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes and the discussions under application of critical accounting policies ( also under item 7 ) , which describes key estimates and assumptions we make in the preparation of our consolidated financial statements ; item 1. business , which describes our wireless and software operations ; and item 1a . risk factors , which describes key risks associated with our operations and industries . a reference to a note in this section refers to the accompanying notes to the consolidated financial statements for the year ended december 31 , 2012. restatement of consolidated financial statements on march 28 , 2013 , management and our audit committee concluded that the previously issued consolidated financial statements included in our annual report on form 10-k for the year ended december 31 , 2011 and in our quarterly reports on form 10-q for the periods ended march 31 , 2011 , june 30 , 2011 and september 30 , 2011 contained material errors and should no longer be relied upon . the adjustments made as a result of the restatement are more fully discussed in note 2 included in this annual report on form 10-k. we have restated the previously issued interim and annual 2011 consolidated financial statements in this annual report on form 10-k for the year ended december 31 , 2012. overview we offer our services and products in the united states and abroad primarily to three major market segments : healthcare , government and large enterprise . the key market segments for our wireless ( paging ) operations include healthcare , government and large enterprise , while our software operations also have a presence in hospitality , in addition to these three segments . for the wireless operations , the government business has been trending downward over the last several years as state and local governments have been struggling with budget constraints . at the same time , our wireless services tend to be a reliable and low cost communication alternative when budgets are constrained and therefore paging services can be positioned well against other communication tools . large enterprise customers have been trending away from paging to cellular/smart phones for a number of years and we expect that trend to continue in future years . our software operations leverage these trends with more advanced critical messaging offerings such as our amcom mobile connect offering for smart phones , which enables caregivers and physicians to communicate more effectively , and other more advanced unified communication tools . the trend toward more advanced/smart communications devices has been ongoing in large enterprise and is emerging in healthcare and government . we generate revenue by providing paging services , as well as developing , licensing , and supporting a wide range of software products and services . our most significant expenses are related to compensating employees , site rents , telecommunications and taxes . wireless operations our wireless operations provide one-way and advanced two-way wireless messaging services including information services throughout the united states . we also offer voice mail , personalized greeting , message storage and retrieval , and equipment loss and or maintenance protection to both one-way and two-way messaging subscribers . we market and distribute these wireless messaging and information services through a direct sales force and a small indirect sales channel . ( see item 1 . business for more details . ) 26 the following table summarizes the breakdown of our direct and indirect units in service at specified dates : replace_table_token_7_th as noted above in the overview , our key market segments are healthcare , government and large enterprise . the following table indicates the percentage of our units in service by key market segments for the periods stated and illustrates the relative significance of these market segments to our operations . replace_table_token_8_th the following table indicates the revenue by key market segments for the periods stated and illustrates the relative significance of these market segments to our operations . replace_table_token_9_th the following table sets forth information on our direct units in service by account size for the periods stated : replace_table_token_10_th 27 we provide wireless messaging services to subscribers for a periodic fee , as described above . in addition , subscribers either lease a messaging device from us for an additional fixed monthly fee or they own a device , having purchased it either from us or from another vendor . we also sell devices to resellers who lease or resell devices to their subscribers and then sell messaging services utilizing our networks . we derive the majority of our revenues from fixed monthly or other periodic fees , charged to subscribers for wireless messaging services . such fees are not generally dependent on usage . as long as a subscriber maintains service , operating results benefit from recurring payment of these fees . revenues are generally based upon the number of units in service and the monthly charge per unit . the number of units in service changes based on subscribers added , referred to as gross placements , less subscriber cancellations , or disconnects . the net of gross placements and disconnects is commonly referred to as net gains or losses of units in service or net disconnect rate . the absolute number of gross placements as well as the number of gross placements relative to average units in service in a period , referred to as the gross placement rate , is monitored on a monthly basis . disconnects are also monitored on a monthly basis . the ratio of units disconnected in a period to average units in service for the same period , called the disconnect rate , is an indicator of our success at retaining subscribers , which is important in order to maintain recurring revenues and to control operating expenses . story_separator_special_tag these are expenses associated with costs for pagers for the wireless operations and hardware , third-party software , professional services , payroll and related expenses , and various other expenses associated with the software operations . service , rental , and maintenance . these are expenses associated with the operation of our networks and the provision of messaging services . expenses consist largely of site rent expenses for transmitter locations , telecommunication expenses to deliver messages over our networks , and payroll and related expenses for our engineering and pager repair functions . expenses related to the development and maintenance of our software products are also included in this category . selling and marketing . these are expenses associated with our direct sales force and indirect sales channel and marketing expenses in support of those sales groups . this classification consists primarily of payroll and related expenses and commission expenses . general and administrative . these are expenses associated with customer service , inventory management , billing , collections , bad debt , and other administrative functions . this classification consists primarily of payroll and related expenses , outside service expenses , tax , license and permit expenses , and facility rent expenses . we review the percentages of these operating expenses to revenues on a regular basis . even though the operating expenses are classified as described above , expense control and management are also performed by expense category . approximately 70 % of the operating expenses referred to above were incurred in payroll and related expenses , site and facility rent expenses and telecommunication expenses for the years ended december 31 , 2012 , 2011 and 2010 , respectively . payroll and related expenses for the year ended december 31 , 2012 for software operations included a benefit of $ 0.3 million for forfeitures under the 2012 stip associated with the departure of two former executives . payroll and related expenses for the year ended december 31 , 2010 for wireless operations included a benefit of $ 0.2 million for forfeitures related to the 2009 ltip cash awards and $ 0.5 million of payroll and related expenses reclassified to intangible assets for a non-compete agreement with a former executive . 31 payroll and related expenses include wages , incentives , employee benefits and related taxes . on a monthly basis , we review the number of employees in major functional categories such as direct sales , engineering and technical staff , customer service , collections and inventory . we also review the design and physical locations of functional groups to continuously improve efficiency , to simplify organizational structures , and to minimize the number of physical locations for the wireless operations . we have reduced our wireless employee base by approximately 12.9 % to 378 full-time equivalent employees ( ftes ) at december 31 , 2012 from 434 ftes at december 31 , 2011. we anticipate continued staffing reductions in 2013 for wireless operations , consistent with the subscriber and revenue trends , and we have accrued post-employment benefits for these anticipated staffing reductions . we implemented a reorganization of our software operations during the first quarter of 2013 which resulted in the elimination of certain positions . we have accrued post-employment benefits for these anticipated staffing reductions . once this reorganization is completed , we expect staffing increases associated with our software operations in 2013 to support our revenue growth . the software operations had 287 ftes at december 31 , 2012 , an increase of 15.3 % from 249 ftes at december 31 , 2011. site rent expenses for transmitter locations are largely dependent on our paging networks . we operate local , regional , and nationwide one-way and two-way paging networks . these networks each require locations on which to place transmitters , receivers , and antennae . generally , site rent expenses are incurred for each transmitter location . therefore , site rent expenses for transmitter locations are highly dependent on the number of transmitters , which in turn is dependent on the number of networks . in addition , these expenses generally do not vary directly with the number of subscribers or units in service , which is detrimental to our operating margins as revenues decline . in order to reduce these expenses , we have an active program to consolidate the number of networks , and thus transmitter locations , which we refer to as network rationalization . we have reduced the number of active transmitters by 4.8 % to 4,749 active transmitters at december 31 , 2012 from 4,991 active transmitters at december 31 , 2011. telecommunication expenses are incurred to interconnect our paging networks and to provide telephone numbers for customer use , points of contact for customer service , and connectivity among our offices . these expenses for wireless operations are dependent on the number of units in service and the number of office and network locations that we maintain . the dependence on units in service is related to the number of telephone numbers provided to customers and the number of telephone calls made to our call centers , though this is not always a direct dependency . for example , the number or duration of telephone calls to call centers may vary from period to period based on factors other than the number of units in service , which could cause telecommunication expenses to vary regardless of the number of units in service . in addition , certain phone numbers we provide to our customers may have a usage component based on the number and duration of calls to the subscriber 's messaging device . telecommunication expenses do not necessarily vary in direct relationship to units in service . therefore , based on the factors discussed above , efforts are underway to review and reduce telephone circuit inventories for wireless operations . telecommunication expenses are also incurred for our offices and call centers for software operations . in 2010 , we incurred a non-recurring expense to settle an outstanding litigation .
| overview based on current and anticipated levels of operations , we anticipate net cash provided by operating activities , together with the available cash on hand at december 31 , 2012 , should be adequate to meet anticipated cash requirements for both our wireless and software operations for the foreseeable future . in the event that net cash provided by operating activities and cash on hand are not sufficient to meet future cash requirements , we may be required to reduce planned capital expenses , reduce or eliminate our cash dividends to stockholders , reduce or eliminate our common stock repurchase program , and or sell assets or seek additional financing beyond the availability on our revolving credit facility . we can provide no assurance that reductions in planned capital expenses or proceeds from asset sales would be sufficient to cover shortfalls in available cash or that additional financing would be available on acceptable terms . as of december 31 , 2012 , our available cash on hand was $ 61.0 million and our excess borrowing capacity under our revolving credit facility was approximately $ 40.0 million ( see borrowings below ) . the following table sets forth information on our net cash flows from operating , investing , and financing activities for the periods stated : replace_table_token_38_th net cash provided by operating activities . as discussed above , we are dependent on cash flows from operating activities to meet our cash requirements . cash from operations varies depending on changes in various working capital items , including deferred revenues , accounts payable , accounts receivable , prepaid expenses and various accrued expenses .
| 7,447 |
on september 7 , 2012 , the company issued 75,000 fully-vested warrants with a fair value of $ 65,978 to a related party as compensation for the use of the office facilities and receptionist . such warrants have an exercise price of $ 1.00 and will be exercisable for a period of five years . in accordance with asc 505-50-25 , the company recorded the fair market value of the warrants as professional fees . 32 ohr pharmaceutical , inc. ( a development stage company ) notes to the financial statements september 30 , 2012 below is a table summarizing the warrants issued and outstanding as of september 30 , 2012. replace_table_token_9_th the outstanding warrants as of september 30 , 2012 have an intrinsic value of approximately $ 4.88 million . note 8 – common stock options the company has determined the estimated value of the options granted to employees and non-employees in exchange for services and financing expenses using the black-scholes pricing model and the following assumptions : stock price at valuation , $ 0.40-0.65 ; expected term of five years , exercise price of $ 0.50-0.57 , a risk free interest rate of 0.83-2.60 percent , a dividend yield of 0 percent and volatility of 192-277 percent . 33 ohr pharmaceutical , inc. ( a development stage company ) notes to the financial statements september 30 , 2012 on april 12 , 2010 the company granted 1,000,000 options to employees as part of its 2009 stock option plan . the company calculated a fair value of $ 0.40 per option . of the 1,000,000 options issued , 520,000 vested upon issuance and the remaining 480,000 vest over the five year life of the options . as of september 30 , 2012 , 790,000 options have vested resulting in compensation expense of $ 315,341 . in the years ended september 30 , 2012 and 2011 , 120,000 shares vested , resulting in compensation expense in each period of $ 47,900 . on march 9 , 2012 , the company agreed to grant 1,700,000 options to board members and executives . the company calculated a fair value of $ 0.63 per option . of the 1,700,000 options issued , 425,000 vested upon issuance and the remaining 1,275,000 vest in 25 percent tranches on each anniversary . as of september 30 , 2012 , 425,000 options have vested resulting in compensation expense of $ 358,367 . below is a table summarizing the options issued and outstanding as of september 30 , 2012. replace_table_token_10_th as of september 30 , 2012 , the outstanding options have an intrinsic value of approximately $ 1.45 million . note 9 – commitments and contingencies legal proceedings the company may become involved in certain legal proceedings and claims which arise in the normal course of business . if an unfavorable ruling were to occur , there exists the possibility of a material adverse impact on the company 's results of operations , prospects , cash flows , financial position and brand . to the best knowledge of the company 's management , at september 30 , 2012 , there are no legal proceedings which the company believes will have a material adverse effect on its business , results of operations , cash flows or financial condition . in july 2012 , the company received notice that it was being named , along with twenty six other parties , as a defendant in a class action lawsuit being brought against the genaera liquidating trust ( “ trust ” ) . we purchased biotechnology assets from the trust in 2009. the company does not believe the allegations against the company in the complaint have merit and intends to defend the case vigorously . recognizing that the outcome of litigation is uncertain , management believes that the litigation is unlikely to have a materially adverse impact to the company 's financial statements . note 10 – subsequent events on october 5 , 2012 , the company received a notice of conversion from two holders of its series b preferred shares for the conversion of 138,889 preferred shares into common shares . the conversion rate for the preferred shares is one to one into common shares . accordingly , the company issued 138,889 shares of common stock . on october , 24 , 2012 , the company received a notice of exercise for 200,000 warrants at an exercise price of $ 0.50 . accordingly , the company issued 200,000 shares and received proceeds of $ 100,000 . on october 30 , 2012 , the company agreed to extend the term of the 11,985,367 common stock purchase warrants , expiring october 31 , 2012 , to april 30 , 2013 , subject to the warrant agreement , as amended . these amendments include removal of the cashless exercise provision and early termination of the extension period , at the sole discretion of the company , in the event that the company 's common stock trades at or above $ story_separator_special_tag operations safe harbor statement 13 certain statements contained in this report , including , without limitation , statements containing the words “ believes , ” “ anticipates , ” “ expects , ” “ intends , ” and words of similar import , constitute “ forward-looking statements ” as defined in the private securities litigation reform act of 1995 or by the securities and exchange commission in its rules , regulations and releases , regarding the company 's financial and business prospects . these forward-looking statements are qualified in their entirety by these cautionary statements , which are being made pursuant to the provisions of such act and with the intention of obtaining the benefits of the “ safe harbor ” provisions of such act . story_separator_special_tag we acquired ohr/avr118 in a secured party sale and squalamine from the genaera liquidating trust as part of the company 's strategy to acquire undervalued biotechnology companies and assets . on march 20 , 2009 , the company acquired in a secured party sale all the patents , related intellectual property , clinical data and other assets related to avr 118 ( renamed ohr/avr118 ) . ohr/avr118 is in an ongoing phase ii trial for the treatment of cachexia . the company acquired the assets in the secured party sale with $ 100,000 in cash and by issuing a $ 500,000 principal amount 11 % convertible secured non-recourse debenture due june 20 , 2011 , and convertible at $ 0.40 per share ( the “ convertible debenture ” ) . the convertible debenture is secured by the acquired assets . the cash portion of the purchase price was financed by short-term loans from an affiliate of orin hirschman , a director of the company , and another current shareholder . the convertible debenture was paid in full on december 29 , 2010. on august 19 , 2009 the company completed the acquisition of squalamine , trodusquemine and related compounds from genaera liquidating trust . the company paid $ 200,000 in cash for the compounds . on april 12 , 2010 the company hired dr. irach taraporewala as ceo and sam backenroth as vice president of business development and cfo . on september 24 , 2012 , the company announced the initiation of a multi center , randomized , placebo controlled phase ii trial to evaluate the efficacy and safety of squalamine eye drops for the treatment of wet-amd . the company is currently engaged in the clinical testing of ohr/avr118 and the squalamine eye drop program for the treatment of wet-amd . discontinued operations and divestment of assets on june 5 , 2007 , the company announced that it ceased its broadband maritime operations and reduced employment to a small residual force . on november 1 , 2007 , the company sold substantially all of its assets ( primarily intellectual property and technology ) relating to broadband services to ships to private investors for 460,000. the company has limited core operating expenses as we have only two full-time employees . in connection with the hiring of our executive management team , we established an office in new york city products and markets the company is a pharmaceutical company currently focused on development of the company 's previously acquired compounds . with the addition of our executive management team in april 2010 , we have shifted our strategy accordingly to focus on the development of our two later stage lead products , ohr/avr 118 for the treatment of cancer cachexia , and squalamine eye drops for the treatment of wet-amd . we acquired ohr/avr118 in a secured party sale and squalamine from the genaera liquidating trust as part of the company 's strategy to acquire undervalued biotechnology companies and assets . product pipeline squalamine squalamine is a small molecule anti-angiogenic drug with a novel intracellular mechanism of action . the drug acts against the development of aberrant neovascularization by inhibiting multiple protein growth factors of angiogenesis , including vascular endothelial growth factor ( “ vegf ” ) , platelet-derived growth factor ( “ pdgf ” ) and basic fibroblast growth factor growth factor ( “ bfgf ” ) . recent clinical evidence has shown pdgf to be an additional target for the treatment of wet age-related macular degeneration ( “ wet-amd ” ) . using an intravenous formulation in over 250 patients in phase i and phase ii trials for the treatment of wet-amd , the trials demonstrated that the molecule had biological effect and maintained and improved visual acuity outcomes , with both early and advanced lesions responding . ohr reformulated squalamine for ophthalmic indications from an intravenous infusion ( “ iv ” ) to a topical eye drop . preclinical testing has demonstrated that the eye drop formulation is both safe to ocular tissues and achieves in excess of target anti-angiogenic concentrations in the tissues of the back of the eye . the topical formulation is designed for enhanced uptake to the back of the eye and decreased potential for side effects . the company plans on advancing its clinical wet-amd program with the novel topical formulation . in may 2012 , the u.s. food and drug administration ( “ fda ” ) awarded fast track designation to the squalamine eye drop program for the potential treatment of wet-amd . 16 squalamine eye drops are designed for self-administration which may provide several potential advantages over the fda approved current standards of care ( roche/genetech 's lucentis® and regeneron 's eylea® intravitreal injections ) . · eye drops versus standard of care which is an intravitreal injection directly into the eye every 4-8 weeks on a chronic basis · reduction or elimination of intravitreal injections has the potential to provide patients with improved safety by reducing or eliminating side effects associated with the intravitreal injection procedure · inhibition of multiple growth factors may achieve superior visual acuity outcomes . clinical evidence has demonstrated that inhibiting vegf and pdgf together may provide patients with better visual acuity outcomes than anti-vegf therapy alone · cost advantage of manufacturing a small molecule when compared to large molecule proteins and antibodies in phase ii clinical trials using the intravenous formulation of squalamine , stabilization or improvement in visual activity was observed in the vast majority of patients , with both early and advanced lesions responding and few drug-related ocular or systemic effects observed .
| results of operations for the fiscal year ended september 30 , 2012 , the company had zero revenues and operating expenses of approximately $ 3,286,408. the loss from operations was comprised of $ 1,625,695 in research and development costs , $ 875,868 in professional fees , $ 649,293 in salaries and wages , and $ 135,552 in general and administrative expenses . during the same period , the company recorded interest expense of $ 1,817 , a gain on the settlement of debt of $ 21,005 , a gain on derivative liabilities of $ 1,812,224 , and other income items totaling $ 112. the net loss from continuing operations for the year ended september 30 , 2012 was $ 1,454,884. for the fiscal year ended september 30 , 2011 , the company had zero revenues and operating expenses of approximately $ 1,243,401. the loss from operations was comprised of $ 521,969 in research and development costs , $ 338,055 in professional fees , $ 279,029 in salaries and wages , and $ 104,348 in general and administrative expenses . during the same period , the company recorded interest expense of $ 2,433 , a gain on the sale of assets of $ 70,500 , a gain on the settlement of debt of $ 49,179 , a loss on derivative liabilities of $ 3,977,041 , and other income items totaling $ 1,677. the net loss from continuing operations for the year ended september 30 , 2011 was $ 5,101,519. as noted above , the company had no revenues for fiscal year 2012 , and does not anticipate that it will have revenues in fiscal year 2013. the operating expenses of the company increased from fiscal year 2011 to 2012 by approximately $ 2,043,007. the company had increases in all expense categories as ongoing development costs and testing efforts for its pharmaceutical products continue .
| 7,448 |
results of operations a summary of our operating results for the years ended december 31 , 2017 , 2016 and 2015 is as follows : replace_table_token_8_th 30 non-comparable items impacting the company 's earnings per diluted share and net earnings the company 's earnings per diluted share were $ 2.08 , $ 0.55 and $ 2.70 for the years ended december 31 , 2017 , 2016 and 2015 , respectively . the non-comparable items presented below are calculated after tax using the corresponding effective tax rate and the weighted average number of diluted shares for each of the years then ended . the company believes the following table is useful in highlighting non-comparable items that impacted its earnings per diluted share : replace_table_token_9_th a summary of non-comparable items impacting the company 's net earnings for the years ended december 31 , 2017 , 2016 and 2015 is as follows : year ended december 31 , 2017 : in the third quarter of 2017 , the company started exploring strategic options for the non-core emission product lines . in the fourth quarter of 2017 , the company launched an active program to locate a buyer for the non-core pipes and thermostat product lines and initiated all other actions required to complete the plan to sell the non-core product lines . the company determined that the assets and liabilities of the pipes and thermostat product lines met the held for sale criteria as of december 31 , 2017. as a result , the company recorded an asset impairment expense of $ 71.0 million in the fourth quarter of 2017 to adjust the net book value of this business to fair value less costs to sell . refer to note 19 , `` assets and liabilities held for sale , '' to the consolidated financial statements in item 8 of this report for more information . the company recorded restructuring expense of $ 58.5 million related to engine and drivetrain segment actions designed to improve future profitability and competitiveness , including $ 48.2 million primarily related to professional fees and negotiated commercial costs associated with emissions business divestiture and manufacturing footprint rationalization activities . the company will continue its plan to improve the future profitability and competitiveness of its remaining european emissions business and these actions may result in the recognition of additional restructuring charges that could be material . the company also recorded restructuring expense of $ 6.8 million primarily related to contractually required severance associated with sevcon executive officers and other employee termination benefits . refer to note 15 , `` restructuring , '' to the consolidated financial statements in item 8 of this report for more information . during the year ended december 31 , 2017 , the company recorded $ 10.0 million of merger and acquisition expense primarily related to the acquisition of sevcon , inc. ( `` sevcon '' ) completed on september 27 , 2017. refer to note 18 , `` recent transactions , '' to the consolidated financial statements in item 8 of this report for more information . 31 the company recorded reduction of income tax expenses of $ 10.1 million , $ 1.0 million , $ 18.2 million and $ 3.8 million related to restructuring expense , merger and acquisition expense , asset impairment expense and other one-time tax adjustments , respectively , discussed in the other expense , net footnote . additionally , the company recorded a tax expense of $ 273.5 million for the change in the tax law related to tax effects of the act . year ended december 31 , 2016 : in the fourth quarter of 2016 , the company determined that its best estimate of the aggregate liability both for asbestos-related claims asserted but not yet resolved and potential asbestos-related claims not yet asserted , including an estimate for defense costs , is $ 879.3 million as of december 31 , 2016. the company recorded a charge of $ 703.6 million before tax ( $ 440.6 million after tax ) in other expense , representing the difference in the total liability from what was previously accrued , consulting fees , less available insurance coverage . refer to note 14 , `` contingencies , '' to the consolidated financial statements in item 8 of this report for more information . in october 2016 , the company sold the remy light vehicle aftermarket business associated with the 2015 remy international , inc. ( `` remy '' ) acquisition and recorded a loss on divestiture of $ 127.1 million . refer to note 18 , `` recent transactions , '' to the consolidated financial statements in item 8 of this report for more information . the company recorded $ 23.7 million of transition and realignment expenses associated with the remy acquisition , including certain costs related to the sale of remy light vehicle aftermarket business . the company incurred restructuring expense of $ 26.9 million primarily related to continuation of prior year actions in both the drivetrain and engine segments . the drivetrain segment charges represent other expenses and employee termination benefits associated with three labor unions at separate facilities in western europe for approximately 450 employees , as well as restructuring of the 2015 remy acquisition . the engine segment charges primarily relate to the restructuring of the 2014 gustav wahler gmbh u. co. kg and its general partner ( `` wahler '' ) acquisition . these expenses included $ 10.6 million related to employee termination benefits and $ 16.3 million of other expenses including $ 3.1 million related to winding down certain operations in north america . both the drivetrain and engine restructuring actions are designed to improve the future profitability and competitiveness of each segment . the company recorded intangible asset impairment losses of $ 12.6 million related to engine segment etatech 's eccos intellectual technology due to the discontinuance of interest from potential customers during the fourth quarter of 2016 that significantly lowered the commercial feasibility of the product line . story_separator_special_tag our current long-term expectation for r & d spending remains at 4 % of net sales . other expense , net was $ 144.5 million , $ 889.7 million and $ 101.4 million for the years ended december 31 , 2017 , 2016 and 2015 , respectively . this line item is primarily comprised of non-income tax items discussed within the subtitle `` non-comparable items impacting the company 's earnings per diluted share and net earnings '' above . equity in affiliates ' earnings , net of tax was $ 51.2 million , $ 42.9 million and $ 40.0 million in the years ended december 31 , 2017 , 2016 and 2015 , respectively . this line item is driven by the results of our 50 % -owned japanese joint venture , nsk-warner , and our 32.6 % -owned indian joint venture , turbo energy private limited ( “ tel ” ) . the increase in the year ended december 31 , 2017 compared to 2016 and 2015 is primarily driven by higher earnings from nsk-warner as a result of improved business conditions in asia . refer to note 5 , `` balance sheet information , '' to the consolidated financial statements in item 8 of this report for further discussion of nsk-warner . interest expense and finance charges were $ 70.5 million , $ 84.6 million and $ 60.4 million in the years ended december 31 , 2017 , 2016 and 2015 , respectively . the decrease in interest expense for the year ended december 31 , 2017 compared with the year ended december 31 , 2016 was primarily due to the reduction in average outstanding short term borrowings and senior notes and increase in capitalized interest . the increase in interest expense for the year ended december 31 , 2016 compared with the year ended december 31 , 2015 was primarily due to the company 's march and november 2015 issuances of senior notes . provision for income taxes the provision for income taxes resulted in an effective tax rate of 54.6 % for the year ended december 31 , 2017 , compared with rates of 15.9 % and 30.3 % for the years ended december 31 , 2016 and 2015 , respectively . the u.s. income tax payable of $ 25.1 million includes an estimated $ 23.6 million of transition tax , net of foreign tax credits associated with the required inclusion of unremitted foreign earnings and amounts carried forward from prior years . the estimated transition tax is due and payable annually over an eight year period beginning in the first quarter of 2018. for further details , see note 4 , `` income tax , '' to the consolidated financial statements in item 8. the company is continuing to evaluate the impact that the act will have on the future effective tax rates . based upon the company 's current interpretations of tax regulations , we estimate that our 2018 effective tax rate will be approximately 28 % . 34 the effective tax rate of 54.6 % for the year ended december 31 , 2017 includes reduction of income tax expenses of $ 10.1 million , $ 1.0 million , $ 18.2 million and $ 3.8 million related to restructuring expense , merger and acquisition expense , asset impairment expense and other one-time tax adjustments , respectively , discussed in the other expense , net footnote . additionally , the company recorded a tax expense of $ 273.5 million for the change in the tax law related to tax effects of the act . excluding the impact of these non-comparable items , the company 's annual effective tax rate associated with ongoing operations for 2017 was 28.2 % . the effective tax rate of 15.9 % for the year ended december 31 , 2016 includes reduction of income tax expenses of $ 263.0 million , $ 22.7 million , $ 8.6 million , $ 6.0 million and $ 4.4 million associated with an asbestos-related charge , loss on divestiture , other one-time tax adjustments , restructuring expense and intangible asset impairment loss , respectively , as well as a tax expense of $ 2.2 million related to a gain associated with the release of certain remy light vehicle aftermarket liabilities due to the expiration of a customer contract . excluding the impact of these non-comparable items , the company 's annual effective tax rate associated with ongoing operations for 2016 was 30.9 % . the effective tax rate of 30.3 % for the year ended december 31 , 2015 includes reduction of income tax expenses of $ 9.0 million , $ 3.8 million and $ 3.7 million related to the pension settlement loss , merger and acquisition expense and restructuring expense discussed in note 3 , `` other expense , net , '' to the consolidated financial statements in item 8 of the report . additionally , the effective tax rate includes a tax benefit of $ 9.9 million primarily related to foreign tax incentives and tax settlements . excluding the impact of these non-comparable items , the company 's annual effective tax rate associated with ongoing operations for 2015 was 29.8 % . net earnings attributable to the noncontrolling interest , net of tax of $ 43.4 million for the year ended december 31 , 2017 increased by $ 1.7 million and $ 6.7 million compared to the years ended december 31 , 2016 and 2015 , respectively . the increase during the year ended december 31 , 2017 compared to the years ended december 31 , 2016 and 2015 was primarily related to higher sales and earnings by the company 's joint ventures . story_separator_special_tag style= '' font-family : arial ; font-size:11pt ; '' > $ 1.25 billion ) to a $ 1.2 billion multi-currency revolving credit facility ( which includes a feature that allows the company 's borrowings to be increased to $ 1.5 billion ) . the facility provides for borrowings through june 29 , 2022 .
| results by reporting segment the company 's business is comprised of two reporting segments : engine and drivetrain . these segments are strategic business groups , which are managed separately as each represents a specific grouping of related automotive components and systems . the company allocates resources to each segment based upon the projected after-tax return on invested capital ( `` roic '' ) of its business initiatives . roic is comprised of adjusted ebit after deducting notional taxes compared to the projected average capital investment required . adjusted ebit is comprised of earnings before interest , income taxes and noncontrolling interest ( “ ebit '' ) adjusted for restructuring , goodwill impairment charges , affiliates ' earnings and other items not reflective of ongoing operating income or loss . adjusted ebit is the measure of segment income or loss used by the company . the company believes adjusted ebit is most reflective of the operational profitability or loss of our reporting segments . the following tables show segment information and adjusted ebit for the company 's reporting segments . 35 net sales by reporting segment replace_table_token_11_th adjusted earnings before interest , income taxes and noncontrolling interest ( `` adjusted ebit '' ) replace_table_token_12_th the engine segment 's net sales for the year ended december 31 , 2017 increased $ 471.4 million , or 8.4 % , and segment adjusted ebit increased $ 48.4 million , or 5.1 % , from the year ended december 31 , 2016. excluding the impact of strengthening foreign currencies , primarily the euro and korean won , net sales increased 7.7 % from the year ended december 31 , 2016 due to higher sales of light vehicle turbochargers , thermal products , engine timing systems and stronger commercial vehicle markets around the world .
| 7,449 |
142 kronos bio , inc. notes to financial statements expected dividend —the company has never story_separator_special_tag the following discussion and analysis should be read in conjunction with our financial statements and related notes included elsewhere in this annual report on form 10-k. this discussion contains forward-looking statements that reflect our plans , estimates and beliefs and involve numerous risks and uncertainties , including but not limited to those described in the “ risk factors ” section of this annual report . actual results may differ materially from those contained in any forward-looking statements . you should carefully read “ forward-looking statements ” and “ risk factors. ” overview we are a clinical-stage biopharmaceutical company dedicated to the discovery and development of novel cancer therapeutics designed to transform patient outcomes through a precision medicine strategy by targeting dysregulated transcription . our proprietary product engine focuses on dysregulated transcription factors and the transcriptional regulatory networks ( trns ) that drive their oncogenic activity . 110 our lead product candidate , entospletinib ( ento ) , which we acquired from gilead sciences in july 2020 , is an orally administered , selective syk inhibitor that has been tested in more than 200 aml patients . our expertise in trn biology allowed us to recognize syk as a critical node in the hox/meis trn , and this acquisition accelerated our pipeline to late clinical stage . based on clinical results in a biomarker-defined subset of patients and based on the discussion and guidance from our recent end-of-phase 2 meeting with the fda , we intend to proceed as planned with our registrational phase 3 clinical trial of ento using measurable residual disease ( mrd ) negative complete response ( cr ) as the primary endpoint . we plan to initiate such phase 3 clinical trial in mid-2021 , with mrd negative cr data expected in the second half of 2023. we plan to have similar discussions regarding use of this surrogate primary endpoint with the european medicines agency later in 2021. in addition , we are developing kb-0742 , which is designed to be an orally bioavailable inhibitor of cdk9 with a differentiated selectivity profile , for the treatment of myc-amplified solid tumors . the fda cleared our ind for kb-0742 in december 2020. in february 2021 , the first patient was dosed in our phase 1/2 clinical trial of kb-0742 in patients with advanced solid tumors . we plan to report initial data from this trial in the fourth quarter of 2021 , with a data read-out from the expansion cohorts of the trial anticipated in 2022. in addition , we are leveraging our product engine to drive multiple oncology discovery programs targeting dysregulated transcription factors and their associated trns . the following chart summarizes the current stages of our development programs , including our lead product candidate , ento , as well as kb-0742 , and our next anticipated milestones . we also are executing on robust discovery programs across multiple trns , which focus on four cancer types where dysregulated transcription plays a central role : hematologic malignancies , prostate cancer , myc-driven cancers , and small cell/neuroendocrine cancers . we anticipate submitting an ind for a drug candidate arising from one of these programs in 2022 , although we may not be successful in identifying product candidates that can selectively modulate the specific oncogenic trns associated with such programs . in october 2020 , we completed the initial public offering ( ipo ) of our common stock . in the ipo , we issued and sold 15,131,579 shares of our common stock at a price to the public of $ 19.00 per share , inclusive of the exercise in full by the underwriters of their option to purchase additional shares . we received approximately $ 263.7 million in net proceeds after deducting underwriting discounts and commissions and other offering expenses . in august 2020 , we raised approximately $ 151.3 million through a private financing of the sale of 111 $ 155.2 million principal amount of convertible notes ( 2020 notes ) . upon closing of the ipo , the 2020 notes automatically converted into a total of 9,610,713 shares of our common stock . our primary use of cash is to fund operating expenses , which consist primarily of research and development expenditures and , to a lesser extent , general and administrative expenditures . the current covid-19 pandemic has presented substantial public health and economic challenges around the world . we can not at this time predict the specific extent , duration or impact that covid-19 will have on our financial condition and operations , including ongoing research activities , ongoing and planned clinical trials and our financial results . while we are currently conducting a phase 1/2 clinical trial for kb-0742 and are preparing to initiate clinical trials in 2021 , covid-19 precautions may directly or indirectly impact their timelines and interrupt clinical enrollment . since our formation in june 2017 , we have devoted substantially all of our resources to organizing and staffing our company , business planning , raising capital , identifying , acquiring and developing our product candidates , building our product engine , establishing our intellectual property portfolio , and providing general and administrative support for these operations . we have principally financed our operations to date through private placements of preferred stock and convertible debt , and our ipo . since our formation , we have incurred significant operating losses , primarily from costs incurred in connection with research and development activities and general and administrative costs associated with our operations . our net losses were $ 88.4 million , $ 16.1 million , and $ 6.7 million for the years ended december 31 , 2020 , 2019 , and 2018 , respectively . as of december 31 , 2020 and 2019 , we had an accumulated deficit of $ 111.9 million and $ 23.5 million , respectively . story_separator_special_tag payments for these activities are based on the terms of the individual agreements , which may differ from the pattern of costs incurred , and are reflected in our financial statements as prepaid or accrued research and development expenses . because we are working on multiple research and development programs at any one time , we intend to track our direct costs by the stage of program , clinical or preclinical . however , our internal costs , employees and infrastructure are not directly tied to any one program and are deployed across multiple programs . as such , we do not track indirect costs on a specific program basis . our research and development expenses may vary significantly based on a variety of factors , such as : the scope , rate of progress , expense and results of our preclinical development activities ; per patient trial costs ; the number of trials required for approval ; the number of sites included in the trials ; the number of patients that participate in the trials ; the countries in which the trials are conducted ; uncertainties in clinical trial design and patient enrollment or drop out or discontinuation rates , particularly in light of the current covid-19 pandemic environment ; potential additional safety monitoring requested by regulatory agencies ; the duration of patient participation in the trials and follow-up ; 114 the safety and efficacy of our product candidates ; the timing , receipt , and terms of any approvals from applicable regulatory authorities including the fda and non-u.s. regulators ; significant and changing government regulation and regulatory guidance ; potential additional trials requested by regulatory agencies ; establishing clinical and commercial manufacturing capabilities or making arrangements with third-party manufacturers in order to ensure that we or our third-party manufacturers are able to make product successfully ; the extent to which we establish additional strategic collaborations or other arrangements ; the impact of any business interruptions to our operations or to those of the third parties with whom we work , particularly in light of the current covid-19 pandemic environment ; the expense of filing , prosecuting , defending , and enforcing any patent claims and other intellectual property rights ; and maintaining a continued acceptable safety profile of our product candidates following approval , if any , of our product candidates . a change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate . we expect that our research and development expenses will continue to increase substantially for the foreseeable future as we continue to identify and develop additional product candidates and as more of our product candidates move into later stages of clinical development , which typically have higher development costs than those in earlier stages of clinical development due to the increased size and duration of later-stage clinical trials . the process of conducting the necessary preclinical and clinical research to obtain regulatory approval is costly and time-consuming . the actual probability of success for our product candidates may be affected by a variety of factors . we may never succeed in achieving regulatory approval for any of our product candidates . further , a number of factors , including those outside of our control , could adversely impact the timing and duration of our product candidates ' development , which could increase our research and development expenses . general and administrative expenses general and administrative expenses consist primarily of personnel costs , which include salaries , benefits and other employee related costs , such as stock-based compensation , for personnel in our executive , finance , corporate and business development , and administrative functions . general and administrative expenses also include legal fees relating to patent and corporate matters ; professional fees for accounting , auditing , tax and consulting services ; insurance costs ; recruiting costs ; travel expenses ; and facilities-related costs . we expect that our general and administrative expenses will continue to increase substantially for the foreseeable future as we continue to increase our general and administrative personnel headcount to support personnel in research and development , and to support our operations generally as we increase our research and development activities and activities related to the potential commercialization of our product candidates . we also expect to incur increased expenses associated with operating as a public company , including costs of accounting , audit , legal , regulatory and tax-related services associated with maintaining compliance with exchange listing and sec requirements , director and officer insurance costs , and investor and public relations costs . 115 change in fair value of convertible notes payable we elected on issuance to account for our convertible notes payable ( 2020 notes and gilead note ) at fair value until their settlement . the change in fair value of our convertible notes payable was recognized through the statement of operations and comprehensive loss . the 2020 notes and the gilead note settled on the closing of our ipo in october 2020. interest expense interest expense consists of debt issuance costs we incurred to issue the 2020 notes . the debt issuance costs were expensed on issuance because we elected to record the 2020 notes at fair value . interest and other income , net interest and other income , net primarily consists of interest earned on our cash , cash equivalents and investments . story_separator_special_tag public of $ 19.00 per share and received approximately $ 263.7 million in net proceeds after deducting underwriting discounts and commissions and offering expenses . future funding requirements our primary use of cash is to fund operating expenses , which consist primarily of research and development expenditures related to ento , lanra and kb-0742 , and our other research efforts , and to a lesser extent , general and administrative expenditures .
| results of operations comparison of years ended december 31 , 2020 , 2019 , and 2018 the following table summarizes our results of operations for the years ended december 31 , 2020 , 2019 , and 2018 : replace_table_token_0_th research and development expenses the following table summarizes our research and development expenses for the years ended december 31 , 2020 , 2019 , and 2018 : replace_table_token_1_th 116 research and development expenses were $ 43.3 million for the year ended december 31 , 2020 , compared to $ 13.5 million for the year ended december 31 , 2019. the increase of $ 29.8 million was primarily due to $ 6.6 million in acquisition costs for our syk portfolio related to the gilead asset purchase agreement ( see note 13 ) , an increase of $ 9.9 million in outside and consulting research expenses , and an increase of $ 8.7 million in personnel costs primarily attributable to increased research and development personnel headcount , including an increase in stock-based compensation of $ 1.3 million . also contributing to this increase in research and development expenses is an increase of $ 3.4 million in facilities , depreciation and other expenses primarily attributable to the commencement of the lease for our new cambridge facility ( as described below ) in march 2020 , and an increase of $ 1.2 million in lab supplies related to increased development activity in connection with our preclinical product candidates . research and development expenses were $ 13.5 million for the year ended december 31 , 2019 compared to $ 5.0 million for the year ended december 31 , 2018. the increase of $ 8.4 million was primarily due to an increase of $ 3.5 million in outside and consulting research expenses and an increase of $ 0.7 million in lab supplies related to increased development activity in connection with our preclinical product candidates , an increase of $ 1.9
| 7,450 |
the leases typically provide the tenant with one or more multi-year renewal options subject to generally the same terms and conditions , including rent increases , consistent with the initial lease term . as of december 31 , 2014 , the future minimum rental income to be received under the terms of all non-cancellable tenant leases is as follows : replace_table_token_24_th since lease renewal periods are exercisable at the option of the tenant , the above table only presents future minimum lease payments due during the current lease terms . in addition , this table does not include amounts for potential variable rent increases that are based on the cpi or future contingent rents which may be received on the leases based on a percentage of the tenant 's gross sales . f- 14 agree realty corporation notes to consolidated financial statements of these future minimum rents , approximately 25.4 % of the total is attributable to walgreens as of december 31 , 2014. the loss of this tenant or the inability of it to pay rent could have an adverse effect on the company 's business . no other tenant contributed 5.0 % or more of the company 's total revenues as of december 31 , 2014. deferred revenue in july 2004 , the company 's tenant in a joint venture property located in boynton beach story_separator_special_tag the following discussion should be read in conjunction with the consolidated financial statements , and related notes thereto , included elsewhere in this annual report on form 10-k and the “ -special note regarding forward-looking statements ” in item 1a “ risk factors ” above . overview we are a fully integrated reit primarily focused on the ownership , acquisition , development and management of retail properties net leased to industry leading tenants . we were founded in 1971 by our current executive chairman , richard agree , and listed on the nyse in 1994. our assets are held by , and all of our operations are conducted through , directly or indirectly , the operating partnership , of which we are the sole general partner and in which we held a 98.06 % interest as of december 31 , 2014. as of december 31 , 2014 , our portfolio consisted of 209 properties located in 37 states and totaling approximately 4.3 million square feet of gross leasable area . as of december 31 , 2014 , our portfolio was approximately 98.6 % leased and had a weighted average remaining lease term of approximately 11.9 years . substantially all of our tenants are subject to net lease agreements . a net lease typically requires the tenant to be responsible for minimum monthly rent and property operating expenses including property taxes , insurance and maintenance . we have elected to be taxed as a reit for federal income tax purposes commencing with our taxable year ended december 31 , 1994. we believe that we have been organized and have operated in a manner that has allowed us to qualify as a reit for federal income tax purposes and we intend to continue operating in such a manner . recent accounting pronouncements in april 2014 , the financial accounting standards board ( `` fasb '' ) issued asu 2014-08 `` reporting discontinued operations and disclosures of disposals of components of an entity '' which updates asc 205 `` presentation of financial statements '' and asc 360 `` property , plant and equipment. ” the amendments in this update change the criteria for reporting discontinued operations while enhancing disclosures in this area . under the new guidance , only disposals representing a strategic shift in operations should be presented as discontinued operations . for public entities , asu 2014-08 is effective prospectively for fiscal years beginning after december 15 , 2015 ; however , early adoption is permitted , but only for disposals or classifications as held for sale that have not been reported in financial statements previously issued or available for issuance . we have elected to early adopt this updated standard effective in the first quarter of 2014. the adoption of this guidance had an effect on the presentation of our consolidated financial statements . beginning in 2014 , activities related to individual sales of properties are generally no longer classified as discontinued operations except for the property classified as held for sale as of december 31 , 2013. in may 2014 , the financial accounting standards board issued asu no . 2014-09 “ revenue from contracts with customers ” as a new topic , accounting standards codification ( `` asc '' ) topic 606. the objective of asu 2014-19 is to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most of the existing revenue recognition guidance , including industry-specific guidance . the core principle is that a company should 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 . in applying the new standard , companies will perform a five-step analysis of transactions to determine when and how revenue is recognized . asu 2014-09 applies to all contracts with customers except those that are within the scope of other topics in the fasb asc , including revenue from leases . this asu is effective for annual reporting periods ( including interim periods within those periods ) beginning after december 15 , 2016 and shall be applied using either a full retrospective or modified retrospective approach . early adoption is not permitted . the company is currently evaluating the new guidance and has not determined the impact , if any , this standard may have on the consolidated financial statements . critical accounting policies our accounting policies are determined in accordance with u.s. generally accepted accounting principles ( “ gaap ” ) . story_separator_special_tag land lease payments decreased $ 146,000 , or 25 % , to $ 428,000 in 2013 compared to $ 574,000 for 2012. the decrease is the result of our purchase of the underlying land at our property in ann arbor , michigan in june 2012. general and administrative expenses increased $ 270,000 , to $ 5,952,000 in 2013 compared to $ 5,682,000 in 2012. the increase in general and administrative expenses was primarily the result of increased employee costs of $ 196,000 , increased professional fees of $ 99,000 , offset by net decreases in other expenses of $ 25,000. general and administrative expenses as a percentage of total revenue decreased to 13.7 % for 2013 from 16.4 % in 2012. depreciation and amortization increased $ 2,248,000 , or 36 % , to $ 8,489,000 in 2013 compared to $ 6,241,000 in 2012. the increase was primarily the result of the acquisition of 18 properties in 2013 and 25 properties in 2012. interest expense increased $ 1,341,000 , or 26 % , to $ 6,475,000 in 2013 , from $ 5,134,000 in 2012. the increase in interest expense was a result of higher levels of borrowings to finance the acquisition and development of additional properties in 2013 and 2012 , including a $ 35,000,000 unsecured term loan entered into in september of 2013 , a $ 25,000,000 secured term loan entered into in december 2012 and a $ 23,600,000 commercial mortgage backed security “ cmbs ” financing that closed in december 2012. in 2013 , we recognized a gain of $ 946,000 on the sale of a walgreens in ypsilanti , michigan . this gain is reflected in discontinued operations in 2013. in 2012 we recognized a net gain of $ 2,097,000 on the sale of six assets , including a vacant single tenant office property , two vacant single tenant retail properties , a kmart-anchored shopping center in charlevoix , michigan , a kmart-anchored shopping center in plymouth , wisconsin and a kmart-anchored shopping center in shawano , wisconsin . income from discontinued operations was $ 298,000 in 2013 compared to $ 2,267,000 in 2012. income from discontinued operations in 2013 was attributable to ironwood commons , inclusive of a $ 450,000 impairment charge , and a walgreens in ypsilanti , michigan that was sold in january 2013. income from discontinued operations in 2012 was attributable to six properties that were sold during 2012 , four former borders properties that were conveyed to the lender in march 2012 , and a walgreens in ypsilanti , michigan which was classified as held for sale at december 31 , 2012 and subsequently sold in january 2013. our net income increased $ 1,586,000 , or 9 % , to $ 20,190,000 in 2013 , from $ 18,604,000 in 2012 as a result of the foregoing factors . liquidity and capital resources our principal demands for funds include payment of operating expenses , payment of principal and interest on our outstanding indebtedness , distributions to our shareholders and future property acquisitions and development . 26 we expect to meet our short term liquidity requirements through cash provided from operations and borrowings under our credit facility . as of december 31 , 2014 , $ 15,000,000 was outstanding on our credit facility and $ 135,000,000 was available for future borrowings . we anticipate funding our long term capital needs through cash provided from operations , borrowings under our credit facility , the issuance of long term debt or the issuance of common or preferred equity or other instruments convertible into or exchangeable for common or preferred equity . we continually evaluate alternative financing and believe that we can obtain financing on reasonable terms . however , there can be no assurance that additional financing or capital will be available , or that the terms will be acceptable or advantageous to us . capitalization as of december 31 , 2014 , our total market capitalization was approximately $ 777,887,000. market capitalization consisted of $ 556,124,000 of common equity ( based on the december 31 , 2014 closing price on the nyse of $ 31.09 per common share and assuming the conversion of op units ) and $ 221,762,200 of total debt including ( i ) $ 106,762,000 of mortgage notes payable ; ( ii ) $ 100,000,000 of unsecured term loans ; and ( iii ) $ 15,000,000 of borrowings under our credit facility . our ratio of total debt to total market capitalization was 28.5 % at december 31 , 2014. at december 31 , 2014 , the non-controlling interest in our operating partnership represented ownership of 1.94 % of the operating partnership . the op units may , under certain circumstances , be exchanged for our shares of common stock on a one-for-one basis . we , as sole general partner of the operating partnership , have the option to settle exchanged op units held by others for cash based on the current trading price of our shares . assuming the exchange of all op units , there would have been 17,887,565 shares of common stock outstanding at december 31 , 2014. debt revolving credit and term loan facility in july 2014 , the company entered into a $ 250,000,000 senior unsecured revolving credit and term loan agreement consisting of ( i ) a new $ 150,000,000 revolving credit facility ( the “ credit facility ” ) ; ( ii ) a new $ 65,000,000 seven-year unsecured term loan facility ( the “ 2021 term loan ” ) ; and ( iii ) our existing $ 35,000,000 unsecured term loan facility due 2020 ( the “ 2020 term loan ” ) . the credit facility , 2021 term loan and 2020 term loan , together , are referred to as our “ revolving credit and term loan facility ” . the credit facility is due july 21 , 2018 , with an additional one-year extension at the company 's option , subject to customary conditions .
| results of operations comparison of year ended december 31 , 2014 to year ended december 31 , 2013 minimum rental income increased $ 8,508,000 , or 21 % , to $ 49,403,000 in 2014 , compared to $ 40,895,000 in 2013. approximately $ 6,809,000 of the increase is due to the acquisition of 77 properties in 2014 and the full year impact of 18 properties acquired in 2013. approximately $ 2,158,000 of the increase is attributable to five development projects completed in 2014 and the full year impact of six development projects completed in 2013. these increases were partially offset by approximately $ 341,000 due to a reduction in minimum rental income from properties sold during 2014 that were owned for all of 2013 , and approximately $ 101,000 due to other minimum rental income adjustments . percentage rents increased to $ 160,000 in 2014 from $ 36,000 in 2013. the primary driver of the increase is properties acquired in 2013 for which we received percentage rent in 2014. operating cost reimbursements increased $ 1,257,000 , or 49 % , to $ 3,825,000 in 2014 , compared to $ 2,567,000 in 2013. operating cost reimbursements increased due to higher levels of recoverable property operating expenses as a result of our 2014 and 2013 acquisition and development activity . our portfolio recovery rate increased to 86.1 % in 2014 compared to 79.5 % in 2013 . 24 other income increased to $ 171,000 in 2014 from $ 19,000 in 2013. the primary driver of the increase is non-recurring fee income earned in 2014. real estate taxes increased $ 730,000 , or 36 % , to $ 2,766,000 in 2014 , compared to $ 2,035,000 in 2013. the increase is due to the ownership of additional properties in 2014 compared to 2013 for which we remit real estate taxes and are subsequently reimbursed by tenants .
| 7,451 |
outstanding balances to one borrower or affiliated borrowers are limited by federal regulation ; however , limits well below the regulatory thresholds are generally observed . the vast majority of the company 's loans are to businesses located in the geographic market areas served by the company 's branch bank system . additionally , a significant portion of the collateral securing the loans in the portfolio is located within the company 's primary geographic footprint . in general , the company story_separator_special_tag the following discussion and analysis is intended to provide a better understanding of the consolidated financial condition and results of operations of the company and its subsidiaries years ended december 31 , 2017 , 2016 and 2015 . this discussion and analysis should be read in conjunction with the consolidated financial statements , related notes and selected financial data appearing elsewhere in this report . forward-looking statements this report may contain certain forward-looking statements , such as discussions of the company 's pricing and fee trends , credit quality and outlook , liquidity , new business results , expansion plans , anticipated expenses and planned schedules . the company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the private securities litigation reform act of 1955. forward-looking statements , which are based on certain assumptions and describe future plans , strategies and expectations of the company , are identified by use of the words “ believe , ” ” expect , ” ” intend , ” ” anticipate , ” ” estimate , ” ” project , ” or similar expressions . actual results could differ materially from the results indicated by these statements because the realization of those results is subject to many risks and uncertainties , including those described in item 1a . “ risk factors ” and other sections of the company 's annual report on form 10-k and the company 's other filings with the sec , and changes in interest rates , general economic conditions and those in the company 's market area , legislative/regulatory changes , monetary and fiscal policies of the u.s. government , including policies of the u.s. treasury and the federal reserve board , the quality or composition of the loan or investment portfolios and the valuation of the investment portfolio , the company 's success in raising capital , demand for loan products , deposit flows , competition , demand for financial services in the company 's market area and accounting principles , policies and guidelines . furthermore , forward-looking statements speak only as of the date they are made . except as required under the federal securities laws or the rules and regulations of the sec , we do not undertake any obligation to update or review any forward-looking information , whether as a result of new information , future events or otherwise . pending acquisition on december 11 , 2017 , the company and merger sub entered into the merger agreement with first bank pursuant to which , among other things , the company agreed to acquire 100 % of the issued and outstanding shares of first bank pursuant to a business combination whereby first bank will merge with and into merger sub , with merger sub as the surviving entity and a wholly-owned subsidiary of the company . for the years ended december 31 , 2017 , 2016 and 2015 overview this overview of management 's discussion and analysis highlights selected information in this document and may not contain all of the information that is important to you . for a more complete understanding of trends , events , commitments , uncertainties , liquidity , capital resources , and critical accounting estimates , you should carefully read this entire document . these have an impact on the company 's financial condition and results of operations . net income was $ 26.7 million , $ 21.8 million , and $ 16.5 million and diluted earnings per share were $ 2.13 , $ 2.05 , and $ 1.81 for the years ended december 31 , 2017 , 2016 and 2015 , respectively . the following table shows the company 's annualized performance ratios for the years ended december 31 , 2017 , 2016 and 2015 : replace_table_token_3_th total assets at december 31 , 2017 , 2016 and 2015 were $ 2.84 billion , $ 2.88 billion , and $ 2.11 billion , respectively . net loan balances increased to $ 1.92 billion at december 31 , 2017 , from $ 1.81 billion at december 31 , 2016 , from $ 1.27 billion at december 31 , 2015 . of the increase in 2017 , $ 58.5 million was due to increases in construction and land development loans and $ 51.6 million was due to increases in commercial real estate loans . of the increase in 2016 , $ 439 million was due to loans acquired in the first clover leaf acquisition . in addition , $ 65 million or 12 % was due to increases in commercial real estate loans and $ 35.8 million or 6.6 % was due to increases in commercial and industrial loans . total deposit balances decreased to $ 2.27 billion at december 31 , 2017 from $ 2.33 billion at december 31 , 2016 and from $ 1.73 billion at december 31 , 2015 . the decrease in 2017 was primarily due to a decrease in money market deposits and interest bearing deposits . the increase in 2016 was primarily the result of the acquisition of first clover leaf during the third quarter of 2016 that included $ 550 million in deposits . net interest margin , defined as net interest income divided by average interest-earning assets , was 3.57 % for 2017 , 3.28 % for 2016 and 3.27 % for 2015 . in 2017 , the increase was primarily due to an increase in earnings assets and net accretion income from the acquisition of first clover leaf . story_separator_special_tag the company enters into financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers . these financial instruments include lines of credit , letters of credit and other commitments to extend credit . the total outstanding commitments at december 31 , 2017 , 2016 and 2015 were $ 415.5 million , $ 485.1 million , and $ 298.3 million , respectively . see note 17 – “ commitments and contingent liabilities ” herein for further information . critical accounting policies and use of significant estimates the company has established various accounting policies that govern the application of u.s. generally accepted accounting principles in the preparation of the company 's financial statements . the significant accounting policies of the company are described in the footnotes to the consolidated financial statements . certain accounting policies involve significant judgments and assumptions by management that have a material impact on the carrying value of certain assets and liabilities ; management considers such accounting policies to be critical accounting policies . the judgments and assumptions used by management are based on historical experience and other factors , which are believed to be reasonable under the circumstances . because of the nature of the judgments and assumptions made by management , actual results could differ from these judgments and assumptions , which could have a material impact on the carrying values of assets and liabilities and the results of operations of the company . allowance for loan losses . the company believes the allowance for loan losses is the critical accounting policy that requires the most significant judgments and assumptions used in the preparation of its consolidated financial statements . an estimate of potential losses inherent in the loan portfolio are determined and an allowance for those losses is established by considering factors including historical loss rates , expected cash flows and estimated collateral values . in assessing these factors , the company uses organizational history and experience with credit decisions and related outcomes . the allowance for loan losses represents the best estimate of losses inherent in the existing loan portfolio . the allowance for loan losses is increased by the provision for loan losses charged to expense and reduced by loans charged off , net of recoveries . the company evaluates the allowance for loan losses quarterly . if the underlying assumptions later prove to be inaccurate based on subsequent loss evaluations , the allowance for loan losses is adjusted . the company estimates the appropriate level of allowance for loan losses by separately evaluating impaired and nonimpaired loans . a specific allowance is assigned to an impaired loan when expected cash flows or collateral do not justify the carrying amount of the loan . the methodology used to assign an allowance to a nonimpaired loan is more subjective . generally , the allowance assigned to nonimpaired loans is determined by applying historical loss rates to existing loans with similar risk characteristics , adjusted for qualitative factors including the volume and severity of identified classified loans , changes in economic conditions , changes in credit policies or underwriting standards , and changes in the level of credit risk associated with specific industries and markets . because the economic and business climate in any given industry or market , and its impact on any given borrower , can change rapidly , the risk profile of the loan portfolio is continually assessed and adjusted when appropriate . notwithstanding these procedures , there still exists the possibility that the assessment could prove to be significantly incorrect and that an immediate adjustment to the allowance for loan losses would be required . other real estate owned . other real estate owned acquired through loan foreclosure is initially recorded at fair value less costs to sell when acquired , establishing a new cost basis . the adjustment at the time of foreclosure is recorded through the allowance for loan losses . due to the subjective nature of establishing the fair value when the asset is acquired , the actual fair value of the other real estate owned or foreclosed asset could differ from the original estimate . if it is determined that fair value temporarily declines subsequent to foreclosure , a valuation allowance is recorded through noninterest expense . operating costs associated with the assets after acquisition are also recorded as noninterest expense . gains and losses on the disposition of other real estate owned and foreclosed assets are netted and posted to other noninterest expense . investment in debt and equity securities . the company classifies its investments in debt and equity securities as either held-to-maturity or available-for-sale in accordance with statement of financial accounting standards ( sfas ) no . 115 , “ accounting for certain investments in debt and equity securities , ” which was codified into asc 320. securities classified as held-to-maturity are recorded at cost or amortized cost . available-for-sale securities are carried at fair value . fair value calculations are based on quoted market prices when such prices are available . if quoted market prices are not available , estimates of fair value are computed using a variety of techniques , including extrapolation from the quoted prices of similar instruments or recent trades for thinly traded securities , fundamental analysis , or through obtaining purchase quotes . due to the subjective nature of the valuation process , it is possible that the actual fair values of these investments could differ from the estimated amounts , thereby affecting the financial position , results of operations and cash flows of the company . if the estimated value of investments is less than the cost or amortized cost , the company evaluates whether an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment . if such an event or change has occurred and the company determines that the impairment is other-than-temporary , a further determination is made as to the portion of impairment that is related to credit loss .
| results of operations net interest income the largest source of operating revenue for the company is net interest income . net interest income represents the difference between total interest income earned on earning assets and total interest expense paid on interest-bearing liabilities . the amount of interest income is dependent upon many factors , including the volume and mix of earning assets , the general level of interest rates and the dynamics of changes in interest rates . the cost of funds necessary to support earning assets varies with the volume and mix of interest-bearing liabilities and the rates paid to attract and retain such funds . 21 the company 's average balances , interest income and expense and rates earned or paid for major balance sheet categories are set forth in the following table ( dollars in thousands ) : year ended december 31 , 2017 year ended december 31 , 2016 year ended december 31 , 2015 average balance interest average rate average balance interest average rate average balance interest average rate assets interest-bearing deposits $ 28,544 $ 291 1.02 % $ 38,359 $ 195 0.51 % $ 78,605 $ 199 0.25 % federal funds sold 9,025 62 0.69 % 8,392 40 0.48 % 493 — 0.10 % certificates of deposit investments 3,317 50 1.50 % 28,777 295 1.02 % 5,118 44 0.86 % investment securities taxable 559,657 11,708 2.09 % 514,096 9,260 1.80 %
| 7,452 |
as home equity lines of credit underwriting are subject to specific regulations , the company typically underwrites its home equity lines of credit to conform to widely accepted standards . several factors are considered in underwriting including the value of the underlying real estate and the debt to income and credit history of the borrower . commercial business loans the company originates commercial non-mortgage business ( term ) loans story_separator_special_tag overview we have grown our organization to $ 595.6 million in assets at june 30 , 2016 from $ 377.2 million in assets at june 30 , 2009. we have increased our assets primarily in investment securities and loan growth . historically , we operated as a traditional thrift institution . as recently as june 30 , 2009 , approximately 72.4 % of our loan portfolio consisted of longer-term , one- to four-family residential real estate loans . however , in recent years , we have increased our focus on the origination of commercial real estate loans , multi-family real estate loans and commercial business loans , which generally provide higher returns than one- to four-family residential mortgage loans , have shorter durations and are often originated with adjustable rates of interest . as a result , our net interest rate spread ( the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities ) increased to 3.00 % for the year ended june 30 , 2016 from 2.53 % for the year ended june 30 , 2009. during this same period , many financial institutions have experienced interest rate spread compression . this contributed to a corresponding increase in net interest income ( the difference between interest income and interest expense ) to $ 17.1 million for the fiscal year ended june 30 , 2016 from $ 9.5 million for the fiscal year ended june 30 , 2009. our emphasis on conservative loan underwriting has resulted in relatively low levels of non-performing assets . our non-performing assets totaled $ 2.5 million or 0.42 % of total assets at june 30 , 2016. other than our loans for the construction of one- to four-family residential properties and the draw portion of our home equity lines of credit , we do not offer interest only mortgage loans on one- to four-family residential properties ( where the borrower pays interest but no principal for an initial period , after which the loan converts to a fully amortizing loan ) . we also do not offer loans that provide for negative amortization of principal , such as option arm loans , where the borrower can pay less than the interest owed on their loan , resulting in an increased principal balance during the life of the loan . we do not offer subprime loans ( loans that generally target borrowers with weakened credit histories typically characterized by payment delinquencies , previous charge-offs , judgments , bankruptcies , or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burden ratios ) or alt-a loans ( traditionally defined as loans having less than full documentation ) . we also do not own any private label mortgage-backed securities that are collateralized by alt-a , low or no documentation or subprime mortgage loans . the association 's legal lending limit to any one borrower is 15 % of unimpaired capital and surplus . on july 30 , 2012 the association received approval from the office of the comptroller of the currency to participate in the supplemental lending limits program ( sllp ) . this program allows eligible savings associations to make additional residential real estate loans or extensions of credit to one borrower , small business loans or extensions of credit to one borrower , or small farm loans or extensions of credit to one borrower . for our association this additional limit ( or supplemental limit ( s ) ) for one- to four-family residential real estate , small business , or small farm loans is 10 % of our association 's capital and surplus . in addition , the total outstanding amount of the association 's loans or extensions of credit or parts of loans and extensions of credit made to all of its borrowers under the sllp may not exceed 100 % of the association 's capital and surplus . by association policy , participation of any credit facilities in the sllp is to be infrequent and all credit facilities are to be with prior board approval . all of our mortgage-backed securities have been issued by freddie mac , fannie mae or ginnie mae , u.s. government-sponsored enterprises . these entities guarantee the payment of principal and interest on our mortgage-backed securities . on july 7 , 2011 we completed our initial public offering of common stock in connection with iroquois federal 's mutual-to-stock conversion , selling 4,496,500 shares of common stock at $ 10.00 per share , including 384,900 shares sold to iroquois federal 's employee stock ownership plan , and raising approximately $ 45.0 million of gross proceeds . in addition , we issued 314,755 shares of our common stock to the iroquois federal foundation . in april , 2014 we opened a new branch office at 108 arbours drive , savoy , illinois , in champaign county . 48 critical accounting policies we consider accounting policies that require management to exercise significant judgment or discretion or make significant assumptions that have , or could have , a material impact on the carrying value of certain assets or on income , to be critical accounting policies . we consider the following to be our critical accounting policies . allowance for loan losses . we believe that the allowance for loan losses and related provision for loan losses are particularly susceptible to change in the near term , due to changes in credit quality which are evidenced by trends in charge-offs and in the volume and severity of past due loans . story_separator_special_tag net loans receivable , including loans held for sale , increased by $ 87.6 million , or 24.6 % , to $ 443.7 million at june 30 , 2016 from $ 356.2 million at june 30 , 2015. the increase in net loans receivable during this period was due primarily to a $ 25.8 million , or 44.2 % , increase in multi-family loans , a $ 20.7 million , or 55.7 % , increase in commercial business loans , a $ 4.7 million , or 3.2 % , increase in one- to four-family loans , a $ 16.0 million , or 15.5 % , increase in commercial real estate loans , a $ 1.8 million , or 21.2 % , increase in consumer loans , a $ 19.2 million , or 4082.2 % , increase in construction loans , and a $ 425,000 , or 5.5 % , increase in home equity lines of credit . investment securities , consisting entirely of securities available for sale , decreased $ 49.3 million , or 28.9 % , to $ 121.3 million at june 30 , 2016 from $ 170.6 million at june 30 , 2015. the decrease was primarily due to the sale of securities to fund loan growth . we had no held-to-maturity securities at june 30 , 2016 or june 30 , 2015. compared to june 30 , 2015 , as of june 30 , 2016 , other assets increased $ 516,000 to $ 895,000 , other real estate increased $ 288,000 to $ 338,000 , and interest receivable increased $ 130,000 to $ 1.8 million , while premises and equipment decreased $ 214,000 to $ 4.6 million , deferred income taxes decreased $ 503,000 to $ 1.7 million and mortgage servicing rights decreased $ 65,000 to $ 440,000. federal home loan bank stock was $ 5.4 million at both june 30 , 2016 and 2015. the increase in other assets resulted from an increase in accounts receivable general due to the payoff of a purchased loan late in june for which we had not yet received the proceeds from the servicing bank as of june 30 , 2016. the increase in other real estate was due to the addition of one residential real estate property , and the increase in interest receivable was mostly due to the increase in the loan portfolio . the decrease in premises and equipment was primarily due to normal depreciation and the decrease in deferred income taxes was mostly due to an increase in the unrealized gain on sale of available-for sale securities . mortgage servicing rights decreased due to a reduction in both the balance of fhlb mpf xtra loans serviced and the market value of the servicing . at june 30 , 2016 , our investment in bank-owned life insurance was $ 8.6 million , an increase of $ 266,000 from $ 8.3 million at june 30 , 2015. we invest in bank-owned life insurance to provide us with a funding source for our benefit plan obligations . bank-owned life insurance also generally provides us noninterest income that is non-taxable . federal regulations generally limit our investment in bank-owned life insurance to 25 % of the association 's tier 1 capital plus our allowance for loan losses . at june 30 , 2016 , our investment of $ 8.6 million in bank-owned life insurance was 12.0 % of our tier 1 capital plus our allowance for loan losses . deposits increased $ 18.2 million , or 4.4 % , to $ 433.7 million at june 30 , 2016 from $ 415.5 million at june 30 , 2015. certificates of deposit , excluding brokered certificates of deposit , increased $ 8.3 million , or 4.0 % , to $ 216.3 million , savings , now , and money market accounts increased $ 5.9 million , or 3.9 % , to $ 156.7 million , brokered certificates of deposit increased $ 2.1 million , or 5.3 % , to $ 41.6 million , and noninterest bearing demand accounts increased $ 1.9 million , or 10.8 % , to $ 19.0 million . repurchase agreements increased $ 368,000 to $ 4.4 million . 50 advances from the federal home loan bank of chicago increased $ 9.0 million , or 15.5 % , to $ 67.0 million at june 30 , 2016 from $ 58.0 million at june 30 , 2015. total equity increased $ 3.5 million , or 4.4 % , to $ 84.0 million at june 30 , 2016 from $ 80.4 million at june 30 , 2015. equity increased due to net income of $ 3.6 million , esop and stock equity plan activity of $ 690,000 , and an increase in accumulated other comprehensive income , net of tax , of $ 1.2 million , partially offset by a decrease due to the repurchase of 83,313 shares of the company 's common stock at an aggregate cost of approximately $ 1.4 million and the payment of dividends to our shareholders . the increase due to stock equity plan activity was the result of the full vesting of one participant 's restricted stock and stock options due to disability , the exercising of options by one participant , and the vesting of restricted stock awards . the increase in other accumulated comprehensive income was primarily due to an increase in unrealized gains on securities available for sale . a stock repurchase program was adopted on may 21 , 2015 , which authorized the company to repurchase up to 210,313 shares of its common stock , or approximately 5 % of then current outstanding shares . as of june 30 , 2016 , all 210,313 shares were repurchased , 83,313 of which were repurchased during the fiscal year ended june 30 , 2016. the board of directors adopted another stock repurchase program on february 5 , 2016 , which authorized the company to repurchase up to 200,703 shares of its common stock , or approximately 5 % of its then current outstanding shares .
| general . net income increased $ 292,000 , or 8.9 % , to $ 3.6 million net income for the year ended june 30 , 2016 from $ 3.3 million net income for the year ended june 30 , 2015. the increase was primarily due to an increase in net interest income and an increase in noninterest income , partially offset by an increase in noninterest expense and an increase in provision for loan losses . net interest income . net interest income increased by $ 1.4 million , or 8.9 % , to $ 17.1 million for the year ended june 30 , 2016 from $ 15.7 million for the year ended june 30 , 2015. the increase was due to an increase of $ 1.5 million in interest and dividend income , partially offset by an increase of $ 87,000 in interest expense . the increase in net interest income was primarily the result of an increase in the average balance of interest earning assets and higher average yields on interest earning assets . we had a $ 23.4 million , or 4.4 % , increase in the average balance of interest earning assets , partially offset by a $ 20.3 million , or 4.6 % , increase in the average balance of interest bearing liabilities . our interest rate spread increased 13 basis points to 3.00 % for the year ended june 30 , 2016 from 2.87 % for the year ended june 30 , 2015 , and our net interest margin increased by 13 basis points to 3.11 % for the year ended june 30 , 2016 from 2.98 % for the year ended june 30 , 2015. interest and dividend income .
| 7,453 |
sales returns and allowance for doubtful accounts we maintain a reserve for returns and credits which is estimated based on several factors including historical experience , known credits yet to be issued , the aging of customer accounts and the nature of service level commitments . a considerable amount of judgment is required in assessing these factors . provisions for sales returns and credits are charged against the related revenue items . accounts receivable are recorded at original invoice story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read in conjunction with item 1a risk factors and our consolidated financial statements and related notes included elsewhere in this annual report on form 10-k. the following discussion and analysis presents financial information denominated in millions of dollars which can lead to differences from rounding when compared to similar information contained in the consolidated financial statements and related notes which are primarily denominated in thousands of dollars . executive summary we are the world 's leading cloud software company powering social good . serving the entire social good community—nonprofits , foundations , companies , education institutions , healthcare organizations and individual change agents— we connect and empower organizations to increase their impact through cloud software , services , expertise and data intelligence . our portfolio is tailored to the unique needs of vertical markets , with solutions for fundraising and crm , marketing , advocacy , peer-to-peer fundraising , corporate social responsibility , school management , ticketing , grantmaking , financial management , payment processing and analytics . serving the industry for more than three decades , we are headquartered in charleston , south carolina and have operations in the united states , australia , canada , costa rica and the united kingdom . as of december 31 , 2018 , we had over 45,000 customers . our revenue is primarily generated from the following sources : ( i ) charging for the use of our software solutions in cloud-based and hosted environments ; ( ii ) providing payment and transaction services ; ( iii ) providing software maintenance and support services ; and ( iv ) providing professional services , including implementation , consulting , training , analytic and other services . during 2018 , we continued to execute our four-point growth strategy targeted to drive an extended period of solution and service innovation , quality enhancement , increased operating efficiency and improved financial performance : four-point growth strategy 1. integrated and open solutions in the cloud we will continue to transition our business to predominantly serve customers through a subscription-based cloud delivery model , enabling lower cost of entry , greater scalability and lower total cost of ownership to our customers . we continue to optimize our portfolio of solutions and integrate powerful capabilities — such as built-in data analytics , payment services and tailored user experiences — to bring even greater value and performance to our customers . during 2018 , we made several portfolio announcements , ranging from solution integrations to new capabilities for existing solutions to new solution introductions . we introduced our cloud solution for faith communities , which combines our proven strength in financial management , fundraising , marketing , payments and analytics with our completely new church management capabilities . with this move , we now will provide integrated end-to-end cloud capabilities that enable churches to digitally transform their operations through a single connected experience . we also announced our cloud solution for higher education , introducing a new education management portfolio , along with stewardship management and guided fundraising capabilities tailored for higher education . this new cloud solution will enable customers to manage the complete student life cycle , from admissions to alumni engagement , student enrollment , classroom scheduling and a student information system . we also announced the integrated cloud initiative for nonprofits , a joint investment with microsoft to accelerate cloud innovation in areas that address critical market needs across the mission life cycle of nonprofits . as part of this initiative , we are jointly developing a solution called nonprofit resource management , which is a breakthrough in helping nonprofits effectively source , track , distribute and measure the impact of their resources across core business processes for managing the distribution of everything from material goods to financial and human capital . replace_table_token_31_th blackbaud , inc. 2. drive sales effectiveness we are making investments to increase the effectiveness of our sales organization , with a focus on enabling our expanding sales teams with the talent , processes and tools to accelerate our revenue growth and improve effectiveness . our sales teams are now managed on a common sales operating model . this model , which is driving increased productivity , includes common procedures , training , key operating metrics , compensation plans and reporting . our sales account executives now lead with a total-solution selling strategy by vertical , focused on recurring revenue and driving more products per customer , higher asps and increased customer retention over the long-term . we believe that attaching training , analytics and payments improves the cloud experience , drives customer outcomes , improves retention and increases customer lifetime value . we continue to innovate and acquire solutions that create greater value for our customers . we spent the second half of 2018 ramping our direct sales hiring resulting in an increase in sales headcount of 19 % since the end of 2017. we expect to continue making similar investments during 2019 and beyond . these incremental investments are intended to address the large market opportunity that we see for ourselves and fuel future revenue growth . also , our partnership with microsoft is gaining momentum with microsoft introducing us to new joint-selling opportunities . 3. expand tam into near adjacencies with acquisitions and product investments we will continue to evaluate compelling opportunities to acquire companies and acquire or build technologies and services . story_separator_special_tag during 2018 , we generated $ 201.4 million in cash flow from operations , had net cash outlays of $ 44.9 million , primarily for the acquisition of reeher , returned $ 23.3 million to stockholders by way of dividends and had cash outlays of $ 52.3 million for purchases of property and equipment and capitalized software development costs . replace_table_token_35_th blackbaud , inc. recent development - yourcause acquisition on january 2 , 2019 , we acquired yourcause for $ 157.0 million in cash , subject to certain adjustments set forth in the agreement and plan of merger . the acquisition expands our footprint in corporate social responsibility and employee engagement and enhances our position as a leader in providing solutions to both nonprofit organizations and for-profit companies committed to addressing social issues . the purchase price and related expenses were funded primarily through borrowings under the 2017 credit facility . as a result of the acquisition , yourcause has become a wholly-owned subsidiary of ours . we will include the operating results of yourcause , as well as the assets acquired , liabilities assumed and any goodwill arising from the acquisition , in our consolidated financial statements from the date of the acquisition . results of operations reportable segment we report our operating results and financial information in one operating and reportable segment . see note 16 of our consolidated financial statements in this report for additional information . comparison of 2018 to 2017 and 2017 to 2016 acquisitions during 2018 and 2017 , we acquired companies that provided us with strategic opportunities to expand our tam and share of the philanthropic giving market through the integration of complementary solutions and services to serve the changing needs of our customers . the following are the companies we acquired and their respective acquisition dates : reeher llc ( `` reeher '' ) – april 30 , 2018 ; giving limited ( `` justgiving '' ) – october 2 , 2017 ; and academicworks , inc. ( `` academicworks '' ) – april 3 , 2017 we have included the results of operations of acquired companies in our consolidated results of operations from the date of their respective acquisition . we determined that the reeher , justgiving and academicworks acquisitions were not material business combinations ; therefore , revenue and earnings since the acquisition date and pro forma information are not required or presented . see note 3 to our consolidated financial statements in this report for a summary of these acquisitions . reclassifications our revenue from `` subscriptions '' and `` maintenance '' and a portion of our `` services and other '' revenue have been combined within `` recurring '' revenue beginning in 2018. in order to provide comparability between periods presented , those amounts of revenue have been combined within `` recurring '' revenue in the previously reported consolidated statements of comprehensive income to conform to presentation of the current period . similarly , `` cost of subscriptions '' and `` cost of maintenance '' and a portion of `` cost of services and other '' have been combined within `` cost of recurring '' in the previously reported consolidated statements of comprehensive income to conform to presentation of the current period . `` services and other '' revenue has been renamed as `` one-time services and other '' revenue and consists of revenue that did not meet the description of `` recurring '' revenue in the consolidated statements of comprehensive income . `` cost of services and other '' has been renamed as `` cost of one-time services and other '' and consists of costs that did not meet the description of those related to `` recurring '' revenue in the consolidated statements of comprehensive income . adoption of new revenue accounting standard on january 1 , 2018 , we adopted asu 2014-09 , using the full retrospective method of transition , which requires that the standard be applied to all periods presented . the impacts of adoption are reflected in the financial information herein . for additional details , see note 2 to our consolidated financial statements in this report . replace_table_token_36_th blackbaud , inc. story_separator_special_tag style= '' padding-left:0px ; text-indent:0px ; line-height : normal ; padding-top:10px ; '' > replace_table_token_41_th sales , marketing and customer success expense includes compensation costs , variable sales commissions , travel-related expenses , advertising and marketing materials , public relations costs and allocated depreciation , facilities and it support costs . 2018 vs. 2017 we continue to make investments to drive sales effectiveness , which is a component of our four-point growth strategy . we also continue investing in our customer success organization to drive customer outcomes , loyalty , retention and referrals . the increases in sales , marketing and customer success expense in dollars and as a percentage of total revenue during 2018 , when compared to 2017 , was primarily due to increases in compensation costs of $ 9.7 million , commissions expense of $ 7.6 million , and advertising and marketing costs of $ 1.9 million . compensation costs increased as a result of our efforts during the second half of 2018 to increase our direct sales force and we expect to continue making similar investments during 2019 and beyond . these incremental investments are intended to address the large market opportunity that we see for ourselves and fuel future revenue growth . in addition , compensation costs increased due to incremental headcount associated with the inclusion of academicworks , justgiving and reeher . the increase in commission expense was primarily driven by an increase in commissionable sales . advertising and marketing costs increased as a result of our inclusion of justgiving . 2017 vs. 2016 the increases in sales , marketing and customer success expense in dollars and as a percentage of total revenue during 2017 , when compared to 2016 , were primarily due to an increase in compensation costs of $ 12.8 million .
| operating results replace_table_token_37_th ( 1 ) the individual amounts for each year may not sum to recurring gross profit due to rounding . recurring revenue is comprised of fees for the use of our subscription-based software solutions , which includes providing access to cloud-based solutions , hosting services , online training programs , subscription-based analytic services , such as donor acquisitions and data enrichment , and payment services . recurring revenue also includes fees from maintenance services for our on-premises solutions , services included in our renewable subscription contracts , subscription-based contracts for professional services and variable transaction revenue associated with the use of our solutions . cost of recurring revenue is primarily comprised of compensation costs for customer support and production it personnel , third-party contractor expenses , third-party royalty and data expenses , hosting expenses , allocated depreciation , facilities and it support costs , amortization of intangible assets from business combinations , amortization of software development costs , transaction-based costs related to payments services including remittances of amounts due to third-parties and other costs incurred in providing support and recurring services to our customers . we continue to experience growth in sales of our cloud-based solutions as we meet the demand of our customers that increasingly prefer cloud-based subscription offerings with integrated analytics , training and payment services . recurring subscription contracts are typically for a term of three years at contract inception with one to three-year renewals thereafter . we intend to continue focusing on innovation , quality and integration of our cloud-based solutions , which we believe will drive future revenue growth . 2018 vs. 2017 the increase in recurring revenue during 2018 , when compared 2017 , was primarily due to positive demand across our portfolio of cloud-based solutions as revenue from subscriptions increased $ 98.1 million .
| 7,454 |
the ramaco coal note was repaid on november 5 , 2018 with proceeds from the credit facility . 75 on-going administrative services —under a mutual services agreement dated december 22 , 2017 but effective as of march 31 , 2017 , the company and ramaco coal , llc agreed to share the services of certain of each company 's employees . each party will pay the other a fee on a quarterly basis for such services calculated as the annual base salary of each employee providing services multiplied by the percentage of time each employee spent providing services for the other party . the services will be provided for 12‑month terms , but may be terminated by either party at the end of any 12‑month term by providing written notice at least 30 days prior to the end of the then-current term . no payments were made to either party under this agreement in 2019 or 2018. note 12—income taxes income tax expense consisted of the following : replace_table_token_23_th the items accounting for differences between income taxes computed at the federal statutory rate and the provision recorded for income taxes were as follows : replace_table_token_24_th 76 deferred tax assets and liabilities were as follows : replace_table_token_25_th as of december 31 , 2019 , our federal net operating loss carryforwards for income tax purposes were approximately $ 81 million . total state loss carryforwards were approximately $ 57 million . if not utilized , federal and state net operating loss carryforwards approximating $ 60 million and $ 47 million , respectively , will expire between 2035 and 2037. the remaining net operating loss carryforwards have no statutory expiration . a valuation allowance was previously established against our net deferred tax assets given our limited operating history . this valuation allowance was reversed in 2018. tax cuts and jobs act —on december 22 , 2017 , the u.s. government enacted comprehensive tax legislation referred to as the tax cuts and jobs act ( the “ act ” ) . the act made broad and complex changes to the u.s. tax code , including but not limited to , reducing the u.s. federal corporate rate from 35 % to 21 % , allowing full expensing of qualified property acquired and placed in service after september 27 , 2017 and imposing new limits on the deduction of net operating losses , executive compensation and net interest expense . there was no impact of the act on our 2017 financial statements . note 13—earnings ( loss ) per share the following table is a calculation of the net earnings ( loss ) per basic and diluted share : replace_table_token_26_th diluted eps for 2019 and 2017 excludes 937,424 options to purchase our common stock because their effect would be anti-dilutive . * * * * * 77 selected quarterly financial data ( unaudited ) the following table presents selected quarterly financial data derived from our unaudited interim financial statements . the following data is only a summary and should be read with our historical consolidated financial statements and related notes contained in this document . replace_table_token_27_th ( a ) represents total revenue less cost of sales . ( b ) the sum of quarterly per share amounts may not equal amounts reported for the annual periods due to the effects of rounding . * * * * * 78 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 under the supervision and with the participation of our management , including the chief executive officer ( “ ceo ” ) , the principal executive officer , and chief financial officer ( “ cfo ” ) , the principal financial officer , we conducted an evaluation of the effectiveness of our disclosure controls and procedures , as such term is defined under rule 13a‑15 ( e ) and 15d - 15 ( e ) promulgated under the securities exchange act of 1934 ( the “ exchange act ” ) , as amended . based on this evaluation , the ceo and cfo concluded that our story_separator_special_tag the following discussion contains forward-looking statements that reflect our future plans , estimates , beliefs and expected performance . the forward-looking statements are dependent upon events , risks and uncertainties that may be outside our control . we caution you that our actual results could differ materially from those discussed in these forward-looking statements . factors that could cause or contribute to such differences are discussed elsewhere in this annual report , particularly in the “ cautionary note regarding forward-looking statements ” and “ risk factors , ” all of which are difficult to predict . in light of these risks , uncertainties and assumptions , the forward-looking events discussed may not occur . we do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law . overview our primary source of revenue is the sale of metallurgical coal . we have a 242 million ton reserve base of high-quality metallurgical coal and a development portfolio including four primary properties . our plan is to continue development of our existing properties and grow production to 4-4.5 million clean tons of metallurgical coal by the year 2023 , subject to market conditions , permitting and additional capital deployment . we may make acquisitions of reserves or infrastructure that continue our focus on advantaged geology and lower costs . during 2019 , we sold 1.95 million tons of coal . of this , 75 % was sold in north american markets and 25 % was sold in export markets principally to europe and asia . story_separator_special_tag gaap and therefore should not be considered as an alternative to revenue under u.s. gaap . replace_table_token_5_th non-gaap cash cost per ton sold non-gaap cash cost per ton sold is calculated as cash cost of sales less transportation costs , divided by tons sold . we believe cash cost per ton sold provides useful information to investors as it enables investors to compare our cash cost per ton against similar measures made by other publicly-traded coal companies and more effectively monitor changes in coal cost from period to period excluding the impact of transportation costs which are beyond our control . the adjustments made to arrive at these measures are significant in understanding and assessing our financial condition . cash cost per ton sold is not a measure of financial performance in accordance with u.s. gaap and therefore should not be considered as an alternative to cost of sales under u.s. gaap . replace_table_token_6_th 2020 sales commitments as of december 31 , 2019 , we had entered into forward sales contracts with north american customers for 2020 on a fixed price basis for 1.5 million tons at an average realizable price of $ 93.29/ton fob mine . these volumes were all metallurgical quality coal . liquidity and capital resources our primary source of cash is proceeds from the sale of our coal production to customers . our primary uses of cash include the cash costs of coal production , capital expenditures , royalty payments and other operating expenditures . 54 cash flow information is as follows : replace_table_token_7_th cash flows from operating activities during 2019 increased from the comparable period of the prior year primarily resulting from higher cash earnings offset by a greater amount required for working capital ( receivables , inventories and accounts payable ) associated with higher sales revenue . net cash used in investing activities was $ 45.7 million for the year ended december 31 , 2019 as compared with $ 42.9 million for 2018. capital expenditures totaled $ 45.7 million and $ 48.1 million in the 2019 and 2018 periods , respectively . we received proceeds of $ 5.2 million from maturing investment securities during the 2018 period . cash flows from financing activities were $ 2.8 million for the year ended december 31 , 2019 , which was primarily due to net borrowings during the period . cash flows from financing activities were $ 7.9 million for 2018 , which was due to net proceeds from short term borrowings . restricted cash balances at december 31 , 2019 and 2018 were $ 1.3 million and $ 0.4 million , respectively , consisted of funds held in escrow for potential future workers ' compensation claims and were classified in other current assets in the consolidated balance sheets . indebtedness on november 2 , 2018 , we entered into a credit and security agreement with keybank national association ( “ keybank ” ) consisting of a $ 10.0 million term loan , which we refinanced in november 2019 , and up to $ 30.0 million revolving line of credit , including $ 1.0 million letter of credit availability ( the “ revolving credit facility ” ) . all personal property assets , including , but not limited to accounts receivable , coal inventory and certain surface mining equipment were pledged to secure the indebtedness . the revolving credit facility has a maturity date of november 2 , 2021. the revolving credit facility interest rate is based on libor + 2.35 % or base rate + 1.75 % . the term loan credit interest rate was based on libor + 4.75 % or base rate + 3.75 % . base rate is the highest of ( i ) keybank 's prime rate , ( ii ) federal funds effective rate + 0.5 % , or ( iii ) libor + 1.0 % . the loans were initially base rate loans , but may be converted to libor rate loans at certain times at our discretion . as of december 31 , 2019 , $ 3.0 million was outstanding on the revolving credit facility and we had remaining availability of $ 16.7 million . on november 22 , 2019 , we repaid the existing term loan with proceeds from a new $ 10 million term loan with keybank . the new term loan is secured with a pledge of certain underground and surface mining equipment . the new term loan interest rate is libor + 5.15 % . the outstanding principal balance of the new term loan is required to be repaid in 36 monthly installments of $ 277 thousand plus accrued interest . the outstanding principal balance of the new term loan was $ 9.9 million at december 31 , 2019. the revolving credit facility and new term loan contain usual and customary covenants , including but not limited to , limitations on liens , additional indebtedness , investments , restricted payments , asset sales , mergers , affiliate transactions and other customary limitations , as well as financial covenants . as of december 31 , 2019 , we were in compliance with all covenants . 55 please see note 6 to the consolidated financial statements included in item 8 of part i in this annual report on form 10‑k for additional information on the revolving credit facility and new term loan . liquidity as of december 31 , 2019 , our available liquidity was $ 21.8 million , comprised of cash and availability under our revolving credit facility . we expect to fund our capital and liquidity requirements with cash on hand , borrowings discussed above and projected cash flow from operations .
| results of operations replace_table_token_2_th adjusted ebitda was $ 55.4 million in 2019 , which was 31 % above that for 2018. we sold 1.9 million tons of company produced tons at realized pricing of $ 109/ton , our highest year on record . the strong pricing was reflective of our decision in 2018 to commit the majority of our 2019 sales tons into the domestic steel market . development of our berwind mining complex began in late 2017. we expect the berwind mine to achieve full commercial production in late-2020 from two deep mine operations . these development efforts contributed to higher cash costs of production and higher capital expenditures during 2019 and 2018. year ended december 31 , 2019 compared to year ended december 31 , 2018 revenue . our revenue includes sales to customers of company produced coal and coal purchased from third parties . we include amounts billed by us for transportation to our customers within revenue and transportation costs incurred within cost of sales . for the year ended december 31 , 2019 , we had revenue of $ 230.2 million from the sale of 1.95 million tons of coal including 0.1 million tons of purchased coal . for the year ended december 31 , 2018 , we had revenue of $ 227.6 million from the sale of coal . during 2018 , we sold 2.1 million tons of coal including 0.4 million tons of purchased coal . 51 coal sales information is summarized as follows : replace_table_token_3_th cost of sales .
| 7,455 |
when assessing a trustee 's relationship with us , our board of trustees considers all relevant facts and circumstances , not merely from the trustee 's standpoint , but also from that of the persons or organizations with which the trustee has an affiliation . based on this review , our board of trustees has determined that lisa harris jones , bruce m. gans and joseph l. morea currently qualify as independent trustees under applicable nasdaq and sec criteria and as independent trustees under our bylaws . in making these determinations , our board of trustees reviewed and discussed additional information provided by the trustees and us with regard to each of the trustees ' relationships with us , rmr inc. or rmr llc and the other companies to which rmr llc or its subsidiaries provide management and advisory services . our board of trustees has concluded that none of these three trustees possessed or currently possesses any relationship that could impair his or her judgment in connection with his or her duties and responsibilities as a trustee or that could otherwise be a direct or indirect material relationship under applicable nasdaq and sec standards . item 14. principal accountant fees and services the following table story_separator_special_tag the following information should be read in conjunction with our consolidated financial statements and accompanying notes included elsewhere in this annual report on form 10-k. overview as of december 31 , 2017 , we owned 266 properties with approximately 28.5 million rentable square feet , including 226 buildings , leasable land parcels and easements with approximately 16.8 million rentable square feet located on the island of oahu , hi , and 40 buildings with approximately 11.7 million rentable square feet located in 24 other states . as of december 31 , 2017 , our properties were approximately 99.9 % leased ( based on rentable square feet ) to 243 different tenants with a weighted average remaining lease term ( based on annualized rental revenues ) of approximately 11.1 years . property operations as of december 31 , 2017 , 99.9 % of our rentable square feet was leased , compared to 99.2 % of our rentable square feet as of december 31 , 2016 . occupancy data for our properties as of december 31 , 2017 and 2016 is as follows ( square feet in thousands ) : 45 replace_table_token_4_th ( 1 ) subject to modest adjustments when space is re-measured or re-configured for new tenants and when land leases are converted to building leases . ( 2 ) percent leased includes ( a ) space being fitted out for occupancy pursuant to existing leases as of december 31 , 2017 , if any , and ( b ) space which is leased but is not occupied or is being offered for sublease by tenants , if any . the average annualized effective rental rates per square foot , as defined below , for our properties for the years ended december 31 , 2017 and 2016 are as follows : replace_table_token_5_th ( 1 ) average annualized effective rental rates per square foot leased represents total revenues during the period specified divided by the average rentable square feet leased during the period specified . during the year ended december 31 , 2017 , we entered lease renewals and new leases for approximately 963,000 square feet at weighted average rental rates ( per square foot ) that were approximately 17.6 % higher than prior rates for the same land area or building area ( with leasing rate increases for vacant space based upon the most recent rental rate for the same space ) . consolidated portfolio occupancy during this annual period increased from 99.2 % as of december 31 , 2016 to 99.9 % as of december 31 , 2017 . the weighted average lease term per square foot for leases that were in effect for the same land area or building area during the prior lease term , which included commencement dates beginning in december 2003 , was 13.6 years . commitments for tenant improvements , leasing costs and concessions for leases entered during the year ended december 31 , 2017 totaled $ 1.3 million , or $ 0.10 per square foot per year of the new weighted average lease term . also , during the year ended december 31 , 2017 , we completed six rent resets at our hawaii properties for approximately 306,000 square feet of land , at rental rates that were approximately 41.5 % higher than the prior rental rates . as shown in the table below , approximately 1.2 % of our rented square feet and approximately 1.0 % of our total annualized rental revenues as of december 31 , 2017 are included in leases scheduled to expire by december 31 , 2018 . as of december 31 , 2017 , our lease expirations by year are as follows ( dollars and square feet in thousands ) : 46 replace_table_token_6_th ( 1 ) rented square feet is pursuant to existing leases as of december 31 , 2017 , and includes ( i ) space being fitted out for occupancy , if any , and ( ii ) space which is leased but is not occupied or is being offered for sublease by tenants , if any . we generally receive rents from our tenants monthly in advance . as of december 31 , 2017 , tenants representing 1 % or more of our total annualized rental revenues were as follows ( square feet in thousands ) : 47 replace_table_token_7_th ( 1 ) rented square feet is pursuant to existing leases as of december 31 , 2017 , and includes ( i ) space being fitted out for occupancy , if any , and ( ii ) space which is leased but is not occupied or is being offered for sublease by tenants , if any . mainland properties . we generally will seek to renew or extend the terms of leases at our mainland properties when they expire . story_separator_special_tag we are required to pay a commitment fee on the unused portion of our revolving credit facility until and if such time as we make a ratings election , and thereafter we will be required to pay a facility fee in lieu of such commitment fee based on the maximum amount of our revolving credit facility . we may borrow , repay and reborrow funds under our revolving credit facility until maturity , and no principal repayment is due until maturity . our credit agreement also includes a feature under which the maximum borrowing availability under our revolving credit facility may be increased to up to $ 1,500,000 in certain circumstances . 49 on january 17 , 2018 , we completed the ipo , in which we issued 20,000,000 of our common shares for net proceeds of approximately $ 435,900 , after deducting the underwriting discounts and commissions and estimated expenses including reimbursements to sir for the costs it incurred in connection with our formation and the preparation for the ipo . in connection with our formation , in september 2017 , among other things , sir contributed to us 266 properties ( approximately 28.5 million rentable square feet ) and we issued a $ 750,000 demand note to sir . we also assumed three mortgage notes totaling $ 63,069 , as of september 30 , 2017 , that were secured by three of our properties . in december 2017 , we obtained a $ 750,000 secured revolving credit facility , and we used the proceeds of an initial borrowing under this credit facility to pay the sir note in full . also in december 2017 , sir prepaid on our behalf two of the mortgage notes totaling $ 14,319 that had encumbered two of our initial properties . upon the closing of the ipo , our secured revolving credit facility converted into a four year unsecured revolving credit facility , and we used substantially all of the net proceeds from the ipo to reduce amounts outstanding under our revolving credit facility . we also reimbursed sir for costs that it incurred in connection with our formation and the preparation for the ipo . for more information regarding our financing activities , see “ management 's discussion and analysis of financial condition and results of operations—liquidity and capital resources—our investment and financing liquidity and resources ” of this annual report on form 10-k. 50 story_separator_special_tag properties . acquisition and transaction related costs . acquisition and transaction related costs reflect costs expensed under gaap that are related to our property acquisitions and investment activity . the increase in acquisition and transaction related costs primarily reflects accounting fees related to the ipo that are required to be expensed under gaap . general and administrative . general and administrative expenses were primarily allocated to us by sir based on the historical cost of our properties as a percentage of sir 's historical cost of all of its properties . the increase in general and administrative expense reflects the related increase in sir 's general and administrative expenses allocated to our properties primarily as a result of business management incentive fees recognized by sir in the 2017 period . interest expense . interest expense reflects interest on borrowings under our revolving credit facility in 2017 , as well as interest expense related to mortgage notes securing properties acquired in 2015 . 52 income tax expense . income tax expense reflects state income taxes payable in certain jurisdictions despite our expected status as a reit for federal income tax purposes . net income . the decrease in net income for the 2017 period compared to the 2016 period reflects the changes noted above . net income per common share - basic and diluted . net income per common share reflects the changes to net income noted above . 53 year ended december 31 , 2016 , compared to year ended december 31 , 2015 ( dollars and share amounts in thousands , except per share data ) replace_table_token_10_th ( 1 ) consists of 235 properties that we owned continuously since january 1 , 2015 . 54 ( 2 ) consists of 31 properties we acquired during the period from january 1 , 2015 to december 31 , 2016 . ( 3 ) see footnote ( 1 ) on page 52 for the definition of noi . ( 4 ) see footnote ( 2 ) on page 52 for the definitions of ffo and normalized ffo . references to changes in the income and expense categories below relate to the comparison of results for the year ended december 31 , 2016 , compared to the year ended december 31 , 2015. our acquisition activity reflects our acquisition of 31 properties in january 2015. rental income . the increase in rental income primarily reflects our acquisition activity and increases from leasing activity and rent resets at certain of our comparable hawaii properties . rental income includes non-cash straight line rent adjustments totaling approximately $ 6,202 for the 2016 period and approximately $ 6,344 for the 2015 period , and net amortization of acquired real estate leases and assumed real estate lease obligations totaling approximately $ 403 for the 2016 period and approximately $ 486 for the 2015 period . tenant reimbursements and other income . the increase in tenant reimbursements and other income primarily reflects our acquisition activity and increases in real estate tax and operating expense reimbursements from tenants at certain of our comparable properties . real estate taxes . the increase in real estate taxes primarily reflects tax valuation and tax rate increases at certain of our comparable properties , and our acquisition activity . other operating expenses : provision for bad debts . the increase in provision for bad debts primarily reflects the recovery in 2015 of net amounts previously reserved for our comparable properties net of bad debt reserves recorded in 2015 and 2016. other expenses . the increase in other expenses primarily reflects increases in property management related expenses , repairs and maintenance , other general operating expenses and our acquisition activity .
| results of operations year ended december 31 , 2017 , compared to year ended december 31 , 2016 ( dollars and share amounts in thousands , except per share data ) replace_table_token_9_th 51 ( 1 ) the calculation of noi excludes certain components of net income in order to provide results that are more closely related to our property level results of operations . we calculate noi as shown above . we define noi as income from our rental of real estate less our property operating expenses . noi excludes amortization of capitalized tenant improvement costs and leasing commissions that we record as depreciation and amortization . we consider noi to be an appropriate supplemental measure to net income because it may help both investors and management to understand the operations of our properties . we use noi to evaluate individual and company wide property level performance , and we believe that noi provides useful information to investors regarding our results of operations because it reflects only those income and expense items that are generated and incurred at the property level and may facilitate comparisons of our operating performance between periods and with other reits . noi does not represent cash generated by operating activities in accordance with gaap and should not be considered an alternative to net income or operating income as an indicator of our operating performance or as a measure of our liquidity . this measure should be considered in conjunction with net income and operating income as presented in our consolidated statements of comprehensive income . other real estate companies and reits may calculate noi differently than we do . ( 2 ) we calculate ffo and normalized ffo as shown above .
| 7,456 |
information with respect to our plans and strategy for our business and financing , 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 annual report on form 10-k for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis . overview product portfolio emergent biosolutions inc. is a global specialty biopharmaceutical company seeking to protect and enhance life by offering specialized products to healthcare providers and governments to address medical needs and emerging public health threats . we develop , manufacture , and deliver a portfolio of medical countermeasures primarily for government agencies in the areas of biological and chemical threats and emerging infectious diseases . we also develop and commercialize therapeutics and other specialty products for hospitals and clinics in the areas of hematology/oncology , transplantation , infectious diseases and autoimmune disorders . we have two operating divisions : biodefense and biosciences . for financial reporting purposes , we operate in two business segments that correspond to these two divisions . biodefense our biodefense division is a specialty biopharmaceutical business focused on countermeasures that address public health threats , specifically chemical , biological , radiological , nuclear and explosive , or cbrne , threats as well as emerging infectious diseases , or eid . the u.s. government is the primary purchaser of our biodefense products and often provides us with substantial funding for the development of our biodefense product candidates . our biodefense portfolio consists of five revenue-generating products and various investigational stage product candidates . our biodefense division marketed products are : § biothrax ® ( anthrax vaccine adsorbed ) , the only vaccine licensed by the u.s. food and drug administration , or the fda , for the general use prophylaxis and post-exposure prophylaxis of anthrax disease ; § anthrasil ( anthrax immune globulin intravenous ( human ) ) , the only polyclonal antibody therapeutic licensed by the fda for the treatment of inhalational anthrax ; § bat ( botulism antitoxin heptavalent ( a , b , c , d , e , f , g ) -equine ) , the only heptavalent therapeutic licensed by the fda for the treatment of botulinum disease ; § vigiv ( vaccinia immune globulin intravenous ( human ) ) , the only therapeutic licensed by the fda to address adverse events from smallpox vaccination ; and § rsdl ® ( reactive skin decontamination lotion kit ) , the only device cleared by the fda for the removal or neutralization of chemical agents , t-2 toxin and many pesticide-related chemicals from the skin . our biodefense division investigational stage product candidates are : § nuthrax ( anthrax vaccine adsorbed with cpg 7909 adjuvant ) , a next generation anthrax vaccine ; § uv-4b , a novel antiviral being developed for dengue and influenza infections ; § gc-072 , the lead compound in the ev-035 series of broad spectrum antibiotics , being developed for burkholderia pseudomallei ; § vax161c , a recombinant pandemic influenza vaccine candidate being developed by vaxinnate , inc. and for which we have an exclusive license agreement to manufacture and sell in the event of a surge order from the biomedical advanced research and development authority , or barda ; § previthrax ( recombinant protective antigen anthrax vaccine , purified ) , a next generation anthrax vaccine ; and § other biodefense product candidates focused on public health threats and emerging infectious diseases . a unique component of our biodefense division investigational stage product portfolio is that most of our candidates are under an active development contract with significant funding from the u.s. government . this allows our development pipeline , along with our marketed products , to be aligned with the strategic priorities of our u.s. and allied foreign government customers . our biodefense division also has programs that leverage our proven manufacturing infrastructure and expertise . we have responded to specific task order requests issued by barda for the development and manufacture of specific countermeasures as part of our center for innovation in advanced development and manufacturing , or ciadm , program focused on imminent public health threats , including pandemic influenza and ebola . our biodefense division also includes multiple platform technologies , including the mvatortm ( modified vaccinia virus ankara vector ) platform technology and emergard , a military-grade auto-injector device designed for intramuscular self-injection of antidotes and other emergency response medical treatments that can address exposure to certain chemical agents and other similar emerging threats . in february 2016 , we announced that emergard was selected by the u.s. department of defense , or dod , and battelle memorial institute to be tested against and developed to u.s. military specifications as a platform for nerve agent antidote delivery . development and testing of emergard is expected to be completed in 2016 and , if successful , could lead to emergard 's future procurement for u.s. military and emergency responder use . the testing and development of emergard will be performed under a subcontract with battelle , which in turn has a prime contract with the dod . operations that support this division include manufacturing , regulatory affairs , quality assurance , quality control , international sales and marketing , and government affairs in support of our marketed products , as well as product development and manufacturing infrastructure in support of our investigational stage product candidates . we have derived the majority of our historical product sales revenues from biothrax sales to the u.s. government . story_separator_special_tag following the spin-off , we will be a global specialty life sciences company focused on providing specialty products for civilian and military populations that address intentional and naturally emerging public health threats . we will be better positioned to establish ourselves as a pure play company , recognized as a leader in the public health threats and emerging infectious diseases fields ; enhance our financial returns and operating margins through the elimination of biosciences related research and development , sales , marketing and general and administrative costs ; and , exercise greater flexibility in our capital allocation decisions . product sales we have derived a majority of our historical product sales revenues from biothrax sales to the u.s. government . we are currently a party to a contract with the cdc , an operating division of the hhs to supply up to 44.75 million doses of biothrax for placement into the strategic national stockpile , or sns , over a five-year period . our total revenues from biothrax sales were $ 293.9 million , $ 245.9 million and $ 246.7 million for the years ended december 31 , 2015 , 2014 and 2013 , respectively . we expect to continue to derive a majority of our product sales revenues from sales of biothrax to the u.s. government . we are focused on increasing the sales of our biodefense products to u.s. government customers and expanding the market for our product portfolio to other customers domestically and internationally . contracts and grants we seek to advance development of our product candidates through external funding arrangements . we may slow down development programs or place them on hold during periods that are not covered by external funding . we have received funding from the u.s. government for a number of our development programs . we continue to actively pursue additional government sponsored development contracts and grants and commercial collaborative relationships . both governmental agencies and philanthropic organizations may provide development funding or conduct clinical studies of our product candidates . manufacturing infrastructure biodefense we have a manufacturing facility focused on bacterial fermentation located at our 12.5 acre , multi-building campus in lansing , michigan . we currently manufacture biothrax at the 100 liter scale at this facility . to augment our existing biothrax manufacturing capabilities , we have constructed a large-scale , multi-product facility capable of producing biothrax at the 1320 liter scale . in july 2010 , we entered into a contract with barda which provides funding to support the work needed to approve manufacturing of biothrax at the larger scale . we also have a manufacturing facility focused on disposable manufacturing for viral and non-viral products located at our biodefense manufacturing facility in baltimore , maryland . this facility has been designed to leverage single-use bioreactor technology and is capable of making several different products . the facility is designed to produce proteins derived from cell culture or microbial systems . in june 2012 , we entered into a contract with barda , which established our baltimore facility as a ciadm . the ciadm contract with barda provides us with funding for manufacturing and development activities relating to a clinical stage pandemic flu vaccine candidate that we in-licensed from a third party . we envision our biodefense baltimore facility supporting future ciadm development and manufacturing activities for chemical , biological , radiological , nuclear and explosive threat countermeasures , as well as our current and future non-ciadm product development and manufacturing needs . in connection with our august 2013 acquisition of the healthcare protective products division , or hppd , of bracco diagnostics inc. , or bracco , we acquired rights to a manufacturing and packaging facility at the university of southern mississippi 's accelerator , a technology innovation and commercialization center . this facility is equipped to manufacture and package rsdl . a significant portion of the doses of rsdl that we sell to domestic customers are packaged at this facility . we also entered into a three year manufacturing agreement with bracco and its wholly-owned subsidiary , e-z-em canada inc. ( dba therapex ) , to manufacture finished rsdl units and bulk quantities of rsdl 's active ingredient . biosciences in connection with the cangene acquisition , we acquired facilities with manufacturing and other capabilities located in winnipeg , manitoba , canada . these facilities include space for plasma-derived hyperimmune therapeutics manufacturing , chromatography-based plasma fractionation , bacterial fermentation , downstream processing capability , aseptic filling , packaging and warehousing , quality assurance and control , development laboratories and office space . this facility has the potential capacity to provide additional contract research and manufacturing activities if needed . additionally , as part of cangene acquisition , we acquired a manufacturing facility located in baltimore , maryland focused on pharmaceutical product development and filling services for injectable and other sterile products , as well as process design , technical transfer , manufacturing validations , laboratory support , aseptic filling , lyophilization , final packaging and accelerated and ongoing stability studies and is an approved manufacturing facility under the regulatory regimes in the united states , canada , japan , brazil , the middle east and several countries in the european union . the facility includes warehousing space used for cold-storage and freezer capacity to support our biosciences product distribution activities within the united states . this facility and its capabilities may be utilized in the future to fill and finish our development and commercial stage products , which currently rely upon third party fill/finish providers . neither of these facilities will be included with the assets that are contributed to aptevo in the planned spin-off of our biosciences business . critical accounting policies and estimates our discussion and analysis of our financial condition and results of operations are based on our financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states . the preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses .
| results of operations year ended december 31 , 2015 compared to year ended december 31 , 2014 revenue replace_table_token_5_th product sales : the increase in biothrax sales was primarily due to the timing of deliveries under our contract with the cdc . biothrax product sales revenues during the year ended december 31 , 2015 consisted of sales to the cdc of $ 292.8 million and aggregate international and other sales of $ 1.1 million . biothrax product sales revenues during the year ended december 31 , 2014 consisted primarily of biothrax sales to the cdc of $ 242.2 million and aggregate international and other sales of $ 3.7 million . the decrease in biosciences product sales revenue was primarily related to sales of winrho ® due to reduced international sales . contract manufacturing : the increase in contract manufacturing revenues was primarily due to a full year of revenues from our fill/finish facility in baltimore and our plasma based manufacturing facility in winnipeg , both of which we acquired in february 2014. in addition , contract manufacturing revenue increased by $ 3.8 million due to services related to the production of an mva ebola vaccine candidate . contracts , grants and collaborations : the increase in contracts , grants and collaboration revenues was primarily due to the following : § increased development funding of $ 11.0 million for our anthrasil program , related to plasma collection ; and § increased development funding of $ 9.4 million related to our ciadm program , including a $ 5.0 million milestone payment from barda and $ 3.0 million from new ciadm task orders . these increases were partially offset by a decrease of approximately $ 10.0 million in revenue from our collaboration with morphosys , primarily related to recognition of over $ 15.0 million in revenue in 2014 related to the upfront payment .
| 7,457 |
the company reports cash flows on repurchase agreements entered into by rcap and shannon as operating activities in the consolidated statements of cash flows . f-8 convertible senior notes – the company records the convertible senior notes at their contractual amounts , adjusted by the effect of the beneficial conversion feature . the convertible senior notes have a conversion price adjustment feature that is evaluated at the time of the conversion price adjustment . a contingent beneficial conversion feature was recognized in the year ended december 31 , 2011 as a result of adjustments to the conversion price for dividends declared . the company determined the intrinsic value of the contingent beneficial conversion feature . this intrinsic value is included in “ additional paid in capital ” on the company 's consolidated statements of financial condition and , therefore , reduces the liability associated with the convertible senior notes . cumulative convertible preferred stock - the series b cumulative convertible preferred stock ( the “ series b preferred stock ” ) contains fundamental change provisions that allow the holder to redeem the series b preferred stock for cash if certain events occur . as redemption under these provisions is not solely within the company story_separator_special_tag overview we own , manage , and finance a portfolio of real estate related assets , including mortgage pass-through certificates , collateralized mortgage obligations ( or cmos ) , agency callable debentures , and other securities representing interests in or obligations backed by pools of mortgage loans . our principal business objective is to generate net income for distribution to our stockholders from the spread between the interest income on our interest-earning assets and the costs of borrowing to finance our acquisition of interest-earning assets and from dividends we receive from our subsidiaries . our wholly-owned subsidiaries offer diversified real estate , asset management and other financial services . fidac and merganser are our wholly-owned taxable reit subsidiaries that are registered investment advisors that generate advisory and service fee income . rcap is our wholly-owned broker dealer taxable reit subsidiary which generates fee income . we also own subsidiaries engaged in corporate middle market lending transactions , providing warehouse financing to residential mortgage originators , providing advice on commercial real estate transactions , including sale-leaseback and single tenant net leased properties across europe , and investing in trading securities . we are primarily engaged in the business of investing , on a leveraged basis , in mortgage pass-through certificates , cmos and other mortgage-backed securities representing interests in or obligations backed by pools of mortgage loans issued or guaranteed by freddie mac , fannie mae and ginnie mae . we also invest in federal home loan bank ( or fhlb ) , freddie mac and fannie mae debentures . under our capital investment policy , at least 75 % of our total assets must be comprised of high-quality mortgage-backed securities and short-term investments . high quality securities means securities that ( 1 ) are rated within one of the two highest rating categories by at least one of the nationally recognized rating agencies , ( 2 ) are unrated but are guaranteed by the united states government or an agency of the united states government , or ( 3 ) are unrated but we determine them to be of comparable quality to high-quality rated mortgage-backed securities . the remainder of our assets , comprising not more than 25 % of our total assets , may consist of other qualified reit real estate assets which are unrated or rated less than high quality , but which are at least “ investment grade ” ( rated “ bbb ” or better by standard & poor 's corporation ( or s & p ) or the equivalent by another nationally recognized rating agency ) or , if not rated , we determine them to be of comparable credit quality to an investment which is rated “ bbb ” or better . in addition , we may directly or indirectly invest part of this remaining 25 % of our assets in other types of securities , including without limitation , unrated debt , equity or derivative securities , to the extent consistent with our reit qualification requirements . the derivative securities in which we invest may include securities representing the right to receive interest only or a disproportionately large amount of interest , as well as inverse floaters , which may have imbedded leverage as part of their structural characteristics . we may acquire agency mortgage-backed securities backed by single-family residential mortgage loans as well as securities backed by loans on multi-family , commercial or other real estate related properties . to date , substantially all of the agency mortgage-backed securities that we have acquired have been backed by single-family residential mortgage loans . we have elected to be taxed as a real-estate investment trust , or reit , for federal income tax purposes . pursuant to the current federal tax regulations , one of the requirements of maintaining our status as a reit is that we must distribute at least 90 % of our reit taxable income ( determined without regard to the deduction for dividends paid and by excluding any net capital gain ) to our stockholders , subject to certain adjustments . the results of our operations are affected by various factors , many of which are beyond our control . our results of operations primarily depend on , among other things , our net interest income , the market value of our assets and the supply of and demand for such assets . our net interest income , which reflects the amortization of purchase premiums and accretion of discounts , varies primarily as a result of changes in interest rates , borrowing costs and prepayment speeds , the behavior of which involves various risks and uncertainties . story_separator_special_tag we believe using the ois curve , which reflects the interest rate typically paid on cash collateral , more accurately reflects the fair value of interest rate swaps . consistent with market practice , we have individually negotiated agreements with certain counterparties to exchange collateral ( “ margining ” ) based on the level of fair values of the interest rate swaps . through this margining process , one party or each party to a derivative contract provides the other party with information about the fair value of the derivative contract to calculate the amount of collateral required , providing additional verification of our recorded fair value of the interest rate swaps . revenue recognition interest income on agency mortgage-backed securities and debentures is recognized over the projected life of the securities using the interest method . the projected life of the securities is determined based on expected prepayment speeds , past prepayment history of the security , government initiatives that would affect the agency mortgage-backed securities market , and market consensus . gains or losses on investment securities are recorded on trade date based on the average cost of the security . 42 income taxes we elected to be taxed as a reit , under sections 856 through 860 of the internal revenue code , beginning with our taxable year ended december 31 , 1997. to qualify as a reit , we must meet certain organizational and operational requirements , including a requirement to distribute at least 90 % of our ordinary taxable income , if any , to stockholders . as a reit , we generally will not be subject to u.s. federal income tax on taxable income that we distribute to our stockholders . if we fail to qualify as a reit in any taxable year , we will then be subject to u.s. federal income taxes on our taxable income at regular corporate rates and we will not be permitted to qualify for treatment as a reit for u.s. federal income tax purposes for four years following the year during which qualification is lost unless the internal revenue service grants us relief under certain statutory provisions . such an event could materially adversely affect our net income and net cash available for distributions to stockholders . however , we believe that we will be organized and operate in such a manner as to qualify for treatment as a reit and we intend to operate in the foreseeable future in such a manner so that we will qualify as a reit for u.s. federal income tax purposes . we may , however , be subject to certain state and local taxes and our taxable reit subsidiaries are subject to federal , state and local taxes . exposure to european financial counterparties a significant portion of our agency mortgage-backed securities are financed with repurchase agreements . we secure our borrowings under these agreements by pledging our agency mortgage-backed securities as collateral to the lender . the collateral we pledge exceeds the amount of the borrowings under each agreement , typically with the extent of over-collateralization being at least 3 % of the amount borrowed . if the counterparty to the repurchase agreement defaults on its obligations and we are not able to recover our pledged assets , we are at risk of losing the over-collateralized amount . the amount of this exposure is the difference between the amount loaned to us plus interest due to the counterparty and the fair value of the collateral pledged by us to the lender including accrued interest receivable on such collateral . we also use interest rate swaps to manage our interest rate risks . under these swap agreements , we pledge agency mortgage-backed securities as collateral as part of a margin arrangement for interest rate swaps that are in an unrealized loss position . if a counterparty were to default on its obligation , we would be exposed to a loss to a swap counterparty to the extent that the amount of our agency mortgage-backed securities pledged exceeded the unrealized loss on the associated swaps and we were not able to recover the excess collateral . over the past several years , several large european financial institutions have experienced financial difficulty and have been either rescued by government assistance or by other large european banks or institutions . some of these financial institutions or their u.s. subsidiaries have provided us financing under repurchase agreements or we have entered into interest rate swaps with such institutions . we have entered into repurchase agreements and or interest rate swaps with 10 financial institution counterparties that are either domiciled in europe or a u.s.-based subsidiary of a european domiciled financial institution . the following table summarizes our exposure to such counterparties at december 31 , 2011 : replace_table_token_7_th ( 1 ) represents the amount of cash and or securities pledged as collateral to each counterparty less the aggregate of repurchase agreement financing and unrelated loss on swaps for each counterparty . at december 31 , 2011 , we did not use credit default swaps or other forms of credit protection to hedge the exposures summarized in the table above . 43 if the european credit crisis continues to impact these major european financial institutions , it is possible that it will also impact the operations of their u.s. subsidiaries . our financings and operations could be adversely affected by such events . we monitor our exposure to our repurchase agreement and swap counterparties on a regular basis , using various methods , including review of recent rating agency actions , financial relief plans , credit spreads or other developments and by monitoring the amount of cash and securities collateral pledged and the associated loan amount under repurchase agreements and or the fair value of swaps with our counterparties . we make reverse margin calls on our counterparties to recover excess collateral as permitted by the agreements governing our financing arrangements or interest rate swaps , or may try to take other actions to reduce the amount of our exposure to a counterparty when necessary .
| results of operations : net income summary for the year ended december 31 , 2011 our net income was $ 344.5 million or $ 0.37 per average common share , as compared to net income of $ 1.3 billion or $ 2.12 per average common share for the year ended december 31 , 2010 and net income of $ 2.0 billion or $ 3.55 per average common share for the year ended december 31 , 2009. net income per average share decreased by $ 1.75 per average common share and the total net income decreased $ 922.8 million for the year ended december 31 , 2011 , when compared to the year ended december 31 , 2010. we attribute the decrease in net income for the year ended december 31 , 2011 from the year ended december 31 , 2010 to the unrealized losses on interest rate swaps of $ 1.8 billion for the year ended december 31 , 2011 , as compared to an unrealized loss on interest rate swaps of $ 318.8 million for the year ended december 31 , 2010. net income per average share decreased by $ 1.43 per average share available to common shareholders and total net income decreased $ 694.2 million for the year ended december 31 , 2010 ,
| 7,458 |
( g ) foreign currency transactions and translation the reporting currency of the company is the united states dollar ( “ us dollar ” ) . the financial records of the company 's prc operating subsidiaries are maintained in their local currency , the renminbi ( “ rmb ” ) , which is the functional currency . the financial records of the company 's subsidiaries established in other countries are maintained in their local currencies . assets and liabilities of the subsidiaries are translated into the reporting currency at the exchange rates at the balance sheet date , equity accounts are translated at historical exchange rates , and income and expense items are translated using the average rate for the period . the translation adjustments are recorded in accumulated other comprehensive loss under shareholders ' equity . monetary assets and liabilities denominated in currencies other than the applicable functional currencies are translated into the functional currencies at the prevailing rates of exchange at the balance sheet date story_separator_special_tag the following management 's discussion and analysis should be read in conjunction with our financial statements and the notes thereto and the other financial information appearing elsewhere in this report . in addition to historical information , the following discussion contains certain forward-looking information . see “ special note regarding forward looking statements ” above for certain information concerning those forward looking statements . our financial statements are prepared in u.s. dollars and in accordance with u.s. gaap . overview we are engaged in the developing , manufacturing and selling of new energy high power lithium batteries , which are mainly used in the following applications : ● electric vehicles ( “ ev ” ) , such as electric cars , electric buses , hybrid electric cars and buses ; ● light electric vehicles ( “ lev ” ) , such as electric bicycles , electric motors , sight-seeing cars ; and ● electric tools , energy storage , uninterruptible power supply , and other high power applications . we generated revenues from the manufacture and sale of high power lithium batteries of $ 22.2 million and $ 24.4 million for the fiscal years ended december 31 , 2019 and 2018 , respectively . we incurred a net loss of $ 10.9 million and $ 2.0 million during the fiscal years ended december 31 , 2019 and 2018 , respectively . our revenues are , to some extent , adversely impacted by the reduction of government subsidies to new energy vehicles . for more details , see “ item 1. business—overview of our business. ” as a temporary measure , we have reduced our production of batteries used in electric vehicles and focused more on batteries of uninterruptable supplies . accordingly , net revenues from sales of batteries for uninterruptable supplies was $ 17.7 million for the fiscal year ended december 31 , 2019 , as compared to $ 16.2 million for fiscal year ended december 31 , 2018 , an increase of $ 1.5 million , or 9.3 % . however , we believe the government policies relating to new energy will in the long term encourage the production of new energy vehicles , optimize the structure of the new energy vehicles industry , enhance technical standards of the industry and strengthen its core competitiveness , which ultimately would foster strategic development of the new energy vehicles . therefore , the demand for new energy likely will grow in the future and we will be able to secure more potential orders from the new energy market . we have completed the construction of a cylindrical power battery manufacturing plant and a power battery packing plant of our dalian facilities which started commercial production in july 2015. we have received and been utilizing most of bak tianjin 's operating assets relocated to our dalian facilities , including its machinery and equipment for battery production and battery pack production , customers , management team and technical staff , patents and technologies . we have also purchased machinery and equipment to expand our manufacturing capabilities . moreover , given the equity and debt financings we have obtained , we believe that with the booming future market demand for high power lithium ion products , we can continue as a going concern and return to profitability . the consolidated financial statements contained in this annual report have been prepared assuming we will continue to operate as a going concern , which contemplates the realization of assets and the settlement of liabilities in the normal course of business . the 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 classification of liabilities that may result from the outcome of this uncertainty related to our ability to continue as a going concern . 34 recent developments the ongoing coronavirus pandemic that first surfaced in china and is spreading globally has had a material adverse effect on our business . all of our operating subsidiaries are located in china . in the first quarter of 2020 , the covid-19 outbreak has caused disruptions in our manufacturing operations and temporary closure of our offices . the disruption in the procurement , manufacturing and assembly process within our production facilities has resulted in delays in the shipment of our products to customers , increased costs and reduced revenue . as of the date of this annual report , we have fully resumed operations . we will continue to monitor the developments of covid-19 and mitigate the adverse impacts it may have on our workforce , customers , operating results and profitability . see “ risk factors—risks related to our business—our business operations have been and may continue to be materially and adversely affected by the outbreak of the coronavirus ( covid-19 ) . ” financial statement presentation net revenues . the company recognizes revenues when its customer obtains control of promised goods or services , in an amount that reflects the consideration which it expects to receive in exchange for those goods . story_separator_special_tag on june 14 , 2016 , we renewed our banking facilities from bank of dandong for loans with a maximum amount of rmb130 million ( approximately $ 18.7 million ) , including three-year long-term loans and three-year revolving bank acceptance and letters of credit bills for the period from june 13 , 2016 to june 12 , 2019. the banking facilities were guaranteed by mr. yunfei li ( “ mr . li ” ) , our ceo , and ms. qinghui yuan , mr. li 's wife , mr. xianqian li , our former ceo , ms. xiaoqiu yu , the wife of our former ceo and shenzhen bak battery co. , ltd. , our former subsidiary ( “ shenzhen bak ” ) . the facilities were also secured by part of our dalian site 's prepaid land use rights , buildings , construction in progress , machinery and equipment and pledged deposits . under the banking facilities , we borrowed various three-year term bank loans that totaled rmb126.8 million ( approximately $ 18.2 million ) , bearing fixed interest at 7.2 % per annum . we also borrowed a series of revolving bank acceptance totaled $ 0.5 million from bank of dandong under the credit facilities , and bank deposit of 50 % was required to secure against these bank acceptance bills . we repaid the loan and bank acceptance bills on june 12 , 2018. in the second quarter of 2018 , we obtained additional banking facilities from bank of dandong with bank acceptance bills of rmb5.0 million ( approximately $ 0.7 million ) for a term until october 17 , 2018. we have borrowed a series of bank acceptance bills totaled rmb 5.0 million ( approximately $ 0.7 million ) for a term until october 17 , 2018. we repaid the bank acceptance bills on october 17 , 2018. on august 2 , 2017 , we obtained one-year term facilities from china merchants bank with a maximum amount of rmb100 million ( approximately $ 14.4 million ) including revolving loans , trade finance , notes discount , acceptance of commercial bills etc . any amount drawn under the facilities requires security in the form of cash or banking acceptance bills receivable of at least the same amount . under the facilities , we borrowed a series of bank acceptance bills from china merchants bank totaled rmb21.3 million ( approximately $ 3.1 million ) for a term until october 25 , 2018. the facilities expired on august 1 , 2018 and we repaid the bills on october 25 , 2018 . 38 on november 9 , 2017 , we obtained banking facilities from china everbright bank dalian branch with a maximum amount of rmb100 million ( approximately $ 14.4 million ) with the term expiring on november 7 , 2018. the banking facilities were secured by the 100 % equity in cbak power held by bak asia . under the facilities , on november 10 , 2017 , we borrowed a net letter of credit of rmb96.1 million ( approximately $ 13.8 million ) to november 7 , 2018. under the facilities , bank deposit of approximate 50 % was required to secure against this letter of credit . we discounted this letter of credit of even date to china everbright bank at a rate of 4.505 % . we repaid the letter of credit on november 7 , 2018. on june 4 , 2018 , we obtained banking facilities from china everbright bank dalian branch with a maximum amount of rmb200 million ( approximately $ 28.7 million ) with the term from june 12 , 2018 to june 10 , 2021 , bearing interest at 130 % of benchmark rate of the people 's bank of china ( “ pboc ” ) for three-year long-term loans , which is currently 6.175 % per annum . under the facilities , we borrowed rmb126.0 million ( $ 18.1 million ) , rmb23.3 million ( $ 3.3 million ) , rmb9.0 million ( $ 1.3 million ) and rmb9.5 million ( $ 1.4 million ) on june 12 , june 20 , september 20 , and october 19 , 2018 , respectively . the loans are repayable in six installments of rmb0.8 million ( $ 0.12 million ) on december 10 , 2018 , rmb24.3 million ( $ 3.50 million ) on june 10 , 2019 , rmb0.8 million ( $ 0.12 million ) on december 10 , 2019 , rmb74.7 million ( $ 10.7 million ) on june 10 , 2020 , rmb0.8 million ( $ 0.12 million ) on december 10 , 2020 and rmb66.3 million ( $ 9.6 million ) on june 10 , 2021. under the facilities , we borrowed rmb141.8 million ( $ 20.4 million ) as of december 31 , 2019. the facilities were secured by our dalian site 's land use rights and part of our dalian site 's buildings , machinery and equipment . we repaid the bank loan of rmb0.8 million ( $ 0.12 million ) , rmb24.3 million ( $ 3.5 million ) and rmb0.8 million ( $ 0.12 million ) on december 2018 , june 2019 and december 2019 , respectively . further , in august 2018 , we borrowed a total of rmb60 million ( approximately $ 8.6 million ) in the form of bills payable from china everbright bank dalian branch for a term until august 14 , 2019 , which was secured by our cash totaled $ 8.6 million . we discounted these two bills payable of even date to china everbright bank at a rate of 4.0 % . we repaid these bills payable in august 2019. on august 22 , 2018 , we obtained one-year term facilities from china everbright bank dalian branch with a maximum amount of rmb100 million ( approximately $ 14.4 million ) including revolving loans , trade finance , notes discount , and acceptance of commercial bills etc . any amount drawn under the facilities requires security in the form of cash or banking acceptance bills receivables of at least the same amount .
| results of operations comparison of years ended december 31 , 2018 and december 31 , 2019 the following table sets forth key components of our results of operations for the years indicated , both in dollars and as a percentage of our revenue . ( all amounts , other than percentages , in thousands of u.s. dollars ) replace_table_token_4_th net revenues . net revenues were $ 22.2 million for the fiscal year ended december 31 , 2019 , as compared to $ 24.4 million for the fiscal year ended december 31 , 2018 , a decrease of $ 2.24 million , or 9 % . the following table sets forth the breakdown of our net revenues by end-product applications derived from high-power lithium batteries . ( all amounts , other than percentage , in thousands of u.s. dollars ) replace_table_token_5_th 36 net revenues from sales of batteries for electric vehicles were $ 4.5 million for the fiscal year ended december 31 , 2019 , as compared to $ 8.2 million for 2018 , a decrease of $ 3.7 million , or 45 % . net revenues from sales of batteries for light electric vehicles was approximately $ 16,147 for the fiscal year ended december 31 , 2019 , as compared $ 64,140 for 2018 , representing a decrease of $ 47,992 , or 75 % . as we focused more on other market , our sales of batteries for light electric vehicles remains at a small-scale level in recent years . net revenues from sales of batteries for uninterruptable supplies was $ 17.7 million for the fiscal year ended december 31 , 2019 , as compared to $ 16.2 million for fiscal year ended december 31 , 2018 , an increase of $ 1.5 million , or 9 % . as we focused more on this market in 2019 , sale of batteries for uninterruptable power supplies increased significantly . cost of revenues .
| 7,459 |
factors that could cause or contribute to such differences include , but are not limited to , those identified below and those discussed in the section titled “ risk factors ” included elsewhere in this annual report on form 10-k. certain revenue information in the section entitled `` — revenue '' is presented on a constant currency basis . this information is a non-gaap financial measure . to calculate revenue on a constant currency basis , we translated revenue for the full year 2016 using 2015 monthly exchange rates for our settlement currencies other than the u.s. dollar . this non-gaap financial measure is not intended to be considered in isolation or as a substitute for , or superior to , financial information prepared and presented in accordance with gaap . this measure may be different from non-gaap financial measures used by other companies , limiting its usefulness for comparison purposes . moreover , presentation of revenue on a constant currency basis is provided for year-over-year comparison purposes , and investors should be cautioned that the effect of changing foreign currency exchange rates has an actual effect on our operating results . we believe this non-gaap financial measure provides investors with useful supplemental information about the financial performance of our business , enable comparison of financial results between periods where certain items may vary independent of business performance , and allows for greater transparency with respect to key metrics used by management in operating our business . fy 2016 overview and highlights total revenue was $ 2.53 billion , an increase of 14 % compared to 2015. advertising revenue totaled $ 2.25 billion , an increase of 13 % compared to 2015. mobile advertising revenue was 89 % of total advertising revenue data licensing and other revenue totaled $ 281.6 million , an increase of 26 % compared to 2015. u.s. revenue totaled $ 1.56 billion , an increase of 8 % compared to 2015. international revenue totaled $ 964.8 million , an increase of 25 % compared to 2015. total ad engagements were up 152 % year-over-year . cost per engagement was down 55 % year-over-year . net loss was $ 456.9 million and adjusted ebitda was $ 751.5 million , resulting in an adjusted ebitda margin of 30 % , an increase of 5 % compared to 2015. cash , cash equivalents and short-term investments in marketable securities totaled $ 3.77 billion as of december 31 , 2016. average monthly active users ( maus ) were 319 million for the three months ended december 31 , 2016 , up 4 % compared to the three months ended december 31 , 2015 ( sms fast followers have been excluded from total reported maus for the three months ended december 31 , 2015 to enable a direct period-to-period comparison ) . in the three months ended december 31 , 2016 , approximately 80 % of our average maus accessed twitter from a mobile device , roughly stable from the three months ended december 31 , 2015. average daily active usage ( dau ) for the three months ended december 31 , 2016 grew 11 % year-over-year . 43 key metrics we review a number of metrics , including the following key metrics , to evaluate our business , measure our performance , identify trends affecting our business , formulate business plans and make strategic decisions . monthly active users ( maus ) . we define maus as twitter users who logged in or were otherwise authenticated and accessed twitter through our website , mobile website , desktop or mobile applications , sms or registered third-party applications or websites in the 30-day period ending on the date of measurement . average maus for a period represent the average of the maus at the end of each month during the period . maus are a measure of the size of our logged in or otherwise authenticated active user base . in the three months ended december 31 , 2016 , we had 319 million average maus , which represents an increase of 4 % from the three months ended december 31 , 2015. the growth in average maus was driven primarily by product improvements and organic growth , as well as marketing initiatives . in the three months ended december 31 , 2016 , we had 67 million average maus in the united states and 252 million average maus in the rest of the world , which represent increases of 3 % and 5 % , respectively , from the three months ended december 31 , 2015. for additional information on how we calculate maus and factors that can affect this metric , see the section titled “ note regarding key metrics. ” 44 changes in daily active users/daily active usage ( dau ) . we define daily active users or daily active usage as twitter users who logged in or were otherwise authenticated and accessed twitter through our website , mobile website or mobile applications on any given day . average dau for a period represent the average of the dau at the end of such period . changes in dau are a measure of changes in the size of our daily logged in or otherwise authenticated active user base . prior to reporting results for the thi rd quarter of 2016 , we had discussed daus and the ratio of monthly active users ( maus ) to daus . in those instances , for comparability and consistency with maus , daus also included users who accessed twitter through our desktop applications and third-party properties . for additional information on how we calculate changes in daus and factors that can affect this metric , see the section titled “ note regarding key metrics. ” changes in ad engagements and cost per ad engagement . we define an ad engagement as a user interaction with one of our pay-for-performance advertising products . story_separator_special_tag we have , and may in the future , increase ad load to the extent that we are able to continue to reach the right balance of advertiser value and the overall user experience . in order to improve monetization , we plan to increase the value of our advertising services by continuing to increase the size and engagement of our user base as well as improve our ability to target advertising to our users ' interests and the ability of our advertisers to optimize their campaigns and measure the results of their campaigns . although the majority of the promoted products we sell to our advertisers are placed on twitter , we have augmented our advertising revenue by selling to advertisers our advertising products that we place on third-party publishers ' websites , applications or other offerings . for the latter category of advertising placements , we incur additional costs , particularly traffic acquisition costs , to fulfill our services to advertisers . this mix shift of additional advertising revenue being generated from such third-party placements may continue in the future . as we have chosen to decrease our investment in the product , we have seen a declining trend in revenue from our tellapart offering and expect contributions from our advertising products that we place on third-party publishers ' websites and applications to face significant headwinds in 2017 from factors impacting our tellapart offering . in 2017 , we expect an even steeper decline in contribution to revenue directly from our tellapart offering . 46 we intend to continue to increase the monetization of our platform by improving the targeting capabilities of our advertising services to enhance the value of our promoted products for advertisers , delivering differentiated products to advertisers , and dev eloping new ad formats for advertisers . effectiveness of our advertising services . advertisers can use twitter to communicate directly with their followers for free , but many choose to purchase our advertising services to reach a broader audience and further promote their brands , products and services . we believe that increasing the effectiveness of our promoted products for advertisers , as well as providing better measurement tools and improving creative capabilities , will increase the amount that advertisers spend with us . we aim to increase the value of our promoted products by increasing the size and engagement of our user base , improving our ability to target advertising to our users ' interests and improving the ability of our advertisers to optimize their campaigns and measure the results of their campaigns . we may also develop new advertising products and services . investment in international operations . we intend to strategically invest in our international operations in order to expand our user base and advertiser base and increase user engagement and monetization internationally . in the three months ended december 31 , 2016 , we had 252 million average maus internationally compared to 67 million average maus in the united states . in addition , our number of users is growing at a faster rate in many international markets , such as canada , france , germany india , japan , mexico , the philippines , saudi arabia , and south korea . however , we derive the majority of our advertising revenue from advertisers in the united states . we face challenges in increasing our advertising revenue internationally , including local competition , differences in advertiser demand , differences in the digital advertising market and conventions , and differences in the manner in which twitter is accessed and used internationally . we face competition from well-established competitors in certain international markets . in addition , certain international markets are not as familiar with digital advertising in general , or with new forms of digital advertising , such as our promoted products . in these jurisdictions we are investing to educate advertisers about the benefits of our advertising services . however , we expect that it may require a significant investment of time and resources to educate advertisers in many international markets . we also face challenges in providing certain advertising products , features or analytics in certain international markets , such as the european union , due to government regulation . in addition , in certain emerging markets , a significant portion of users still access twitter through feature phones with limited functionality , rather than through smartphones , our website or desktop applications . this limits our ability to deliver certain features to these users and may limit the ability of advertisers to deliver compelling ads to users in these markets . competition . we face increasing competition for users and advertisers . we compete against many companies to attract and engage users and for advertiser spend , including companies with greater financial resources and substantially larger user bases which offer a variety of internet and mobile device-based products , services and content . in recent years there has been a significant number of acquisitions and consolidation activity by and among our actual and potential competitors . we must compete effectively for users and advertisers in order to grow our business and increase our revenue . we believe that our ability to compete effectively for users depends upon a number of factors , including the quality of our products and services and the actual or perceived return our advertisers receive on their investment in our products and services . our ability to compete effectively for advertisers also depends upon a number of factors , including our ability to offer attractive advertising products with unique targeting capabilities and the size of our active user base . we have seen escalating competition for digital ad spending and expect this trend to continue . in addition , many advertisers , particularly branded advertisers use marketing mix analyses to determine how to allocate their advertising budgets on an annual or bi-annual basis .
| quarterly results of operations the following table sets forth our unaudited consolidated statement of operations data for each of the eight quarters in the period ended december 31 , 2016. the unaudited quarterly statement of operations data set forth below have been prepared on a basis consistent with our audited annual consolidated financial statements in this annual report on form 10-k and include , in our opinion , all normal recurring adjustments necessary for a fair statement of the financial information contained in those statements . our historical results are not necessarily indicative of the results that may be expected in the future . the following quarterly financial data should be read in conjunction with our audited consolidated financial statements and the related notes included elsewhere in this annual report on form 10-k. replace_table_token_18_th ( 1 ) in the fourth quarter of 2016 and 2015 , we incurred restructuring charges of $ 101.2 million and $ 12.9 million , respectively . costs and expenses include stock-based compensation expense as follows : replace_table_token_19_th 56 ( 2 ) the following table presents a reconciliation of net loss to adjusted ebitda for each of the periods indicated : replace_table_token_20_th ( 3 ) the following table presents a reconciliation of net loss to non-gaap net income for each of the periods indicated : replace_table_token_21_th credit facility in october 2013 , we entered into a revolving credit agreement with certain lenders which provides for a $ 1.0 billion revolving unsecured credit facility maturing on october 22 , 2018. loans under the credit facility bear interest , at our option , at ( i ) a base rate based on the highest of the prime rate , the federal funds rate plus 0.50 % and an adjusted libor rate for a one-month interest period plus 1.00 % , in each case plus a margin ranging from 0.00 % to 0.75 % or ( ii ) an adjusted libor rate plus a margin ranging from 1.00 %
| 7,460 |
in some cases , customers place blanket purchase orders and request the company to maintain inventory sufficient to respond quickly upon receiving a shipment request . the company manufactures to specifications and the products typically have a life which extends over several years and does not deteriorate over time . therefore , the risk of obsolescence due to the passage of time , per se , is minimal . however , in order to more efficiently schedule production or to meet agreements with customers to have inventory in the pipeline , the company occasionally manufactures products in advance of purchase orders . in these instances , the company bears the risk that it will be left with product manufactures to specification for which there are no customer purchase orders . the company scrutinizes its inventory and , in the absence of pending orders or strong evidence of future sales , establishes an obsolescence reserve when there has been no activity on a particular part for a twelve month period . in determining inventory cost , the company uses the first-in , first-out method and states inventory at the lower of cost or market . virtually all of the company 's inventory is customer specific ; as a result , if a customer 's order is cancelled , it is unlikely that cps would be able to sell that inventory to another customer . likewise , if the company chooses to manufacture product in advance of anticipated purchase orders and those orders did not materialize , it is unlikely that it would be able to sell that inventory to another customer . the value of cps 's work in process and finished goods is based on the assumption that specific customers will take delivery of specific items of inventory . the company has not experienced losses to date as a result of customer cancellations and has not established a reserve for such cancellations . the company typically buys ‘ lots ' of components for its hermetic packaging products . often all the components in a lot are not necessary to complete the order . annually the company reviews this unused material and establishes an obsolescence reserve for the amount it does not expect to use over the next three years . property and equipment property and equipment are stated at cost . depreciation of equipment is calculated on a straight-line basis over the estimated useful life , generally five years for production equipment and three to five years for furniture and office equipment . amortization of equipment under capital leases is calculated on a straight-line basis over the life of the lease . maintenance and repairs are charged to expense as incurred . upon retirement or sale , the cost and related accumulated depreciation or amortization are removed from their respective accounts . any gains or losses on the disposition of property and equipment are included in the results of operations in the period in which they occur . income taxes deferred tax assets and liabilities are based on the net tax effects of tax credits , operating loss carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes . the company considers many factors in assessing whether or not a valuation allowance for its deferred tax asset is warranted . on the positive side , the company considered such factors as its : history of taxable earnings ( three of the last four years had operating profits ) , global customer base consisting of large companies with significant resources , current products and their expected life , technological advantages , potential for price increases , trend of improved manufacturing efficiencies and the magnitude of the deferred tax asset compared with the company 's expectation of future earnings over the remaining life of the asset . on the negative side , the company considered such factors as : the global economic environment , the company 's ability to absorb a period of operating losses and negative cash flow and the potential for the technological breakthroughs and substitution of the company 's products by lower cost solutions . at december 31 , 2016 the company 's deferred tax asset and other temporary differences which will require taxable income of approximately $ 7.2 million and reversals of existing temporary differences to fully utilize , assuming an effective corporate tax rate of 39 % . the company has concluded that it is more likely than not that its deferred tax asset will be fully realized . current projections of future taxable income , including the reversal of temporary differences , reflect the company 's belief that it has attractive growth opportunities and a favorable cost structure . these projections support the conclusion that the company will generate taxable income sufficient to utilize the losses before they expire . the company 's policy is to recognize interest and penalties related to income tax matters in income tax expense . as of december 31 , 2016 and december 26 , 2015 , the company had no accruals for interest or penalties related to income tax matters . the company did not have any uncertain tax positions at december 31 , 2016 or december 26 , 2015 which required accrual or disclosure . income tax effects related to share-based compensation that are in excess , or less than , grant-date fair value , less any proceeds received on exercise of stock prices , are recognized as either an increase or decrease to additional paid-in capital upon exercise . these tax effects are either offset against currently payable taxes or the benefit of net operating loss utilization . story_separator_special_tag the lease through february 28 , 2018 the lease is a triple net lease wherein the company is responsible for payment of all real estate taxes , operating costs and utilities . the company also has an option to buy the property and a first story_separator_special_tag in some cases , customers place blanket purchase orders and request the company to maintain inventory sufficient to respond quickly upon receiving a shipment request . the company manufactures to specifications and the products typically have a life which extends over several years and does not deteriorate over time . therefore , the risk of obsolescence due to the passage of time , per se , is minimal . however , in order to more efficiently schedule production or to meet agreements with customers to have inventory in the pipeline , the company occasionally manufactures products in advance of purchase orders . in these instances , the company bears the risk that it will be left with product manufactures to specification for which there are no customer purchase orders . the company scrutinizes its inventory and , in the absence of pending orders or strong evidence of future sales , establishes an obsolescence reserve when there has been no activity on a particular part for a twelve month period . in determining inventory cost , the company uses the first-in , first-out method and states inventory at the lower of cost or market . virtually all of the company 's inventory is customer specific ; as a result , if a customer 's order is cancelled , it is unlikely that cps would be able to sell that inventory to another customer . likewise , if the company chooses to manufacture product in advance of anticipated purchase orders and those orders did not materialize , it is unlikely that it would be able to sell that inventory to another customer . the value of cps 's work in process and finished goods is based on the assumption that specific customers will take delivery of specific items of inventory . the company has not experienced losses to date as a result of customer cancellations and has not established a reserve for such cancellations . the company typically buys ‘ lots ' of components for its hermetic packaging products . often all the components in a lot are not necessary to complete the order . annually the company reviews this unused material and establishes an obsolescence reserve for the amount it does not expect to use over the next three years . property and equipment property and equipment are stated at cost . depreciation of equipment is calculated on a straight-line basis over the estimated useful life , generally five years for production equipment and three to five years for furniture and office equipment . amortization of equipment under capital leases is calculated on a straight-line basis over the life of the lease . maintenance and repairs are charged to expense as incurred . upon retirement or sale , the cost and related accumulated depreciation or amortization are removed from their respective accounts . any gains or losses on the disposition of property and equipment are included in the results of operations in the period in which they occur . income taxes deferred tax assets and liabilities are based on the net tax effects of tax credits , operating loss carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes . the company considers many factors in assessing whether or not a valuation allowance for its deferred tax asset is warranted . on the positive side , the company considered such factors as its : history of taxable earnings ( three of the last four years had operating profits ) , global customer base consisting of large companies with significant resources , current products and their expected life , technological advantages , potential for price increases , trend of improved manufacturing efficiencies and the magnitude of the deferred tax asset compared with the company 's expectation of future earnings over the remaining life of the asset . on the negative side , the company considered such factors as : the global economic environment , the company 's ability to absorb a period of operating losses and negative cash flow and the potential for the technological breakthroughs and substitution of the company 's products by lower cost solutions . at december 31 , 2016 the company 's deferred tax asset and other temporary differences which will require taxable income of approximately $ 7.2 million and reversals of existing temporary differences to fully utilize , assuming an effective corporate tax rate of 39 % . the company has concluded that it is more likely than not that its deferred tax asset will be fully realized . current projections of future taxable income , including the reversal of temporary differences , reflect the company 's belief that it has attractive growth opportunities and a favorable cost structure . these projections support the conclusion that the company will generate taxable income sufficient to utilize the losses before they expire . the company 's policy is to recognize interest and penalties related to income tax matters in income tax expense . as of december 31 , 2016 and december 26 , 2015 , the company had no accruals for interest or penalties related to income tax matters . the company did not have any uncertain tax positions at december 31 , 2016 or december 26 , 2015 which required accrual or disclosure . income tax effects related to share-based compensation that are in excess , or less than , grant-date fair value , less any proceeds received on exercise of stock prices , are recognized as either an increase or decrease to additional paid-in capital upon exercise . these tax effects are either offset against currently payable taxes or the benefit of net operating loss utilization . story_separator_special_tag the lease through february 28 , 2018 the lease is a triple net lease wherein the company is responsible for payment of all real estate taxes , operating costs and utilities . the company also has an option to buy the property and a first
| results of operations year ended december 31 , 2016 ( “ 2016 ” ) compared to the year ended december 26 , 2015 ( “ 2015 ” ) total revenues were $ 15.4 million in 2016 , a 29 % decrease compared with the $ 21.8 million generated in 2015. this decrease was due primarily to a reduction in the sales of baseplates . the sale of hermetic packages , fracking balls and lids were also down , offset in part by an increase in armor revenues . there were no significant price reductions during the year . gross margin in 2016 totaled $ 2.2 million or 14 % of sales . in 2015 the company 's gross margin totaled $ 4.7 million , or 21 % of sales . the decrease in margin was directly attributable to the reduction in sales , offset in part by reduced spending on factory support costs . selling , general and administrative ( sg & a ) expenses totaled $ 3.3 million in 2016 , down 18 % when compared with sg & a spending of $ 4.0 million in 2015. this difference of $ 0.7 million was due to lower sales commissions , incentive compensation , professional fees , 401k match and legal costs , offset in small part by an increased spending on sales and marketing activities in china . the company generated $ 51 of “ other income ” in 2016 . $ 11 of this was interest and $ 40 was due to the sale of used equipment in excess of book value . as a result of lower volume , offset in part by reduced spending on factory overhead and sg & a the company incurred an operating loss of $ 1.2 million in 2016 , compared with an operating profit of $ 0.6 million in 2015. the effective tax rate in 2016 was 60 % and in 2015 was 28 % .
| 7,461 |
our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors , including those set forth under risk factors in this annual report on form 10-k. our company we were incorporated in delaware under the delaware general corporation law in march 2009 , and are the successor to apex silver for purposes of reporting under the exchange act . during the year ended december 31 , 2014 , our only sources of income were revenues from the sale of lead and zinc concentrates from our velardeña properties , royalty and interest income , and sales of non-core exploration properties . we incurred net operating losses for the years ended december 31 , 2014 and 2013 . 2014 highlights we recommenced mining activities at the velardeña properties in july 2014 and began processing material from the mine in november 2014. our decision to restart mining activities followed an extensive evaluation period , which began after the shutdown of the velardeña properties in june 2013 and included a 9,000-meter drill program that concluded in june 2014. in addition to the velardeña properties , we are focused on establishing a second group of mining assets , which may include those recently acquired assets in the parral district in chihuahua mexico . during 2014 we continued our exploration efforts on selected properties in our portfolio of approximately 30 exploration properties located primarily in mexico . we continued to hold our el quevar property on care and maintenance until we can find a partner to further advance the project . we reduced general and administrative expenses in 2014 by approximately 17 % over 2013 expenses . we also continued to review strategic opportunities , focusing on development or operating properties in north america , including mexico . financing activities · on september 10 , 2014 , the company completed an underwritten registered public offering and concurrent private placement for total net proceeds , after underwriter commissions and expenses , of $ 7.4 million . the company sold 3,692,000 units in the registered offering , priced at $ 0.86 per unit , before discount to the underwriters , with each unit consisting of one share of the 36 company 's common stock and a five year warrant to purchase 0.50 of a share of the company 's common stock at an exercise price of $ 1.21 per share . the company sold an additional 5,800,000 units in a concurrent private placement to the sentient group ( sentient ) , the company 's largest stockholder , at a price of $ 0.817 per unit , the same discounted price paid by the underwriter in the registered offering . following the completion of the private placement and the offering , sentient holds approximately 27.2 % ( on a non-diluted basis ) of the company 's outstanding common stock ( excluding restricted common stock held by the company 's employees ) . sale of assets · we generated approximately $ 1.0 million in asset sales in 2014 , including $ 700,000 from the sale of mining concessions totaling 770 hectares located in the zacatecas district in mexico , $ 150,000 as partial payment for the sale of our 1,100 hectare peruvian otuzco property , and $ 130,000 from the sale of miscellaneous surplus equipment located in argentina . restart of mining at the velardeña properties · following the shutdown of the velardeña properties in june 2013 , we continued to develop and evaluate plans to restart mining . we completed this evaluation and new mine plans in the second quarter 2014. in july 2014 we restarted mining at the velardeña properties and began processing material from the mine in november 2014. during 2014 we generated payable metals totaling approximately 42,000 silver equivalent ounces ( equivalents calculated at 70:1 silver to gold ) and included approximately 29,000 ounces of silver and 194 ounces of gold . in 2015 we expect output of approximately 0.8 to 1.0 million silver equivalent ounces ( including silver and gold but excluding lead and zinc and calculated at a ratio of 70 silver ounces to 1 gold ounce ) , with cash costs in 2015 between $ 12.00 and $ 15.00 per payable silver ounce net of by-product gold , lead and zinc credits , assuming a price for gold of $ 1,250 per ounce . cash costs per payable silver ounce , net of by-product credits is a non-gaap financial measure defined below in non-gaap financial measures . · under our new mine plan , we are using shrinkage stope mining , standard mechanized cut and fill and an overhand cut and fill mining method and slusher mucking in the stopes in the narrower veins . this later mining method should allow us to mine narrower vein widths with a significant decrease in dilution , which should allow higher grade material to be hauled to the mill . since reopening velardeña , we have employed about half of the employees prior to the june 2013 shutdown when we were running both sulfide and oxide plants and processing approximately 500 tonnes per day ( tpd ) . in 2014 we processed mined material to make silver and gold bearing lead and zinc concentrates , and in 2015 we expect to also make saleable pyrite concentrates . during 2014 and 2015 we are focused primarily on mining on the san mateo , terneras and roca negra veins , which contain higher grade material over more consistent widths in the 0.5 to 1.0 meter range , with significantly lower arsenic levels than those in the santa juana vein system that was the focus of our previous mining activity . · we began processing material through the sulfide mill in november 2014. during november 2014 we tested new equipment in the mill including a revamped electrical system , concentrate filters for our concentrate products , refurbished flotation cells and other equipment . story_separator_special_tag significant inputs to the valuation model included the company 's closing stock price at december 31 , 2014 of $ 0.54 , the exercise prices for the warrants disclosed in note 15 of our consolidated financial statements , the company 's stock volatility of 90 % , the applicable risk free interest rate of 1.6 % , and the probability of an additional issuance of the company 's common stock at a lower price than the current warrant exercise price . gain ( loss ) on foreign currency . we recorded a $ 0.1 million foreign currency gain for the year ended december 31 , 2014 compared to a $ 0.6 million foreign currency loss for the year ended december 31 , 2013. foreign currency gains and losses are primarily related to the effect of currency fluctuations on monetary assets net of liabilities held by our foreign subsidiaries that are denominated in currencies other than us dollars . income taxes . we recorded no income tax expense or benefit for the year ended december 31 , 2014. for the year ended december 31 , 2013 we recorded an income tax benefit of $ 49.7 million primarily related to the impairment of long lived assets during the year . 39 liquidity and capital resources at december 31 , 2014 our aggregate cash and cash equivalents totaled $ 8.6 million . with the cash balance at december 31 , 2014 and the assumptions described below we expect to have sufficient funding to continue our long term business strategy through 2015 , ending 2015 with a cash balance of approximately $ 2.0 million . our cash and cash equivalents balance at december 31 , 2014 of $ 8.6 million is $ 10.5 million lower than the $ 19.1 million in similar assets held at december 31 , 2013 due primarily to negative operating margin ( defined as revenues less costs of sales ) at the velardeña properties of $ 1.4 million ; expenditures of $ 3.6 million on the restart of mining activities and plant capital and repairs at our velardeña properties ; $ 2.5 million in care and maintenance and $ 1.0 million in drilling costs at our velardeña properties ; $ 4.5 million in other exploration expenditures ; $ 1.6 million in maintenance and property holding costs at the el quevar project ; and $ 4.6 million in general and administrative expenses ; offset in part by net proceeds of $ 7.4 million received from the sale of shares of our common stock and warrants through an underwritten registered offering and concurrent private placement ; $ 1.0 million in proceeds received from the sale of non-strategic property interests ; and a reduction in working capital and other items of $ 0.3 million primarily related to collections of vat receivables in mexico and an increase in accounts payable for expenditures associated with the restart of mining activities at the velardeña properties . with the cash balance at december 31 , 2014 of $ 8.6 million and a positive operating margin of $ 2.5 million from the velardeña properties for the full year 2015 , assuming metals prices of $ 17.00 per ounce of silver and $ 1,250 per ounce of gold , we plan to spend the following amounts totaling approximately $ 9.1 million during 2015 . · approximately $ 0.3 million for sustaining capital for the velardeña properties ; · approximately $ 1.0 million at the el quevar project to fund ongoing maintenance activities and property holding costs ; · approximately $ 3.0 million on other exploration activities and property holding costs related to the company 's portfolio of exploration properties located primarily in mexico ; and · approximately $ 4.5 million on general and administrative costs and $ 0.3 million in increased working capital primarily related to the build-up of inventories and accounts receivable at the velardeña properties . in arriving at our forecast for a cash balance of $ 2.0 million at the end of 2015 we assumed a price for silver and gold of $ 17.00 and $ 1,250 per ounce , respectively . for the full year 2015 , a 10 percent change in the price per ounce of silver would have a $ 0.9 million impact ( positive or negative ) on our cash balance at the end of 2015. a 10 percent change in the price per ounce of gold would have a $ 0.7 million impact ( positive or negative ) on our cash balance at the end of 2015. the actual amount that we spend through year end 2015 and the projected year end cash balance may vary significantly from the amounts specified above and will depend on a number of factors , including unexpected costs associated with mining and processing at the velardeña properties , and the results of continued project assessment work at our other exploration properties . despite projections of positive net cash flow by mid-2015 from the velardeña properties at metals prices of $ 17.00 per ounce of silver and $ 1,250 per ounce of gold , our projected cash balance at the end of 2015 would not be sufficient to provide adequate reserves in the event of decreasing metals prices , interruptions in mining and processing at the velardeña properties or to adequately pursue further exploration of our properties in mexico , requiring us to seek additional funding from equity or debt or from monetization of non-core assets . there can be no assurance that we would be successful in obtaining sufficient funding from any of these actions or sources in the future on terms acceptable to us or at all . non-gaap financial measures cash costs , net of by-product credits , per payable ounce of silver is a non gaap financial measure that is widely used in the mining industry .
| results of operations for the results of operations discussed below , we compare the results of operations for the year ended december 31 , 2014 to the results of operations for the year ended december 31 , 2013. revenue from the sale of metals . we recorded $ 0.2 million and $ 10.7 million of revenue for the years ended december 31 , 2014 and 2013 , respectively , all from the sale of metals from our velardeña properties in mexico . the decrease in revenue in 2014 is primarily the result of the suspension of mining and processing at our velardeña properties from june 2013 until processing mined material resumed in november 2014 , as discussed above . costs of metals sold . we recorded $ 1.7 million and $ 17.5 million of costs applicable to sales for the years ended december 31 , 2014 and 2013 , respectively . the decrease in cost of metals sold in 2014 is primarily the result of the suspension of mining and processing at our velardeña properties from june 2013 until mining activity resumed in july 2014 and processing resumed in november 2014 , as discussed above . included in costs of metals sold for the period ended december 31 , 2014 was a $ 1.2 million write down of finished goods inventory to estimated net realizable value . exploration expense . our exploration expense , including property holding costs and allocated administrative expenses , totaled $ 5.5 million for the year ended december 31 , 2014 , as compared to $ 4.6 million for the year ended december 31 , 2013. exploration expense for both years was incurred primarily in mexico , peru , and argentina ( excluding amounts spent on the yaxtché deposit at the el quevar project ) and includes property holding costs and costs incurred by our local exploration offices .
| 7,462 |
the story_separator_special_tag you should read the following discussion and analysis in conjunction with item 6 selected financial data and our consolidated financial statements and related notes , each included elsewhere in this annual report on form 10-k. we are a global network marketing company that sells weight management products , nutritional supplements , energy , sports & fitness products and personal care products . we pursue our mission of changing people 's lives by providing a financially rewarding business opportunity to distributors and quality products to distributors and their customers who seek a healthy lifestyle . we are one of the largest network marketing companies in the world with net sales of approximately $ 3.5 billion for the year ended december 31 , 2011. as of december 31 , 2011 , we sold our products in 79 countries through a network of approximately 2.7 million independent distributors . in china , we sell our products through retail stores , sales representatives , sales officers and independent service providers . due to changes in china 's labor laws , effective in the third quarter of 2011 , we no longer have sales employees in china as they have been transitioned into independent service providers . we believe the quality of our products and the effectiveness of our distribution network , coupled with geographic expansion , has been the primary reasons for our success throughout our 32-year operating history . our products are grouped in four principal categories : weight management , targeted nutrition , energy , sports & fitness and outer nutrition , along with literature and promotional items . our products are often sold in programs that are comprised of a series of related products and literature designed to simplify weight management and nutrition for consumers and maximize our distributors ' cross-selling opportunities . industry-wide factors that affect us and our competitors include the global obesity epidemic and the aging of the worldwide population , which are driving demand for nutrition and wellness-related products along with the global increase in under and unemployment which can affect the recruitment and retention of distributors seeking part time or full time income opportunities . while we continue to monitor the current global financial crisis , we remain focused on the opportunities and challenges in retailing of our products , recruiting and retaining distributors , improving distributor productivity , opening new markets , further penetrating existing markets , globalizing successful distributor methods of operation , or dmo , such as nutrition clubs and weight loss challenges , introducing new products and globalizing existing products , developing niche market segments and further investing in our infrastructure . management also continues to monitor the venezuela market and especially the limited ability to repatriate cash . we report revenue from our six regions : north america ; mexico ; south and central america ; emea , which consists of europe , the middle east and africa ; asia pacific ( excluding china ) ; and china . volume points by geographic region a key non-financial measure we focus on is volume points on a royalty basis , or volume points , which is essentially our weighted average measure of product sales volume . volume points , which are unaffected by exchange rates or price increases , are used by management as a proxy for sales trends because in general , an increase in volume points in a particular geographic region or country indicates an increase in our local currency net sales while a decrease in volume points in a particular geographic region or country indicates a decrease in our local currency net sales . 52 we assign a volume point value to a product when it is first introduced into the market . the specific number of volume points assigned to a product is based on a volume point to u.s. dollar ratio that we use for the vast majority of new products . if a product is available in different quantities then the various sizes will have different volume point values . if a new product is not introduced in or otherwise expected to be sold in the u.s. , we will determine the volume point value for that product based on a review of various factors in the regions and countries in which we will market the product , including the volume point to local currency ratio of existing products in the relevant countries . in general , once assigned , a volume point value is consistent in each region and country and does not change from year to year . the reason volume points are used in the manner described above is that we use volume points for distributor qualification and recognition purposes and therefore attempts to keep volume points for a similar or like product consistent on a global basis . however , because volume points are a function of value rather than product type or size , they are not a reliable measure for product mix . as an example , an increase in volume points in a specific country or region could mean a significant increase in sales of less expensive product or a marginal increase in sales of an expensive product . replace_table_token_14_th average active sales leaders by geographic region with the continued expansion of daily consumption dmos in our different markets , we believe the average active sales leader metric , which represents the monthly average number of sales leaders that place an order from us in a given quarter , is a useful metric . we rely on this metric as an indication of the engagement level of sales leaders in a given region . changes in the average active sales leader metric may be indicative of the current momentum in a region as well as the potential for higher annual retention levels and future sales growth through utilization of daily consumption dmos . story_separator_special_tag however , net sales in local currency measures should not be considered in isolation or as an alternative to net sales in u.s. dollars measures that reflect current period exchange rates , or to other financial measures calculated and presented in accordance with u.s. gaap . our gross profit consists of net sales less cost of sales , which represents our manufacturing costs , the price we pay to our raw material suppliers and manufacturers of our products as well as shipping and handling costs related to product shipments , duties and tariffs , freight expenses relating to shipment of products to distributors and importers and similar expenses . 55 royalty overrides are our most significant expense and consist of : royalty overrides and production bonuses which total approximately 15 % and 7 % , respectively , of the retail sales of weight management , targeted nutrition , energy , sports & fitness , outer nutrition and promotional products ; the mark hughes bonus payable to some of our most senior distributors in the aggregate amount of up to 1 % of retail sales of weight management , targeted nutrition , energy , sports & fitness , outer nutrition products and promotional products ; and other discretionary incentive cash bonuses to qualifying distributors . royalty overrides are generally earned based on retail sales and provide potential earnings to distributors of up to 23 % of retail sales or approximately 33 % of our net sales . royalty overrides are generally compensation to distributors for the development , retention and improved productivity of their sales organizations and are paid to several levels of distributors on each sale . due to restrictions on direct selling in china , our sales employees in china , prior to the transition into independent service providers , were compensated with wages , bonuses and benefits and our independent service providers in china are compensated with service fees instead of the distributor allowances and royalty overrides utilized in our traditional marketing program . compensation to china sales employees and independent service providers are included in selling , general and administrative expenses . because of local country regulatory constraints , we may be required to modify our typical distributor incentive plans as described above . we also pay reduced royalty overrides with respect to certain products worldwide . consequently , the total royalty override percentage may vary over time . royalty overrides together with distributor allowances of up to 50 % of retail sales prices represent the potential earnings to distributors of up to approximately 73 % of retail sales . our contribution margins consist of net sales less cost of sales and royalty overrides . selling , general and administrative expenses represent our operating expenses , components of which include labor and benefits , sales events , professional fees , travel and entertainment , distributor marketing , occupancy costs , communication costs , bank fees , depreciation and amortization , foreign exchange gains and losses and other miscellaneous operating expenses . most of our sales to distributors outside the united states are made in the respective local currencies . in preparing our financial statements , we translate revenues into u.s. dollars using average exchange rates . additionally , the majority of our purchases from our suppliers generally are made in u.s. dollars . consequently , a strengthening of the u.s. dollar versus a foreign currency can have a negative impact on our reported sales and contribution margins and can generate transaction losses on intercompany transactions . throughout the last five years , foreign currency exchange rates have fluctuated significantly . from time to time , we enter into foreign exchange forward and option contracts to partially mitigate our foreign currency exchange risk as discussed in further detail in item 7a quantitative and qualitative disclosures about market risk . 56 results of operations our results of operations for the periods below are not necessarily indicative of results of operations for future periods , which depend upon numerous factors , including our ability to recruit new distributors and retain existing distributors , open new markets , further penetrate existing markets , introduce new products and programs that will help our distributors increase their retail efforts and develop niche market segments . the following table sets forth selected results of our operations expressed as a percentage of net sales for the periods indicated : replace_table_token_19_th ( 1 ) compensation to our china sales employees and service fees to our independent service providers in china are included in selling , general and administrative expenses while distributor compensation for all other countries is included in royalty overrides . changes in net sales are directly associated with the recruiting and retention of our distributor force , retailing of our products , the quality and completeness of our product offerings that the distributor force has to sell and the number of countries in which we operate . management 's role , both in-country and at the region and corporate level , is to provide distributors with a competitive and broad product line , encourage strong teamwork and distributor leadership and offer leading edge business tools and technology services to make doing business with herbalife simple . management uses the distributor marketing program coupled with educational and motivational tools and promotions to incentivize distributors to increase recruiting , retention and retailing , which in turn affect net sales . such tools include company sponsored sales events such as extravaganzas , leadership development weekends and world team schools where large groups of distributors gather , thus allowing them to network with other distributors , learn recruiting , retention and retailing techniques from our leading distributors and become more familiar with how to market and sell our products and business opportunities . accordingly , management believes that these development and motivation programs increase the productivity of the sales leader network . the expenses for such programs are included in selling , general and administrative expenses .
| quarterly results of operations quarterly income taxes , net income , basic earnings per share , and diluted earnings per share presented in the table below reflect the change in accounting method discussed in note 2 , basis of presentation , to the consolidated financial statements . basic and diluted earnings per share , and weighted average shares outstanding , have also been adjusted to reflect the stock split as discussed above . replace_table_token_27_th contingencies see note 7 , contingencies , to the consolidated financial statements for information on our contingencies as of december 31 , 2011. subsequent events on february 21 , 2012 , we announced that our board of directors approved a quarterly cash dividend of $ 0.30 per common share to shareholders of record as of march 7 , 2012 , payable on march 22 , 2012 . 78 critical accounting policies u.s. gaap requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the year . we regularly evaluate our estimates and assumptions related to revenue recognition , allowance for product returns , inventory , share-based compensation expense , goodwill and purchased intangible asset valuations , deferred income tax asset valuation allowances , uncertain tax positions , tax contingencies , and other loss contingencies . we base our estimates and assumptions on current facts , historical experience and various other factors that we believe to be reasonable under the circumstances , the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue , costs and expenses . actual results could differ from those estimates .
| 7,463 |
story_separator_special_tag as follows : replace_table_token_6_th according to the most recent rvia forecast in august 2017 , shipments for towable and motorized units for the 2017 calendar year will approximate 419,500 and 60,200 units , respectively , which are 11.6 % and 9.9 % higher , respectively , than the corresponding 2016 calendar year wholesale shipments . the combined total of 479,700 units would be the third largest total in the past half century . travel trailers and fifth wheels are expected to account for approximately 85 % of all rv shipments in calendar year 2017 , and more class c motorhomes are expected to be shipped in 2017 than any year since 1984. the outlook for calendar year 2017 growth in rv sales is based on the expectation of continued gains in jobs and disposable income and low inflation . it also takes into account the impact of slowly rising interest rates and assumes geopolitical risks will have minimal impact on the overall pace of growth in the domestic economy . 22 rvia has also forecasted that 2018 calendar year shipments for towables and motorized units will approximate 429,300 and 61,900 units , respectively , which are 2.3 % and 2.8 % higher , respectively , than expected 2017 calendar year shipments . industry retail statistics calendar ytd we believe that retail demand is the key to continued growth in the rv industry . we believe that rv industry wholesale shipments will generally approximate a one-to-one replenishment ratio with retail sales going forward . key retail statistics for the rv industry , as reported by statistical surveys , inc. for the periods indicated , are as follows : replace_table_token_7_th note : data reported by statistical surveys , inc. is based on official state records . this information is subject to adjustment and is continuously updated . company wholesale statistics calendar ytd the company 's wholesale rv shipments , for the six-month periods ended june 30 , 2017 and 2016 , to correspond to the industry periods denoted above , were as follows ( the 2016 totals exclude jayco due to the timing of its acquisition on june 30 , 2016 ) : replace_table_token_8_th company retail statistics calendar ytd retail shipments of the company 's rv products , as reported by statistical surveys , inc. , were as follows for the six-month periods ended june 30 , 2017 and 2016 , to correspond to the industry periods denoted above , and are adjusted to include retail unit shipment results from acquisitions only from the date of acquisition forward ( therefore , the 2016 totals exclude jayco due to the timing of its acquisition on june 30 , 2016 ) : replace_table_token_9_th note : data reported by statistical surveys , inc. is based on official state records . this information is subject to adjustment and is continuously updated . 23 company wholesale statistics fiscal year for the fiscal years ended july 31 , 2017 and 2016 , the company 's wholesale rv shipments were as follows ( includes jayco results only from the june 30 , 2016 date of acquisition forward ) : replace_table_token_10_th the wholesale totals above for towables and motorized units include 62,642 and 5,654 units , respectively , in fiscal 2017 and 3,577 and 243 units , respectively , in fiscal 2016 related to jayco since its june 30 , 2016 acquisition date . our outlook for future growth in retail sales is dependent upon various economic conditions faced by consumers such as the rate of unemployment , the level of consumer confidence , the growth in disposable income of consumers , changes in interest rates , credit availability , the state of the housing market and changes in tax rates and fuel prices . assuming continued stability or improvement in consumer confidence , availability of retail and wholesale credit , low interest rates and the absence of negative economic factors , we would expect to see continued growth in the rv industry . a positive future outlook for the rv segment is supported by favorable demographics . the number of consumers between the ages of 55 and 74 , the age brackets that historically have accounted for the bulk of retail rv sales , will total 79 million by 2025 , 15 % higher than in 2015 according to the rvia . in addition , in recent years the industry has benefited from growing retail sales to younger consumers with new product offerings targeted to younger , more active families , as they place a higher value on family outdoor recreation than any prior generation . based on a study from the pew research center , the millennial generation , defined at the time as those between the ages of 18 and 34 , consisted of more than 75 million people in 2015. in general , these consumers are more technologically savvy , but still value active outdoor experiences shared with family and friends , making them strong potential customers for our industry in the decades to come . based on the kampgrounds of america ( koa ) 2017 north american camping report , their millennial group comprised 31 % of the total population in the most recent census yet accounted for 38 % of the total campers in 2016 , which increased from 34 % of the total campers in 2015. younger rv consumers are generally attracted to lower and moderately priced travel trailers , as affordability is a key driver at this stage in their lives . as the first generation of the internet age , millennials are generally more comfortable gathering information online , and are therefore generally more knowledgeable about products and competitive pricing than any prior generation . this generation is camping more as they view camping as an opportunity to spend time with family and friends as well as a way to reduce stress , escape the pressures of everyday life , be more active and lead a healthier lifestyle . story_separator_special_tag the effective income tax rates for the fiscal 2017 and fiscal 2016 periods were both favorably impacted by various uncertain tax benefit settlements and expirations . 26 segment reporting towable recreational vehicles analysis of change in net sales for fiscal 2017 vs. fiscal 2016 replace_table_token_12_th impact of change in product mix and price on net sales : % decrease towables travel trailers and other ( 10.0 ) fifth wheels ( 1.9 ) total towables ( 12.0 ) the increase in total towables net sales of 53.6 % compared to the prior fiscal year resulted from a 65.6 % increase in unit shipments partially offset by a 12.0 % decrease in the overall net price per unit due to the impact of changes in product mix and price . jayco accounted for 37.7 % of the 53.6 % increase in total towable net sales and for $ 1,257,659 of the $ 1,788,832 increase due to the inclusion of twelve months of jayco 's operations in fiscal 2017 as compared to one month in fiscal 2016 from the date of acquisition . jayco also accounted for 45.8 % of the 65.6 % increase in total towable unit shipments and for 59,065 of the 84,630 unit increase . the 12.0 % decrease in the overall towables net price per unit is greater than the percentage decreases within the travel trailer and fifth wheel product lines due to a higher concentration of the more moderately priced travel trailers and other units , as compared to fifth wheels , in the current-year period as compared to the prior-year period . the other units within the travel trailer and other category consist primarily of truck and folding campers and other specialty vehicles . the overall industry increase in combined travel trailer and fifth wheel wholesale unit shipments for the twelve months ended july 31 , 2017 was 17.7 % compared to the same period last year according to statistics published by rvia . the decreases in the overall net price per unit within the travel trailer and other product lines of 10.0 % and the fifth wheel product lines of 1.9 % were both primarily due to a change in product mix , attributable to both the acquisition of jayco and market-driven changes in product mix toward generally smaller and lower-priced units . cost of products sold increased $ 1,552,540 to $ 4,343,739 , or 84.7 % of towables net sales , for fiscal 2017 compared to $ 2,791,199 , or 83.6 % of towables net sales , for fiscal 2016. the change in material , labor , freight-out and warranty costs comprised $ 1,450,503 of the $ 1,552,540 increase in cost of products sold . material , labor , freight-out and warranty costs as a combined percentage of towables net sales increased to 78.9 % for fiscal 2017 compared to 77.7 % for fiscal 2016. this increase in percentage was primarily the result of increases in both the material and freight-out percentages to sales due to changes in product mix , which is partially attributable to the acquisition of jayco . there was also a modest increase in labor costs due to both the current competitive rv labor market and training an increasing workforce . total manufacturing overhead increased $ 102,037 with the increase in sales , but decreased slightly as a percentage of towables net sales from 5.9 % to 5.8 % . 27 variable costs in manufacturing overhead increased $ 95,035 to $ 274,407 , or 5.4 % of towable net sales , for fiscal 2017 compared to $ 179,372 , or 5.4 % of towable net sales , for fiscal 2016 as a result of the increase in net sales . fixed costs in manufacturing overhead , which consist primarily of facility costs , property taxes and depreciation , increased $ 7,002 to $ 23,103 in fiscal 2017 from $ 16,101 in fiscal 2016 primarily due to the increase in manufacturing facilities and production lines . towables gross profit increased $ 236,292 to $ 783,752 , or 15.3 % of towables net sales , in fiscal 2017 compared to $ 547,460 , or 16.4 % of towables net sales , in fiscal 2016. the increase in gross profit is primarily due to the 65.6 % increase in unit sales volume noted above , while the decrease in the gross profit percentage is primarily due to the increase in the cost of products sold percentage noted above . selling , general and administrative expenses were $ 273,550 , or 5.3 % of towables net sales , for fiscal 2017 compared to $ 195,983 , or 5.9 % of towables net sales , for fiscal 2016. the primary reason for the $ 77,567 increase was increased towables net sales and towables income before income taxes , which caused related commissions , bonuses and other compensation to increase by $ 55,791. these costs , however , decreased as a percentage of towables net sales by 0.4 % compared to the prior fiscal year . sales-related travel , advertising and promotional costs also increased $ 11,296 in correlation with the sales increase and legal , professional and related settlement cost increased $ 4,033. towables income before income taxes was $ 458,915 , or 9.0 % of towables net sales , for fiscal 2017 compared to $ 321,874 , or 9.6 % of towables net sales , for fiscal 2016. the primary reason for the decrease in percentage was the impact of the increase in the cost of products sold percentage as noted above . in addition , amortization costs as a percentage of towables net sales also increased 0.4 % due to the increase of $ 34,581 in jayco 's amortization costs . these increases in cost percentages were partially offset by the one-time goodwill impairment charge of $ 9,113 included in the results for fiscal 2016 as discussed in note 7 to the consolidated financial statements , and the decrease in the selling , general and administrative expense percentage noted above .
| executive overview we were founded in 1980 and have grown to be the largest manufacturer of rvs in north america . according to statistical surveys , inc. , for the six months ended june 30 , 2017 , thor 's combined u.s. and canadian market share was approximately 50.7 % for travel trailers and fifth wheels combined and approximately 39.6 % for motorhomes . our business model includes decentralized operating units , and we compensate operating management primarily with cash , based upon the profitability of the business unit which they manage . our corporate staff provides financial management , insurance , legal , human resource , risk management , marketing and internal audit functions . senior corporate management interacts regularly with operating management to assure that corporate objectives are understood and monitored appropriately . our rv products are sold to non-franchise dealers who , in turn , retail those products . we generally do not finance dealers directly , but do provide repurchase agreements to the dealers ' floor plan lenders . our growth has been both internal and by acquisition . our strategy is designed to increase our profitability through innovation , servicing our customers , manufacturing quality products , improving the efficiencies of our facilities and making acquisitions . we generally rely on internally generated cash flows from continuing operations to finance our growth , however , we did obtain a credit facility to partially fund the jayco , corp. acquisition as more fully described in notes 2 and 11 to the consolidated financial statements . capital expenditures of $ 115,027 in fiscal 2017 were made primarily for purchases of land , production building additions and improvements and replacing machinery and equipment used in the ordinary course of business .
| 7,464 |
mr. grimm was formerly chairman of the board of rsp permian , inc. ( nyse : rspp ) from january 2014 until june 2018. from november 2018 until it was sold in 2019 , mr. grimm served on the board of directors of anadarko petroleum corporation . prior to the formation of rising star , mr. grimm was vice president of worldwide exploration and land for placid oil company from 1990 to 1994. prior to joining placid oil company , mr. grimm was employed by amoco production company for thirteen years where he held numerous positions throughout the exploration department in houston , new orleans and chicago . mr. grimm has been an active member of the story_separator_special_tag and results of operations ( tabular dollar and unit amounts , except per unit data , are in millions ) energy transfer lp is a delaware limited partnership whose common units are publicly traded on the nyse under the ticker symbol “ et. ” the following discussion of our historical consolidated financial condition and results of operations should be read in conjunction with our historical consolidated financial statements and accompanying notes thereto included in “ item 8. financial statements and supplementary data ” of this report . this discussion includes forward-looking statements that are subject to risk and uncertainties . actual results may differ substantially from the statements we make in this section due to a number of factors that are discussed in “ item 1a . risk factors ” of this report . 77 unless the context requires otherwise , references to “ we , ” “ us , ” “ our , ” the “ partnership ” and “ et ” mean energy transfer lp and its consolidated subsidiaries , which include eto , etp gp , etp llc , panhandle , sunoco lp and lake charles lng . references to the “ parent company ” mean energy transfer lp on a stand-alone basis . overview energy transfer lp directly and indirectly owns equity interests in eto , sunoco lp and usac , all of which are limited partnerships engaged in diversified energy-related services . sunoco lp and usac have publicly traded common units . we control eto through our ownership of its general partner . the parent company 's principal sources of cash flow are derived from its direct and indirect investments in the limited partner and general partner interests in eto . eto 's earnings and cash flows are generated by its subsidiaries , including eto 's investments in sunoco lp and usac . the amount of cash that eto , sunoco lp and usac distribute to their respective partners , including the parent company , each quarter is based on earnings from their respective business activities and the amount of available cash , as discussed below . in order to fully understand the financial condition and results of operations of the parent company on a stand-alone basis , we have included discussions of parent company matters apart from those of our consolidated group . general our primary objective is to increase the level of our distributable cash flow to our unitholders over time by pursuing a business strategy that is currently focused on growing our subsidiaries ' natural gas and liquids businesses through , among other things , pursuing certain construction and expansion opportunities relating to our subsidiaries ' existing infrastructure and acquiring certain strategic operations and businesses or assets . the actual amounts of cash that we will have available for distribution will primarily depend on the amount of cash our subsidiaries generate from their operations . our reportable segments are as follows : intrastate transportation and storage ; interstate transportation and storage ; midstream ; ngl and refined products transportation and services ; crude oil transportation and services ; investment in sunoco lp ; investment in usac ; and all other . recent developments covid-19 in 2020 , the covid-19 pandemic prompted several states and municipalities in which we operate to take extraordinary and wide-ranging actions to contain and combat the outbreak and spread of the virus , including mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations . to the extent covid-19 continues or worsens , governments may impose additional similar restrictions . as a provider of critical energy infrastructure , our business has been designated as a “ critical infrastructure sector ” and our employees as “ essential critical infrastructure workers ” pursuant to the department of homeland security guidance on essential critical infrastructure workforce ( s ) . to date , our field operations have continued uninterrupted , and remote work and other covid-19 related conditions have not significantly impacted our ability to maintain operations or caused us to incur significant additional expenses ; however , we are unable to predict the magnitude or duration of current and potential future covid-19 mitigation measures . as an essential business providing critical energy infrastructure , the safety of our employees and the continued operation of our assets are our top priorities and we will continue to operate in accordance with federal and state health guidelines and safety protocols . we have implemented several new policies and provided employee training to help maintain the health and safety of our workforce . 78 pending enable acquisition on february 17 , 2021 , the partnership announced its entry into a definitive merger agreement to acquire enable . under the terms of the merger agreement , enable 's common unitholders will receive 0.8595 of an et common unit in exchange for each enable common unit . in addition , each outstanding enable series a preferred unit will be exchanged for 0.0265 of an et series g preferred unit , and et will make a $ 10 million cash payment for enable 's general partner . the transaction is subject to the approval of enable 's unitholders and other customary regulatory approvals . et contribution of semgroup assets to eto on december 5 , 2019 , et completed the acquisition of semgroup . story_separator_special_tag even without application of the ferc 's recent rate making-related policy statements and rulemakings , the ferc or our shippers may challenge the cost-of-service rates we charge . the ferc 's establishment of a just and reasonable rate is based on many components , including roe and tax-related components , although changes in these components may tend to decrease our cost-of-service rate , other components in the cost-of-service rate calculation may increase and result in a newly calculated cost-of-service rate that is less than , the same as , or greater than the prior cost-of-service rate . moreover , we receive revenues from our pipelines based on a variety of rate structures , including cost-of-service rates , negotiated rates , discounted rates and market-based rates . many of our interstate pipelines , such as etc tiger pipeline , llc , midcontinent express and fayetteville express , have negotiated market rates that were agreed to by customers in connection with long-term contracts entered into to support the construction of the pipelines . other systems , such as fgt , transwestern and panhandle , have a mix of tariff rate , discount rate , and negotiated rate agreements . the revenues we receive from natural gas transportation services we provide pursuant to cost-of-service based rates may decrease in the future as a result of the revised policy statement , changes to roe methodology , or other ferc policies , combined with the reduced corporate federal income tax rate established in the tax act . the extent of any revenue reduction related to our cost-of-service rates , if any , will depend on a detailed review of all of eto 's cost-of-service components and the outcomes of any challenges to our rates by the ferc or our shippers . on july 18 , 2018 , the ferc issued a final rule establishing procedures to evaluate rates charged by the ferc-jurisdictional gas pipelines in light of the tax act and the ferc 's revised policy statement . by order issued january 16 , 2019 , the ferc initiated a review of panhandle 's existing rates pursuant to section 5 of the nga to determine whether the rates currently charged by panhandle are just and reasonable and set the matter for hearing . panhandle filed a cost and revenue study on april 1 , 2019 and an nga section 4 rate case on august 30 , 2019. the section 4 and section 5 proceedings were consolidated by order of the chief judge on october 1 , 2019. a hearing in the combined proceedings commenced on august 25 , 2020 and adjourned on september 15 , 2020. by order dated january 19 , 2021 , the chief judge has extended the deadline for the initial decision to march 26 , 2021. pipeline certification the ferc issued a notice of inquiry on april 19 , 2018 ( “ pipeline certification noi ” ) , thereby initiating a review of its policies on certification of natural gas pipelines , including an examination of its long-standing policy statement on certification of new interstate natural gas pipeline facilities , issued in 1999 , that is used to determine whether to grant certificates for new pipeline projects . we are unable to predict what , if any , changes may be proposed as a result of the pipeline certification noi that will affect our natural gas pipeline business or when such proposals , if any , might become effective . comments in response to the pipeline certification noi were due on or before july 25 , 2018. we do not expect that any change in this policy would affect us in a materially different manner than any other natural gas pipeline company operating in the united states . interstate common carrier regulation the ferc utilizes an indexing rate methodology which , as currently in effect , allows common carriers to change their rates within prescribed ceiling levels that are tied to changes in the producer price index for finished goods , or ppi-fg . many existing pipelines utilize the ferc liquids index to change transportation rates annually . the indexing methodology is applicable to existing rates , with the exclusion of market-based rates . the ferc 's indexing methodology is subject to review every five years . in a december 2020 order , ferc determined that during the five-year period commencing july 1 , 2021 and ending june 30 , 2026 , common carriers charging indexed rates will be permitted to adjust their indexed ceilings annually by ppi-fg plus 0.78 percent . requests for rehearing of the december 2020 order were filed on january 19 , 2021 , and remain pending before ferc . accordingly , the ferc 's final determination of the index rate coupled with the anticipated and subsequent appeals of the december 2020 order could adversely impact the final determination of the ferc approved index . 80 ferc has also implemented changes related to its treatment of federal income taxes . the change in treatment impacts two rate components . those components are the allowance for income taxes and the amount for accumulated deferred income taxes . these changes will primarily impact any cost-of-service related filing and our revenues associated with any cost-based service could be adversely affected by future ferc or judicial rulings . however , we believe that these impacts , if any , will be minimal . trends and outlook recent market disruptions involving the covid-19 pandemic have negatively impacted our earnings and cash flows from operations and may continue to do so . reduced demand for natural gas , ngls , refined products and or crude oil caused by the covid-19 pandemic and low wti crude oil prices may result in the continued shut-in of production from u.s. oil and gas wells , which in turn may result in decreased volumes transported on our pipeline systems and decreased overall utilization of our midstream services .
| segment operating results intrastate transportation and storage replace_table_token_22_th 96 volumes . for the year ended december 31 , 2019 compared to the prior year , transported volumes increased primarily due to the impact of reflecting rigs as a consolidated subsidiary beginning april 2018 and the impact of the red bluff express pipeline coming online in may 2018 , as well as the impact of favorable market pricing spreads . segment margin . the components of our intrastate transportation and storage segment margin were as follows : replace_table_token_23_th segment adjusted ebitda . for the year ended december 31 , 2019 compared to the prior year , segment adjusted ebitda related to our intrastate transportation and storage segment increased due to the net impacts of the following : an increase of $ 64 million in transportation fees , excluding the impact of consolidating rigs beginning april 2018 as discussed below , primarily due to the red bluff express pipeline coming online in may 2018 , as well as new contracts ; a net increase of $ 11 million primarily due to the consolidation of rigs beginning april 2018 , resulting in increases in transportation fees , retained fuel revenues and operating expenses of $ 24 million , $ 2 million and $ 6 million , respectively , partially offset by a decrease in adjusted ebitda related to unconsolidated affiliates of $ 9 million ; and an increase of $ 7 million in realized storage margin primarily due to a realized adjustment to the bammel storage inventory of $ 25 million in 2018 and higher storage fees , partially offset by a $ 20 million decrease due to lower physical withdrawals ; partially offset by a decrease of $ 9 million in retained fuel revenues primarily due to lower gas prices ; and a decrease of $ 5 million in realized natural gas sales and other due to lower realized gains from pipeline optimization
| 7,465 |
contractually obligated cash flow requirements as story_separator_special_tag trilogy metals inc. management 's discussion & analysis for the fourth quarter and year ended november 30 , 2017 ( expressed in us dollars ) 78 management 's discussion and analysis 1 general 1 description of business 1 property review 1 corporate developments 2 project activities 2 outlook 5 summary of results 5 fourth quarter results 6 selected financial data 7 liquidity and capital resources 8 contractual obligations 8 off-balance sheet arrangements 9 outstanding share data 9 financial instruments 9 new accounting pronouncements 10 critical accounting estimates 10 disclosure controls and procedures 11 internal control over financial reporting 11 risk factors 11 additional information 11 cautionary notes 11 trilogy metals inc. year end 2017 trilogy metals inc. management 's discussion & analysis ( expressed in us dollars ) general this management 's discussion and analysis ( “ md & a ” ) of trilogy metals inc. ( “ trilogy ” , “ the company ” , “ us ” or “ we ” ) is dated february 1 , 2018 and provides an analysis of our audited financial results for the year ended november 30 , 2017 compared to the year ended november 30 , 2016. the following information should be read in conjunction with our november 30 , 2017 audited consolidated financial statements and related notes which were prepared in accordance with united states generally accepted accounting principles ( “ u.s . gaap ” ) . a summary of the u.s. gaap accounting policies are outlined in note 2 of the audited consolidated financial statements . all amounts are in united states dollars unless otherwise stated . references to “ canadian dollars ” and “ c $ ” and “ cdn $ ” are to the currency of canada and references to “ u.s . dollars ” , “ $ ” or “ us $ ” are to the currency of the united states . andrew west , certified professional geologist , an employee and exploration manager for trilogy , is a qualified person under national instrument 43-101 - standards of disclosure for mineral projects ( “ ni 43-101 ” ) , and has approved the scientific and technical information in this md & a . trilogy 's shares are listed on the toronto stock exchange ( “ tsx ” ) and the nyse american under the symbol “ tmq ” . additional information related to trilogy , including our annual report on form 10-k , is available on sedar at www.sedar.com and on edgar at www.sec.gov . description of business we are a base metals exploration company focused on exploring and developing our mineral holdings in the ambler mining district located in alaska , u.s.a. we conduct our operations through a wholly-owned subsidiary , novacopper us inc. which is doing business as trilogy metals us ( “ trilogy metals us ” ) . our upper kobuk mineral projects , ( “ ukmp ” or “ ukmp projects ” ) , consist of : i ) the 100 % owned ambler lands which host the arctic copper-zinc-lead-gold-silver project ( the “ arctic project ” ) ; and ii ) the bornite lands being explored under a collaborative long-term agreement with nana regional corporation , inc. ( “ nana ” ) , a regional alaska native corporation , which host the bornite carbonate-hosted copper project ( the “ bornite project ” ) . property review our principal assets , the ukmp projects , are located in the ambler mining district in northwest alaska . our ukmp projects comprise approximately 355,400 acres ( 143,825 hectares ) consisting of the ambler and bornite lands . arctic project the ambler lands , which host a number of deposits , including the high-grade copper-zinc-lead-gold-silver arctic project , and other mineralized occurrences within a 100 kilometer long volcanogenic massive sulfide ( “ vms ” ) belt , are owned by trilogy metals us . the ambler lands are located in northwestern alaska and consist of 114,500 acres ( 46,337 hectares ) of federal patented mining claims and state of alaska mining claims , within which vms mineralization has been found . we have recorded the ambler lands as a mineral property with acquisition costs capitalized and exploration costs expensed in accordance with our accounting policies . bornite project on october 19 , 2011 , trilogy metals us and nana signed a collaborative agreement to explore and develop the ambler mining district . under the exploration agreement and option to lease ( the “ nana agreement ” ) , we acquired , in exchange for , among other things , a $ 4.0 million cash payment to nana , the exclusive right to explore the bornite property and lands deeded to nana through the alaska native claims settlement act ( “ ancsa ” ) , located adjacent to the arctic project , and the non-exclusive right to access and entry onto nana 's lands . the agreement establishes a framework for any future development of either the bornite project or the arctic project . both projects are included as part of a larger area of interest set forth in the nana agreement . the agreement with nana created a total land package incorporating our ambler lands with the adjacent bornite and ancsa lands with a total area of approximately 355,400 acres ( 143,825 hectares ) . trilogy metals inc. year end 2017 1 trilogy metals inc. management 's discussion & analysis ( expressed in us dollars ) upon the decision to proceed with development of a mine within the area of interest , nana maintains the right to purchase an ownership interest in the mine equal to between 16 % -25 % or retain a 15 % net proceeds royalty which is payable after we have recovered certain historical costs , including capital and cost of capital . should nana elect to purchase an ownership interest in the mine , consideration will be payable based on the elected percentage purchased and all the costs incurred on the properties less $ 40.0 million , not to be less than zero . story_separator_special_tag as the initial option payments are credited against the future subscription price upon exercise , we have accounted for the payment received as deferred consideration . at such time as the option is exercised , the initial payments received to that date will be recognized as part of the consideration received for our contribution of the alaska assets , including the ukmp , into the joint venture . if south 32 withdraws from the option agreement , the consideration will be recognized in the statement of loss at that time . bornite project in partnership with south32 we were able to complete a $ 10 million exploration program directed by the joint trilogy-south32 technical committee at the bornite project . the focus of this year 's program was to target high-grade copper mineralization north and east of the previously identified resources last drilled by us in 2013 and to define the edges of the mineralized system . this year 's exploration program at bornite was one of the larger programs in the history of drilling at the bornite project . spending a total of $ 10.0 million , we drilled nine diamond drill holes comprising 8,437 meters at bornite this field season to test the extension of the mineralization from the drill holes from our 2013 drill campaign . drilling at the bornite project began in early june and wrapped up in mid-october with the results released throughout the fall . due to inclement weather , two holes ( rc17-241 and 242 ) were stopped before reaching target depth and cemented in preparation for re-entry during the 2018 drill program . the 2017 drilling program doubled the size of the known mineralized footprint and continues to demonstrate that the high-grade bornite copper resource system is open to further expansion . the exploration program also included completing a ground gravity survey , continuation of hydrology and baseline environmental data collection , and the initiation of metallurgy and acid based accounting for bornite . in fiscal 2017 , we expended $ 10.0 million on the bornite project , consisting of $ 4.8 million in drilling and geochemistry , $ 2.9 million in project support expenses , $ 1.8 million in wages and benefits , $ 0.2 million in engineering studies , $ 0.1 million in geophysical programs , and $ 0.1 million in environmental studies . early in december 2017 , south32 committed to fund the 2018 program and budget of $ 10.0 million focused at the bornite project . the funds , which represent the second tranche of $ 10 million under the option agreement , maintain the agreement in good standing , were fully received in january 2018. planning for the 2018 program is underway and will include in-fill and off-set drilling to better define and expand the high grade copper resources at bornite . arctic project 2017 continued to be a busy year at the arctic project . in the spring of 2017 , we announced several milestones including the release of an updated mineral resource estimate , metallurgical , geotechnical and hydrogeological results in preparation for a pre-feasibility study ( “ pfs ” ) . in early june 2017 , we announced the engagement of ausenco engineering canada inc. to prepare the arctic project pfs technical report . the company also engaged amec foster wheeler to complete mine planning and srk consulting ( canada ) inc. to complete tailings and waste design , hydrology and environmental studies . the pfs study is on track to be completed in q1 2018. trilogy metals inc. year end 2017 3 trilogy metals inc. management 's discussion & analysis ( expressed in us dollars ) the summer field program for the arctic project pfs was conducted in july with the completion of 274 meters of geotechnical drilling and 26 test pits completed to determine site facility locations and mine design . we also completed geophysical ground surveys to evaluate ground conditions . we continued our environmental baseline program through the summer of 2017 which includes baseline data collection on aquatic and avian resources , ongoing water quality , hydrology and meteorology . the water quality program was expanded in 2017 to include additional sample locations and increased sample frequency . the field program information is currently being incorporated into the engineering design for the pfs which will be released in the first quarter of 2018. we also completed 785 meters of infill drilling at arctic in early september collecting core to provide two tonnes of material for an ore-sorting study . the core collected during the program has been crushed and is currently being transported to begin the next phase of the ore sorting study . results are expected in the spring of 2018. in fiscal 2017 , we expended $ 5.2 million on the arctic project , consisting of $ 1.8 million in engineering expenses , $ 0.4 million in drilling , geochemistry and geophysical programs , $ 1.0 million in project support expenses , $ 0.7 million in wages and benefits , $ 0.8 million in land maintenance and permit expenses , $ 0.3 million in community engagement and $ 0.2 million in environmental studies . ambler mining district industrial access project significant milestones were also achieved in 2017 in the permitting process for the ambler mining district industrial access project ( “ amdiap ” ) . the amdiap , being built by the alaska industrial development export authority ( `` aidea ” ) , is anticipated to provide surface access to the ambler mining district and our ukmp projects . the notice of intent ( “ noi ” ) initiating the permitting process under the national environmental policy act ( “ nepa ” ) for the preparation of an environmental impact statement ( “ eis ” ) on the amdiap was published on february 28 , 2017 by the bureau of land management ( “ blm ” ) in the u.s. federal register . the blm is the lead federal agency for the eis . this notice initiates the public scoping process for the eis and comments were due by january 31 , 2018.
| summary of results in thousands of dollars , except for per share amounts replace_table_token_9_th for the year ended november 30 , 2017 , we reported a net loss of $ 21.1 million ( or $ 0.20 basic and diluted loss per common share ) compared to a net loss for the corresponding period in 2016 of $ 4.9 million ( or $ 0.05 basic and diluted loss per common share ) and a net loss of $ 9.5 million for the corresponding period in 2015 ( or $ 0.12 basic and diluted loss per common share ) . this variance was primarily due to the significantly increased size and magnitude of the field programs undertaken at our mineral properties in 2017 as well as a one-time gain on the sale of sunward investments ltd. ( “ sunward investments ” ) , which through a subsidiary , owned 100 % of the titiribi gold-copper exploration project in colombia , in 2016. additionally , there were losses recognized on both the sale of investments as well as investments designated as held for trading in 2017 that did not exist in the two prior fiscal years . the investments consist of shares and warrants to purchase shares in gold mining inc. ( “ gmi ” ) ( formerly , brazil resources inc. ) that were acquired through the sale of sunward investments in 2016. for the year ended november 30 , 2017 , we reported a net loss from continuing operations of $ 21.1 million ( or $ 0.20 basic and diluted loss from continuing operations per common share ) compared to a net loss for the corresponding period in 2016 of $ 8.7 million ( or $ 0.08 basic and diluted loss from continuing operations per common share ) and a net loss of $ 9.1 million for the corresponding period in 2015 ( or $ 0.11 basic and diluted loss from continuing operations per common share ) .
| 7,466 |
terminal value rate determination follows common methodology of capturing the present value of perpetual cash flow estimates beyond the last projected period assuming a constant wacc and low long-term growth rates . if the calculated fair value is less than the current carrying value , impairment of the reporting unit may exist . if the recoverability test indicates potential impairment , the company calculates story_separator_special_tag overview aci worldwide , the universal payments ( up ) company , powers electronic payments for more than 5,000 organizations around the world . more than 1,000 of the largest financial institutions and intermediaries as well as 300 of the leading global retailers rely on aci to execute $ 14 trillion each day in payments . in addition , thousands of organizations utilize our electronic bill presentment and payment services . through our comprehensive suite of software and saas-based solutions , we deliver real-time , any-to-any payments capabilities and enable the industry 's most complete omni-channel payments experience . in addition to our own products , we distribute , or act as a sales agent for , software developed by third parties . our products are sold and supported through distribution networks covering three geographic regions the americas , emea , and asia/pacific . each distribution network has its own globally coordinated sales force and supplements its sales force with independent reseller and or distributor networks . our products and services are used principally by financial institutions , retailers , and electronic payment processors , both in domestic and international markets . accordingly , our business and operating results are influenced by trends such as information technology spending levels , the growth rate of the electronic payments industry , mandated regulatory changes , and changes in the number and type of customers in the financial services industry . our products are marketed under the aci worldwide and aci universal payment systems brands . we derive a majority of our revenues from domestic operations and believe we have large opportunities for growth in international markets as well as continued expansion domestically in the united states . refining our global infrastructure is a critical component of driving our growth . we have launched a globalization strategy which includes elements intended to streamline our supply chain and maximize expertise in several geographic locations to support a growing international customer base and competitive needs . we utilize our irish subsidiaries to manage certain of our intellectual property rights and to oversee and manage certain international product development and commercialization efforts . we also continue to grow centers of expertise in timisoara , romania and pune and bangalore in india as well as key operational centers such as capetown , south africa and in multiple locations in the united states . key trends that currently impact our strategies and operations include : increasing electronic payment transaction volumes . electronic payment volumes continue to increase around the world , taking market share from traditional cash and check transactions . the boston consulting group predicts that electronic payment transactions will grow in volume at an annual rate of 6.6 % , from 454.6 billion in 2015 to 624.6 billion in 2020 , with varying growth rates based on the type of payment and part of the world . we leverage the growth in transaction volumes through the licensing of new systems to customers whose older systems can not handle increased volume and through the licensing of capacity upgrades to existing customers . 32 adoption of real-time payments . customer expectations , from both consumers and corporate , are driving the payments world to more real-time delivery . in the uk , payments sent through the traditional ach multi-day batch service can now be sent through the faster payments service giving almost immediate access to the funds and this is being considered in several countries including australia and the us . corporate customers expect real-time information on the status of their payments instead of waiting for an end of day report . and regulators expect banks to be monitoring key measures like liquidity in real time . aci 's focus has always been on the real-time execution of transactions and delivery of information through real-time tools such as dashboards so our experience will be valuable in addressing this trend . increasing competition . the electronic payments market is highly competitive and subject to rapid change . our competition comes from in-house information technology departments , third-party electronic payment processors , and third-party software companies located both within and outside of the united states . many of these companies are significantly larger than us and have significantly greater financial , technical , and marketing resources . as electronic payment transaction volumes increase , third-party processors tend to provide competition to our solutions , particularly among customers that do not seek to differentiate their electronic payment offerings or are eliminating banks from the payments service reducing the need for our solutions . as consolidation in the financial services industry continues , we anticipate that competition for those customers will intensify . adoption of cloud technology . in an effort to leverage lower-cost computing technologies some financial institutions , retailers and electronic payment processors are seeking to transition their systems to make use of cloud technology . our investment in aci on demand provides us the grounding to deliver cloud capabilities in the future . electronic payments fraud and compliance . as electronic payment transaction volumes increase , criminal elements continue to find ways to commit a growing volume of fraudulent transactions using a wide range of techniques . financial institutions , retailers and electronic payment processors continue to seek ways to leverage new technologies to identify and prevent fraudulent transactions and other attacks such as denial of service attacks . due to concerns with international terrorism and money laundering , financial institutions in particular are being faced with increasing scrutiny and regulatory pressures . we continue to see opportunity to offer our fraud detection solutions to help customers manage the growing levels of electronic payment fraud and compliance activity . story_separator_special_tag ebpp encompasses all facets of bill payment , including biller direct , where customers initiate payments on biller websites , the consolidator model , where customers initiate payments on a financial institution website , and walk-in bill payment , as one might find in a convenience store . the ebpp market continues to grow as consumers move away from traditional forms of paper-based payments . according to javelin strategy & research , a subsidiary of greenwich associates , the number of households paying at biller websites was projected to increase from 51 million in 2014 to 57 million in 2019 , a 2.8 % cagr , while the number of households paying at financial institution websites was projected to increase from 56 million in 2014 to 68 million in 2019 , a 5 % cagr . the consolidator model or bank bill pay segment has grown as financial institutions view these services as sticky. similarly , the biller direct segment is seeing strong growth as billers migrate these services to outsourcers , such as aci , from legacy systems built in-house . we believe that ebpp remains ripe for outsourcing , as a significant amount of biller-direct transactions are still processed in house . as billers seek to manage costs and improve efficiency , we believe that they will continue to look to third-party ebpp vendors that can offer a complete solution for their billing needs . the banking , financial services and payments industries have come under increased scrutiny from federal , state and foreign lawmakers and regulators in response to the crises in the financial markets and the global recession . in particular , the dodd-frank wall street reform and consumer protection act ( the dodd-frank act ) , which was signed into law july 21 , 2010 , represents a comprehensive overhaul of the u.s. financial services industry and requires the implementation of many new regulations that will have a direct impact on our customers and potential customers . this is not limited to the united states , in april 2014 , the european commission voted to adopt a number of amendments with regards to the payment services directive , placing further pressure on industry incumbents . these regulatory changes may create both opportunities and challenges for us . the application of the new regulations on our customers could create an opportunity for us to market our product capabilities and the flexibility of our solutions to assist our customers in addressing these regulations . at the same time , these regulatory changes may have an adverse impact on our operations and our financial results as we adjust our activities in light of increased compliance costs and customer requirements . it is currently too difficult to predict the long term extent to which the dodd-frank act , payment services directive or the resulting regulations will impact our business and the businesses of our current and potential customers . several other factors related to our business may have a significant impact on our operating results from year to year . for example , the accounting rules governing the timing of revenue recognition in the software industry are complex and it can be difficult to estimate when we will recognize revenue generated by a given transaction . factors such as maturity of the software product licensed , payment terms , creditworthiness of the customer , and timing of delivery or acceptance of our products often cause revenues related to sales generated in one period to be deferred and recognized in later periods . for arrangements in which 34 services revenue is deferred , related direct and incremental costs may also be deferred . additionally , while the majority of our contracts are denominated in the united states dollar , a substantial portion of our sales are made , and some of our expenses are incurred , in the local currency of countries other than the united states . fluctuations in currency exchange rates in a given period may result in the recognition of gains or losses for that period . we continue to seek ways to grow through organic sources , partnerships , alliances , and acquisitions . we continually look for potential acquisitions designed to improve our solutions ' breadth or provide access to new markets . as part of our acquisition strategy , we seek acquisition candidates that are strategic , capable of being integrated into our operating environment , and financially accretive to our financial performance . acquisitions pay.on on november 4 , 2015 , the company completed the acquisition of pay.on ag and its subsidiaries ( collectively , pay.on ) for $ 186.4 million in cash and stock . pay.on is a leader in ecommerce payments gateway solutions to payment service providers globally . their advanced software as a service ( saas ) based solution complements and strengthens the company 's merchant retail omni-channel universal payments offerings . the combined entities will provide customers the ability to deliver a seamless omni-channel customer payment experience in store , mobile , and online . to fund this acquisition and related transaction fees , we drew an additional $ 181.0 million on our revolving credit facility . see note 4 , debt , for terms of the financing arrangement subsequent event on january 20 , 2016 , the company and fiserv , inc. ( fiserv ) entered into a definitive agreement ( the agreement ) providing for the sale of its community financial services products and their related identified assets and liabilities for $ 200.0 million , subject to certain working capital adjustments , on the terms and conditions described in the agreement . the consummation of the agreement is subject to the satisfaction of customary conditions , including the expiration of the applicable waiting period under the hart-scott-rodino antitrust improvements act of 1976 , aci 's delivery of specified third-party consents and the absence of a material adverse change .
| results of operations the following tables present the consolidated statements of income as well as the percentage relationship to total revenues of items included in our consolidated statements of income ( amounts in thousands ) : year ended december 31 , 2015 compared to year ended december 31 , 2014 revenues replace_table_token_6_th total revenue for the year ended december 31 , 2015 increased $ 29.8 million , or 3 % , as compared to the same period in 2014. the increase is the result of a $ 16.0 million , or 7 % , increase in license revenue , a $ 1.2 million , or 1 % , increase in services revenue and a $ 26.6 million , or 6 % , increase in hosting revenue partially offset by a $ 14.1 million , or 6 % , decrease in maintenance revenue . the increase in total revenue for the year ended december 31 , 2015 as compared to the year ended december 31 , 2014 was due to a $ 8.8 million , or 1 % , increase in the americas reportable segment , a $ 19.7 million , or 9 % , increase in the emea reportable segment , and a $ 1.3 million , or 2 % , increase in the asia/pacific reportable segment . the addition of pay.on and red contributed $ 27.6 million of the increase in total revenue for the year ended december 31 , 2015. total revenue was $ 25.0 million lower in 2015 as compared to 2014 due to the impact of foreign currencies weakening against the u.s. dollar . excluding the impact of the addition of pay.on , red and foreign currency , total revenue for the year ended december 31 , 2015 , increased $ 27.2 million , or 3 % , compared to the same period in 2014 , primarily due to increased license fees .
| 7,467 |
such statements include , but are not limited to , statements concerning our anticipated operating results , research and development , clinical trials , regulatory proceedings , and financial resources , and can be identified by use of words such as , for example , anticipate , estimate , expect , project , intend , plan , believe and would , should , could or may. all statements , other than statements of historical facts , included herein that address activities , events , or developments that the company expects or anticipates will or may occur in the future , are forward-looking statements , including statements regarding : plans and expectations regarding clinical trials ; plans and expectations regarding regulatory approvals ; our strategy and expectations for clinical development and commercialization of our products ; potential strategic partnerships ; expectations regarding the effectiveness of our products ; plans for research and development and related costs ; statements about accounting assumptions and estimates ; expectations regarding liquidity and the sufficiency of cash to fund currently planned operations through march 31 , 2017 ; our commitments and contingencies ; and our 32 market risk exposure . forward-looking statements are based on current expectations , estimates and projections about the industry and markets in which galectin therapeutics operates , and management 's beliefs and assumptions . these statements are not guarantees of future performance and involve certain known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements . such risks and uncertainties are related to and include , without limitation , our early stage of development , we have incurred significant operating losses since our inception and can not assure you that we will generate revenue or profit , our dependence on additional outside capital , we may be unable to enter into strategic partnerships for the development , commercialization , manufacturing and distribution of our proposed product candidates , uncertainties related to any litigation , including shareholder class actions and derivative lawsuits filed , uncertainties related to our technology and clinical trials , including expected dates of availability of clinical data , we may be unable to demonstrate the efficacy and safety of our developmental product candidates in human trials , we may be unable to improve upon , protect and or enforce our intellectual property , we are subject to extensive and costly regulation by the u.s. food and drug administration ( fda ) and by foreign regulatory authorities , which must approve our product candidates in development and could restrict the sales and marketing and pricing of such products , competition and stock price volatility in the biotechnology industry , limited trading volume for our stock , concentration of ownership of our stock , and other risks detailed herein and from time to time in our sec reports , and we caution investors that actual results or business conditions may differ materially from those projected or suggested in forward-looking statements as a result of various factors including , but not limited to , those described above and in the risk factors section of this annual report on form 10-k. we can not assure you that we have identified all the factors that create uncertainties . moreover , new risks emerge from time to time and it is not possible for our management to predict all risks , nor can we assess the impact of all risks on our business or the extent to which any risk , or combination of risks , may cause actual results to differ from those contained in any forward-looking statements . readers should not place undue reliance on forward-looking statements . we undertake no obligation to publicly release the result of any revision of these forward-looking statements to reflect events or circumstances after the date they are made or to reflect the occurrence of unanticipated events . overview we are a clinical stage biopharmaceutical company engaged in drug research and development to create new therapies for fibrotic disease and cancer . our drug candidates are based on our method of targeting galectin proteins , which are key mediators of biologic and pathologic functions . we use naturally occurring , readily-available plant materials as starting material in manufacturing processes to create proprietary complex carbohydrates with specific molecular weights and other pharmaceutical properties . these complex carbohydrate molecules are appropriately formulated into acceptable pharmaceutical formulations . using these unique carbohydrate-based candidate compounds that largely bind and inhibit galectin proteins , particularly galectin-3 , we are undertaking the focused pursuit of therapies for indications where galectins have a demonstrated role in the pathogenesis of a given disease . we focus on diseases with serious , life-threatening consequences to patients and those where current treatment options are limited . our strategy is to establish and implement clinical 33 development programs that add value to our business in the shortest period of time possible and to seek strategic partners when a program becomes advanced and requires additional resources . we endeavor to leverage our scientific and product development expertise as well as established relationships with outside sources to achieve cost-effective and efficient development . these outside sources , amongst others , provide us with expertise in preclinical models , pharmaceutical development , toxicology , clinical development , pharmaceutical manufacturing , sophisticated physical and chemical characterization , and commercial development . we also have established several collaborative scientific discovery programs with leading experts in carbohydrate chemistry and characterization . these discovery programs are generally aimed at the targeted development of new carbohydrate molecules which bind galectin proteins and offer alternative options to larger market segments in our primary disease indications , such as subcutaneous or oral administration . we also have established a discovery program aimed at the targeted development of small molecules ( non-carbohydrate ) which bind galectin proteins and may afford options for alternative means of drug delivery ( e.g. , oral ) and as a result expand the potential uses of our compounds . story_separator_special_tag in addition , should gr-md-02 be approved for marketing , the success of this study supports a broader patient population for the drug label . our phase 2 program in fibrotic disease consists of two separate human clinical trials . the first clinical trial is the nash-cx study for patients with nash with cirrhosis , which began enrolling in june 2015. this study is a randomized , placebo-controlled , double-blind , parallel-group phase 2 trial to evaluate the safety and efficacy of gr-md-02 for the treatment of liver fibrosis and resultant portal hypertension in patients with nash cirrhosis . a total of 156 patients at approximately 50 sites in the united states will be randomized to receive either 2 mg/kg of gr-md-02 , 8 mg/kg of gr-md-02 or placebo , with 52 patients in each group . the primary endpoint is a reduction in change in hepatic venous pressure gradient ( hvpg ) . patients will receive an infusion every other week for one year , total of 26 infusions , and will be evaluated to determine the change in hvpg as compared with placebo . hvpg will be correlated with secondary endpoints of fibrosis on liver biopsy as well as with measurement of liver stiffness ( fibroscan ( r ) ) and assessment of liver metabolism ( 13 c-methacetin breath test , exalenz ) , which are non-invasive measures of the liver that may be used in future studies . data readout is expected by the end of 2017. the second clinical trial is the nash-fx for patients with nash advanced fibrosis uses a variety of non-invasive fibrosis assessment technologies . the first patient in this 30 patient study is was consented in september 2015 , and the study is designed for 15 patients receiving 8 mg/kg of gr-md-02 and 15 receiving placebo to be treated . that study will evaluate the safety and efficacy of gr-md-02 for a four month treatment period of bi-weekly infusions of gr-md-02 on non-invasive measures on liver stiffness as assessed imaging of liver fibrosis using multi-parametric magnetic resonance imaging ( livermultiscan ( r ) , perspectum diagnostics ) , as the primary endpoint , as well as magnetic resonance-elastography and fibroscan score , as secondary endpoints . top-line data is expected to be available in the third quarter of 2016. our drug candidate provides a promising new approach for the therapy of fibrotic diseases , and liver fibrosis in particular . fibrosis is the formation of excess connective tissue ( collagen and other proteins plus cellular elements such as myofibroblasts ) in response to damage , inflammation or repair . when the fibrotic tissue becomes confluent , it obliterates the cellular architecture , leading to scarring and dysfunction of the underlying organ . given galectin-3 's broad biological functionality , it has been demonstrated to be involved in cancer , inflammation and fibrosis , heart disease , renal disease and stroke . we have further demonstrated the broad applicability of the actions of our galectin-3 inhibitor 's biological effect in ameliorating fibrosis involving lung , kidney and cardiac tissues in a variety of animal models . the focus and goal of the therapeutic program is to stop the progression of and reverse the fibrosis in the liver and , thereby improve liver function and prevent the development of complications of fibrosis/cirrhosis and liver-related mortality in patients . cancer immunotherapy . we believe there is potential for galectin inhibition to play a key role in the burgeoning area of cancer immunotherapy . for example , there have been several recent approvals of drugs that enhance a patient 's immune system to fight cancer . with many additional vaccines and immune stimulatory agents in development , industry analysts forecast that this market could generate over $ 35 billion in sales over the next 10 years . it is our goal to use a galectin inhibitor to enhance the immune system function to fight cancer in a way that complements other approaches to this type of therapy . our drug candidates provide a promising new therapeutic approach to enhance the activity of the immune system against cancer cells . preclinical studies have indicated that gr-md-02 enhances the immune response to cancer cells , increased tumor shrinkage and enhanced survival in immune competent mice with prostate , breast , melanoma and sarcoma cancers when 36 combined with one of the immune checkpoint inhibitors , anti-ctla-4 or anti-pd-1 . these preclinical data led to the filing of an investigator-sponsored ind and the initiation of a study of gr-md-02 in combination with yervoy ® ( ipilimumab ) in a phase 1b study of patients with metastatic melanoma . this study is being conducted under the sponsorship of providence portland medical center 's earle a. chiles research institute ( eacri ) . a study with keytruda and grmd-02 is conducted by eacri is expected to begin enrolling by april 2016. we believe the mechanism of action for gr-md-02 is based upon interaction with , and inhibition of , galectin proteins , particularly galectin-3 , which are expressed at high levels in certain pathological states including inflammation , fibrosis and cancer . while gr-md-02 is capable of binding to multiple galectin proteins , we believe that it has the greatest affinity for galectin-3 , the most prominent galectin implicated in pathological processes . blocking galectin in cancer and liver fibrosis has specific salutary effects on the disease process , as discussed below . psoriasis . during our phase 1 nash fibrosis trial with gr-md-02 , a clinical effect on plaque psoriasis was observed in a nash patient who also had this disease . this patient had marked improvement in her psoriasis , with improvement beginning after the third infusion . she reported that her psoriasis was completely gone and her skin was normal after the fourth infusion . her skin remained normal for 17 months after the final infusion of study drug . the patient is convinced that the improvement in her psoriasis is related to the study drug .
| general and administrative expense replace_table_token_8_th general and administrative expenses consist primarily of salaries including stock based compensation , legal and accounting fees , insurance , investor relations , business development and other office related expenses . the primary reasons for the increase for the year ended december 31 , 2014 as compared to the same period for 2013 are due to , increased legal expenses of $ 407,000 related to our arbitration with dr. platt which was settled in 2014 and includes the $ 150,000 retention of legal fees we paid in connection with the shareholder suits filed in 2014 and increased insurance expense of $ 115,000. other income and expense during the year ended december 31 , 2014 , other income and expense consisted primarily of the $ 400,000 loss on equity method investment in galectin sciences llc . liquidity and capital resources as described above in the overview and elsewhere in this annual report on form 10-k , we are in the development stage and have not generated any revenues to date . since our inception on july 10 , 2000 , we have financed our operations from proceeds of public and private offerings of debt and equity . as of december 31 , 2015 , we raised a net total of $ 122.5 million from these offerings . at december 31 , 2015 , the company had $ 25.8 of unrestricted cash and cash equivalents available to fund future operations . the company currently believes there is sufficient cash to fund currently planned operations through march 31 , 2017. we will require more cash to fund our operations after march 31 , 2017 and believe we will be able to obtain additional financing . however , there can be no assurance that we will be successful in obtaining such new financing or , if available , that such financing will be on terms favorable to us .
| 7,468 |
our financial strength ratings are important to the company in establishing our competitive position and can impact our ability to write policies . the discussion of our financial condition and results of operations that follows provides information that will assist the reader in understanding our consolidated 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 consolidated financial statements . this discussion should be read in conjunction with our consolidated financial statements and the related notes that appear elsewhere in this document . covid-19 and other matters with regard to the covid-19 pandemic , our first priority remains the health and safety of our employees and their families . approximately 78 % of our total personnel are either working from home full-time or on a hybrid schedule between office and home . our corporate and remote offices remain operational , we are practicing social distancing , and have enhanced cleaning protocols and are using personal protective equipment in addition to employing other preventative measures . we continue to monitor the short-and long-term impacts of covid-19 virus and its variants , a global pandemic that has caused a significant slowdown in the global economy beginning in march 2020. for the year ended december 31 , 2020 , we saw virtually no impact to our business . as a residential property insurer , we view our business as somewhat insulated because property owners and renters generally view our products as a necessity . the majority of our gross and net premiums written are from renewals of expiring policies . new business , which accounts for a smaller portion of our revenue , may be impacted if consumers are not buying as many new homes in our geographies , but this could be partially or fully offset by increased retention in our renewal portfolio . in a prolonged recessionary and social-distancing environment , we could experience disruptions to our independent agency distribution channel , which may have a negative impact on our revenues and financial condition . although we have not experienced a significant amount of payment delays , or non-payment , there may be delays in premium payments in geographies that require us to grant policyholders additional time to pay their premiums and , under prolonged recessionary economic conditions , we could experience more significant delays in premium payments and possibly non-payment of premiums . global credit and financial markets experienced extreme volatility and disruptions during the second quarter of 2020 as a result of the covid-19 pandemic , including diminished liquidity and credit availability , declines in consumer confidence , increases in unemployment rates and uncertainty about economic stability . although we were relatively unaffected by the condition of the credits markets , if the credit and financial markets again experience significant deterioration at a time when we need additional liquidity , it may make any necessary debt or equity financing more difficult , more costly , and more dilutive . notwithstanding these actual and potential impacts , we currently believe that our cash on hand , revolving credit facility and expected earnings give us sufficient liquidity to fund our operations . however , if we need additional liquidity at a time when equity and credit markets deteriorate , it may make any necessary debt or equity financing more difficult , more costly , and more dilutive . coronavirus aid , relief , and economic security act the cares act was enacted on march 27 , 2020 in the united states . the cares act and related notices include several significant provisions , including delaying certain payroll tax payments , mandatory transition tax payments under the tcj act , and estimated income tax payments that we are deferring to future periods . we do not currently expect the cares act to have a material impact on our liquidity or our financial results , except for the benefit associated with a 5 year carryback of our 2020 tax net operating loss . we will continue to monitor and assess the impact the cares act and similar legislation may have on our business and financial results . 28 key components of our results of operations revenue gross premiums written represent , with respect to a period , the sum of direct premiums written ( premiums from policies written during the period , net of any midterm cancellations and renewals of voluntary policies ) and assumed premiums written ( primarily premiums from state fair plan policies ) , in each case prior to ceding premiums to reinsurers . gross premiums earned represent the total premiums earned during a period from policies written . premiums associated with new and renewal policies are earned ratably over the twelve-month term of the policy and premiums associated with assumed policies are earned ratably over the remaining term of the policy . ceded premiums represent the cost of our reinsurance during a period . we recognize the cost of our reinsurance program ratably over term of the arrangement , which is typically twelve months . our catastrophe excess of loss reinsurance generally incepts june 1 and runs through may 31 of the following year . our net quota share treaty incepts december 31. our other reinsurance programs may be purchased on a calendar or fiscal year basis . net premiums earned reflect gross premiums earned less ceded premiums during the period . net investment income represents interest earned on fixed maturity securities , short term securities and other investments , dividends on equity securities , realized gains or losses on investment sales and unrealized gains or losses on equity securities . other revenue includes rental income due under non-cancelable leases for space at the company 's commercial property in clearwater , florida , and all policy and pay-plan fees . our regulators have approved a policy fee on each policy written for certain states ; to the extent these fees are not subject to refund , the company recognizes the income immediately when collected . story_separator_special_tag cash and cash equivalents may not be sufficient to fund such expenditures . as such , in addition to the use of our existing credit facilities , we may need to utilize additional debt to secure funds for such purposes . 33 statement of cash flows the net increases ( decreases ) in cash and cash equivalents are summarized in the following table : replace_table_token_6_th operating activities net cash provided by operating activities for december 31 , 2020 was $ 170.2 million as compared to net cash provided of $ 119.7 million during the prior year . the increase was primarily due to an increase in gross written premiums and reinsurance collections as well as timing of payment of claims . investing activities net cash provided by investing activities for the year ended december 31 , 2020 was $ 22.1 million as compared to net cash used in of $ 53.6 million in the prior year . the variance relates primarily to proceeds from strategic sales of fixed income securities during the year . financing activities net cash used in financing activities for the year ended december 31 , 2020 was $ 28.9 million , as compared net cash used in of $ 45.4 million in the prior year . the variance relates primarily to a repayment on our revolving credit facility and repurchases of a larger amount of stock during 2019. credit facilities on december 14 , 2018 , the company entered into a credit agreement ( the “ credit agreement ” ) by and among the company , as borrower , certain subsidiaries of the company from time to time party thereto as guarantors , the lenders from time to time party thereto ( the “ lenders ” ) , regions bank , as administrative agent and collateral agent , bmo harris bank n.a. , as syndication agent , hancock whitney bank and canadian imperial bank of commerce , as co-documentation agents , and regions capital markets and bmo capital markets corp. , as joint lead arrangers and joint bookrunners . pursuant to the credit agreement , the participating lenders agreed to provide ( 1 ) a five-year senior secured term loan facility in an aggregate principal amount of $ 75 million ( the “ term loan facility ” ) and ( 2 ) a five-year senior secured revolving credit facility in an aggregate principal amount of $ 50 million ( inclusive of a $ 5 million sublimit for the issuance of letters of credit and a $ 10 million sublimit for swingline loans ) ( the “ revolving credit facility ” and together with the term loan facility , the “ credit facilities ” ) . as of december 31 , 2020 , the company had in aggregate $ 60.0 million principal outstanding under the term loan facility and $ 10.0 million of borrowings outstanding under the revolving credit facility . at our option , borrowings under the credit facilities bear interest at rates equal to either ( 1 ) a rate determined by reference to libor ( based on one , two , three or six-month interest periods ) , adjusted for statutory reserve requirements , plus an applicable margin ( equal to 3.25 % as of the closing date ) or ( 2 ) a base rate determined by reference to the greatest of ( a ) the “ prime rate ” of regions bank , ( b ) the federal funds rate plus 0.50 % , and ( c ) the libor index rate applicable for an interest period of one month plus 1.00 % , plus an applicable margin ( equal to 2.25 % ) . the applicable margin for loans under the credit facilities varies from 3.25 % per annum to 3.75 % per annum ( for libor loans ) and 2.25 % to 2.75 % per annum ( for base rate loans ) based on our consolidated leverage ratio . interest payments with respect to the credit facilities are required either on a quarterly basis ( for base rate loans ) or at the end of each interest period ( for libor loans ) or , if the duration of the applicable interest period exceeds three months , then every three months . as of december 31 , 2020 , the borrowing under our credit facilities were accruing interest at a rate of 3.475 % per annum . in addition to paying interest on outstanding borrowings under the revolving credit facility , we are required to pay a quarterly commitment fee based on the unused portion of the revolving credit facility , which is determined by our consolidated leverage ratio . 34 each of the revolving credit facility and the term loan facility mature on december 14 , 2023. the principal amount of the term loan facility amortizes in quarterly installments , which began with the close of the fiscal quarter ended march 3 1 , 2019 , in an amount equal to $ 1,875,000 per quarter , payable monthly or quarterly , with the balance payable at maturity . the company may prepay the loans under the credit facilities , in whole or in part , at any time without premium or penalty , subject to certain conditions including minimum amounts and reimbursement of certain costs in the case of prepayments of libor loans . in addition , the company is required to prepay the loan under the term loan facility with the proceeds from certain financing transactions , involuntary dispositions or asset sales ( subject , in the case of asset sales , to reinvestment rights ) . all obligations under the credit facilities are or will be guaranteed by each existing and future direct and indirect wholly owned domestic subsidiary of the company , other than all of the company 's current and future regulated insurance subsidiaries ( collectively , the “ guarantors ” ) . the company and the guarantors entered into a pledge and security agreement , on december 14 , 2018 ( the “ security agreement ” ) , in favor of regions bank , as collateral agent .
| results of operations in the following section , we discuss the results of our operations for the year ended december 31 , 2020 compared to the year ended december 31 , 2019. for a discussion of the year ended december 31 , 2019 compared to the year ended december 31 , 2018 , please refer to part ii , item 7 “ management 's discussion and analysis of financial condition and results of operations ” in our annual report on form 10-k for the year ended december 31 , 2019 , which was filed with the sec on march 10 , 2020. please read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes included under part ii , item 8 of this annual report on form 10-k. 30 consolidated results of operations the following table summarizes our results of operations for the periods indicated : replace_table_token_2_th nm – not meaningful gross premiums written gross premiums written of $ 1.1 billion , up 15.2 % year-over-year , including 15.8 % growth outside florida and 14.6 % growth in florida . the overall increase relates to growth in each state in which we conduct business as well as expansion to california , delaware , mississippi , and maryland . growth in existing states was organic , including growth via independent agents and strategic partnerships with national carriers . rate increases materially benefited 2020 gross premiums written growth , particularly in florida . gross premiums earned gross premiums earned were $ 996.8 million for the year ended december 31 , 2020 , up 7.9 % compared to $ 924.2 million in the prior year . the increase in gross premiums earned stems from gross premiums written growth in 2019 and 2020. ceded premiums ceded premiums were $ 452.1 million for the year ended december 31 , 2020 , up 1.5 % compared to $ 445.5 million in the prior year .
| 7,469 |
the properties we operate are located primarily in markets within the united states ' top ten metropolitan areas . there are 90 properties in our core portfolio totaling approximately 5.6 million square feet . fund ii has four properties , two of which ( representing 0.3 million square feet ) are currently operating , one is under construction , and one is in the design phase . fund iii has 10 properties , seven of which ( representing 1.1 million square feet ) are currently operating and three of which are in the design phase . fund iv has 43 properties , 18 of which ( representing 1.0 million square feet ) are operating and 25 are under development . the majority of our operating income is derived from rental revenues from operating properties , including expense recoveries from tenants , offset by operating and overhead expenses . as our rcp venture invests in operating companies , we consider these investments to be private-equity style , as opposed to real estate , investments . since these are not traditional investments in operating rental real estate but investments in operating businesses , the operating partnership typically invests in these through a taxable reit subsidiary ( `` trs '' ) . our primary business objective is to acquire and manage commercial retail properties that will provide cash for distributions to shareholders while also creating the potential for capital appreciation to enhance investor returns . we focus on the following fundamentals to achieve this objective : 35 own and operate a core portfolio of high-quality retail properties located primarily in high-barrier-to-entry , densely-populated metropolitan areas and create value through accretive redevelopment and re-tenanting activities coupled with the acquisition of high-quality assets that have the long-term potential to outperform the asset class as part of our core asset recycling and acquisition initiative . generate additional external growth through an opportunistic yet disciplined acquisition program within our funds . we target transactions with high inherent opportunity for the creation of additional value through : ◦ value-add investments in street retail properties , located in established and `` next generation '' submarkets , with re-tenanting or repositioning opportunities , ◦ opportunistic acquisitions of well-located real-estate anchored by distressed retailers , and ◦ other opportunistic acquisitions which may include high-yield acquisitions and purchases of distressed debt . these may also include joint ventures with private equity investors for the purpose of making investments in operating retailers with significant embedded value in their real estate assets . maintain a strong and flexible balance sheet through conservative financial practices while ensuring access to sufficient capital to fund future growth . story_separator_special_tag million decrease related to lower average interest rates during 2015. these decreases were offset by a $ 4.0 million increase related to higher average outstanding borrowings during 2015. gain on disposition of properties in the core portfolio during 2014 represents the gain on the foreclosure of the walnut hill plaza . gain on disposition of properties in the funds in 2015 represents our gain on the sales of air rights on phase iii at our city point development , lincoln park centre and liberty avenue . net income attributable to noncontrolling interests in the funds represents their share of all fund variances discussed above . comparison of the year ended december 31 , 2014 ( `` 2014 '' ) to the year ended december 31 , 2013 ( `` 2013 '' ) replace_table_token_21_th rental income in the core portfolio increased $ 11.9 million primarily as a result of additional rents from 2013 and 2014 core acquisitions . these increases were partially offset by a $ 1.7 million reduction in rental income following the disposition of walnut hill plaza . rental income in the funds increased $ 10.5 million primarily as a result of additional rents of $ 6.0 million related to 2014 fund portfolio property acquisitions ( `` 2014 fund acquisitions '' ) and $ 4.3 million as a result of re-anchoring and leasing activities within the fund portfolio ( `` fund re-tenanting '' ) . expense reimbursements in the core portfolio increased $ 3.0 million primarily as a result of $ 2.0 million related to 2013 and 2014 core acquisitions as well as $ 0.7 million related to reimbursement of higher winter related operating costs in 2014. expense reimbursements in the funds increased $ 1.3 million primarily as a result of the 2014 fund acquisitions and reimbursement of higher winter related operating costs in 2014. other income in the funds decreased $ 3.2 million primarily due to the recognition of income upon the collection of a note receivable during 2013 , which had been previously written off . other income in structured financing increased $ 2.7 million as a result of the collection of two notes that had been reserved prior to 2014. replace_table_token_22_th property operating expenses in the core portfolio increased $ 1.6 million primarily as a result of the 2013 and 2014 core acquisitions . property operating expenses in the funds increased $ 2.2 million primarily as a result of $ 1.5 million attributable to the 2014 fund acquisitions and $ 0.5 million related to fund re-tenanting . other operating in the funds decreased $ 1.3 million as a result of a decrease in acquisition related costs . 38 real estate taxes in the core portfolio increased $ 1.6 million primarily as a result of the 2013 and 2014 core acquisitions . general and administrative expenses increased $ 0.9 million in structured financing primarily as a result of legal fees incurred during 2014 associated with collection efforts on non-performing notes receivable . depreciation and amortization expenses in the core portfolio increased $ 6.9 million primarily as a result of the 2013 and 2014 core acquisitions . depreciation and amortization expenses in the funds increased $ 2.5 million primarily as a result of the 2014 fund acquisitions . story_separator_special_tag liquidity and capital resources uses of liquidity our principal uses of liquidity are ( i ) distributions to our shareholders and op unit holders , ( ii ) investments which include the funding of our capital committed to the funds and property acquisitions and redevelopment/re-tenanting activities within our core portfolio , ( iii ) distributions to our fund investors and ( iv ) debt service and loan repayments . distributions in order to qualify as a reit for federal income tax purposes , we must currently distribute at least 90 % of our taxable income to our shareholders . for the year ended december 31 , 2015 , we paid dividends and distributions on our common shares and common op units totaling $ 92.5 million , which were primarily funded from the operating partnership 's share of operating cash flow . this amount included a $ 21.8 million special dividend that was paid in january 2015 , which related to the operating partnership 's share of cash proceeds from property dispositions during 2014. distributions of $ 1.8 million were made to noncontrolling interests in fund i during the year ended december 31 , 2015 primarily as a result of asset sales in the rcp venture . 42 distributions of $ 1.4 million were made to noncontrolling interests in fund ii during the year ended december 31 , 2015 primarily as a result of operating cash flows . distributions of $ 61.8 million were made to noncontrolling interests in fund iii during the year ended december 31 , 2015. of this , $ 57.9 million resulted from proceeds following the dispositions of lincoln park centre , white city shopping center and parkway crossing as discussed in note 2 to the notes to consolidated financial statements . $ 3.0 million resulted from operating cash flows and $ 0.9 million resulted from financing proceeds . distributions of $ 4.6 million were made to noncontrolling interests in fund iv during the year ended december 31 , 2015. of this , $ 0.2 million was made from operating cash flows and $ 4.4 million resulted from financing proceeds . distributions to other noncontrolling interests within fund joint ventures totaled $ 1.7 million for the year ended december 31 , 2015. investments during 2015 , we acquired an additional 4.6 % interest in fund iii from a limited partner for $ 7.3 million , giving us an aggregate 24.5 % interest in fund iii . during january 2016 , we acquired an additional 8.3 % interest in fund ii from a limited partner for $ 18.4 million , giving us an aggregate 28.3 % interest in fund ii . fund i and mervyns i fund i and mervyns i have returned all invested capital and accumulated preferred return thus triggering our promote in all future fund i and mervyns i earnings and distributions . as of december 31 , 2015 , $ 86.6 million has been invested in fund i and mervyns i , of which the operating partnership contributed $ 19.2 million . as of december 31 , 2015 , fund i has been liquidated . in addition , we , along with our fund i investors , have invested in mervyns as discussed in note 4 to the consolidated financial statements of this form 10-k. fund ii and mervyns ii to date , fund ii 's primary investment focus has been in investments involving significant redevelopment activities and the rcp venture . as of december 31 , 2015 , $ 300.0 million has been invested in fund ii and mervyns ii , of which the operating partnership contributed $ 60.0 million . during january 2016 , the operating partnership acquired an additional 8.3 % interest in fund ii from one of the investors for $ 18.4 million . during september of 2004 , through fund ii , we launched our new york urban/infill redevelopment initiative . fund ii , together with an unaffiliated partner , formed acadia urban development llc ( `` acadia urban development '' ) for the purpose of acquiring , constructing , redeveloping , owning , operating , leasing and managing certain retail or mixed-use real estate properties in the new york city metropolitan area . the unaffiliated partner agreed to invest 10 % of required capital up to a maximum of $ 2.2 million and fund ii , the managing member , agreed to invest the balance to acquire assets in which acadia urban development agreed to invest . of the eight properties acquired by acadia urban development , four have been sold . of the remaining four assets , one is currently at , or near , stabilization , one is under contract for disposition , one is currently under construction and one is in the pre-construction phase as previously discussed in `` -investing activities- redevelopment activities '' in item 1. of this form 10-k. redevelopment costs incurred during 2015 by acadia urban development in connection with the new york urban/infill redevelopment initiative totaled $ 46.3 million . anticipated additional costs for the property currently under construction are currently estimated to range between $ 48.1 and $ 68.1 million . these amounts are net of anticipated contributions from the proceeds of residential tower sales . rcp venture see note 4 in the notes to consolidated financial statements , for a table summarizing the rcp venture investments from inception through december 31 , 2015 . fund iii during 2007 , we formed fund iii with 14 institutional investors , including all of the investors from fund i and a majority of the investors from fund ii with $ 502.5 million of committed discretionary capital . during 2012 , the committed capital amount was 43 reduced to $ 475.0 million and during 2015 , this amount was further reduced to $ 450.0 million . as of december 31 , 2015 , $ 387.5 million has been invested in fund iii , of which the operating partnership contributed $ 77.1 million . the remaining $ 62.5 million of unfunded capital will be used to fund current redevelopment projects .
| results of operations see note 3 in the notes to consolidated financial statements for an overview of our three reportable segments . a discussion of the significant variances and primary factors contributing thereto within the results of operations for the years ended december 31 , 2015 , 2014 and 2013 are addressed below : comparison of the year ended december 31 , 2015 ( `` 2015 '' ) to the year ended december 31 , 2014 ( `` 2014 '' ) replace_table_token_18_th rental income in the core portfolio increased $ 19.1 million primarily as a resul t of additional rents from property acquisitions in 2014 and 2015 ( `` core acquisitions '' ) . rental income in the funds decreased $ 5.5 million due to decreases of $ 4.7 million relating to property dispositions in 2015 ( `` fund dispositions '' ) and an anticipated significant vacancy at 161st street in connection with its redevelopment . these decreases were partially offset by property acquisitions in 2015 and 2014 ( `` fund acquisitions '' ) . the $ 4.0 million increase in interest income in the structured financing portfolio was a result of $ 2.7 million of additional interest from loans originated in 2014 and 2015 as well as the collection of $ 1.5 million of interest that was previously reserved . expense reimbursements in the core portfolio increased $ 4.4 million primarily as a result of core acquisitions as well as additional repairs and maintenance during 2015. other income in the core portfolio increased $ 1.5 million primarily as a result of a gain on the acquisition of the unaffiliated partner 's remaining interest in the route 202 shopping center during 2015. other income in the structured financing portfolio for 2015 relates to the collection of a note receivable in excess of carrying value , including default interest and other costs .
| 7,470 |
we plan to adopt asu 2016-02 in the story_separator_special_tag the following information should be read in conjunction with our consolidated financial statements , including the notes thereto , included in part ii , item 8 of this annual report on form 10-k. overview and highlights we are a global technology company that designs , develops , manufactures , markets and supports software driven , three-dimensional ( “ 3d ” ) measurement , imaging and realization systems . this technology permits high-precision 3d measurement , imaging and comparison of parts and complex structures within production and quality assurance processes . our devices are used for inspection of components and assemblies , rapid prototyping , reverse engineering , documenting large volume or structures in 3d , surveying and construction , as well as for investigation and reconstruction of accident sites or crime scenes . we sell the majority of our products through a direct sales force across a broad number of customers in a range of manufacturing , industrial , architecture , surveying , building information modeling , construction , public safety forensics , cultural heritage and other applications . our faroarm ® , faro scanarm ® , faro gage ® , faro laser tracker tm , faro cobalt array imager , faro laser projector , and their companion cam2 ® , buildit , and raytracer tm software solutions , provide for computer-aided design ( “ cad ” ) based inspection , factory-level statistical process control , high-density surveying and laser-guided assembly and production . together , these products integrate the measurement , quality inspection , and reverse engineering functions with cad and 3d software to improve productivity , enhance product quality , and decrease rework and scrap in the manufacturing process , mainly supporting applications in our factory metrology vertical . our faro focus and faro scanner freestyle 3d x laser scanners , and their companion faro scene , faro pointsense , and faro zone public safety forensics software offerings , are utilized for a wide variety of 3d modeling , documentation and high-density surveying applications in our construction building information modeling - construction information management ( “ construction bim-cim ” ) and public safety forensics verticals . our faro scanarm ® , faro cobalt array imager , faro scanner freestyle 3d x laser scanners and their companion scene software also enable a fully digital workflow used to capture real world geometry for the purpose of empowering design , enabling innovation , and speeding up the design cycle , supporting our product design vertical . faro visual inspect enables large , complex 3d cad data to be transferred to a tablet device and then used for mobile visualization and comparison to real world conditions , facilitating in-process inspection , assembly , guidance and positioning for applications in our factory metrology and construction bim-cim verticals . our line of galvanometer-based scan heads and laser scan controllers are used in a variety of laser applications and are integrated into larger components and systems . we derive our revenues primarily from the sale of our measurement equipment and related multi-faceted software programs . revenue related to these products is generally recognized upon shipment . in addition , we sell extended warranties and training and technology consulting services relating to our products . we recognize the revenue from extended warranties on a straight-line basis over the term of the warranty , and revenue from training and technology consulting services when the services are provided . we operate in international markets throughout the world and maintain sales offices in australia , brazil , canada , china , france , germany , india , italy , japan , malaysia , mexico , the netherlands , poland , portugal , singapore , south korea , spain , switzerland , thailand , turkey , the united kingdom , and the united states . we manufacture our faroarm ® , faro scanarm ® , and faro gage products in our manufacturing facility located in switzerland for customer orders from europe , the middle east and africa ( “ emea ” ) , in our manufacturing facility located in singapore for customer orders from the asia-pacific region , and in our manufacturing facility located in florida for customer orders from the americas . we manufacture our faro focus in our manufacturing facilities located in germany and switzerland for customer orders from emea and the asia-pacific region , and in our manufacturing facility located in pennsylvania for customer orders from the americas . we manufacture our faro freestyle 3d x products in our facility located in germany . we manufacture our faro laser tracker tm , faro cobalt array imager and our faro laser projection products in our facility located in pennsylvania . we expect all of our existing manufacturing facilities to have the production capacity necessary to support our volume requirements during 2018. we account for wholly-owned foreign subsidiaries in the currency of the respective foreign jurisdiction ; therefore , fluctuations in exchange rates may have an impact on the value of the intercompany account balances denominated in different currencies and reflected in our consolidated financial statements . we are aware of the availability of off-balance sheet financial instruments to hedge exposure to foreign currency exchange rates , including cross-currency swaps , forward contracts and foreign currency options . however , we have not used such instruments in the past , and none were utilized in 2017 , 2016 or 2015 . 25 executive summary our total sales increased $ 35.3 million , or 10.9 % , to $ 360.9 million for the year ended december 31 , 2017 from $ 325.6 million for the year ended december 31 , 2016 . this increase reflected improved growth in both product and service revenue as we have continued to grow our global sales force consistent with our strategy . story_separator_special_tag gross margin from product revenue increased by 2.6 percentage points to 60.4 % for the year ended december 31 , 2017 from 57.8 % in the prior year period . this increase was primarily due to higher average selling prices in our products attributable to our new product introductions and improved manufacturing efficiencies . gross margin from service revenue increased by 1.4 percentage points to 44.4 % for the year ended december 31 , 2017 from 43.0 % for the prior year period , primarily due to higher warranty and customer service revenue . 27 selling and marketing expenses . selling and marketing expenses increased by $ 23.6 million , or 29.6 % , to $ 103.5 million , for the year ended december 31 , 2017 from $ 79.9 million for the year ended december 31 , 2016 . this increase was driven primarily by higher compensation expense , reflecting an investment in selling headcount as part of our global strategic initiatives to drive sales growth . selling and marketing expenses as a percentage of sales were 28.7 % for the year ended december 31 , 2017 compared with 24.5 % for the year ended december 31 , 2016 . our worldwide period-ending selling headcount increased by 95 , or 17.7 % , to 631 at december 31 , 2017 from 536 at december 31 , 2016. general and administrative expenses . general and administrative expenses increased by $ 3.0 million , or 7.3 % , to $ 43.8 million for the year ended december 31 , 2017 from $ 40.8 million for the year ended december 31 , 2016 . this increase in general and administrative expenses was primarily driven by higher compensation and global system expenses . the higher global system expenses resulted from our strategic initiative to harmonize global verticals through the implementation of entity-wide systems , such as our human resource information system . general and administrative expenses were 12.1 % of sales for the year ended december 31 , 2017 compared to 12.5 % of sales in the prior year . depreciation and amortization expenses . depreciation and amortization expenses increased by $ 2.7 million , or 19.6 % , to $ 16.6 million for the year ended december 31 , 2017 from $ 13.9 million for the year ended december 31 , 2016 . this increase in depreciation and amortization expenses was primarily due to higher amortization of intangible assets related to acquisitions and new production tooling for the manufacture of our new products . research and development expenses . research and development expenses increased $ 5.3 million , or 17.4 % , to $ 35.4 million for the year ended december 31 , 2017 from $ 30.1 million for the year ended december 31 , 2016 . this increase in research and development expenses was mainly due to higher compensation expense resulting from increased headcount in connection with our acquisitions . research and development expenses as a percentage of sales increased to 9.8 % for the year ended december 31 , 2017 from 9.3 % for the year ended december 31 , 2016 . other ( income ) expense . other income was $ 0.5 million for the year ended december 31 , 2017 compared to other expense of $ 0.7 million for the year ended december 31 , 2016 . the change was primarily driven by foreign exchange transaction gains resulting from the positive impact of changes in foreign exchange rates on the value of the current intercompany account balances of our subsidiaries denominated in other currencies during the year ended december 31 , 2017 compared to losses resulting from the negative impact of changes in foreign exchange rates during the year ended december 31 , 2016 . income tax expense . income tax expense for the year ended december 31 , 2017 was $ 20.3 million compared with income tax expense of $ 1.5 million for the year ended december 31 , 2016 . the increase was primarily related to tax expense of $ 19.4 million recorded in the fourth quarter of 2017 pursuant to the tax cuts act . $ 17.4 million of this expense related to the provisional transition tax expense on the mandatory deemed repatriation of foreign earnings . $ 2.0 million of this expense related to the remeasurement of our deferred tax assets and liabilities that we expect to utilize in the future as a result of the tax cuts act decreasing the united states statutory corporate tax rate from 35 % to 21 % for tax years beginning january 1 , 2018. net ( loss ) income . net loss was $ 14.5 million for the year ended december 31 , 2017 compared with net income of $ 11.1 million for the year ended december 31 , 2016 , reflecting the impact of the factors described above . story_separator_special_tag style= '' line-height:120 % ; text-indent:48px ; font-size:10pt ; '' > net income . net income was $ 11.1 million for the year ended december 31 , 2016 compared with $ 12.8 million for the year ended december 31 , 2015 reflecting the impact of the factors described above . segment results replace_table_token_9_th sales . sales in our factory metrology segment increased $ 13.6 million , or 6.1 % , to $ 236.3 million for the year ended december 31 , 2016 from $ 222.7 million in the prior year , primarily reflecting higher average selling prices and higher service revenue across all our regions , partially offset by a decline in units sold mainly in the emea region . foreign exchange rates had a negative impact on sales of $ 1.5 million , decreasing sales growth by 0.7 percentage points . segment profit . segment profit in our factory metrology segment increased $ 10.2 million , or 16.1 % , to $ 73.7 million for the year ended december 31 , 2016 from $ 63.5 million in the prior year .
| segment results we use segment profit to evaluate the performance of our reportable segments , which are factory metrology , construction bim-cim and other . segment profit is calculated as gross profit , net of selling and marketing expenses , for the reporting segment . the discussion of segment results for the years ended december 31 , 2017 and 2016 presented below is based on segment profit , as described above , and segment profit as a percent of sales , which is calculated as segment profit divided by net sales for such reporting segment . our definition of segment profit may not be comparable to similarly titled measures reported by other companies . for additional information , including a reconciliation of total segment profit to income from operations , see note 16 to the “ notes to consolidated financial statements ” included in part ii , item 8 of this annual report on form 10-k. 28 replace_table_token_5_th sales . sales in our factory metrology segment increased $ 8.8 million , or 3.7 % , to $ 245.1 million for the year ended december 31 , 2017 from $ 236.3 million in the prior year , primarily reflecting higher average selling prices and higher service revenue . segment profit . segment profit in our factory metrology segment increased $ 5.2 million , or 7.1 % , to $ 78.9 million for the year ended december 31 , 2017 from $ 73.7 million in the prior year . this increase was primarily due to the increase in average selling prices and service revenue , partially offset by an increase in selling and marketing expenses reflecting higher headcount . replace_table_token_6_th sales . sales in our construction bim-cim segment increased $ 21.2 million , or 32.7 % , to $ 86.3 million for the year ended december 31 , 2017 from $ 65.1 million in the prior year , primarily reflecting an increase in units sold and higher service revenue . segment profit .
| 7,471 |
factors that could affect results are discussed more fully under the item 1a , entitled “ risk factors , ” and elsewhere in this annual report . although forward-looking statements help to provide complete information about us , readers should keep in mind that forward-looking statements may not be reliable . readers are cautioned not to place undue reliance on the forward-looking statements . we undertake no duty to update any forward-looking statements made herein after the date of this annual report . the following discussion should be read in conjunction with the consolidated financial statements contained herein and the notes thereto , along with the section entitled “ critical accounting policies and estimates , ” set forth below . overview and business segments our business is comprised of two segments . our “ osur ” business consists of the development , manufacture , marketing and sale of oral fluid diagnostic products and specimen collection devices using our proprietary technologies , other diagnostic products including immunoassays and other in vitro diagnostic tests that are used on other specimen types . our molecular collections systems or “ dnag ” business consists of the manufacture and sale of kits that are used to collect , stabilize , transport and store samples of genetic material for molecular testing in the consumer genetic , clinical genetic , academic research , pharmacogenomics , personalized medicine , microbiome and animal genetics markets . our osur diagnostic products include tests that are performed on a rapid basis at the point of care and tests that are processed in a laboratory . these products are sold in the united states and internationally to various clinical laboratories , hospitals , clinics , community-based organizations and other public health organizations , distributors , government agencies , physicians ' offices , and commercial and industrial entities . we also manufacture and sell medical devices used for the removal of benign skin lesions by cryosurgery or freezing . these cryosurgical products are sold in both professional and over-the-counter ( “ otc ” ) markets in north america , europe , central and south america , and australia . our dnag or molecular collection systems business is operated by our subsidiary , dna genotek inc. ( “ dnag ” ) , a company based in ottawa , canada . dnag 's oragene® dna sample collection kit provides an all-in-one system for the collection , stabilization , transportation and storage of dna from human saliva . we also sell research use only sample collection products into the microbiome and tuberculosis markets and we offer our customers a suite of genomics and microbiome services , that range from package customization and study design optimization to extraction , analysis and reporting services . we serve customers worldwide , including many leading research universities and hospitals . recent developments management succession plan in january 2018 , we announced the planned retirement of douglas a. michels , our then president and chief executive officer ( “ ceo ” ) , and ronald h. spair , our then chief financial officer ( “ cfo ” ) and chief operating officer . stephen s. tang , ph.d. , who served as chairman of the board of directors ( the “ board ” ) , was appointed as the company 's new president and ceo , effective april 1 , 2018. dr. tang replaced mr. michels , who retired as president and ceo , and as a member of the board , on march 31 , 2018. in addition , roberto cuca was appointed as the company 's new cfo , effective june 8 , 2018. mr. cuca replaced mr. spair , who retired as cfo and chief operating officer , and as a member of our board of directors , on the same date . included in our 2018 financial results are $ 9.6 million in transition costs associated with these changes in management . these costs largely consist of non-cash stock compensation charges . business acquisitions on january 4 , 2019 , the company , through a wholly-owned subsidiary , acquired all of the outstanding stock of corebiome , inc. ( “ corebiome ” ) , pursuant to the terms of a merger agreement , dated january 3 , 2019. corebiome is a minnesota-based early-stage microbiome laboratory services provider that accelerates research and discovery for customers in the pharmaceutical , agricultural , and research communities . these services provide optimal analytical algorithms to deliver speed and scalability in the lab with precise analytics . also on january 4 , 2019 , the company , through a wholly-owned subsidiary , acquired all of the outstanding stock of novosanis nv ( “ novosanis ” ) , pursuant to a share purchase agreement , dated january 3 , 2019. novosanis is a belgian company founded as a spinoff company from the university of antwerp , belgium , in 2013. novosanis is an early commercial-stage producer and distributor of urine 52 sample collection devices targeted p rimarily at the liquid biopsy and s exually t ransm itted i nfection screening market s . novosanis ' primary product is colli-pee , an easy to use device designed for the standardized collection of first-void urine which can be used in the privacy of the user 's home or in a clinic . the initial commercial appl ication of this product is for liquid biopsy in the prostate and bladder cancer markets . product validation and clinical trials are also under way with various sexually transmitted infection test manufacturers . story_separator_special_tag this royalty agreement was entered into in 2017 and required royalty payments beginning in the first quarter of 2018. there were no revenues of this nature in 2017. consolidated operating results consolidated gross profit percentage was 63 % for the year ended december 31 , 2018 compared to 59 % for 2017. gross profit percentage in 2018 benefited from improved product mix associated with an increase in higher gross profit percentage sales , lower manufacturing costs associated with our oragene ® product , increased royalty income and other revenues which have a gross profit percentage of 100 % , lower scrap and spoilage costs and lower royalty expense . consolidated operating income in 2018 was $ 28.4 million , an $ 11.8 million decline from $ 40.2 million of operating income reported in 2017. operating income in 2017 included a pre-tax gain of $ 12.5 million associated with the settlement of our litigation against ancestry.com dna llc and its contract manufacturer . in addition , our results for 2018 were negatively impacted by the inclusion of $ 9.6 million of transition costs associated with executive management changes , $ 1.2 million of transaction costs associated with our recent acquisitions , and increased spending on research and development and sales and marketing . operating income ( loss ) by segment osur segment osur 's gross profit percentage was 56 % in 2018 compared to 58 % in 2017. osur 's gross profit percentage in 2018 was negatively impacted by an increase in lower profit percentage revenues as a result of higher international sales , partially offset by the increase in barda funding and cost reimbursement from the gates foundation , and lower scrap and spoilage costs and royalty expense . research and development expenses increased 21 % to $ 12.7 million in 2018 from $ 10.5 million in 2017 , due to increased spending on our ebola and zika products , higher staffing costs , and increased product registration fees related to our expansion in more international markets . sales and marketing expenses increased 5 % to $ 19.9 million in 2018 from $ 18.9 million in 2017 , primarily as a result of increased consulting costs associated with our international sales contractors and increased staffing costs associated with higher headcount . general and administrative expenses increased 35 % to $ 35.3 million in 2018 from $ 26.1 million in 2017 as a result of the inclusion of $ 9.6 million of transition costs associated with executive management changes , $ 1.2 million of transaction costs associated with our recent acquisitions , and higher consulting costs partially offset by a decrease in other staffing related costs . 56 all of the above contributed to osur ' s operating loss of $ 20.1 million for 2018 , which included non-cash charges of $ 3 . 8 million for depreciation and amortization and $ 14.7 million for stock-based compensation . dnag segment dnag 's gross profit percentage was 69 % in 2018 compared to 61 % in 2017. this increase was attributable to the royalty income recorded in 2018 and improved product mix associated with an increase in higher gross profit percentage sales and lower manufacturing costs associated with our oragene ® product . no royalty income was recorded in 2017. research and development expenses increased 25 % to $ 3.5 million in 2018 from $ 2.8 million in 2017 due to higher staffing costs associated with the development of new product and service offerings . sales and marketing expenses increased 12 % to $ 10.7 million in 2018 compared to $ 9.6 million in 2017 due to higher staffing and commission expenses . general and administrative expenses decreased 4 % to $ 3.1 million in 2018 compared to $ 3.2 million in 2017 , due to lower legal costs . operating expenses in 2017 were offset by the $ 12.5 million pre-tax gain associated with the settlement of the ancestry litigation . all of the above contributed to dnag 's operating income of $ 48.6 million for 2018 , which included non-cash charges of $ 3.4 million for depreciation and amortization and $ 540,000 for stock-based compensation . consolidated income taxes we continue to believe the full valuation allowance established in 2008 against osur 's total u.s. deferred tax asset is appropriate as the facts and circumstances necessitating the allowance have not changed . for the year ended december 31 , 2018 , we recorded state income tax expense of $ 155,000 compared to $ 0 in the year ended december 31 , 2017. canadian income tax expense of $ 11.2 million and $ 10.1 million was recorded in 2018 and 2017 , respectively . the increase in income tax expense was largely a result of the increase in income before taxes generated by dnag partially offset by the additional taxes recorded during 2017 related to the $ 12.5 million litigation settlement which did not re-occur in 2018. on december 22 , 2017 , the u.s. enacted the tax cuts and jobs act ( the “ tax act ” ) that instituted fundamental changes to the taxation on multinational corporations . the impact of the tax act on our financial results is not material given osur has a full valuation allowance against its total u.s. deferred tax assets and due to the net operating losses ( “ nols ” ) and tax credits that are being generated by the u.s. entity . year ended december 31 , 2017 compared to december 31 , 2016 consolidated net revenues the table below shows a breakdown of total net revenues ( dollars in thousands ) generated by each of our business segments . replace_table_token_9_th consolidated net product revenues increased 51 % to $ 162.0 million in 2017 from $ 106.9 million in 2016. higher sales of our molecular and oraquick ® hcv products and higher international sales of our oraquick ® hiv self-test were partially offset by lower domestic sales of our professional oraquick ® hiv product and lower domestic and otc sales of our cryosurgical products . in 2017 , we recognized $ 4.4
| current consolidated financial results during the year ended december 31 , 2018 , our consolidated net revenues of $ 181.7 million rose 9 % , compared to $ 167.1 million for the year ended december 31 , 2017. net product revenues during the year ended december 31 , 2018 increased 2 % when compared to 2017 , primarily due to higher sales of our molecular collection systems products and higher international sales of our oraquick ® hiv self-test , partially offset by lower sales of our oraquick ® hcv products , lower domestic sales of our professional oraquick ® hiv product and lower sales of our cryosurgical products . royalty income was $ 9.7 million for the year ended december 31 , 2018. other revenues for 2018 were $ 6.7 million compared to $ 5.1 million in 2017. other revenues in 2018 included $ 5.0 million of funding received from the u.s. department of health and human services office of the assistant secretary for preparedness and response 's biomedical advanced research and development authority ( “ barda ” ) related to our ebola and zika products and $ 1.7 million of cost reimbursement under our charitable support agreement with the bill & melinda gates foundation ( “ gates foundation ” ) . other revenues in 2017 included $ 4.4 million of barda funding and $ 689,000 of cost reimbursement . our consolidated net income for the year ended december 31 , 2018 was $ 20.4 million , or $ 0.33 per share on a fully-diluted basis , compared to consolidated net income of $ 30.9 million , or $ 0.51 per share on a fully-diluted basis for the year ended december 31 , 2017. results for the current year include $ 1.2 million of pre-tax transaction costs associated with the recent acquisitions discussed above , and $ 9.6 million of pre-tax transition costs associated with the executive management changes also noted above .
| 7,472 |
ligand has the right to terminate the master license agreement under certain circumstances , including , but not limited to : ( 1 ) in the event of the company 's insolvency or bankruptcy , ( 2 ) if the company does not pay an undisputed amount owing under the master license agreement when due and fails to cure such default within a specified period of time , or ( 3 ) if the company defaults on certain of its material and substantial obligations story_separator_special_tag story_separator_special_tag underwriters of the ipo exercised their full over-allotment option to purchase an additional 450,000 shares of our common stock . on may 28 , 2015 , we sold the 450,000 shares to the underwriters pursuant to the over-allotment option and received additional net proceeds of $ 3,225,866 after deducting underwriting discounts , commissions and other offering expenses of $ 374,134. although it is difficult to predict our liquidity requirements , as of december 31 , 2015 , and based upon our current operating plan , we do not believe that we will have sufficient cash to meet our projected operating requirements for at least the next 12 months unless we raise additional capital . as of december 31 , 2015 , we had an accumulated deficit of $ 45,545,445. these losses have resulted principally from research and development costs incurred in connection with acquiring the exclusive worldwide rights to the portfolio of five drug candidates discussed above and the related non-cash interest expense recorded for increases in the deemed fair market value for the license fees payable to ligand , research and development expenses related to the manufacturing of clinical drug product and clinical development of vk5211 , vk2809 and vk0214 , consulting fees and general and administrative expenses . we anticipate that we will continue to incur net losses for the foreseeable future as we continue the development of our clinical drug candidates and preclinical programs and incur additional costs associated with being a public company . financial operations overview revenues to date , we have not generated any revenue . we do not expect to receive any revenue from any drug candidates that we develop unless and until we obtain regulatory approval for , and commercialize , our drug candidates or enter into collaborative agreements with third parties . research and development expenses we had limited operating expenses related to research and development activities prior to may 2014. in may 2014 , we acquired certain rights to a number of research and development programs from ligand and charged $ 21,687,576 to research and development expense during the year ended december 31 , 2014 as a cost of acquiring these assets . during the year ended december 31 , 2015 , we charged $ 6,966,842 to research and development expense as following the ipo , we began manufacturing certain drug supply and initiated efforts related to conducting phase 2 clinical trials for vk5211 and vk2809 and in vivo studies for vk0214 . we expect that our ongoing research and development expenses will consist of costs incurred for the development of our drug candidates , including , but not limited to : · employee and consultant-related expenses , which will include salaries , benefits and stock-based compensation , and certain consultant fees and travel expenses ; · expenses incurred under agreements with investigative sites and contract research organizations , or cros , which will conduct a substantial portion of our research and development activities on our behalf ; · payments to third-party manufacturers , which will produce our active pharmaceutical ingredients and finished products ; · license fees paid to third parties for use of their intellectual property ; and · facilities , depreciation and other allocated expenses , which will include direct and allocated expenses for rent and maintenance of facilities and equipment , depreciation of leasehold improvements , equipment and laboratory and other supplies . we expense all research and development costs as incurred . 65 the process of conducting the necessary clinical research to obtain regulatory approval is costly and time consuming and the successful development of our drug candidates is highly uncertain . ou r future research and development expenses will depend on the clinical success of each of our drug candidates , as well as ongoing assessments of the commercial potential of such drug candidates . in addition , we can not forecast with any degree of certainty which drug candidates may be subject to future collaborations , when such arrangements will be secured , if at all , and to what degree such arrangements would affect our development plans and capital requirements . we expect to incur increased research and de velopment expenses in the future as we continue our phase 2 clinical trial for vk5211 , commence our phase 2 clinical trial for vk2809 and seek to advance our additional programs . general and administrative expenses prior to the consummation of the ipo , our general and administrative expenses consisted primarily of salaries and related benefits paid to our employees in executive , operational and finance functions , including stock-based compensation and fees paid to certain consultants to help commence and continue our operations . following the consummation of the ipo , our general and administrative expenses have increased as we have hired additional employees , issued additional equity awards , which has resulted in increased stock-based compensation expense , moved to a larger office to accommodate the increase in headcount , implemented certain systems to increase efficiency , and incurred additional costs for insurance , legal and accounting related to operating as a public company . we expect that our general and administrative expenses will continue to increase in the future in order to support our expected increase in research and development activities , including increased salaries and other related costs , stock-based compensation and consulting fees for executive , finance , accounting and business development functions . story_separator_special_tag financial accounting standards board , or fasb , accounting standards codification , or asc , topic 605-28 , revenue recognition – milestone method , or asc 605-28 , established the milestone method as an acceptable method of revenue recognition for certain contingent event-based payments under research and development arrangements . under the milestone method , a payment that is contingent upon the achievement of a substantive milestone is recognized in its entirety in the period in which the milestone is achieved . a milestone is an event ( 1 ) that can be achieved based in whole or in part on either our performance or on the occurrence of a specific outcome resulting from our performance , ( 2 ) for which there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved , and ( 3 ) that would result in additional payments being due to us . the determination that a milestone is substantive is subject to management 's judgment and is made at the inception of the arrangement . milestones are considered substantive when the consideration earned from the achievement of the milestone ( a ) is commensurate with either our performance to achieve the milestone or the enhancement of value of the item delivered as a result of a specific outcome resulting from our performance to achieve the milestone , ( b ) relates solely to past performance , and ( c ) is reasonable relative to all deliverables and payment terms in the arrangement . other contingent event-based payments received for which payment is either contingent solely upon the passage of time or the results of a collaborative partner 's performance are not considered milestones under asc 605-28. in accordance with asc topic 605-25 , revenue recognition – multiple-element arrangements , or asc 605-25 , such payments will be recognized as revenue when all of the following criteria are met : ( 1 ) persuasive evidence of an arrangement exists , ( 2 ) delivery has occurred or services have been rendered , ( 3 ) price is fixed or determinable , and ( 4 ) collectability is reasonably assured . revenues recognized for royalty payments , if any , are based upon actual net sales of the licensed compounds , as provided by the collaboration arrangement , in the period the sales occur . any amounts received prior to satisfying our revenue recognition criteria are recorded as deferred revenue on our balance sheets . research and development all costs of research and development are expensed in the period incurred . research and development costs primarily consist of fees paid to cros and clinical trial sites ; employee and consultant related expenses , which include salaries , benefits and stock-based compensation for research and development personnel ; external research and development expenses incurred pursuant to agreements with third-party manufacturing organizations ; license fees paid to third parties for use of their intellectual property ; facilities costs ; travel costs ; dues and subscriptions ; depreciation ; and materials used in preclinical studies , clinical trials and research and development . 67 we estimate our preclinical study and clinical trial expenses based on the services we received pursuant to contracts with research institutions and cros that conduct and manage preclinical s tudies and clinical trials on our behalf . clinical trial-related contrac ts vary significantly in length and may be for a fixed amount , based on milestones or deliverables , a variable amount based on actual costs incurred , capped at a certain limit , or for a combination of these elements . we accrue service fees based on work performed , which relies on estimates of total costs incurred based on milestones achieved , patient enrollment and other events . the majority of our service providers invoice us in arrear s and , to the extent that amounts invoiced differ from our estimates of expenses incurred , we accrue for additional costs . the financial terms of these agreements vary from contract to contract and may result in uneven expenses and payment flows . preclinic al study and clinical trial expenses include : · fees paid to cros , laboratories and consultants in connection with preclinical studies ; · fees paid to cros , clinical trial sites , investigators and consultants in connection with clinical trials ; and · fees paid to contract manufacturers and service providers in connection with the production , testing and packaging of active pharmaceutical ingredients and drug materials for preclinical studies and clinical trials . payments under some of these agreements depend on factors such as the milestones accomplished , including enrollment of certain numbers of patients , site initiation and the completion of clinical trial milestones . to date , we have not experienced any events requiring us to make material adjustments to our accruals for service fees . if we do not identify costs that we have begun to incur or if we underestimate or overestimate the level of services performed or the costs of these services , our actual expenses could differ from our estimates , which could materially affect our results of operations . adjustments to our accruals are recorded as changes in estimates become evident . furthermore , based on amounts invoiced to us by our service providers , we may also record payments made to those providers as prepaid expenses that will be recognized as expense in future periods as services are rendered . our historical research and development expenses have primarily related to obtaining certain licensed compounds and related intellectual property rights from ligand . in may 2014 , we acquired certain rights to a number of research and development programs from ligand . in doing so , we updated our policy on research and development to include the purchase of rights to intangible assets .
| financial condition and results of operations . you should read the following discussion and analysis in conjunction with part ii , “ item 8. financial statements and supplementary data ” included below in this annual report on form 10-k. operating results are not necessarily indicative of results that may occur in future periods . the following discussion and analysis of our financial condition and results of operations contains forward-looking statements that involve a number of risks , uncertainties and assumptions . actual events or results may differ materially from our expectations . important factors that could cause actual results to differ materially from those stated or implied by our forward-looking statements include , but are not limited to , those set forth in part i , “ item 1a . risk factors ” in this annual report on form 10-k. all forward-looking statements included in this annual report on form 10-k are based on information available to us as of the time we file this annual report on form 10-k and , except as required by law , we undertake no obligation to update publicly or revise any forward-looking statements . overview we are a clinical-stage biopharmaceutical company focused on the development of novel , first-in-class or best-in-class therapies for metabolic and endocrine disorders . we have exclusive worldwide rights to a portfolio of five drug candidates in clinical trials or preclinical studies , which are based on small molecules licensed from ligand pharmaceuticals incorporated , or ligand . our lead clinical program is vk5211 , an orally available drug candidate , currently in a phase 2 clinical trial for acute rehabilitation following non-elective hip fracture surgery . hip fracture is a common injury among persons aged 60 and older .
| 7,473 |
operations review an analysis of our consolidated results of operations and of the results in each of our three operating segments , to the extent the segment operating results are helpful to an understanding of our business as a whole , for the three years presented in our financial statements . in this section of md & a , income from continuing operations refers to income from continuing operations attributable to harris corporation common shareholders . liquidity , capital resources and financial strategies an analysis of cash flows , common stock repurchases , dividends , capital structure and resources , contractual obligations , off-balance sheet arrangements , commercial commitments , financial risk management , impact of foreign exchange and impact of inflation . critical accounting policies and estimates a discussion of accounting policies and estimates that require the most judgment and a discussion of accounting pronouncements that have been issued but not yet implemented by us and their potential impact on our financial position , results of operations and cash flows . forward-looking statements and factors that may affect future results cautionary information about forward-looking statements and a description of certain risks and uncertainties that could cause our actual results to differ materially from our historical results or our current expectations or projections . business considerations general we are an international communications and information technology company serving government and commercial markets in more than 150 countries . we are dedicated to developing best-in-class assured communications ® products , systems and services for global markets . our company generates revenue , income and cash flows by developing , manufacturing and selling communications products and software as well as providing related services . we sell directly to our customers , the largest of which are u.s. government customers and their prime contractors , and we utilize agents and intermediaries to sell and market some products and services , especially in international markets . we structure our operations primarily around the products and services we sell and the markets we serve . as previously reported and as also discussed in note 1 : significant accounting policies and note 25 : business segments in the notes , in the third quarter of fiscal 2011 , we realigned our operations to provide increased market focus and address certain high-growth commercial markets . as a result of the realignment , effective for the third quarter of 34 fiscal 2011 , our reportable operating segment structure changed , and we now report the financial results of our continuing operations in the following three operating segments : our rf communications segment , which is unchanged by the realignment and continues to be comprised of ( i ) u.s. department of defense and international tactical communications ( tactical communications ) and ( ii ) public safety and professional communications ; our integrated network solutions segment , which is comprised of ( i ) it services , ( ii ) managed satellite and terrestrial communications solutions , ( iii ) healthcare solutions , ( iv ) cyber integrated solutions and ( v ) broadcast and new media solutions ; and our government communications systems segment , which is now comprised of ( i ) civil programs , ( ii ) defense programs and ( iii ) national intelligence programs . our new reportable operating segment structure reflects that it services , managed satellite and terrestrial communications solutions , healthcare solutions and cyber integrated solutions are no longer under our government communications systems segment , but instead have been realigned with broadcast and new media solutions ( formerly a separate reportable segment called broadcast communications ) to form our new integrated network solutions segment . our rf communications segment did not change . the historical results , discussion and presentation of our operating segments as set forth in this report have been adjusted to reflect the impact of these changes to our reportable operating segment structure for all periods presented in this report . additionally , in the fourth quarter of fiscal 2009 , in connection with the may 27 , 2009 spin-off in the form of a taxable pro rata dividend to our shareholders of all the shares of hstx common stock owned by us , we eliminated our former hstx operating segment . our historical financial results have been restated to account for hstx as discontinued operations for all periods presented in this report , and unless otherwise specified , disclosures in this report relate solely to our continuing operations . see note 3 : discontinued operations in the notes for additional information regarding discontinued operations . financial information with respect to all of our other activities , including corporate costs not allocated to the operating segments or discontinued operations , is reported as part of the unallocated corporate expense or non-operating loss line items in our consolidated financial statements and accompanying notes . value drivers of our businesses and our strategy for achieving value harris ' mission statement is as follows : harris corporation will be the best-in-class global provider of mission-critical assured communications ® systems and services to both government and commercial customers , combining advanced technology and application knowledge. we are committed to our mission statement , and we believe that executing our mission statement creates value . consistent with this commitment to effective execution , we currently focus on these key value drivers : continuing profitable revenue growth in all segments by introducing new technology-based products , expanding our addressable markets and customer base , and investing in international markets and channels ; leveraging technology , know-how and capabilities transfer across business segments ; achieving operating efficiencies and cost reductions by delivering on supply chain and operations excellence ; making strategic acquisitions to enhance and supplement our products and services portfolios andto gain access to new markets ; and maintaining a strong financial foundation . story_separator_special_tag however , the level of repurchases depends on a number of factors , including our financial condition , capital requirements , results of operations , future business prospects and other factors our board of directors may deem relevant . share repurchases are expected to be funded with available cash and commercial paper . repurchases under the new repurchase program may be made through open market purchases , private transactions , transactions structured through investment banking institutions , or any combination thereof . the timing , volume and nature of share repurchases are subject to market conditions , applicable securities laws and other factors and are at our discretion and may be suspended or discontinued at any time . additional information regarding share repurchases during fiscal 2011 and our repurchase programs is set forth above under item 5. market for registrant 's common equity , related stockholder matters and issuer purchases of equity securities of this report . 36 key indicators we believe our value drivers , when implemented , will improve our key indicators of value , such as : 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 average assets ; 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 : fiscal 2011 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 4.7 percent to $ 588.0 million in fiscal 2011 from $ 561.6 million in fiscal 2010 ; income from continuing operations per diluted common share increased 7.5 percent to $ 4.60 in fiscal 2011 from $ 4.28 in fiscal 2010 ; revenue increased 13.8 percent to $ 5.9 billion in fiscal 2011 from $ 5.2 billion in fiscal 2010 ; and income from continuing operations as a percentage of revenue decreased to 9.9 percent in fiscal 2011 from 10.8 percent in fiscal 2010. 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 average assets and return on average equity also represent key measurements of our value drivers : net cash provided by operating activities increased to $ 833.1 million in fiscal 2011 from $ 802.7 million in fiscal 2010 ; return on average assets ( defined as income from continuing operations divided by the two-point average of total assets at the beginning and ending of the fiscal year ) decreased to 10.8 percent in fiscal 2011 from 12.2 percent in fiscal 2010 ; 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 ) decreased to 25.0 percent in fiscal 2011 from 27.7 percent in fiscal 2010. refer to md & a heading liquidity , capital resources and financial strategies below in this report for more information . industry-wide opportunities , challenges and risks department of defense : the dod 's u.s. government fiscal year ( gfy ) 2012 budget proposal reflects continued investment in national security priorities ( including cyber security ) and continues efforts to rebalance military forces to focus on both today 's wars as well as potential future conflicts . building on efforts begun in gfy 2010 , the dod will continue to implement its acquisition reforms and modernize key weapons systems to provide service members with the best technology to meet battlefield needs . we expect the u.s. government to remain committed to funding intelligence , information superiority , special operations , warfighter support and cyber security , although there can be no assurance it will do so . the dod 's $ 671 billion gfy 2012 budget request is approximately 3.1 % less than gfy 2010 enacted levels of $ 692 billion and approximately 5.3 % less than the $ 708 billion gfy 2011 budget request . the gfy 2012 budget request includes $ 553 billion for base defense programs compared with $ 549 billion for base defense programs in the gfy 2011 budget request , and includes $ 118 billion for overseas contingency operations ( oco ) compared with $ 159 billion for oco in the gfy 2011 budget request , reflecting the winding down of military operations in iraq and afghanistan . of the $ 118 billion gfy 2012 budget request for oco , $ 107 billion is to support activities in afghanistan and $ 11 billion is to support activities in iraq . the level of budget amounts allocated to dod procurement accounts ( procurement ) , along with research , development , test and evaluation ( rdt & e ) components of the dod budget , also are an important indicator of spending . the gfy 2012 budget requests for procurement and rdt & e of $ 113 billion and $ 75 billion , respectively , are comparable to the gfy 2011 budget requests of $ 113 billion and $ 76 billion , respectively . additionally , the dod operations and maintenance account ( o & m ) , which contains the bulk of funding for training , logistics , services and other logistical support , is an account of major importance . the dod o & m budget request for gfy 2012 is $ 204 billion compared with the gfy 2011 budget request of $ 200 billion .
| operations review revenue and income from continuing operations replace_table_token_4_th fiscal 2011 compared with fiscal 2010 : the increase in revenue in fiscal 2011 compared with fiscal 2010 was primarily due to revenue from caprock , which we acquired in the first quarter of fiscal 2011 , and strength in international sales in tactical communications in our rf communications segment . the increase in income from continuing operations in fiscal 2011 compared with fiscal 2010 was primarily due to higher operating income in our rf communications segment resulting from higher international sales in tactical communications , partially offset by lower operating income in our integrated network solutions segment , primarily due to integration and other costs associated with our acquisitions of caprock , schlumberger gcs and carefx , and higher interest expense , primarily due to borrowings associated with these acquisitions . the decrease in income from continuing operations as a percentage of revenue in fiscal 2011 compared with fiscal 2010 was primarily due to lower operating income as a percentage of revenue in our integrated network solutions segment , primarily the result of integration and other costs associated with the acquisitions mentioned above . see the interest income and interest expense and discussion of business segments discussions below in this md & a for further information . fiscal 2010 compared with fiscal 2009 : revenue increased in fiscal 2010 compared with fiscal 2009 , primarily due to increases in revenue in our rf communications and integrated network solutions segments , partially offset by a decrease in revenue in our government communications systems segment . fiscal 2010 revenue increased by 17.4 percent and 0.6 percent , respectively , in our rf communications and integrated network solutions segments , and decreased 6.3 percent in our government communications systems segment .
| 7,474 |
on the basis of this assessment , we recorded a charge of $ 23.2 million to income tax expense to record a full valuation allowance against our deferred tax assets as of december 31 , 2013. a significant piece of evidence evaluated was the cumulative loss incurred over the three-year period ended december 31 , 2013. because the valuation allowance will remain in place until we return to profitability , we did not record any tax benefit in 2015 associated with our net loss or other deferred tax assets . we story_separator_special_tag forward-looking statements this report contains forward-looking statements that involve risks and uncertainties . when used in this discussion , we intend the words anticipate , believe , plan , estimate , expect , strive , future , intend , will and similar expressions as they relate to us to identify such forward-looking statements . our actual results could differ materially from the results anticipated in these forward-looking statements as a result of certain factors set forth under risk factors , management 's discussion and analysis of financial condition and results of operations , quantitative and qualitative disclosures about market risk and elsewhere in this form 10-k. risks and uncertainties that could cause actual results to differ include , without limitation , general economic conditions , ongoing losses , competition , loss of key personnel , pricing , brand reputation , acquisitions , new initiatives we undertake , security and information systems , legal liability for website content , merchandise supply problems , failure of third parties to provide adequate service , reliance on centralized customer service , overstocks and merchandise returns , our reliance on a centralized fulfillment center , increases in postage and shipping costs , e-commerce trends , future internet related taxes , our founder 's control of us , litigation , fluctuations in quarterly operating results , consumer trends , customer interest in our products , the effect of government regulation and programs and other risks and uncertainties included in our filings with the securities and exchange commission . we caution you that no forward-looking statement is a guarantee of future performance , and you should not place undue reliance on these forward-looking statements which reflect our views only as of the date of this report . we undertake no obligation to update any forward-looking information . you should read the following discussion and analysis of our financial condition and results of operations in conjunction with the consolidated financial statements and related notes included elsewhere in this document . this section is designed to provide information that will assist readers in understanding our consolidated financial statements , changes in certain items in those statements from year to year , the primary factors that caused those changes and how certain accounting principles , policies and estimates affect the consolidated financial statements . overview and outlook we have two reportable business segments which are aligned based on their products or services : gaiam brand and gaia . gaiam brand segment gaiam is a leader in the markets for yoga , fitness and wellness products and media content . gaiam brands include gaiam , focused on yoga and fitness ; gaiam restore , focused on wellness ; spri focused on fitness ; and our eco-travel business . we develop and market fitness and yoga accessories , apparel , and media under gaiam 's brands . these products are sold primarily through major national retailers in the united states , canada , europe , and other countries , with placement in over 38,000 retail doors worldwide and websites . our products and services are targeted to all levels of yoga and fitness enthusiasts , including professionals . we believe that consumers are attracted to our products because of their design , functional characteristics , and our unique brand heritage . our accessories include yoga mats , bags , straps and blocks , media content including digital media and apps , restorative and massage accessories such as rollers , resistance cords and balance balls , and various other offerings . our comprehensive line of apparel includes pants , shorts , tops and jackets designed around yoga . through our business activities , we seek to position our brand as a trusted source for products that are relevant to our consumers ' active lifestyles . our broad distribution network includes retail , online , and digital channels . our business is vertically integrated from product design and content creation through product development and sourcing , to customer service and distribution . this efficient supply chain enables us to provide quality products at competitive prices for all of our brands . we seek to drive sustainable and profitable growth in this segment by leveraging our brands ' leading market positions and heritage to expand our product offering and distribution channels . we believe that growth in yoga participation , greater awareness of health and wellness , and the success of our retail and online partners is increasing consumer interest in our brands and products , and creates new opportunities for us to expand our offering . recent examples of our brand extension include the 2012 launch of gaiam restore and spri dynamic recovery brands , our at-home rehabilitative and restorative products , and the 2013 launch of our spri cross train line of high-intensity fitness accessories . in the spring of 2015 , we launched a gaiam branded yoga apparel line extending our brand to a new product segment . 16 we recently launched or updated certain websites , evolving our e-commerce experience to focus on engaging customers through digital content , and social and mobile marketing across various devices . with the acquisition of yoga studio , the leading paid yoga app for mobile and tablet devices in the u.s. app store , and the launch of our new meditation studio app , we will continue to develop and leverage our interactive digital strategy as a point of brand engagement . story_separator_special_tag replace_table_token_4_th replace_table_token_5_th 19 ( a ) the losses from discontinued operations during 2015 and the fourth quarter of 2014 relate to cash and non-cash charges incurred in connection with our legal dispute and settlement with cinedigm . ( b ) we reported gains on the sale of our rgse stock during 2014 , the carrying value for which had previously been reduced to zero through the recognition of our portion of rgse 's net losses . we also recognized a gain of $ 0.5 million in connection with the sale of cinedigm corp. class a common stock which we received in connection with the sale of our non-branded entertainment media business to cinedigm corp. in october 2013. quarterly fluctuations in our revenue and operating results are due to a number of factors , including changes in market conditions , the timing of new product introductions and mailings to customers , advertising , acquisitions ( including costs of acquisitions and expenses related to integration of acquisitions ) , divestitures , competition , pricing of products by vendors and expenditures on our systems and infrastructure . the impact on revenue and operating results due to the timing and extent of these factors can be significant . our sales are also affected by seasonal influences . on an aggregate basis , we generate our strongest revenue in the fourth quarter due to increased holiday spending and retailer fitness purchases . critical accounting policies we prepare our consolidated financial statements in conformity with accounting principles generally accepted in the united states , which require us to make judgments , estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes . note 2 to the consolidated financial statements in item 8 of this form 10-k summarizes the significant accounting policies and methods used in the preparation of our consolidated financial statements . we believe the following to be critical accounting policies whose application has a material impact on our financial presentation , and involve a higher degree of complexity , as they require us to make judgments and estimates about matters that are inherently uncertain . allowances for doubtful accounts and product returns we maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments . we make estimates of the collectability of our accounts receivable by analyzing historical bad debts , specific customer creditworthiness , and current economic trends . if the financial condition of our customers were to deteriorate such that their ability to make payments to us was impaired , additional allowances could be required . we record allowances for product returns to be received in future periods at the time we recognize the original sale . we base the amounts of the returns allowances upon historical experience and future expectations . inventory inventory consists primarily of finished goods held for sale and is stated at the lower of cost ( first-in , first-out method ) or market . we identify the inventory items to be written down for obsolescence based on the item 's current sales status and condition . we write down discontinued or slow moving inventories based on an estimate of the markdown required to sell off the inventory . goodwill and other intangibles goodwill represents the excess of the purchase consideration over the estimated fair value of assets acquired less liabilities assumed in a business acquisition . our other intangibles consist of customer related assets . we review goodwill for impairment annually or more frequently if impairment indicators arise on a goodwill reporting unit level . we have the option of first assessing qualitative factors to determine whether events and circumstances indicate that it is more likely than not that the fair value of a goodwill reporting unit is less than its carrying amount . if it is determined that the fair value for a goodwill reporting unit is more likely than not greater than the carrying amount for that goodwill reporting unit , then the two-step impairment test is unnecessary . if it is determined that the two-step impairment test is necessary , then for step one , we compare the estimated fair value of a goodwill reporting unit with its carrying amount , including goodwill . if the estimated fair value of a goodwill reporting unit exceeds its carrying amount , we consider the goodwill of the reporting unit not impaired . if the carrying amount of a goodwill reporting unit exceeds its estimated fair value , we perform the second step of the goodwill impairment test to measure the amount of impairment loss . we use either a comparable market approach or a traditional present value method to test for potential impairment . the process of evaluating the potential impairment of goodwill is highly subjective and requires significant judgment at many points during the analysis . application of alternative assumptions and definitions could yield significantly different results . 20 purchase accounting we account for the acquisition of a controlling interest in a business using the acquisition method . in determining the estimated fair value of certain acquired assets and liabilities , we make assumptions based upon many different factors , such as historical and other relevant information and analyses performed by independent parties . assumptions may be incomplete , and unanticipated events and circumstances may occur that could affect the validity of such assumptions , estimates , or actual results . media library our media library asset represents the fair value of libraries of media acquired through business combinations , the purchase price of media rights to both video and audio titles , and the capitalized cost to produce media products , all of which we market to retailers and to e-commerce and subscription customers . we amortize the fair value of acquired or purchased media titles and content on a straight-line basis over succeeding periods on the basis of their estimated useful lives .
| results of operations year ended december 31 , 2015 compared to year ended december 31 , 2014 net revenue . net revenue increased $ 21.3 million , or 12.8 % , to $ 188.0 million during 2015 from $ 166.7 million during 2014. net revenue in our gaiam brand segment increased $ 17.8 million , or 11.3 % , to $ 174.6 million during 2015 from $ 156.8 million during 2014 , due to the successful launch of our apparel line and additional branded product sales , offset by the $ 7.6 million planned reduction of our catalog business . our eco-travel business , which is part of the gaiam brand segment , grew during the year as a result of improved economic conditions . net revenue in our gaia segment increased $ 3.5 million , or 35.8 % , to $ 13.5 million during 2015 from $ 9.9 million during 2014 due to continued subscriber growth plus increased download and other revenues . cost of goods sold . cost of goods sold increased $ 12.1 million , or 13.2 % , to $ 103.2 million during 2015 from $ 91.2 million during 2014. cost of goods sold in our gaiam brand segment increased $ 11.4 million to $ 101.2 million during 2015 from $ 89.8 million during 2014 and , as a percentage of net revenue , increased to 58.0 % during 2015 from 57.3 % during 2014 , primarily due to slightly lower margins on our new apparel line . cost of goods sold in our gaia segment increased $ 0.6 million to $ 2.0 million during 2015 from $ 1.4 million during 2014 and , as a percentage of net revenue , increased to 15.0 % during 2015 from 13.9 % during 2014 , primarily reflecting subscriber growth and the fixed nature of digital distribution costs . selling and operating expenses .
| 7,475 |
asu 2017-09 is effective for fiscal years beginning after december 15 , 2017. we adopted asu 2017-09 on january 1 , story_separator_special_tag the following discussion should be read in conjunction with our consolidated financial statements and accompanying notes included in part iv , item 15 of this annual report on form 10-k. overview we are an internally managed and self-advised reit primarily engaged in the ownership and operation of office buildings in the united states . we were formed in 1986 under maryland law . the company operates as what is commonly referred to as an umbrella partnership real estate investment trust , or upreit , conducting substantially all of its activities through the operating trust . at december 31 , 2018 , our portfolio consisted of 10 properties ( 18 buildings ) , with a combined 5.1 million square feet for a total undepreciated book value of $ 1.1 billion and a depreciated book value of $ 0.8 billion . we currently have three properties totaling 2.7 million square feet for sale . as of december 31 , 2018 , our overall portfolio was 94.8 % leased . during the year ended december 31 , 2018 , we entered into leases , excluding leasing activity for assets during the quarter in which the asset was sold or classified as held for sale , for 1,145 ,000 square feet , including lease renewals for 268 ,000 square feet and new leases for 877 ,000 square feet . leases entered into during the year ended december 31 , 2018 , including both lease renewals and new leases , had weighted average cash rental rates that were approximately 3.2 % higher than prior rental rates for the same space and weighted average gaap rental rates that were approximately 15.2 % higher than prior rental rates for the same space . the change in gaap rents is different than the change in cash rents due to differences in the amount of rent abatements , the magnitude and timing of contractual rent increases over the lease term , and the years of term for the newly executed leases compared to the prior leases . during the year ended december 31 , 2018 , we sold seven properties ( nine buildings ) with a combined 4.4 million square feet for an aggregate gross sales price of $ 1.0 billion , excluding credits and closing costs . during the year ended december 31 , 2017 , we sold 16 properties ( 37 buildings ) and two land parcels with a combined 6.6 million square feet for an aggregate gross sales price of $ 862.6 million , excluding credits and closing costs . we have generated significant proceeds from our dispositions to date and have cash and cash equivalents and marketable securities of $ 2.7 billion as of december 31 , 2018 . during the year ended december 31 , 2018 , we repaid an aggregate of $ 400.0 million in outstanding term loans and redeemed an aggregate of $ 175.0 million of outstanding unsecured notes . additionally , in january 2019 , certain of our subsidiaries entered into a contract to sell 100 % of the equity interests in the fee simple owner of our 1.3 million square foot property at 1735 market street , for a sales price of $ 451.6 million , excluding credits and closing costs . for more information regarding these transactions , see notes 3 and 20 of the notes to consolidated financial statements included in part iv , item 15 of this annual report on form 10-k. as we have sold assets , our income from operations has also declined . on september 26 , 2018 , our board of trustees declared a special , one-time cash distribution of $ 2.50 per common share/unit to shareholders/unitholders of record on october 9 , 2018. on october 23 , 2018 , we paid this distribution to such shareholders/unitholders in the aggregate amount of $ 304.7 million . we recorded a state income tax provision in the statement of operations for the year ended december 31 , 2018 largely as a result of the taxable gain generated by sales of properties . we have engaged cbre , inc. ( cbre ) to provide property management services for our properties . we pay cbre a property-by-property management fee and may engage cbre from time-to-time to perform project management services , such 26 as coordinating and overseeing the completion of tenant improvements and other capital projects at the properties . we reimburse cbre for certain expenses incurred in the performance of its duties , including certain personnel and equipment costs . for the years ended december 31 , 2018 and 2017 , we incurred expenses of $ 9.2 million and $ 17.9 million , respectively , related to our property management agreement with cbre , for property management fees , typically calculated as a percentage of the properties revenues , and salary and benefits reimbursements for property personnel , such as property managers , engineers and maintenance staff . as of december 31 , 2018 and 2017 , we had amounts payable pursuant to these services of $ 0.8 million and $ 1.8 million , respectively . we continue to execute our office repositioning strategy to own and acquire at a discount to replacement cost high-quality , multi-tenant office assets in markets and sub-markets with favorable long-term supply and demand fundamentals . we expect our efforts in the office sector to continue to be primarily focused on larger buildings in central business districts and major urban areas that offer an attractive quality of life , including opportunities for tenants to live and play in close proximity to where they work , with a preference for markets that have above average limitations on new supply . we currently target such efforts towards acquiring portfolios of properties or pursuing other large acquisitions as opposed to purchasing individual properties , although we may acquire individual properties if opportunities to do so are consistent with our strategy . story_separator_special_tag ( 2 ) annualized rental revenue is annualized contractual rents from our tenants pursuant to leases which have commenced as of december 31 , 2018 , plus estimated recurring expense reimbursements ; excludes lease value amortization , straight line rent adjustments , abated ( free ) rent periods and parking revenue . we calculate annualized rental revenue by aggregating the recurring billings outlined above for the most recent month during the quarter reported , adding abated rent , and multiplying the sum by 12 to provide an estimation of near-term potentially-recurring revenues . annualized rental revenue is a forward-looking non-gaap measure . annualized rental revenue can not be reconciled to a comparable gaap measure without unreasonable efforts , primarily due to the fact that it is calculated from the billings of tenants in the most recent month at the most recent rental rates during the quarter reported , whereas historical gaap measures include billings from a potentially different group of tenants over multiple months at potentially different rental rates . ( 3 ) during the third quarter of 2018 , an affiliate of amazon.com , inc. entered into a new 16-year lease for 429,012 square feet , including all of the expedia , inc. space . the lease commences in 2020 . ( 4 ) georgetown university 's leased space includes 111,600 square feet that are sublet to another tenant . during the fourth quarter of 2017 , the other tenant committed to lease this space through september 30 , 2037. the lease commences in 2019 . ( 5 ) formerly known as statoil oil & gas lp . ( 6 ) 67,063 square feet of sunoco 's space has been leased by other tenants with a weighted-average expiration in mid-2026 . these leases commence in 2020. financing activities on december 26 , 2018 , we terminated our credit agreement and recognized a loss on early extinguishment of debt of $ 0.2 million from the write off of unamortized deferred financing fees . on december 17 , 2018 , we repaid $ 4.9 million of mortgage debt at 97 newberry road and recognized a loss on early extinguishment of debt of $ 0.6 million for the year ended december 31 , 2018 from prepayment fees and the write off of unamortized deferred financing fees . on may 4 , 2018 , we redeemed at par the total $ 400.0 million outstanding under our 5-year and 7-year term loans and recognized a loss on early extinguishment of debt of $ 1.5 million from the write off of unamortized deferred financing fees . on march 7 , 2018 , we redeemed at par all $ 175.0 million of our 5.75 % senior unsecured notes due 2042 and recognized a 29 loss on early extinguishment of debt of $ 4.9 million from the write off of unamortized deferred financing fees . for more information regarding our financing sources and activities , please see the section captioned “ liquidity and capital resources—our investment and financing liquidity and resources ” below . story_separator_special_tag deferred financing fees related to our repayment of $ 4.9 million of mortgage debt at 97 newberry road and the write off of unamortized deferred financing fees related to our termination of the credit agreement . the loss on early extinguishment of debt of $ 0.5 million in the 2017 period reflects prepayment fees and the write off of unamortized deferred financing fees , net of the write off of an unamortized premium related to our repayment at par of mortgage debt at parkshore plaza , the write off of unamortized deferred 31 financing fees and the write off of an unamortized discount related to our repayment at par of our 6.65 % senior unsecured notes due 2018 and prepayment fees and the write off of unamortized deferred financing fees related to our repayment of mortgage debt at 33 stiles lane . gain on sale of properties , net . gain on sale of properties , net increased $ 235.9 million in the 2018 period , compared to the 2017 period . gain on sale of properties , net in the 2018 period primarily relates to the following ( dollars in thousands ) : replace_table_token_9_th gain on sale of properties , net in the 2017 period primarily relates to the following ( dollars in thousands ) : replace_table_token_10_th income tax expense . income tax expense increased $ 2.7 million , or 531.2 % , in the 2018 period , compared to the 2017 period , primarily due to the state and local taxes incurred upon the sale of properties . net income attributable to noncontrolling interest . in 2018 and 2017 , we granted ltip units to certain of our trustees and employees . as these ltip units vest , they automatically convert to operating partnership units ( op units ) . the net income attributable to noncontrolling interest of $ 95,000 in the 2018 period and $ 10,000 in the 2017 period relates to the allocation of net income to the ltip/op unit holders . 32 results of operations year ended december 31 , 2017 , compared to year ended december 31 , 2016 replace_table_token_11_th ( 1 ) comparable properties consist of 16 properties ( 26 buildings ) we owned continuously from january 1 , 2016 to december 31 , 2017 . ( 2 ) other properties consist of properties sold or classified as held for sale as of the end of the period . ( 3 ) we calculate net operating income , or noi , as shown above . we define noi as income from our real estate including lease termination fees received from tenants less our property operating expenses . noi excludes amortization of capitalized tenant improvement costs and leasing commissions . we consider noi to be an appropriate supplemental measure to net income because it may help both investors and management to understand the operations of our properties .
| results of operations year ended december 31 , 2018 compared to year ended december 31 , 2017 replace_table_token_8_th ( 1 ) comparable properties consist of 10 properties ( 18 buildings ) we owned continuously from january 1 , 2017 to december 31 , 2018 . ( 2 ) other properties consist of properties sold or classified as held for sale as of the end of the period . ( 3 ) we calculate net operating income , or noi , as shown above . we define noi as income from our real estate including lease termination fees received from tenants less our property operating expenses . noi excludes amortization of capitalized tenant improvement costs and leasing commissions . we consider noi to be an appropriate supplemental measure to net income because it may help both investors and management to understand the operations of our properties . we use noi internally to evaluate property level performance , and we believe that noi provides useful information to investors regarding our results of operations because it reflects only those income and expense items that are incurred at the property level and may facilitate comparisons of our operating performance between periods and with other reits . noi does not represent cash generated by operating activities in accordance with gaap and should not be considered as an alternative to net income , net income attributable to equity commonwealth common shareholders , operating income or cash flow from operating activities , determined in accordance with gaap , or as an indicator of our financial performance or liquidity , nor is this measure necessarily indicative of sufficient cash flow to fund all of our needs .
| 7,476 |
nature of operations and summary of significant accounting policies in the notes to consolidated financial statements included as item 8 of this annual report on form 10-k for additional detail . results of operations – 2012 net income available to stockholders was $ 40.6 million , or $ 1.41 per fully diluted common share , an increase of $ 31.6 million compared to $ 9.0 million , or $ 0.34 per fully diluted common share in 2011 . on february 10 , 2012 , the bank assumed substantially all the deposits and certain other liabilities and acquired certain assets of scb bank , from the fdic as the receiver for scb bank . this transaction generated a pre-tax gain of $ 9.1 million , or $ 0.21 per common share after tax . details of this transaction are included in note 2. purchase and assumption , included within the notes to consolidated financial statements included as item 8 of this annual report on form 10-k. in 2011 , an after-tax loss of $ 12.3 million , or $ 0.47 per share , was recorded due to the accounting treatment for the extinguishment of trust preferred securities . the extinguishment of the trust preferred securities was done in conjunction with the redemption of 69,600 shares of the corporation 's fixed rate cumulative perpetual preferred stock , under the capital purchase program , for $ 69.6 million , the issuance of 90,783 shares of the corporation 's senior non-cumulative perpetual preferred stock , through the small business lending fund , for $ 90.8 million , and the issuance of 2,822,000 shares of the corporation 's common stock in exchange for gross proceeds of $ 21.2 million . the details are discussed within note 14. stockholders ' equity of the notes to consolidated financial statements included as item 8 of this annual report on form 10-k. as of december 31 , 2012 , total assets equaled $ 4.3 billion , an increase of $ 131.7 million from december 31 , 2011 . loans and investments , the corporation 's primary earning assets , totaled $ 3.8 billion , up slightly from the prior year 's total of $ 3.7 billion . while investments decreased $ 72.0 million , loans and loans held for sale increased $ 193.2 million . the bank acquired $ 93.8 million in loans as a result of the scb transaction . additional details of these changes are included within the “ earning assets ” section of management 's discussion and analysis of financial condition and results of operations included as item 7 of this annual report on form 10-k. the corporation 's allowance for loan losses totaled $ 69.4 million as of year end 2012 . the allowance provides 129.9 percent coverage of all non-accrual loans and 2.37 percent of total loans . details of the allowance for loan and lease losses and non-performing loans are discussed within the “ loan quality ” and “ provision/allowance for loan losses ” sections of management 's discussion and analysis of financial condition and results of operations included as item 7 of this annual report on form 10-k. taxes , both current and deferred , decreased in 2012 by $ 5.6 million . this change is primarily driven from decreases in the deferred tax assets associated with the deductibility of the provision for loan losses and pensions and other employee benefits , the utilization of federal tax credit carryforwards , and the increase in the deferred tax liability associated with the gain on the fdic modified whole bank transaction . details of the change is discussed within the “ income tax ” section of management 's discussion and analysis of financial condition and results of operations included as item 7 of this annual report on form 10-k. deposits increased $ 211.7 million from december 31 , 2011 . as part of the scb transaction , the bank assumed deposits of $ 125.9 million . the bank also completed repayment of $ 79.0 million of senior notes ( the `` notes '' ) that matured on march 30 , 2012. the notes were originally issued by the bank on march 31 , 2009 and were guaranteed by the fdic under its temporary liquidity guarantee program . additionally , on august 22 , 2012 , the corporation exercised its option to redeem the $ 4,124,000 subordinated debenture associated with the cnbc statutory trust i. the redemption price was 104.59. the debenture had carried a fixed interest rate of 10.2 percent . additional details of the corporation 's borrowings are discussed in note 10. borrowings of the notes to consolidated financial statements included as item 8 of this annual report on form 10-k. the corporation was able to maintain all regulatory capital ratios in excess of the regulatory definition of “ well-capitalized ” as discussed in the “ capital ” section of management 's discussion and analysis of financial condition and results of operations included as item 7 of this annual report on form 10-k. 31 part ii : item 7. and item 7a . management 's discussion and analysis of financial condition and results of operations net interest income net interest income is the primary source of the corporation 's earnings . net interest margin is a function of net interest income and the level of average earning assets . the following table presents the corporation 's interest income , interest expense , and net interest income as a percent of average earning assets for the three-year period ending in 2012 . story_separator_special_tag see additional information on the corporation 's and bank 's capital ratios in note 15. regulatory capital , in the notes to consolidated financial statements included as item 8 of this annual report on form 10-k. tier i regulatory capital consists primarily of total stockholders ' equity and subordinated debentures issued to business trusts categorized as qualifying borrowings , less non-qualifying intangible assets and unrealized net securities gains or losses . the corporation 's tier i capital to average assets ratio was 11.03 percent and 10.17 percent at december 31 , 2012 and 2011 , respectively . at december 31 , 2012 , the corporation had a tier i risk-based capital ratio of 14.15 percent and total risk-based capital ratio of 16.34 percent , compared to 13.92 percent and 16.54 percent , respectively , at december 31 , 2011 . regulatory capital guidelines require a tier i risk-based capital ratio of at least 4 percent and a total risk-based capital ratio of at least 8 percent . on june 30 , 2010 , the corporation completed an exchange of 46,400 shares of the corporation 's series a preferred stock held by the treasury for $ 46,400,000 in aggregate principal amount of trust preferred securities issued through the corporation 's wholly owned subsidiary trust , first merchants capital trust iii . the trust preferred securities qualified as tier 1 capital , subject to the 25 percent aggregate limitation on tier 1 capital for these and similar securities . after the completed exchange , the treasury continued to hold 69,600 shares of series a preferred stock along with a warrant to purchase up to 991,453 shares of the corporation 's common stock ( “ the warrant ” ) , which was also issued pursuant to the troubled asset relief program ( “ tarp ” ) . on september 9 , 2011 , the corporation entered into securities purchase agreements with two investors , pursuant to which the corporation sold an aggregate of 2,822,000 shares of its common stock in exchange for gross proceeds of approximately $ 21.2 million . the purchase price for each share of common stock was $ 7.50. the common stock was issued in a direct private placement exempt from registration pursuant to section 4 ( 2 ) of the securities act of 1933 , as amended , and rule 506 of regulation d promulgated thereunder . on september 22 , 2011 , the corporation entered into a securities purchase agreement with the treasury , pursuant to which the corporation issued 90,782.94 shares of the corporation 's senior non-cumulative perpetual preferred stock , series b ( the “ series b preferred stock ” ) , having a liquidation amount per share equal to $ 1,000 , for a total purchase price of $ 90,782,940. the purchase agreement was entered into , and the series b preferred stock was issued , pursuant to the sblf program , a $ 30 billion fund established under the small business jobs act of 2010 , that encourages lending to small businesses by providing capital to qualified community banks with assets of less than $ 10 billion . also on september 22 , 2011 , the corporation entered into and consummated two letter agreements with the treasury , pursuant to which the corporation redeemed , out of the proceeds of the issuance of the series b preferred stock in the amount of $ 90,782,940 and cash of $ 25,813,171 ( of which $ 21,165,000 was raised through the private placement of the corporation 's common stock on september 9 , 2011 ) for an aggregate redemption price of $ 116,596,111 , including accrued but unpaid dividends to the date of redemption : ( i ) the remaining 69,600 shares of the corporation 's series a preferred stock , and ( ii ) all 46,400 capital securities held by the treasury . the series b preferred stock is entitled to receive non-cumulative dividends , payable quarterly , on each january 1 , april 1 , july 1 and october 1 , beginning october 1 , 2011. the purchase agreement defines the dividend rate as a percentage of the liquidation amount , and can fluctuate on a quarterly basis during the first ten quarters during which the series b preferred stock is outstanding , based upon changes in the level of qualified small business lending ( “ qsbl ” ) by the bank . 34 part ii : item 7. and item 7a . management 's discussion and analysis of financial condition and results of operations the series b preferred stock is non-voting , except in limited circumstances . in the event that the corporation misses five dividend payments , whether or not consecutive , the holder of the series b preferred stock will have the right , but not the obligation , to appoint a representative as an observer on the corporation 's board of directors . in the event that the corporation misses six dividend payments , whether or not consecutive , and if the then outstanding aggregate liquidation amount of the series b preferred stock is at least $ 25,000,000 , then the holder of the series b preferred stock will have the right to designate two directors to the board of directors of the corporation . the series b preferred stock may be redeemed at any time at the corporation 's option , at a redemption price of 100 percent of the liquidation amount plus accrued but unpaid dividends to the date of redemption for the current period , subject to the approval of its federal banking regulator . on january 3 , 2013 , the corporation redeemed 22,695.94 shares of the series b preferred stock .
| income tax expense income tax expense in 2012 was $ 15,867,000 on pre-tax income of $ 60,989,000 , or 26.0 percent . for the same period in 2011 , the income tax expense was $ 8,655,000 on pre-tax income of $ 33,907,000. additional details are discussed within the “ income taxes ” section of the management 's discussion and analysis of financial condition and results of operations included as item 7 of this annual report on form 10-k. 32 part ii : item 7. and item 7a . management 's discussion and analysis of financial condition and results of operations results of operations – 2011 as of december 31 , 2011 , total assets equaled $ 4.2 billion , an increase of $ 2.2 million from december 31 , 2010. loans and investments , the corporation 's primary earning assets , totaled $ 3.7 billion , consistent with the prior year 's total of $ 3.7 billion . while loans decreased $ 126 million , investment securities increased $ 120 million . excess liquidity mainly created by the decline in the loan portfolio was used to increase the investment securities portfolio . details of these changes are included within the “ earning assets ” section of management 's discussion and analysis of financial condition and results of operations included as item 7 of this annual report on form 10-k. the allowance for loan and lease losses declined by $ 12.1 million during 2011 , as the credit quality of the corporation 's loan portfolio improved throughout the year . details of the allowance for loan and lease losses and non-performing loans are discussed within the “ loan quality ” and “ provision/allowance for loan losses ” sections of management 's discussion and analysis of financial condition and results of operations included as item 7 of this annual report on form 10-k. in 2011 , the cash surrender value of life insurance increased by $ 27.6 million .
| 7,477 |
investments fixed maturities investment in debt securities at december 31 , 2018 and 2017 consists mainly of obligations of government‑sponsored enterprises , u.s. treasury securities and obligations of u.s. government instrumentalities , obligations of the commonwealth of puerto rico and its instrumentalities , municipal securities , corporate bonds , residential mortgage-backed securities , and collateralized mortgage obligations . the company classifies its debt securities in one of two categories : available-for-sale or held-to-maturity . securities classified as held-to-maturity are those securities in which the company has the ability and intent to hold until maturity . all other securities not included in held-to-maturity are classified as available-for-sale . available-for-sale securities are recorded at fair value . the fair values of debt securities ( both available-for-sale and held-to-maturity investments ) are based on quoted market prices for those or similar investments at the reporting date . held-to-maturity story_separator_special_tag this financial discussion contains an analysis of our consolidated financial position and financial performance as of december 31 , 2018 and 2017 , and consolidated results of operations for 2018 , 2017 and 2016. references to the terms `` we '' , `` our '' or `` us '' used throughout this management 's discussion and analysis of financial condition and results of operations ( “ md & a ” ) , refer to tsm and unless the context otherwise requires , its direct and indirect subsidiaries . this analysis should be read in its entirety and in conjunction with the consolidated financial statements , notes and tables included elsewhere in this annual report on form 10-k. the structure of our md & a is as follows : i. overview 57 2018 consolidated highlights 58 overview details 58 ii . membership 61 iii . results of operations 62 consolidated operating results 62 managed care segment operating results 65 life segment operating results 68 property and casualty segment operating results 69 iv . liquidity and capital resources 71 v. critical accounting estimates 75 vi . recently issued accounting standards 84 i. overview we are one of the most significant players in the managed care industry in puerto rico and have 60 years of experience in this industry . we offer a broad portfolio of managed care and related products in the commercial , medicare , and the government of puerto rico health insurance plan ( similar to medicaid ) ( “ medicaid ” or “ the government health plan ” ) markets . in the commercial market we offer products to corporate accounts , u.s. federal government employees , local government employees , individual accounts and medicare supplement . we market our managed care products through an extensive network of independent agents and brokers located throughout puerto rico , as well as an internal salaried sales force . medicaid is funded by the government of puerto rico and the u.s. government . page 57 we have the exclusive right to use the bcbs name and mark throughout puerto rico , the u.s. virgin islands , costa rica , the british virgin islands and anguilla . as of december 31 , 2018 we serve approximately 876,000 members across all regions of puerto rico . for the years ended december 31 , 2018 and 2017 respectively , our managed care segment represented approximately 92 % of our total consolidated premiums earned , net . we also participate in the life and property and casualty insurance markets in puerto rico . we participate in the managed care market through our subsidiaries , tss , tsb and tsa . tss , tsa , and tsb are bcbsa licensees . we participate in the life insurance market through our subsidiary , tsv , and in the property and casualty insurance market through our subsidiary , tsp . the commissioner of insurance of the government of puerto recognizes only statutory accounting practices for determining and reporting the financial condition and results of operations of an insurance company , for determining its solvency under the puerto rico insurance laws , and for determining whether its financial condition warrants the payment of a dividend to its stockholders . no consideration is given by the commissioner of insurance of puerto rico to financial statements prepared in accordance with u.s. generally accepted accounting principles ( “ gaap ” ) in making such determinations . see note 25 , statutory accounting , of the notes to consolidated financial statements , included in “ item 8 , financial statements and supplementary data ” , of this annual report on form 10-k. 2018 consolidated highlights key developments in our business during 2018 are described below : · consolidated premiums earned , net increased 4.0 % year over year , to $ 2.9 billion , primarily reflecting higher managed care premiums ; · managed care premiums increased 3.8 % when compared to last year , primarily reflecting growth in medicare premiums following the company 's achievement of a four-star rated medicare advantage hmo contract this year , resulting in a 5 % bonus applied to the benchmark used in the premium calculation , as well as an increase in the 2018 medicare reimbursement rates . this increase was partially offset by lower membership . · consolidated claims for the year were $ 2.5 billion , up 7.4 % over last year , primarily reflecting the $ 128.7 million unfavorable prior period reserve development in the property and casualty segment related to hurricane maria losses . hurricane maria was a category 4 hurricane that impacted puerto rico in september 2017. in addition , in 2017 the managed care segment experienced significantly lower utilization in the aftermath of hurricanes irma and maria . the consolidated loss ratio was up 280 basis points , to 86.0 % , and the mlr decreased 110 basis points , to 84.5 % . · consolidated operating expenses for the year were $ 554.7 million and the operating expense ratio was 18.8 % . story_separator_special_tag claims incurred also include claims incurred in our life and property and casualty segments . each segment 's results of operations depend to a significant extent on our ability to accurately predict and effectively manage claims and losses . a portion of the claims incurred for each period consists of claims reported but not paid during the period , as well as a management and actuarial estimate of claims incurred but not reported during the period . the mlr , which is calculated by dividing managed care claims incurred by managed care premiums earned , net is one of our primary management tools for measuring these costs and their impact on our profitability . the mlr is affected by the cost and utilization of services . the cost of services is affected by many factors , in particular our ability to negotiate competitive rates with our providers . the cost of services is also influenced by inflation and new medical discoveries , including new prescription drugs , therapies and diagnostic procedures . utilization rates , which reflect the extent to which beneficiaries utilize healthcare services , significantly influence our medical costs . the level of utilization of services depends in large part on the age , health and lifestyle of our members , among other factors . as the mlr is the ratio of claims incurred to premiums earned , net , it is affected not only by our ability to contain cost trends but also by our ability to increase premium rates to levels consistent with or above medical cost trends . we use mlrs both to monitor our management of healthcare costs and to make various business decisions , including what plans or benefits to offer and our selection of healthcare providers . operating expenses . operating expenses include commissions to external brokers , general and administrative expenses , cost containment expenses such as case and disease management programs , and depreciation and amortization . the operating expense ratio is calculated by dividing operating expenses by premiums earned , net plus administrative service fees . a significant portion of our operating expenses are fixed costs . accordingly , it is important that we maintain certain level of volume of business in order to compensate for the fixed costs . significant changes in our volume of business will affect our operating expense ratio and results of operations . we also have variable costs , which vary in proportion to changes in volume of business . page 60 ii . membership our results of operations depend in large part on our ability to maintain or grow our membership . in addition to driving revenues , membership growth is necessary to successfully introduce new products , maintain an extensive network of providers and achieve economies of scale . our ability to maintain or grow our membership is affected principally by the competitive environment , the economy , and general market conditions . the following table sets forth selected membership data as of the dates set forth below : replace_table_token_7_th ( 1 ) commercial membership includes corporate accounts , self-funded employers , individual accounts , medicare supplement , federal government employees and local government employees . page 61 iii . results of operations consolidated operating results the following table sets forth our consolidated operating results for the years ended december 31 , 2018 , 2017 and 2016. further details of the results of operations of each reportable segment are included in the analysis of operating results for the respective segments . replace_table_token_8_th year ended december 31 , 2018 compared with the year ended december 31 , 2017 operating revenues premiums earned , net increased by $ 111.7 million , or 4.0 % , to $ 2.9 billion . this increase primarily reflects higher premiums in the managed care segment by $ 99.1 million . most of the growth in managed care premiums was experienced in the medicare business , reflecting the achievement of a four-star rated medicare advantage hmo contract this year , resulting in a 5 % bonus applied to the benchmark used in the premium calculation , as well as an increase in the 2018 medicare reimbursement rates . this increase was partially offset by lower managed care membership . administrative service fees decreased $ 1.8 million , or 10.9 % , mainly due to lower membership enrolled in this business . net investment income increased $ 10.3 million , or 20.0 % , to $ 61.9 million as a result of higher invested balances and interest rates . page 62 net unrealized investment losses on equity investments the $ 36.5 million in consolidated net unrealized investment losses on equity investments reflects the impact of new accounting guidance implemented effective january 1 , 2018 , which requires the change in unrealized gain ( loss ) of equity investments , previously recorded through comprehensive income , to be recorded through earnings . claims incurred consolidated claims incurred increased by $ 174.5 million , or 7.4 % , to $ 2.5 billion , mostly driven by an increase in the property and casualty segment gross losses related to hurricane maria , a category 4 hurricane that impacted puerto rico in september 2017 , causing the segment to exceed its applicable catastrophe reinsurance coverage limits and resulting in $ 128.7 million unfavorable reserve development recorded in 2018. in addition , in 2017 the managed care segment experienced significantly lower utilization following the hurricanes that occurred during that year , this hurricane-related drop in utilization is estimated to have lowered the managed care segment 's claims by approximately $ 55 million . the 2017 period also includes $ 14.8 million of losses related to hurricanes irma and maria recognized by the property and casualty segment . the consolidated loss ratio increased by 280 basis points to 86.0 % . operating expenses consolidated operating expenses increased by $ 77.5 million , or 16.2 % , to $ 554.7 million .
| life segment operating results replace_table_token_10_th year ended december 31 , 2018 compared with the year ended december 31 , 2017 operating revenues premiums earned , net increased by $ 6.8 million , or 4.2 % to $ 168.6 million , mainly as the result of higher sales and improved policy retention in the individual life and cancer lines of business . policy benefits and claims incurred policy benefits and claims incurred increased by $ 11.7 million , or 13.4 % , to $ 99.0 million , mostly resulting from higher number of deaths benefits paid in the individual life line of business , an increased average cost of claims in the cancer line of business , and higher actuarial reserves following improved portfolio persistency . the segment 's loss ratio increased 470 basis points , to 58.7 % . underwriting and other expenses decrease in underwriting and other expenses of $ 4.6 million , or 5.8 % , to $ 75.3 million mostly results from a lower amortization of deferred acquisition costs and value of business acquired assets reflecting the segment 's improved portfolio persistency . as a result , the segment 's operating expense ratio improved to 44.7 % , or 470 basis points . year ended december 31 , 2017 compared with the year ended december 31 , 2016 operating revenues premiums earned , net increased by $ 4.9 million , or 3.1 % to $ 161.8 million , as the result of premium growth in the segment 's individual life and cancer lines of business , as well as growth in the costa rica operations . page 68 policy benefits and claims incurred policy benefits and claims incurred increased by $ 0.4 million , or 0.5 % , to $ 87.3 million , mostly reflecting a higher volume of business during the year , particularly in the cancer and individual life lines of business , which claims increased by $ 2.7 million , offset by a decrease of $ 2.3 million in actuarial reserves .
| 7,478 |
the amendments are effective for fiscal years , and interim periods within those years , beginning after december 31 story_separator_special_tag forward-looking statements and factors that could affect future results certain statements contained in this annual report on form 10-k that are not statements of historical fact constitute forward-looking statements within the meaning of the private securities litigation reform act of 1995 ( “ act ” ) , notwithstanding that such statements are not specifically identified as such . in addition , certain statements may be contained in the company 's future filings with the sec , in press releases , and in oral and written statements made by or with the approval of the corporation that are not statements of historical fact and constitute forward-looking statements within the meaning of the act . examples of forward-looking statements include , but are not limited to : ( i ) projections of revenues , expenses , income or loss , earnings or loss per common share , the payment or nonpayment of dividends , capital structure and other financial items ; ( ii ) statements of plans , objectives and expectations of first defiance or its management or board of directors , including those relating to products or services ; ( iii ) statements of future economic performance ; and ( iv ) statements of assumptions underlying such statements . words such as “ believes ” , “ anticipates ” , “ expects ” , “ intends ” , “ targeted ” , “ continue ” , “ remain ” , “ will ” , “ should ” , “ may ” and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements . forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements . factors that could cause actual results to differ from those discussed in the forward-looking statements include , but are not limited to : · local , regional , national and international economic conditions and the impact they may have on the company and its customers and the company 's assessment of that impact . · volatility and disruption in national and international financial markets . · government intervention in the u.s. financial system . · changes in the level of non-performing assets and charge-offs . · changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements . · the effects of and changes in trade and monetary and fiscal policies and laws , including the interest rate policies of the federal reserve board . · inflation , interest rate , securities market and monetary fluctuations . · political instability . · acts of god or of war or terrorism . · the timely development and acceptance of new products and services and perceived overall value of these products and services by users . · changes in consumer spending , borrowing and saving habits . · changes in the financial performance and or condition of the company 's borrowers . · technological changes including core system conversions . · acquisitions and integration of acquired businesses . · the ability to increase market share and control expenses . · changes in the competitive environment among financial holding companies and other financial service providers . · the effect of changes in laws and regulations ( including laws and regulations concerning taxes , banking , securities and insurance ) with which the company and the subsidiaries must comply . - 37 - · the effect of changes in accounting policies and practices , as may be adopted by the regulatory agencies , as well as the public company accounting oversight board , the financial accounting standards board and other accounting standard setters . · the costs and effects of legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews . · greater than expected costs or difficulties related to the integration of new products and lines of business . · the company 's success at managing the risks involved in the foregoing items . forward-looking statements speak only as of the date on which such statements are made . the company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events . the following section presents information to assess the financial condition and results of operations of first defiance . this section should be read in conjunction with the consolidated financial statements and the supplemental financial data contained elsewhere in this annual report on form 10-k. overview first defiance is a unitary thrift holding company that conducts business through its subsidiaries , first federal , first insurance and first defiance risk management . first federal is a federally chartered stock savings bank that provides financial services to communities based in northwest ohio , northeast indiana , and southeastern michigan where it operates 32 full service banking centers in 12 northwest ohio counties , 1 northeast indiana county , and 1 southeastern michigan county . first federal provides a broad range of financial services including checking accounts , savings accounts , certificates of deposit , real estate mortgage loans , commercial loans , consumer loans , home equity loans and trust and wealth management services through its extensive branch network . first insurance sells a variety of property and casualty , group health and life and individual health and life insurance products . first insurance is an insurance agency that does business in the defiance , bryan , bowling green , maumee and oregon , ohio areas . on july 1 , 2011 , the company completed its acquisition of payak-dubbs insurance agency , inc. ( “ pdi ” ) , an independent property and casualty insurance agency with two office locations based in maumee , ohio and oregon , ohio for a cash price of $ 4.8 million . story_separator_special_tag all properties that are moved into the other real estate owned ( “ oreo ” ) category are supported by current appraisals , and the oreo is carried at the lower of cost or fair value , which is determined based on appraised value less first federal 's estimate of the liquidation costs . first federal does not adjust any appraisals upward without written documentation of this valuation change from the appraiser . when setting reserves and charge offs on classified loans , appraisal values may be discounted downward based upon first federal 's experience with liquidating similar properties . all loans over 90 days past due and or on non-accrual are classified as non-performing loans . non-performing status automatically occurs in the month in which the 90 day delinquency occurs . as stated above , once a collateral dependent loan is identified as non-performing , first federal generally gets an appraisal . appraisals are received within approximately 60 days after they are requested . the first federal loan loss reserve committee reviews the amount of each new appraisal and makes any necessary charge off decisions at its meeting prior to the end of each quarter . any partially charged-off collateral dependent loans are considered non-performing , and as such , would need to show an extended period of time with satisfactory payment performance as well as cash flow coverage capability supported by current financial statements before first federal will consider an upgrade to performing status . first federal may consider moving the loan to accruing status after approximately six months of satisfactory payment performance . for loans where first federal determines that an updated appraisal is not necessary , other means are used to verify the value of the real estate , such as recent sales of similar properties on which first federal had loans as well as calls to appraisers , brokers , realtors and investors . first federal monitors and tracks its loan to value quarterly to determine accuracy and any necessary charge offs . based on these results , changes may occur in the processes used . loan modifications constitute a troubled debt restructuring if first federal for economic or legal reasons related to the borrower 's financial difficulties grants a concession to the borrower that it would not otherwise consider . for loans that are considered troubled debt restructurings , first federal either computes the present value of expected future cash flows discounted at the original loan 's effective interest rate or it may measure impairment based on the fair value of the collateral . for those loans measured for impairment utilizing the present value of future cash flows method , any discount is carried as a reserve in the allowance for loan and lease losses . for those loans measured for impairment utilizing the fair value of the collateral , any shortfall is charged off . as of december 31 , 2013 and december 31 , 2012 , first federal bank had $ 27.6 million and $ 28.2 million , respectively , of loans that were still performing and which were classified as troubled debt restructurings . - 40 - allowance for loan losses the allowance for loan losses represents management 's assessment of the estimated probable incurred credit losses in the loan portfolio at each balance sheet date . management analyzes the adequacy of the allowance for loan losses regularly through reviews of the loan portfolio . consideration is given to economic conditions , changes in interest rates and the effect of such changes on collateral values and borrower 's ability to pay , changes in the composition of the loan portfolio and trends in past due and non-performing loan balances . the allowance for loan losses is a material estimate that is susceptible to significant fluctuation and is established through a provision for loan losses based on management 's evaluation of the inherent risk in the loan portfolio . in addition to extensive in-house loan monitoring procedures , the company utilizes an outside party to conduct an independent loan review of all commercial loan and commercial real estate loan relationships that exceed $ 1 million of aggregate exposure over a twelve month period . management utilizes the results of this outside loan review to assess the effectiveness of its internal loan grading system as well as to assist in the assessment of the overall adequacy of the allowance for loan losses associated with these types of loans . the provision for loan losses is determined by management as the amount to be added to the allowance for loan losses after net charge-offs have been deducted to bring the allowance to a level which , in management 's best estimate , is necessary to absorb incurred credit losses within the existing loan portfolio in the normal course of business . the allowance for loan loss is made up of two basic components . the first component is the specific allowance in which the company sets aside reserves based on the analysis of individual credits that are cash flow dependent , yet there is a discount between the present value of the future cash flows and the carrying value . this was $ 1.4 million at december 31 , 2013. the second component is the general reserve . the general reserve is used to record loan loss reserves for groups of homogenous loans in which the company estimates the losses incurred in the portfolios based on quantitative and qualitative factors . due to the uncertainty of risks in the loan portfolio , the company 's judgment on the amount of the allowance necessary to absorb loans losses is approximate . due to regulatory guidance , the company no longer carries specific reserves on collateral dependent loans , and instead usually charges off any shortfall .
| summary first defiance reported net income of $ 22.2 million for the year ended december 31 , 2013 compared to $ 18.7 million and $ 15.5 million for the years ended december 31 , 2012 and 2011 , respectively . net income applicable to common shares was $ 22.2 million in 2013 compared with $ 18.0 million in 2012 and $ 13.5 million in 2011. on a diluted per common share basis , first defiance earned $ 2.19 in 2013 , $ 1.81 in 2012 and $ 1.42 in 2011. first defiance 's 2013 and 2012 net income of $ 22.2 million and $ 18.7 million respectively , did not include any acquisition related costs . the 2011 net income included $ 234,000 of acquisition related costs resulting from the pdi acquisition . excluding this item , core earnings were $ 22.2 million , $ 18.7 million and $ 15.7 million for the years ended december 31 , 2013 , 2012 and 2011 , respectively . on a diluted per share basis , core earnings amounted to $ 2.19 , $ 1.81 and $ 1.43 for those same three periods . net interest income first defiance 's net interest income is determined by its interest rate spread ( i.e . the difference between the yields on its interest-earning assets and the rates paid on its interest-bearing liabilities ) and the relative amounts of interest-earning assets and interest-bearing liabilities . as demand for new lending opportunities increased modestly in 2013 coupled with a surge in deposits , the company continued to invest some of its liquidity into investment securities . this may continue into 2014 as management deems it appropriate within its liquidity strategy and consideration of overall loan demand and deposit growth . net interest income was $ 67.6 million for the year ended december 31 , 2013 compared to $ 69.0 million and $ 69.9 million for the years ended december 31 , 2012 and 2011 , respectively .
| 7,479 |
statements containing words such as may , believe , anticipate , expect , intend , plan , project , projections , business outlook , estimate , or similar expressions constitute forward-looking statements . the following discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the accompanying notes thereto included elsewhere herein . the following discussion contains , in addition to historical information , forward-looking statements that include risks and uncertainties . our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors , including those factors set forth under item 1a risk factors of this annual report on form 10-k. overview our business we are a leading national brokerage firm specializing in commercial real estate investment sales , financing , research and advisory services . we have been the top commercial real estate investment broker in the united states based on the number of investment transactions over the last 10 years , based on data from costar and real capital analytics . as of december 31 , 2013 , we had more than 1,300 investment sales and financing professionals in 76 offices who provide investment brokerage and financing services to sellers and buyers of commercial real estate . we also offer market research , consulting and advisory services to our clients . during the year ended december 31 , 2013 , we closed more than 6,600 sales , financing and other transactions with total volume of approximately $ 24.0 billion , an increase from more than 6,100 sales and financing transactions with total volume of approximately $ 22.0 billion in 2012. we generate revenues by collecting real estate brokerage commissions upon the sale and fees upon the financing of commercial properties and , in addition , by providing consulting and advisory services . real estate brokerage commissions are typically based upon the value of the property , and financing fees are typically based upon the size of the loan . during the year ended december 31 , 2013 , approximately 90 % of our revenues were generated from real estate brokerage commissions , 6 % from financing fees and 4 % from other fees , including consulting and advisory services . in 2012 , approximately 91 % of our revenues were generated from real estate brokerage commissions , 6 % from financing fees and 3 % from other fees , including consulting and advisory services . initial public offering on november 5 , 2013 , mmi completed its initial public offering ( the ipo ) of 6,900,000 shares of common stock at a price to the public of $ 12.00 per share . mmi sold 4,173,413 shares of common stock in the ipo , including 900,000 shares of common stock pursuant to the exercise of the underwriters ' option to purchase additional shares . selling stockholders sold an aggregate of 2,726,587 shares in the ipo at the same price to the public . mmi did not receive any proceeds from the sale of the shares by the selling stockholders . the ipo generated net proceeds to the company of $ 42.3 million , including the underwriters ' full exercise of their option to purchase additional shares and after deducting total expenses of $ 7.8 million , consisting of $ 3.5 million of underwriters ' discounts and commissions and ipo related expenses of $ 4.3 million . prior to the completion of the ipo , the shareholders of mmreis contributed all of the outstanding shares of capital stock of mmreis to mmi in exchange for mmi common stock , pursuant to which mmreis 35 index to financial statements became mmi 's wholly owned subsidiary , thereafter , mmc distributed 80.0 % of the shares of mmi common stock to mmc 's shareholders and exchanged the remaining portion of its shares of mmi common stock for cancellation of indebtedness . factors affecting our business our business and our operating results , financial condition and liquidity are significantly affected by the number and size of commercial real estate sales and financing transactions . the number and size of these transactions is affected by our ability to recruit and retain sales and financing professionals and by the general trends in the economy and real estate industry , particularly including : economic and commercial real estate market conditions . our business is dependent on economic conditions and the demand for commercial real estate and related services in the markets in which we operate . changes in the economy on a national , regional or local basis can have a positive or negative impact on our business . fluctuations in acquisition and disposition activity , as well as general commercial real estate investment activity , can impact commissions for arranging such transactions , as well as impacting fees for arranging financing for acquirers and property owners that are seeking to recapitalize their existing properties . in each period discussed , the number of commercial real estate transactions for us has increased . credit and liquidity in the financial markets . since real estate purchases are often financed with debt , credit and liquidity issues in the financial markets have a direct impact on flow of capital to the commercial real estate markets as well as transaction activity and prices . demand for investment in commercial real estate . the willingness of private investors to invest in commercial real estate is affected by factors beyond our control , including the performance of real estate assets when compared with the performance of other investments . fluctuations in interest rates . changes in interest rates as well as steady and protracted movements of interest rates in one direction ( increases or decreases ) could adversely or positively affect the operation and income of commercial real estate properties , as well as the demand from investors for commercial real estate investments . story_separator_special_tag the company values its restricted stock units and restricted stock awards based on the grant date closing price of the company 's common stock when the award is based on shares or based on the grant date cash value when award is based on a predetermined dollar value . the awards typically vest over a three to five-year period . the company recognizes the related expense on a straight-line basis over the requisite service period for the entire award , subject to periodic adjustments to ensure that the cumulative amount of expense recognized through the end of any reporting period is at least equal to the portion of the grant date value of the award that has vested through that date . as a result of being a public company , our costs for such items as insurance , accounting and legal advice increased relative to our historical costs for such services . we also incurred costs which we have not previously incurred for directors fees , increased directors and officers insurance , investor relations fees , expenses for compliance with the sarbanes-oxley act and new rules implemented by the securities and exchange commission and the new york stock exchange , and various other costs of a public company . depreciation and amortization expense . depreciation and amortization expense consists of depreciation and amortization recorded on our computer software and hardware equipment and furniture , fixture , and equipment . depreciation and amortization are provided over estimated useful lives ranging from three to seven years for owned assets or over the lesser of the asset estimated useful lives or the related lease term for leased assets . stock-based and other compensation in connection with ipo . stock-based and other compensation in connection with ipo consists of non-cash stock based compensation and other compensation charges incurred in conjunction with our ipo related to the acceleration of vesting of restricted stock and sars , modifications to remove the formula settlement value of the restricted stock and sars awards , grants of replacement awards in the form of dsus to mmreis 's managing directors , a dsu grant to mr. millichap and grant of other stock-based compensation awards pursuant to the 2013 plan and other compensation charges incurred in conjunction with ipo . other income , net other income , net primarily consists of gains or losses , net on our deferred compensation plan assets , interest income , interest expense pertaining to notes payable for former stockholders and other non-operating gains or losses . provision for income taxes from inception through the date of the ipo , our provision for income taxes was based on a tax-sharing agreement between us and mmc , which stipulated an effective tax rate annual rate of 43.5 % and was utilized to compute the our income tax provision ( benefit ) and the resulting amount due ( from ) to mmc , which included deferred tax assets and liabilities . the tax-sharing agreement with mmc was terminated effective october 31 , 2013. we will file as a stand-alone tax entity for tax purposes beginning for the period ending december 31 , 2013. as a stand-alone tax entity , our taxable income is subject to the applicable u.s. federal and state and local tax rates in the jurisdictions in which the taxable income is generated . the change to a stand-alone entity for tax purposes may result in material changes to our income tax provision in future years . story_separator_special_tag assist in the recruitment of experienced agents and corporate personnel in connection with being a public company , ( ii ) a $ 4.4 million increase in legal expenses , driven by higher legal settlement costs combined with lower insurance recoveries during 2013 as compared 2012 , ( iii ) a $ 1.7 million increase in sales promotional expenses , driven by an increase in our annual sales recognition event and increased marketing expenses to support increased sales ( the annual sales recognition event is typically held in the first quarter of the year and the majority of the expenses are incurred and recognized during that period . ) , and ( iv ) a $ 1.4 million increase in professional fees primarily driven by an increase in accounting and third party consulting service fees in preparation of and operating as a public company . these increases were partially offset by a $ 2.5 million decrease in stock-based compensation expense . stock-based compensation expense included in selling , general and 41 index to financial statements administrative expense decreased primarily due to the company 's book value restricted stock and sars plans being terminated and replaced with immediately vested stock compensation granted in conjunction with the ipo . see note 8 stock-based compensation plans of our notes to consolidated financial statements for additional information on stock-based compensation . stock-based compensation expense in connection with the ipo is presented separately and is further described below . depreciation and amortization expense . there were no significant changes in depreciation and amortization expenses in 2013 as compared to 2012. stock-based and other compensation in connection with ipo . stock-based compensation charges in connection with ipo in 2013 were $ 30.9 million and related to the acceleration of vesting of restricted stock and sars , modifications to remove the formula settlement value of the restricted stock and sars awards , grants of replacement awards in the form of dsus to mmreis 's managing directors , a dsu grant to mr. millichap and grants of other stock-based compensation awards pursuant to the 2013 plan . additionally , there were other compensation expenses of $ 0.4 million pertaining to the ipo . there were no similar costs for 2012. see note 8 stock-based compensation plans of our notes to consolidated financial statements . other income , net . there were no significant changes in other income , net in 2013 as compared to 2012. provision for income taxes .
| results of operations following is a discussion of our results of operations for the years ended december 31 , 2013 , 2012 and 2011. the tables included in the period comparisons below provide summaries of our results of operations . the period-to-period comparisons of financial results are not necessarily indicative of future results . 38 index to financial statements 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 strategic decisions . such key metrics include the following : replace_table_token_8_th replace_table_token_9_th 39 index to financial statements comparison of year ended december 31 , 2013 and 2012 replace_table_token_10_th ( 1 ) earnings per share information has not been presented for periods prior to the ipo on october 31 , 2013. see note 2 accounting policies and note 11 earnings per share of our notes to consolidated financial statements for additional information on earnings per share . ( 2 ) adjusted ebitda is not a measurement of our financial performance under u.s. gaap and should not be considered as an alternative to net income , operating income or any other measures derived in accordance with u.s. gaap . for a definition of adjusted ebitda and a reconciliation of adjusted ebitda to net income , see non-gaap financial measure. 40 index to financial statements revenues our total revenues were $ 435.9 million in 2013 compared to $ 385.7 million in 2012 , an increase of $ 50.2 million , or 13.0 % . total revenues increased primarily as a result of increases in real estate brokerage commissions of $ 41.8 million , which contributed 83.3 % of the total increase , as well as an increase in financing fees of $ 4.8 million , and an increase in other revenues of $ 3.6 million . real estate brokerage commissions .
| 7,480 |
nicolet 's primary revenue sources are net interest income , representing interest income from loans and other interest earning assets such as investments , less interest expense on deposits and other borrowings , and noninterest income , including , among others , trust and brokerage fees , service charges on deposit accounts , secondary mortgage income and other fees or revenue from financial services provided to customers or ancillary to loans and deposits . business volumes and pricing drive revenue potential and tend to be influenced by overall economic factors , including market interest rates , business spending , consumer confidence , economic growth and competitive conditions within the marketplace . 2014 was a year for continued execution on growth and performance . at december 31 , 2014 , total assets were $ 1.2 billion , up only 1 % over year end 2013 , but with an improved asset mix . since year end 2013 , loans grew 4 % to $ 883 million ( predominantly in commercial and industrial loans and lines of credit ) and securities available for sale grew 32 % to $ 168 million , both funded mainly by higher deposits , which grew 2 % to $ 1.06 billion , and continued deployment of cash . asset quality was strong with net charge offs to average loans of 0.31 % for 2014 and nonperforming assets to assets of 0.61 % at december 31 , 2014 , reflecting successful integration of loans acquired in its 2013 acquisitions and the ongoing strength of the core loan portfolio and credit practices . return on average assets of 0.84 % and return on average common equity of 11.55 % indicates solid performance traction in 2014. as part of its capital management , nicolet began and has been executing on a common stock repurchase program in 2014. for 2015 , nicolet remains focused on organic loan growth , comprehensive balance sheet management and revenue maximization in its markets , and continues to evaluate acquisition opportunities for strategic growth . evaluation of financial performance between 2014 and 2013 will be impacted in general from the timing of nicolet 's 2013 acquisition of two distressed financial institutions – the predominantly stock-for-stock merger with mid-wisconsin consummated in april 2013 and the smaller fdic-assisted acquisition of bank of wausau completed in august 2013 ( collectively the “ 2013 acquisitions ” ) . combined , as of their respective acquisition dates , these transactions added 12 branch locations to nicolet 's footprint and approximately $ 483 million in assets , $ 284 million in loans and $ 388 million in deposits . since the results of operations of both entities prior to consummation are appropriately not included in the accompanying consolidated financial statements , income statement results and average balances for 2013 include partial year contributions from the 2013 acquisitions versus a full year in 2014. notably , 2013 includes approximately 8 months of mid-wisconsin operations and 5 months of bank of wausau operations , which analytically could reasonably explain roughly 20 % increases in certain average balances and income statement lines between 2014 and 2013 ; and as well , the 2013 acquisitions recorded $ 11.9 million of non-recurring bargain purchase gains and $ 1.9 million of direct pre-tax merger expenses , which net after tax contributed $ 9.7 million to 2013 's $ 16.1 million net income . 22 story_separator_special_tag style= '' width : 100 % ; font : 10pt times new roman , times , serif '' > 23 net interest income net interest income in the consolidated statements of income ( which excludes any taxable equivalent adjustments ) was $ 41.9 million in 2014 , up 13 % compared to $ 36.9 million in 2013. taxable equivalent adjustments ( adjustments to bring tax-exempt interest to a level that would yield the same after-tax income had that been subject to a 34 % tax rate ) were $ 795,000 for 2014 and $ 608,000 for 2013 , resulting in taxable equivalent net interest income of $ 42.7 million for 2014 and $ 37.5 million for 2013. taxable equivalent net interest income is a non-gaap measure , but is a preferred industry measurement of net interest income ( and its use in calculating a net interest margin ) as it enhances the comparability of net interest income arising from taxable and tax-exempt sources . net interest income is the primary source of nicolet 's revenue , and is the difference between interest income on earning assets , such as loans and investment securities , and interest expense on interest-bearing liabilities , such as deposits and other borrowings . net interest income is directly impacted by the sensitivity of the balance sheet to changes in interest rates and by the amount , mix and composition of interest earning assets and interest-bearing liabilities , including characteristics such as the fixed or variable nature of the financial instruments , contractual maturities , and repricing frequencies . tables 1 , 2 , and 3 present information to facilitate the review and discussion of selected average balance sheet items , taxable equivalent net interest income , interest rate spread and net interest margin . 24 table 1 : average balance sheet and net interest income analysis — taxable-equivalent basis ( dollars in thousands ) replace_table_token_5_th ( 1 ) nonaccrual loans are included in the daily average loan balances outstanding . ( 2 ) the yield on tax-exempt loans and tax-exempt investment securities is computed on a tax-equivalent basis using a federal tax rate of 34 % and adjusted for the disallowance of interest expense . ( 3 ) interest income includes loan fees of $ 291,000 in 2014 , $ 453,000 in 2013 and $ 128,000 in 2012 . 25 table 2 : volume/rate variance — taxable-equivalent basis ( dollars in thousands ) replace_table_token_6_th * nonaccrual loans are included in the daily average loan balances outstanding . ( 1 ) the change in interest due to both rate and volume has been allocated in proportion to the relationship of dollar amounts of change in each . story_separator_special_tag 27 nonperforming loans were $ 5.4 million ( or 0.61 % of total loans ) at december 31 , 2014 compared to $ 10.3 million ( or 1.21 % of total loans ) at december 31 , 2013. the reduction in nonperforming loans was the result of a continued commitment to work distressed assets to resolution , particularly acquired nonaccrual loans . of the $ 16.7 million nonaccrual loans initially acquired in the 2013 acquisitions , $ 4.3 million remain included in the $ 5.4 million of nonaccruals at december 31 , 2014 , compared to $ 9.5 million included in the $ 10.3 million of nonaccruals at december 31 , 2013. the provision for loan losses is predominantly a function of nicolet 's methodology and judgment as to qualitative and quantitative factors used to determine the adequacy of the alll . the adequacy of the alll is affected by changes in the size and character of the loan portfolio , changes in levels of impaired and other nonperforming loans , historical losses and delinquencies in each portfolio segment , the risk inherent in specific loans , concentrations of loans to specific borrowers or industries , existing and future economic conditions , the fair value of underlying collateral , and other factors which could affect potential credit losses . for additional information regarding asset quality and the alll , see “ balance sheet analysis — loans , ” and “ — allowance for loan and lease losses ” and “ —nonperforming assets. ” noninterest income table 4 : noninterest income ( dollars in thousands ) replace_table_token_8_th * n/m means not meaningful comparison of 2014 versus 2013 noninterest income was $ 14.2 million for 2014 ( including $ 0.5 million of net gain on sale or writedown of assets ) , compared to $ 25.7 million for 2013 ( including $ 13.6 million of combined net gain on sale or writedown of assets and bpg ) . removing these net gains , noninterest income was up $ 1.5 million or 12.3 % , with increases in all line items , except mortgage income , largely due to increased business from nicolet 's expanded size , timing of the 2013 acquisitions and improved market performance . bpg is calculated as the net difference in the fair value of the net assets acquired less the consideration paid , which resulted in a non-taxable bpg of $ 9.5 million for mid-wisconsin and a taxable bpg of $ 2.4 million for bank of wausau . for additional details , see note 2 , “ acquisitions , ” of the notes to consolidated financial statements , under part ii , item 8. service charges on deposit accounts for 2014 were $ 2.1 million , up $ 0.3 million or 18.7 % over 2013 , given the higher number of accounts and increased deposit activity . most notably , personal non-sufficient funds fees were up $ 0.2 million over 2013 , while the remaining $ 0.1 million increase was due to higher service-charges and other fees . mortgage income represents net gains received from the sale of residential real estate loans service-released into the secondary market and to a small degree , some related income . residential refinancing activity and new purchase activity vary with movements in mortgage rates , changes in mortgage regulation , and the impact of economic conditions on consumers . secondary mortgage production was $ 92 million for 2014 , down 30.8 % from 2013 's production of $ 133 million . mortgage income was $ 1.9 million for 2014 , down $ 0.4 million or 17.6 % , compared to $ 2.3 million for 2013 , as a result of lower production offset partly by better sales pricing . 28 trust service fees were $ 4.6 million for 2014 , up $ 0.5 million or 13.4 % over 2013. in addition to a full year of income on the larger base of customers acquired and trust assets added from mid-wisconsin , there was market improvement over last year on assets under management , on which trust fees are based . similarly , brokerage fees were $ 0.6 million , up $ 0.2 million or 32.3 % over 2013 , mainly from increased legacy business , market improvements , and to a lesser degree from a full year of the 2013 acquisitions . boli income was $ 0.9 million , up $ 0.1 million or 13.1 % over 2013 , as a result of the $ 4.3 million boli acquired with mid-wisconsin and $ 2.8 million new boli purchased in june 2014 in this lower rate environment , bringing the average boli investment to $ 25.7 million , up 16.7 % over 2013. rent income , investment advisory fees and other income combined were $ 3.5 million for 2014 , up $ 0.8 million or 28.4 % over 2013 , with the majority of the increase due to ancillary fees tied to deposit-related products , most particularly debit card interchange fees ( up $ 0.3 million aided in part by a full year of activity from the 2013 acquisitions but also greater volume related to a popular checking product design ) , check orders , check cashing and wire fee income . nicolet recognized $ 0.5 million net gain on sale or writedown of assets in 2014 , compared to $ 1.7 million in 2013. the 2014 activity consisted of a $ 0.3 million gain on sale of equity securities and $ 0.8 million net gains on sales of other real estate owned ( “ oreo ” ) , and a $ 0.6 million writedown in the second quarter on a bank premise which was subsequently sold prior to year end . the 2013 activity consisted of $ 0.5 million net gains on sales of afs securities , $ 1.3 million net gains on oreo sales and $ 0.1 million writedown on oreo properties . noninterest expense table 5 : noninterest expense ( dollars in thousands ) replace_table_token_9_th comparison of 2014 versus 2013 total noninterest expense was $ 38.7 million for 2014 , an increase of $ 2.3 million or 6.3
| performance summary net income attributable to nicolet was $ 9.9 million for 2014 , and after $ 0.2 million of preferred stock dividends , net income available to common shareholders was $ 9.7 million , or $ 2.25 per diluted common share . comparatively , 2013 net income was $ 16.1 million , and after $ 1.0 million of preferred stock dividends , net income available to common shareholders was $ 15.1 million or $ 3.80 per diluted common share for 2013. as noted above , the 2013 acquisitions impacted 2013 net income most directly from inclusion of non-recurring bargain purchase gains and direct merger expenses , which after tax accounted for $ 9.7 million of the $ 16.1 million net income in 2013. beginning in the fourth quarter of 2013 nicolet qualified for a 1 % annual dividend rate on its preferred stock issued to the treasury related to its participation in the sblf , compared to the previous 5 % annual rate paid by nicolet . a full year of the 1 % rate in 2014 resulted in a $ 0.7 million reduction in preferred stock dividends between 2014 and 2013 , with 2013 only reflecting the lower rate for one quarter . ● net interest income was $ 41.9 million for 2014 , an increase of $ 5.0 million or 13 % compared to 2013. the improvement was primarily volume related , with average interest-earning assets up $ 171 million or 19 % , but at a lower interest rate spread between 2014 and 2013 , driven mainly by lower loan yields and a higher mix of low-earning interest-bearing cash balances , though partly offset by a lower cost of funds .
| 7,481 |
all statements other than statements of historical facts contained in this annual report on form 10-k , including statements regarding our future results of operations and financial position , business strategy , prospective products and product candidates , their expected performance and impact on healthcare costs , marketing authorization from the u.s. food and drug administration , or fda , regulatory clearance , reimbursement for our product candidates , research and development costs , timing of regulatory filings , timing and likelihood of success , plans and objectives of management for future operations and future results of anticipated products , are forward-looking statements . these statements involve known and unknown risks , uncertainties and other important factors that may cause our actual results , performance or achievements to be materially different from any future results , performance or achievements expressed or implied by the forward-looking statements . in some cases , you can identify forward-looking statements by terms such as may , will , should , expect , plan , anticipate , could , intend , target , project , contemplate , believe , estimate , predict , potential or continue or the negative of these terms or other similar expressions . the forward-looking statements in this annual report on form 10-k are only predictions . we have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business , financial condition and results of operations . these forward-looking statements speak only as of the date of this annual report on form 10-k and are subject to a number of risks , uncertainties and assumptions described under the sections in this prospectus entitled item 1a.risk factors and management 's discussion and analysis of financial condition and results of operations and elsewhere in this annual report on form 10-k. these forward looking statements are subject to numerous risks , including , without limitation , the following : · our expectation to incur losses in the future ; · our ability to obtain marketing authorization from the fda or regulatory clearance for new product candidates in the united states or any other jurisdiction ; · the market acceptance of our t2mr technology ; · our ability to timely and successfully develop and commercialize our existing products and future product candidates ; · the length of our anticipated sales cycle ; · our ability to gain the support of leading hospitals and key thought leaders and publish the results of our clinical trials in peer-reviewed journals ; · our future capital needs and our need to raise additional funds ; · the performance of our diagnostics ; · our ability to successfully manage our growth ; · our ability to compete in the highly competitive diagnostics market ; · our ability to protect and enforce our intellectual property rights , including our trade secret-protected proprietary rights in t2mr ; and · federal , state , and foreign regulatory requirements , including fda regulation of our product candidates . these forward-looking statements represent our estimates and assumptions only as of the date of this annual report on form 10-k. unless required by u.s. federal securities laws , we do not intend to update any of these forward-looking 60 statements to reflect circumstances or events that occur after the statement is made or to conform these statements to actual results . the following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this annual report on form 10-k. our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors , including those set forth under item 1a . risk factors in this annual report on form 10-k , and elsewhere in this annual report on form 10-k. you should read the following discussion and analysis of our consolidated financial condition and results of operations together with our consolidated financial statements and related notes thereto included elsewhere in this annual report on form 10-k. some of the information contained in this discussion and analysis or set forth elsewhere in this annual report on form 10-k , including information with respect to our plans and strategy for our business and related financing , includes forward-looking statements that involve risks and uncertainties . as a result of many factors , including those factors set forth in the item 1a.risk factors section of this annual report on form 10-k , our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis . story_separator_special_tag style= '' font-size:10.0pt ; font-style : italic ; font-weight : bold ; '' > our t2dx instrument our fda-authorized t2dx is an easy-to-use , fully-automated , benchtop instrument utilizing t2mr for use in hospitals and labs for a broad range of diagnostic tests . to operate the system , a patient sample tube is snapped onto a disposable test cartridge , which is pre-loaded with all necessary reagents . the cartridge is then inserted into the t2dx , which automatically processes the sample and then delivers a diagnostic test result . test results are displayed on screen or directly through the lab information system . by utilizing our proprietary t2mr for direct detection , the t2dx eliminates the need for sample purification and analyte extraction , which are necessary for other optical-detection devices . eliminating these sample processing steps increases diagnostic sensitivity and accuracy , enables a broad menu of tests to be run on a single platform , and greatly reduces the complexity of the consumables . the t2dx incorporates a simple user interface and is designed to efficiently process up to seven specimens simultaneously . our t2mr platform t2mr is a miniaturized , magnetic resonance-based approach that measures how water molecules react in the presence of magnetic fields . for molecular and immunodiagnostics targets , t2mr introduces nanoparticles to the sample that are coated with target-specific binding agents . story_separator_special_tag results of operations for the years ended december 31 , 2014 and 2013 replace_table_token_11_th revenue we recorded $ 119,000 of research and grant revenue for the year ended december 31 , 2014 compared to $ 266,000 of research and grant revenue for the year ended december 31 , 2013. in the year ended december 31 , 2014 , the company entered into one research and development arrangement in the fourth quarter , compared with three such arrangements in the year ended december 31 , 2013. research and development expenses research and development expenses were $ 19.8 million for the year ended december 31 , 2014 , compared to $ 14.9 million for the year ended december 31 , 2013 , an increase of $ 4.9 million . the increase was primarily due to increased payroll and payroll related expenses of $ 2.7 million , including $ 332,000 of incremental stock compensation expense , as we hired new employees and expanded our use of contractors and temporary help , $ 803,000 of increased lab expenses due to increased headcount , $ 617,000 of increased facilities-related expenses due to increased headcount and expansion of facilities , increased licensing fees of $ 323,000 resulting primarily from milestone payments that became due pursuant to our license arrangement with mgh as a result of our achievement of fda marketing authorization and european ce mark for t2dx and t2candida during the third quarter , increased travel and site expenses of $ 248,000 related to the completion of the pivotal clinical trial for t2dx and t2candida , and $ 212,000 of increased consulting expense incurred to support product development . selling , general and administrative expenses selling , general and administrative expenses were $ 11.0 million for year ended december 31 , 2014 , compared to $ 5.0 million for year ended december 31 , 2013. the increase of $ 6.0 million was due primarily to increased payroll and related expenses of $ 3.7 million , including $ 743,000 of incremental stock compensation expense , as we hired new executive , administrative , direct sales and marketing employees , increased marketing program expenses of $ 536,000 ( related to exhibits at tradeshows , clinical studies and collateral ) , $ 520,000 of increased other public company expenditures ( related to insurance and board of directors fees ) , $ 483,000 of increased consulting related expenses , $ 270,000 of increased facilities expenses , increased legal expenses of $ 265,000 related to corporate and intellectual property matters , and increased travel expenses of $ 248,000 resulting from the expansion of the sales force and increased tradeshow activity . 64 interest expense , net interest expense , net , was $ 721,000 for the year ended december 31 , 2014 , compared to $ 403,000 for the year ended december 31 , 2013 , an increase of $ 318,000. the increase was primarily due to higher borrowing levels on our notes payable , primary from borrowing from solar capital , ltd. , and the write-off of deferred financing costs in connection with the repayment of outstanding borrowings from silicon valley bank . other income ( expense ) , net other income ( expense ) , net , for the year ended december 31 , 2014 increased to $ 12,000 of income , net , compared with $ 515,000 of expense , net , for the year ended december 31 , 2013 , due to the expense recorded related to the change in the fair value of the liability for warrants to purchase redeemable securities for the year ended december 31 , 2013. the underlying warrants were converted into common stock upon completion of our ipo on august 12 , 2014. results of operations for the years ended december 31 , 2013 and 2012 replace_table_token_12_th revenue we recorded $ 266,000 of research and grant revenue for the year ended december 31 , 2013 , which primarily consisted of revenue related to feasibility studies and co-development efforts with three companies . for the year ended december 31 , 2012 , we recorded $ 19,000 in research and grant revenue , which primarily consisted of work completed under a third-party development agreement , offset by the fair value of warrants issued in conjunction with the agreement , which were recorded as a reduction to revenue . research and development expenses research and development expenses were $ 14.9 million for the year ended december 31 , 2013 , compared to $ 11.7 million for the year ended december 31 , 2012 , an increase of $ 3.2 million . the increase was primarily due to increased payroll and payroll related expenses of $ 1.1 million , including stock compensation expenses , as we hired new employees , increased lab expenses to support product development , increased travel and site expenses of $ 2.1 million related to the pivotal clinical trial for t2dx and t2candida . selling , general and administrative expenses selling , general and administrative expenses were $ 5.0 million for the year ended december 31 , 2013 , compared to $ 2.9 million for the year ended december 31 , 2012. the increase of $ 2.1 million was due primarily to increased payroll and related expenses of $ 925,000 , including stock compensation expense , as we hired new administrative employees , increased marketing program expenses of $ 544,000 , including tradeshows and collateral , increased legal expenses of $ 210,000 related to corporate and intellectual property matters , and increased consulting related expenses of $ 208,000. interest expense , net interest expense , net , was $ 403,000 for the year ended december 31 , 2013 , compared to $ 154,000 for the year ended december 31 , 2012 , an increase of $ 249,000. the increase is due to higher borrowing levels in 2013 under our credit facility with silicon valley bank .
| business overview we are an in vitro diagnostics company that has developed an innovative and proprietary technology platform that offers a rapid , sensitive and simple alternative to existing diagnostic methodologies . we are using our t2 magnetic resonance platform , or t2mr , to develop a broad set of applications aimed at lowering mortality rates , improving patient outcomes and reducing the cost of healthcare by helping medical professionals make targeted treatment decisions earlier . our initial development efforts utilizing t2mr target sepsis and hemostasis , which are areas of significant unmet medical need where existing therapies could be more effective with improved diagnostics . on september 22 , 2014 , we received market authorization from the u.s. food and drug administration for our first two products , the t2dx diagnostic instrument , or t2dx and the t2candida panel or t2candida , for the direct detection of candida species in human whole blood specimens and independent of blood culture from patients with symptoms of , or medical conditions predisposing the patient to , invasive fungal infections . we have begun a launch of the t2dx and t2candida with select hospitals in the united states and we are building a direct sales force that is targeting the top 450 hospitals in the united states that have the highest concentration of patients at risk for candida infections . our next three diagnostic applications are called t2bacteria , t2hemostat , and t2lyme , which are focused on bacterial sepsis infections , hemostasis , and lyme disease , respectively . we plan to initiate clinical trials in the second half of 2015 for t2bacteria and in 2016 for t2hemostat . we expect that existing reimbursement codes will support our sepsis , hemostasis and lyme disease product candidates , and that the anticipated economic savings associated with our sepsis products will be realized directly by hospitals .
| 7,482 |
there were no amounts due as of march 31 , 2015. note 7 – other note payable on december 31 , 2014 , the company converted accounts payable into a senior promissory note ( the “ note ” ) in the aggregate principal amount of $ 242,498 . the note bears interest at 6 % per annum and interest is payable on a quarterly basis commencing march 31 , 2015 or the company may elect that the amount of such interest be added to the principal sum outstanding under this note . the payables arose in connection with professional services rendered by attorneys for the company prior to and through december 31 , 2014 , and the note had an original maturity date of december 31 , 2015 which was amended to june 30 , 2016 or such later date as the lender may agree to in writing . as of july 11 , 2016 , the note had not been extended and is currently in default . as of march 31 , 2016 and 2015 , $ 242,498 principal and $ 19,544 and $ 3,588 , respectively , of accrued interest was outstanding under the note . note 8 unsecured convertible notes payable unsecured convertible notes payable at march 31 , 2016 were as follows ; 8 % unsecured convertible notes $ 200,000 less accumulated amortization of valuation discount ( 89,727 ) net $ 110,273 during the year ended march 31 , 2016 , the company issued three 8 % unsecured notes payable to investors ( the “ lenders ” ) for an aggregate amount of $ 200,000 . these notes will be payable upon the date that is 24 months from the date of issuance . in addition , the lenders were issued 200,000 warrants of the company 's common stock at an exercise price of $ 0.01 per share . as of march 31 , 2016 , $ 200,000 of these notes were outstanding . the aggregate relative fair value of the warrants issued along with the notes were valued at $ 99,915 using the black-scholes option pricing model with the following average assumptions : risk-free interest rate of 1.30 % ; dividend yield of 0 % ; volatility rate of 100 % ; and an expected life of four years ( statutory term ) . the value of the warrants of $ 99,915 was considered as debt discount and is being amortized as interest over the term of the notes or in full upon the conversion of the corresponding notes . during the year ended march 31 , 2016 , the company amortized $ 9,818 of such discount to interest expense , and the unamortized discount as of march 31 , 2016 was $ 89,727 . the notes are subject to an automatic conversion feature if the company raises a minimum of 2,500,000 ( excluding the amount converting pursuant to the notes ) in the aggregate in gross proceeds from an equity financing led by a reputable institutional investor in one or more closings ( a “ qualified equity financing ” ) prior to the maturity date , the lenders will have the rights to convert all outstanding principal and interest into the same equity securities ( the “ investor stock ” ) issued in the qualified equity financing at 75 % of the issuance price of the investor stock in such offering . the holders of the notes shall receive the same rights , privileges and protections as the investor stock issued in connection with the qualified equity financing including , but not limited to , registration rights . if a lender 's note is not converted ( as set out above ) prior to its maturity date , such lender shall in its sole discretion have the option to convert all outstanding principal and interest into either the company 's common stock at a conversion price per share based upon the company 's then current valuation , as determined by the board of directors ; provided , however , that if there is a sale of the company ( as defined in the notes ) prior to the conversion of the notes or the maturity date , then , upon the closing of such sale , the company will pay each lender an amount of cash equal to the principal amount outstanding under such lender 's note , plus accrued interest on such note , in full satisfaction of its obligations under the notes . f- 18 note 9 – related party transactions management services from trinad management llc pursuant to a management agreement with trinad management llc ( “ trinad llc ” ) entered into on september 23 , 2011 , trinad llc has agreed to provide certain management services to the company through september 22 , 2014 , including , without limitation , the sourcing , structuring and negotiation of potential business acquisitions and customer contracts for the company . under the management agreement , the company compensated trinad llc for its services with ( i ) a fee equal to $ 2,080,000 , with $ 90,000 payable in advance of each consecutive three-month calendar period during the term of the agreement and with $ 1,000,000 due at the end of the three ( 3 ) year term , and ( ii ) issuance of a warrant to purchase 1,125,000 shares of the company 's common stock at an exercise price of $ 0.15 per share ( “ warrant ” ) . the warrant may be exercised in whole or in part by trinad llc at any time for a period of ten ( 10 ) years . story_separator_special_tag our independent registered public accounting firm has included an explanatory paragraph in their report in our audited financial statements for the fiscal year ended march 31 , 2016 to the effect that our losses from operations and our negative cash flows from operations raise substantial doubt about our ability to continue as a going concern . our financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern . we may be required to cease operations which could result in our stockholders losing all or almost all of their investment . off-balance sheet arrangements we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition , changes in financial condition , revenues or expenses , results of operations , liquidity , capital expenditures or capital resources that is material to investors . 27 critical accounting policies and estimates critical accounting policies are defined as those most important to the portrayal of a company 's financial condition and results and that require the most difficult , subjective or complex judgments . 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 at the date of the financial statements , the disclosure of contingent assets and liabilities , and the reported amounts of revenues and expenses during the reporting period . the estimates that we make include assumption as a going concern , fair value of long-lived assets , valuation allowance for deferred tax assets and estimates and assumptions used in valuation of equity instruments . estimates are based on historical experience , where applicable or other assumptions that management believes are reasonable under the circumstances . we have identified the policies described in note 2. significant accounting policies and practices to our consolidated financial statements as our critical accounting policies . however , actual results may differ from those estimates under different assumptions or conditions . investment in unconsolidated subsidiary under the equity method the company accounts for investments in which the company owns more than 20 % of the investee , using the equity method in accordance with asc topic 323 , investments—equity method and joint ventures . under the equity method , an investor initially records an investment in the stock of an investee at cost , and adjusts the carrying amount of the investment to recognize the investor 's share of the earnings or losses of the investee after the date of acquisition . the amount of the adjustment is included in the determination of net income by the investor , and such amount reflects adjustments similar to those made in preparing consolidated statements including adjustments to eliminate intercompany gains and losses , and to amortize , if appropriate , any difference between investor cost and underlying equity in net assets of the investee at the date of investment . the investment of an investor is also adjusted to reflect the investor 's share of changes in the investee 's capital . dividends received from an investee reduce the carrying amount of the investment . a series of operating losses of an investee or other factors may indicate that a decrease in value of the investment has occurred which is other than temporary and which should be recognized even though the decrease in value is in excess of what would otherwise be recognized by application of the equity method . carrying value , recoverability and impairment of long-lived assets an impairment loss will be recognized only if the carrying amount of a long-lived asset ( asset group ) is not recoverable and exceeds its fair value . the carrying amount of a long-lived asset ( asset group ) is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset ( asset group ) . that assessment is based on the carrying amount of the asset ( asset group ) at the date it is tested for recoverability . an impairment loss is measured as the amount by which the carrying amount of a long-lived asset ( asset group ) exceeds its fair value . if an impairment loss is recognized , the adjusted carrying amount of a long-lived asset will be its new cost basis . for a depreciable long-lived asset , the new cost basis will be depreciated ( amortized ) over the remaining useful life of that asset . restoring a previously recognized impairment loss is prohibited . the company 's long-lived asset ( asset group ) is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable . the company tests its long-lived assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events . stock-based compensation the company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs . the company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by fasb where the value of the award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period . the company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the fasb where the value of the stock compensation is based upon the measurement date as determined at either a ) the date at which a performance commitment is reached , or b ) at the date at which the necessary performance to earn the equity instruments is complete . options granted to non-employees are revalued each reporting period to determine the amount to be recorded as an expense in the
| results of operations as on march 31 , 2016 , we have accumulated a deficit of $ 13,846,171. we anticipate that we will continue to incur substantial losses in the next 12 months . our consolidated financial statements have been prepared assuming that we will continue as a going concern . we will require additional capital to meet our long-term operating requirements . we expect to raise additional capital through , among other things , the sale of equity or debt securities . year ended march 31 , 2016 as compared to the year ended march 31 , 2015 revenues we have no revenues for the fiscal year ended march 31 , 2016 or for the fiscal year ended march 31 , 2015 from the operations of lxl . 26 selling , general and administrative expenses selling , general and administrative expenses primarily consist of outside services , advertising , public relations and travel and entertainment expense . selling , general and administrative expenses for the fiscal year ended march 31 , 2016 increased by $ 903,119 to $ 3,619,000 for the fiscal year ended march 31 , 2016 , from $ 2,715,881 in the prior year , which reflects a increase in non-cash costs associated with the issuance of common stock for outside services in lieu of cash payments . management services – related parties management services – related parties consisted of management fees paid and accrued by us under agreements with trinad management . for the fiscal years ended march 31 , 2016 and march 31 , 2015 , we incurred management fees to trinad management of $ 360,000 and $ 526,660 , respectively .
| 7,483 |
pursuant to the agreements , the warrant holders exercised in full the warrants and purchased an aggregate of 836,780 shares of our common stock at an exercise price of $ 2.86 per share , for an aggregate exercise price of approximately $ 2.4 million and we paid the warrant holders aggregated inducement fees of approximately $ 239,000 , which resulted in net proceeds to us of $ 2.2 million . all remaining unexercised warrants as of april 25 , 2019 expired . underwriting warrants - public offering 2016 in september 2016 , we issued warrants to purchase 135,750 shares of our common stock at an exercise price of $ 4.25 to the underwriter of our public offering of 2,715,000 shares of common stock . the warrants were exercisable for a 2 year period commencing september 9 , 2017 . we refer to these warrants as underwriting warrants - public offering 2016. all remaining unexercised warrants as of september 9 , 2019 expired . private placement warrants - september 2017 in september and october 2017 , we issued warrants to purchase an aggregate of 1,976,919 shares of our common stock at an exercise price of $ 4.85 in connection with our private placement sale of 1,976,919 shares of common stock . the sale was completed in two tranches with the first tranche , which closed on september 28 , 2017 , including 1,745,581 warrants , and the second tranche , which closed on october 2 , 2017 , including 231,338 warrants . the warrants are exercisable for a period commencing 6 months after the closing of the financing and expire on september 28 , 2020. collectively , we refer to these warrants as private placement warrants - september 2017. placement agent warrants - 2017 in addition to the private placement warrants - september 2017 issued in connection with our private placement sale of 1,976,919 shares of our common stock , we also issued to the placement agent , warrants to purchase a total of 98,846 shares of our common stock at an exercise price of $ 4.85 per share . upon closing of the first tranche on september 28 , 2017 , we 53 issued 87,279 warrants , and upon closing the second tranche , we issued 11,567 warrants . the warrants are exercisable for a period commencing 6 months after the closing of the financing and expire on september 28 , 2020 . collectively , we refer to these warrants as placement agent warrants - 2017. a roll-forward of warrant activity from january 1 , 2018 to december 31 , 2018 is shown in the following table : replace_table_token_12_th ( 1 ) during the year ended december 31 , 2018 , there were 249,999 warrants that were exchanged for 242,913 shares of common stock in an exchange transaction where the warrant holders exchanged the warrants for the same number of shares they would have been entitled to in a cashless exercise . ( 2 ) during the year ended december 31 , 2018 , there were 5,556 warrants that were exercised through a cashless exercise , which netted 5,542 shares being issued . ( 3 ) during the year ended december 31 , 2018 , 6,000 warrants expired . ( 4 ) during the year ended december 31 , 2018 , there were 73,000 warrants exercised for cash . ( 5 ) during the year ended december 31 , 2018 , there were 10,600 warrants exercised for cash . a roll-forward of warrant activity from january 1 , 2019 to december 31 , 2019 is shown in the following table : replace_table_token_13_th ( 1 ) during the year ended december 31 , 2019 , 310,500 warrants expired . ( 2 ) during the year ended december 31 , 2019 , there were 485,000 warrants exercised for cash , including 335,000 warrants exercised by our significant shareholder , park city capital . additionally , there were 44,928 warrants that were exercised through a cashless exercise which netted 1,809 shares being issued and 288,135 warrants that expired . 54 ( 3 ) during the year ended december 31 , 2019 , 122,175 warrants expired . note 8—stockholders ' equity and earnings per share common stock pursuant to our amended and restated certificate of incorporation , we are authorized 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 we are a late-stage development company that designs filters for the mobile device industry . we have not yet realized material revenues and our focus is on continuing to engage new customers , expand the number of contracts for filter designs and build the necessary infrastructure to support anticipated growth . consequently , our expenses will continue to modestly increase as we position for a ramp in royalty revenues . we plan to expand our ip libraries , further the development of our isn ® platform and continue to develop ip associated with high frequency/high-wide bandwidth filters . story_separator_special_tag in 2018 , the cash used was a result of the purchase of investments held to maturity in excess of redemptions of investments held to maturity and cash used to purchase property and equipment and expenditures for patents . financing activities provided cash of $ 11.3 million in 2019 and $ 21.3 million in 2018. the cash provided in 2019 was the result of net proceeds from the sale of equity securities in our private placement financing completed in september 2019 and net proceeds from the exercises of warrants for cash . the cash provided in 2018 was the result of net proceeds from the sale of equity securities in an underwritten public offering completed in march 2018 along with the underwriter overallotment option exercised in april 2018 , partially offset by cash used for the repurchase of common stock under an authorized stock repurchase program . off-balance sheet transactions we do not have any off-balance sheet arrangements . contractual obligations and known future cash requirements indemnification agreements in the ordinary course of business , we may enter into agreements of varying scope and terms pursuant to which we agree to indemnify customers , vendors , lessors , business partners and other parties with respect to certain matters , including , but not limited to , losses arising out of breach of such agreements , services to be provided by us or from intellectual property infringement claims made by third parties . in addition , we have entered into indemnification agreements with directors and certain officers and employees that will require us , among other things , to indemnify them against certain liabilities that may arise by reason of their status or service as directors , officers or employees . no demands have been made upon us to provide indemnification under such agreements and there are no claims that we are aware of that could have a material effect on our consolidated balance sheets , consolidated statements of comprehensive loss , consolidated statements of stockholders ' equity or consolidated statements of cash flows . purchasing commitments we have non-cancelable purchasing commitments that we incur in the ordinary course of business . the purchase commitments covered by these agreements are for less than one year and aggregate to $ 824,000 as december 31 , 2019. operating leases we lease various office facilities , including our corporate headquarters in goleta , california , as well as our offices in burlingame , california , austin , texas and anyang , south korea under operating lease agreements . the terms of the lease agreements provide for rental payments on a graduated basis . we recognize rent expense on a straight-line basis over the lease periods . commitments as of d ecember 31 , 2019 , our principal commitments consisted of obligations under our purchasing commitments and the operating leases for our offices . the following table summarizes our future minimum payments under these arrangements as of december 31 , 2019 : 36 replace_table_token_1_th critical accounting policies and estimates our critical accounting estimates are included in our significant accounting policies as described in note 2 of the consolidated financial statements included in item 8 , financial statements and supplemental data , of this annual report on form 10-k. those consolidated financial statements were prepared in accordance with accounting principles generally accepted in the united states of america . critical accounting estimates are those that we believe are most important to the portrayal of our financial condition and results of operations . the preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses . our estimates are evaluated on an ongoing basis and are drawn from historical operations , current trends , future business plans and other factors that management believes are relevant at the time our consolidated financial statements are prepared . actual results may differ from our estimates . management believes that the following accounting estimates reflect the more significant judgments and estimates we use in preparing our consolidated financial statements . investments —securities held-to-maturity : investments are classified as held-to-maturity when we have the positive intent and ability to hold the securities to maturity . when the fair value of an investment instrument classified as held-to-maturity is less than its amortized cost , management assesses whether or not : ( i ) we have the intent to sell the instrument or ( ii ) it is more likely than not that we will be required to sell the instrument before its anticipated recovery . if either of these conditions is met , we recognize an other-than-temporary impairment for the difference between the instrument 's amortized cost basis and its fair value , and include such amounts in other income ( expense ) . we continually evaluate investments and record impairment expense if needed . revenue recognition —as of january 1 , 2018 , we recognize revenue in accordance with financial accounting standards board , or fasb , accounting standards codification , or asc , topic 606 , revenue from contracts with customers . revenue is recognized upon the transfer of control of promised goods or services to the customers in an amount that reflects the consideration we expect to receive in exchange for those products or services . under the new guidance we are required to use estimates to determine the transaction price in the contract as well as the time over which we will satisfy the performance obligations . the determination of the transaction price may include estimates of amounts we expect to receive , including milestones that we may achieve which would result in additional payments upon achievement . these estimates are used for recognition of our revenue primarily related to upfront non-refundable fees received in connection with filter design projects with customers . our performance obligation is to design a licensable filter in accordance with customer specifications . we recognize revenue over the course
| results of operations comparison of the years ended december 31 , 2019 and 2018 revenues . revenues consist primarily of the recognized portion of the transaction price associated with our contracts from customers recognized over time as the obligations under the terms of the contract are satisfied . generally , the transaction price includes both upfront and milestone payments which we expect to receive in exchange for providing services . revenues also include royalties from shipments of our licensed designs . for the years ended december 31 , 2019 and 2018 , we recognized $ 735,000 and $ 524,000 , respectively , of revenue . the increase was primarily a result of the collaboration and license agreement we signed in september 2019 with a major tier 1 rf filter manufacturer . we have recorded $ 1.7 million of deferred revenue as of december 31 , 2019 , which we expect to recognize over the next year . additionally , we expect to continue to recognize royalty revenue from our license agreements . research and development . these expenses relate to direct engineering and other costs associated with the development and commercialization of our technology , including the development of filter designs for our customers , and consist primarily of the compensation costs of employees and consultants , including stock-based compensation , and to a lesser extent development related costs for facilities , 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 .
| 7,484 |
we are also a leading supplier of value-added frozen potato products internationally , with a strong and growing presence in high-growth emerging markets . we offer a broad product portfolio to a diverse channel and customer base in over 100 countries . french fries represent the majority of our value-added frozen potato product portfolio . unless otherwise expressly stated or the context otherwise requires , references to “ we , ” “ our , ” “ us , ” “ the company ” and “ lamb weston ” refer to lamb weston holdings , inc. and its consolidated subsidiaries or , in the case of information as of dates or for periods prior to the separation , the combined and consolidated entities of the lamb weston business of conagra and certain other assets and liabilities that had been historically held at the conagra corporate level but were specifically identifiable and attributable to the lamb weston business . management 's discussion and analysis of our results of operations and financial condition , which we refer to in this filing as “ md & a , ” is provided as a supplement to the combined and consolidated financial statements and related notes included elsewhere in this form 10-k to help provide an understanding of our financial condition , changes in financial condition and results of our operations . our md & a is based on financial data derived from the financial statements prepared in accordance with u.s. generally accepted accounting principles ( “ gaap ” ) and certain other financial data ( adjusted ebitda including unconsolidated joint ventures ) that is prepared using non-gaap measures . lamb weston 's management uses adjusted ebitda including unconsolidated joint ventures and pro forma adjusted ebitda including unconsolidated joint ventures to evaluate the company 's performance excluding the impact of certain non-cash charges and other special items in order to have comparable financial results to analyze changes in our underlying business between reporting periods . the company includes this non-gaap financial measure because management believes it is useful to investors in that it provides for greater transparency with respect to supplemental information used by management in its financial and operational decision making . we believe that the presentation of this non-gaap financial measure , when used in conjunction with gaap financial measures , is a useful financial analysis tool that can assist investors in assessing the company 's operating performance and underlying prospects . adjusted ebitda including unconsolidated joint ventures should not be considered a substitute for net income . see “ reconciliations of non-gaap financial measures to reported amounts ” below for the definition of adjusted ebitda including unconsolidated joint ventures and a reconciliation of this non-gaap financial measure to net income . separation from conagra on november 9 , 2016 , we separated from conagra and became an independent publicly traded company through the pro rata distribution by conagra of 100 % of our outstanding common stock to conagra stockholders . each conagra stockholder of record on november 1 , 2016 received one share of our common stock for every three shares of conagra common stock held on the record date . as a result , approximately 146 million shares of our common stock were distributed on november 9 , 2016 , to conagra stockholders . on november 10 , 2016 , our common stock began trading under the ticker symbol “ lw ” on the nyse . in connection with the separation , we entered into a separation and distribution agreement and several other agreements with conagra , including a transition services agreement , tax matters agreement , employee matters agreement , and trademark license agreement . these agreements govern the relationship between us and conagra following the separation and provide for the allocation of various assets , liabilities , rights and obligations . these agreements also include arrangements for transition services to be provided by conagra to lamb weston . for a discussion of these agreements , see the section entitled “ relationship with conagra after the spinoff ” in the form 10 and note 3 , related party transactions , of the notes to combined consolidated financial statements in “ part ii , item 8. financial statements and supplementary data ” in this form 10-k. 28 in connection with the separation , conagra transferred substantially all of the assets and liabilities and operations of the lamb weston business to us . combined financial statements prior to the separation were prepared on a stand-alone basis and were derived from conagra 's consolidated financial statements and accounting records . the combined financial statements contained in this report reflect our financial position , results of operations , comprehensive income and cash flows as our business was operated as part of conagra prior to the separation and an allocation of a portion of conagra 's shared corporate general and administrative expenses . following the separation , our consolidated financial statements include the accounts of lamb weston holdings , inc. and its wholly owned subsidiaries . the combined financial position , results of operations , and cash flows as of dates and for periods prior to the separation may not be indicative of what our financial position , results of operations , and cash flows would have been as a separate stand-alone public company during the periods presented , nor are they indicative of what our financial position , results of operations , and cash flows may be in the future . information related to the separation and its effect on our financial statements are discussed throughout this form 10‑k . executive summary fiscal 2017 net sales increased 6 % to $ 3,168.0 million , compared with $ 2,993.8 million in the prior year . income from operations increased 39 % to $ 518.3 million , compared with $ 373.3 million in the prior year . story_separator_special_tag the increase in volume was partially offset by a 2 % sales decrease due to the inclusion of an additional week in fiscal 2015. in addition , price/mix declined 2 % , primarily due to ( i ) negative mix impacts of lower japan business , ( ii ) pricing concessions with a major customer in japan to maintain our share , ( iii ) lower net sales prices on new chain business , and ( iv ) domestic price concessions in connection with strategic decisions to maintain exclusivity or increase share . foodservice net sales increased $ 17.0 million , or 2 % , in fiscal 2016 as compared to fiscal 2015. results for fiscal 2016 reflected 5 % growth due to organic volume growth , largely due to increased demand for frozen potato products with our key distributors . the volume increase was partially offset by a decrease of 2 % due to the inclusion of an additional week of sales in fiscal 2015 , and a 1 % decrease in price/mix . retail net sales increased $ 16.5 million , or 5 % , in fiscal 2016 as compared to fiscal 2015. results for fiscal 2016 reflected 7 % growth due to increased volume and pricing in our branded and private label portfolios . the increase was partially offset by a decrease of 2 % due to the inclusion of an additional week in fiscal 2015. other net sales decreased $ 1.2 million , or 1 % , in fiscal 2016 as compared to fiscal 2015. results for fiscal 2016 primarily reflected a reduction due to the inclusion of an additional week of sales in fiscal 2015. product contribution margin global product contribution margin increased $ 42.8 million , or 17 % , in fiscal 2016 as compared to fiscal 2015 , as a result of favorable volume , lower commodity input , transportation , and conversion costs , as well as the impact of costs associated with a west coast port labor dispute in fiscal 2015. cost of goods sold was $ 8.8 million , or 1 % , lower in fiscal 2016 as compared to fiscal 2015 , driven by a decrease in commodity input , transportation , and conversion costs , partially offset by an increase from higher volume . advertising and promotion spending was $ 2.4 million higher in fiscal 2016 as compared to fiscal 2015 , driven by costs related to our global rebranding . foodservice product contribution margin increased $ 8.7 million , or 4 % , in fiscal 2016 as compared to fiscal 2015 , due to favorable volume , as well as lower commodity input , transportation , and conversion costs . cost of goods sold was $ 6.2 million , or 1 % , higher in fiscal 2016 as compared to fiscal 2015 , driven by an increase from higher volume , partially 33 offset by a decrease in commodity input , transportation and conversion costs . advertising and promotion spending was $ 2.1 million higher in fiscal 2016 as compared to fiscal 2015 , driven by costs related to our global rebranding . retail product contribution margin increased $ 22.0 million , or 46 % , in fiscal 2016 as compared to fiscal 2015 , due to favorable volume and price/mix , as well as lower commodity input , transportation , and conversion costs . cost of goods sold was $ 7.2 million , or 2 % , lower in fiscal 2016 as compared to fiscal 2015 , driven by a decrease in commodity input , transportation , and conversion costs , partially offset by an increase from higher volume . advertising and promotion spending was $ 1.6 million higher in fiscal 2016 as compared to fiscal 2015 , driven by additional marketing and promotional spending related to our alexia brand . other product contribution margin increased $ 0.4 million , or 2 % , in fiscal 2016 as compared to fiscal 2015 , as the decrease in net sales was more than offset by a $ 1.5 million , or 1 % , decrease in cost of goods sold . selling , general & administrative expenses selling , general and administrative expenses increased $ 88.2 million , or 43 % , in fiscal 2016 compared with fiscal 2015. fiscal 2016 included $ 64.9 million ( $ 45.3 million after-tax ) of expenses , primarily comprised of $ 59.5 million of actuarial losses of a pension liability and $ 5.3 million of costs related to the separation . fiscal 2015 included $ 0.7 million ( $ 0.7 million after-tax ) of expenses for costs related to the separation , primarily related to professional fees . excluding these costs for each fiscal year , in fiscal 2016 , selling , general and administrative expenses increased $ 23.3 million , or 11 % , largely due to an increase in the expense allocation from conagra and higher incentive compensation as compared to the prior year . interest expense , net net interest expense was $ 5.9 million and $ 6.1 million for fiscal 2016 and 2015 , respectively . income taxes lamb weston 's income tax expense was $ 144.5 million and $ 140.4 million in fiscal 2016 and 2015 , respectively . the effective tax rate ( calculated as the ratio of income tax expense to pre-tax income including equity method investment earnings ) was 33 % and 34 % in fiscal 2016 and fiscal 2015 , respectively . the effective tax rate varies from the u.s. federal statutory tax rate of 35 % principally due to the impact of u.s. state taxes , the domestic manufacturers ' deduction , foreign taxes and other permanent differences . equity method investment earnings equity method investment earnings were $ 71.7 million and $ 42.7 million in fiscal 2016 and 2015 , respectively . equity method investment earnings for fiscal 2016 included a gain of $ 17.7 million related to the settlement of a pension plan of lamb-weston/meijer .
| results of operations we have four reportable segments : global , foodservice , retail , and other . for each period presented , we report net sales and product contribution margin by segment . net sales and product contribution margin are the primary measures reported to our chief operating decision maker for purposes of allocating resources to our segments and assessing their performance . we define product contribution margin as net sales less cost of sales and advertising and promotion expenses . for additional information on our reportable segments , see note 14 , segments , of the notes to combined and consolidated financial statements in “ part ii , item 8. financial statements and supplementary data ” in this form 10-k. 30 fiscal year ended may 28 , 2017 compared to fiscal year ended may 29 , 2016 net sales and product contribution margin ( dollars in millions ) replace_table_token_4_th net sales lamb weston 's net sales for fiscal 2017 were $ 3,168.0 million , an increase of $ 174.2 million , or 6 % , compared with fiscal 2016. net sales in fiscal 2017 reflect a 4 % increase in price/mix and volume growth of 2 % , with growth across all business segments . global net sales increased $ 75.4 million , or 5 % , to $ 1,624.8 million , compared with $ 1,549.4 million in fiscal 2016. net sales in fiscal 2017 reflect a 4 % increase in sales volume , driven by growth domestically , which included organic growth and new business with major restaurant chains , as well as growth in international markets . additionally , net sales in fiscal 2017 reflect a 1 % increase in price/mix associated with price increases in both domestic and international markets , as well as actions to improve customer and product mix .
| 7,485 |
the assets of the rabbi trust are included in other long-term assets on the consolidated balance sheets and the serp liability is included in other long-term story_separator_special_tag the following discussion pertains to the results of operations and financial position of the company for each of the three years in the period ended december 31 , 2012 , and should be read in conjunction with the consolidated financial statements and the notes thereto included elsewhere in this report . 28 overview in 2012 , we recorded our third straight year of record sales and net income , with sales doubling over the last three years and net income tripling over the same period . this growth is fueled by innovative new products leading to market share growth in every product category , remaining the market share leader in side-by-side vehicles , and for the first time ever becoming the north american atv market share leader in 2012. the overall north american powersports industry continued its positive trend with modest growth in 2012. our north america retail sales to consumers increased approximately 14 % in 2012 , helping to drive total full year company sales up 21 % to a record $ 3.21 billion . despite the global economy remaining difficult , continued market share growth in orvs and victory motorcycles led to a nine percent increase in international sales including a 21 percent increase in the asia pacific/latin america regions . full year earnings reflect the success of our margin expansion efforts , as we delivered a 110 basis point increase in net income margin to a record 9.7 percent of sales . this increase came while we continued to invest in numerous longer-term diversification and growth opportunities . the combination of increased sales growth and expanding gross margins drove net income up 37 percent to $ 312.3 million , with diluted earnings per share increasing 38 percent to a record $ 4.40 per share . throughout 2012 , we continued to invest in both product development and strategic initiatives . the investments made have positioned us well for the launch of the new indian motorcycle and jointly developed product with bobcat in 2013 , and supported our continued growth in the small vehicle industry with gem and goupil . in addition , in the fourth quarter of 2012 , we acquired klim , a market leader in the design , development , and distribution of premium technical riding gear for the snowmobile and motorcycle segments . during 2012 , we also established a joint venture with eicher motors limited , which intends to design , develop , and manufacture a full range of new vehicles for india and other emerging markets . global market leadership is a focus for our core and adjacent businesses , with our goal for international sales to customers outside of north america being to generate at least 33 percent of total company sales by 2018. we continued to grow international market share in orvs and motorcycles in 2012 , with sales growth experienced in each of europe , latin america , and asia pacific regions . our planned investment in a manufacturing facility in europe during 2013 and strategic investments such as eicher , positions us well to continue our international growth in the coming years . on january 31 , 2013 , we announced that our board of directors approved a 14 percent increase in the regular quarterly cash dividend to $ 0.42 per share for the first quarter of 2013 , representing the 18th consecutive year of increased dividends to shareholders . this increase reflects the continued momentum and potential of our business and the strength of our balance sheet . story_separator_special_tag style= '' margin-top:12px ; margin-bottom:0px ; text-indent:4 % '' > sales by geographic region for the 2012 , 2011 and 2010 year end periods were as follows : replace_table_token_8_th 31 significant regional trends were as follows : united states : sales in the united states for 2012 increased 24 percent compared to 2011 , primarily resulting from higher shipments in orv and motorcycles due to market share gains driven by innovative products . the united states represented 72 percent , 70 percent and 71 percent of total company sales in 2012 , 2011 and 2010 , respectively . sales in the united states for 2011 increased 33 percent compared to 2010 , primarily resulting from higher shipments in all product lines due to market share gains driven by innovative products . canada : canadian sales increased 19 percent in 2012 compared to 2011. increased volume was the primary contributor for the increase in 2012 due to strong retail sales demand in canada for our products , partially offset by currency rate movements , which had an unfavorable one percent impact on sales for 2012 compared to 2011. sales in canada represented 14 percent of total company sales in 2012 , 2011 , and 2010. canadian sales increased 32 percent in 2011 compared to 2010. fluctuations in the canadian currency rate compared to the united states dollar accounted for a five percent increase in sales for 2011 compared to 2010. increased volume was the primary contributor for the remainder of the increase in 2011 due to strong retail sales demand in canada for our products . other foreign countries : sales in other foreign countries , primarily in europe , increased nine percent for 2012 compared to 2011. the increase was primarily driven by the additional sales from the goupil acquisition , higher sales of victory motorcycles and snowmobiles , and a 21 percent increase in the asia/pacific and latin america region sales . story_separator_special_tag million of expense for 2012 , 2011 and 2010 , respectively . the changes primarily relate to fluctuations of the u.s. dollar and the resulting effects on currency hedging activities , foreign currency transactions , and certain balance sheet positions . provision for income taxes : the income tax provision rate was similar for 2012 , 2011 and 2010 and reflected an effective rate of 34.9 , 34.3 , and 32.7 percent of pretax income , respectively . the income tax rate for 2012 was unfavorably impacted by the united states congress not enacting the 2012 research and development tax credit until january 2013. as a result , the impact of the 2012 research and development tax credit will be recorded in the first quarter 2013 tax provision . 34 reported net income : the following table reflects our reported net income for the 2012 , 2011 and 2010 periods : replace_table_token_13_th weighted average shares outstanding : the weighted average diluted shares outstanding for 2012 , 2011 and 2010 were 71.0 million , 71.1 million , and 68.8 million shares , respectively . in 2012 , the issuance of shares under employee compensation plans offset market share repurchases under our stock repurchase program , resulting in flat weighted average shares outstanding compared to 2011. the increase in weighted average diluted shares outstanding for 2011 compared to 2010 is due to the issuance of shares under employee compensation plans , and the higher dilutive effect of stock options outstanding due to a higher stock price in 2011 compared to 2010. critical accounting policies the significant accounting policies that management believes are the most critical to aid in fully understanding and evaluating our reported financial results include the following : revenue recognition , sales promotions and incentives , dealer holdback programs , share-based employee compensation , product warranties and product liability . revenue recognition : revenues are recognized at the time of shipment to the dealer , distributor or other customers . historically , product returns , whether in the normal course of business or resulting from repurchases made under the floorplan financing program , have not been material . however , we have agreed to repurchase products repossessed by the finance companies up to certain limits . our financial exposure is limited to the difference between the amount paid to the finance companies and the amount received on the resale of the repossessed product . no material losses have been incurred under these agreements . we have not historically recorded any significant sales return allowances because we have not been required to repurchase a significant number of units . however , an adverse change in retail sales could cause this situation to change . polaris sponsors certain sales incentive programs and accrues liabilities for estimated sales promotion expenses and estimated holdback amounts that are recognized as reductions to sales when products are sold to the dealer or distributor customer . sales promotions and incentives : we provide for estimated sales promotion and incentive expenses , which are recognized as a reduction to sales , at the time of sale to the dealer or distributor . examples of sales promotion and incentive programs include dealer and consumer rebates , volume incentives , retail financing programs and sales associate incentives . sales promotion and incentive expenses are estimated based on current programs and historical rates for each product line . we record these amounts as a liability in the consolidated balance sheet until they are ultimately paid . at december 31 , 2012 and 2011 , accrued sales promotions and incentives were $ 107.0 million and $ 81.2 million , respectively , resulting primarily from an increase in the volume of units sold and an increase in the level of dealer inventories in 2012. actual results may differ from these estimates if market conditions dictate the need to enhance or reduce sales promotion and incentive programs or if the customer usage rate varies from historical trends . adjustments to sales promotions and incentives accruals are made from time to time as actual usage becomes known in order to properly estimate the amounts necessary to generate consumer demand based on market conditions as of the balance sheet date . historically , actual sales promotion and incentive expenses have been within our expectations and differences have not been material . 35 dealer holdback programs : dealer holdback represents a portion of the invoiced sales price that is expected to be subsequently returned to the dealer or distributor as a sales incentive upon the ultimate retail sale of the product . holdback amounts reduce the ultimate net price of the products purchased by our dealers or distributors and , therefore , reduce the amount of sales we recognize at the time of shipment . the portion of the invoiced sales price estimated as the holdback is recognized as dealer holdback liability on our balance sheet until paid or forfeited . the minimal holdback adjustments in the estimated holdback liability due to forfeitures are recognized in net sales . payments are made to dealers or distributors at various times during the year subject to previously established criteria . polaris recorded accrued liabilities of $ 86.7 million and $ 76.5 million for dealer holdback programs in the consolidated balance sheets as of december 31 , 2012 and 2011 , respectively . share-based employee compensation : we recognize in the financial statements the grant-date fair value of stock options and other equity-based compensation issued to employees . determining the appropriate fair-value model and calculating the fair value of share-based awards at the date of grant requires judgment . the company utilizes the black-scholes option pricing model to estimate the fair value of employee stock options . option pricing models , including the black-scholes model , also require the use of input assumptions , including expected volatility , expected life , expected dividend rate , and expected risk-free rate of return . the company utilizes historical volatility as it believes this is reflective of market conditions .
| results of operations sales : sales were $ 3,209.8 million in 2012 , a 21 percent increase from $ 2,656.9 million in sales for the same period in 2011. the following table is an analysis of the percentage change in total company sales for 2012 compared to 2011 and 2011 compared to 2010 : replace_table_token_6_th 29 volume for 2012 and 2011 increased 18 and 24 percent compared to 2011 and 2010 , respectively . the volume increase in 2012 and 2011 is primarily due to the company shipping more orvs and on-road vehicles , and related pg & a items to dealers than during the prior years , as consumer retail demand and market share increased for our products . product mix and price increased for both 2012 and 2011 compared to the respective prior years primarily due to the increased shipments of side-by-side vehicles to dealers in both periods . side-by-side vehicles typically have a higher selling price than our other orv products . increased sales of victory motorcycles also contributed to the improved mix of products in 2012 and 2011 compared to the respective prior years . total company sales by product line are as follows : replace_table_token_7_th orv sales of $ 2,225.8 million in 2012 , which includes core atv and ranger and rzr side-by-side vehicles , increased 22 percent from 2011. this increase reflects continued market share gains for both atvs and side-by-side vehicles driven by industry leading product offerings . polaris ' north american orv unit retail sales to consumers increased mid-teens percent for 2012 compared to 2011 , with atv unit retail sales growing mid-single digits percent and side-by-side vehicle unit retail sales increasing more than 20 percent over the prior year . north american dealer inventories of orvs increased 26 percent from 2011 , in support of continued strong retail demand for side-by-side vehicles and incremental new market segments .
| 7,486 |
the agreement was effective september 1 , 2010 , subject to regulatory approvals , and the transaction was completed on june 15 , 2011. purchase consideration was $ 40.1 million and was recorded as capital expenditures in 2011 and 2010. on january 20 , 2012 , the company entered story_separator_special_tag this report , and in particular this management 's discussion and analysis of financial condition and results of operations , contains 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. please see the cautionary language at the very beginning of this annual report on form 10-k regarding the identification of and risks relating to forward-looking statements , as well as part i , item 1a “ risk factors ” in this annual report on form 10-k. the following discussion of our financial condition and results of operations should be read in conjunction with the `` financial statements and supplementary data '' as set out in part ii , item 8 of this annual report on form 10-k. overview we are an independent international energy company incorporated in the united states and engaged in oil and natural gas acquisition , exploration , development and production . our operations are carried out in south america in colombia , argentina , peru , and brazil , and we are headquartered in calgary , alberta , canada . for the year ended december 31 , 2013 , 86 % ( year ended december 31 , 2012 - 84 % ; year ended december 31 , 2011 - 91 % ) of our revenue and other income was generated in colombia . as of december 31 , 2013 , we had estimated proved reserves nar of 42.1 mmboe , comprising 95 % oil and 5 % natural gas , of which 80 % were proved developed reserves . our primary source of liquidity is cash generated from our operations . the price of oil is a critical factor to our business and the price of oil has historically been volatile . future volatility could be detrimental to our financial performance . during 2013 , the average price realized for our oil was $ 90.61 per barrel ( 2012 - $ 97.31 ; 2011 - $ 96.60 ) . business strategy our plan is to continue to build an international oil and gas company through acquisition and exploitation of under-developed prospective oil and gas assets , and to develop these assets with exploration and development drilling to grow commercial reserves and production . our initial focus is in select countries in south america , currently colombia , argentina , peru , and brazil ; we will consider other regions for future growth should those regions make strategic and commercial sense in creating additional value . we have applied a two-stage approach to growth , initially establishing a base of production , development and exploration assets by selective acquisitions , and secondly achieving additional reserve and production growth through drilling . we intend to duplicate this business model in other areas as opportunities arise . we pursue opportunities in countries with proven petroleum systems ; attractive royalty , taxation and other fiscal terms ; and stable legal systems . while continuing to pursue opportunities to grow our business both through internal growth and through mergers , acquisitions and other asset transactions , we will also pursue opportunities to dispose of non-core assets through farm-outs or outright disposition of assets , which may include a sale of the stock of one or more of our subsidiaries . to implement this strategy , we may be involved in various related discussions and activities at any given time . acquisitions are motivated by many factors , including , among others , our desire to grow our business , obtain quality assets , including ones with attractive revenue streams , and acquire skilled personnel . dispositions are motivated by our desire devote our resources to our best performing and most profitable assets that result in us achieving the best return . 57 story_separator_special_tag morales block . dd & a expenses in 2012 included a $ 20.2 million ceiling test impairment in our brazil cost center related to seismic and drilling costs on block bm-cal-10 . for the year ended december 31 , 2013 , funds flow from operations increase d by 9 % from $ 323.8 million to $ 352.9 million primarily due to increase d oil and natural gas sales and lower g & a expenses and realized foreign exchange losses partially offset by increase d operating and income tax expenses , including a $ 10.4 million non-recurring tax expense in brazil on the proceeds from termination of a farmout agreement . cash and cash equivalents were $ 428.8 million at december 31 , 2013 , compared with $ 212.6 million at december 31 , 2012 . the change in cash and cash equivalents during 2013 was primarily the result of funds flow from operations of $ 352.9 million , a $ 167.9 million change in net assets and liabilities from operating activities , proceeds from oil and gas properties of $ 59.6 million , and proceeds from issuance of common stock of $ 3.8 million , partially offset by capital expenditures of $ 367.3 million and a $ 0.8 million increase in restricted cash . working capital ( including cash and cash equivalents ) was $ 245.8 million at december 31 , 2013 , a $ 23.4 million increase from december 31 , 2012 . property , plant and equipment at december 31 , 2013 , was $ 1.3 billion , an increase of $ 54.7 million from december 31 , 2012 , as a result of $ 314.8 million of net capital expenditures ( net of proceeds from oil and gas properties of $ 59.6 million and excluding changes in non-cash working capital ) , partially offset by $ 260.1 million of depletion , depreciation and impairment expenses . story_separator_special_tag also , raising funds by issuing shares or other equity securities would further dilute our existing shareholders , and this dilution would be exacerbated by a decline in our share price . any securities we issue may have rights , preferences and privileges that are senior to our existing equity securities . borrowing money may also involve further pledging of some or all of our assets , may require compliance with debt covenants and will expose us to interest rate risk . depending on the currency used to borrow money , we may also be exposed to further foreign exchange risk . our ability to borrow money and the interest rate we pay for any money we borrow will be affected by market conditions , and we can not predict what price we may pay for any borrowed money . business combinations on october 8 , 2012 , we received regulatory approval and acquired the remaining 30 % working interest in four blocks in brazil pursuant to the terms of a purchase and sale agreement dated january 20 , 2012. with the exception of one block which has three producing wells , the remaining blocks are unproved properties . we paid cash purchase consideration of $ 35.5 million . contingent consideration up to an additional $ 3.0 million may be payable dependent on production volumes from the acquired blocks . on march 18 , 2011 , we completed the acquisition of all the issued and outstanding common shares and warrants of petrolifera pursuant to the terms and conditions of an arrangement agreement dated january 17 , 2011. petrolifera is a calgary-based oil , natural gas and ngl exploration , development and production company active in argentina , colombia and peru . as indicated in the allocation of the consideration transferred , the fair value of identifiable assets acquired and liabilities assumed exceeded the fair value of the consideration transferred . consequently , we reassessed the recognition and measurement of identifiable assets acquired and liabilities assumed and concluded that all acquired assets and assumed liabilities were recognized and that the valuation procedures and resulting measures were appropriate . as a result , we recognized a gain on acquisition of $ 21.7 million in the consolidated statement of operations in the year ended december 31 , 2011. the gain reflected the impact on petrolifera 's pre-acquisition market value resulting from their lack of liquidity and capital resources required to maintain current production and reserves and further develop and explore their inventory of prospects . for further details reference should be made to note 3 of the consolidated financial statements in item 8 “ financial statements and supplementary data ” . 61 consolidated results of operations replace_table_token_13_th ( 1 ) production represents production volumes nar adjusted for inventory changes . 62 consolidated results of operations for the year ended december 31 , 2013 , compared with the results for the year ended december 31 , 2012 net income for the year ended december 31 , 2013 , was $ 126.3 million , a 27 % increase from 2012 . on a per share basis , net income increased to $ 0.45 per share basic and $ 0.44 per share diluted from $ 0.35 per share basic and diluted in 2012 . for the year ended december 31 , 2013 , increase d oil and natural gas sales and foreign exchange gains and lower g & a expenses were partially offset by increase d operating , dd & a , and income tax expenses and other loss and the absence of other gain recorded in 2012. oil and ngl production , nar and adjusted for inventory changes , for the year ended december 31 , 2013 , increased to 7.9 mmbbl compared with 5.9 mmbbl in 2012 due to the reduced impact of pipeline disruptions in colombia , a decrease in oil inventory in the ecopetrol s.a. ( `` ecopetrol '' ) operated trans-andean oil pipeline ( the `` ota pipeline ” ) and associated ecopetrol operated facilities in the putumayo basin , and production from new wells in colombia . the net inventory reduction accounted for 0.1 mmbbl or 155 bopd of the production increase . in the year ended december 31 , 2013 , the impact of ota pipeline disruptions on production was mitigated by selling a portion of our oil through trucking and an alternative pipeline . average realized oil prices decreased by 7 % to $ 90.61 per bbl for the year ended december 31 , 2013 , from $ 97.31 per bbl for 2012. average brent oil prices for the year ended december 31 , 2013 , were $ 108.64 per bbl compared with $ 111.67 per bbl in 2012 . west texas intermediate ( `` wti '' ) oil prices for the year ended december 31 , 2013 , were $ 97.97 per bbl compared with $ 94.20 per bbl in 2012 . during the year ended december 31 , 2013 , 49 % of our oil and gas volumes sold in colombia were to a customer which takes delivery at the costayaco battery and transports the oil by truck over a 1,500 km route to the port of barranquilla . the sales price for this customer is based on average wti prices plus a vasconia differential and premium , less trucking costs . for sales to this customer , the trucking costs are recorded as a reduction of the realized price and not as operating costs . revenue and other income for the year ended december 31 , 2013 , increase d to $ 723.6 million from $ 585.2 million in 2012 as a result of increased production , partially offset by decrease d realized prices . operating expenses for the year ended december 31 , 2013 , were $ 149.1 million , or $ 18.34 per boe , compared with $ 124.9 million , or $ 20.20 per boe , in 2012 .
| highlights replace_table_token_10_th replace_table_token_11_th ( 1 ) production represents production volumes nar adjusted for inventory changes . ( 2 ) funds flow from operations is a non-gaap measure which does not have any standardized meaning prescribed under generally accepted accounting principles in the united states of america ( “ gaap ” ) . management uses this financial measure to analyze operating performance and the income generated by our principal business activities prior to the consideration of how non-cash items affect that income , and believes that this financial measure is also useful supplemental information for investors to analyze operating performance and our financial results . investors should be cautioned that this measure should not be construed as an alternative to net income or other measures of financial performance as determined in accordance with gaap . our method of calculating this measure may differ from other companies and , accordingly , it may not be comparable to similar measures used by other companies . funds flow from operations , as presented , is net income adjusted for depletion , depreciation , accretion and impairment ( “ dd & a ” ) expenses , deferred tax recovery or expense , stock-based compensation , unrealized gain on financial instruments , unrealized foreign exchange gain or loss , cash settlement of asset retirement obligation , other gain , other loss , equity tax and gain on acquisition . a reconciliation from net income to funds flow from operations is as follows : 58 replace_table_token_12_th ( 3 ) in 2013 , capital expenditures are net of proceeds of $ 54.0 million relating to termination of a farm-in agreement in brazil ; $ 4.1 million relating to our assumption of the remaining 50 % working interest in the santa victoria block in argentina ; and $ 1.5 million relating to the sale of our 15 % working interest in the mecaya block in colombia .
| 7,487 |
in september 2018 , the company obtained a new mortgage in the amount of $ 1,000,000 on the same property . the interest rate on the new loan is fixed at 4.75 % per annum for the first five years and variable for the remaining of the term . the note matures in october 2048 . $ 995,000 received as a result of the refinance was used to pay down the rloc . 40 each mortgage notes payable is secured by real estate or the hotel . as of june 30 , 2019 and 2018 , the mortgage notes payables are summarized as follows : replace_table_token_26_th 41 replace_table_token_27_th future minimum payments for all mortgage notes payable are as follows : replace_table_token_28_th 42 note 12 – management agreements on february 1 , 2017 , justice entered into a hotel management agreement ( “ hma ” ) with interstate management company , llc ( “ interstate ” ) to manage the hotel with an effective takeover date of february 3 , 2017. the term of management agreement is for an initial period of 10 years commencing on the takeover date and automatically renews for an additional year not to exceed five years in the aggregate subject to certain conditions . the hma also provides for interstate to advance a key money incentive fee to the hotel for capital improvements in the amount of $ 2,000,000 under certain terms and conditions described in a separate key money agreement . the key money contribution shall be amortized in equal monthly amounts over an eight ( 8 ) year period commencing on the second ( 2 nd ) anniversary of the takeover date . the $ 2,000,000 is included in restricted cash balances in the consolidated balance sheets as of june 30 , 2019 and 2018. as of june 30 , 2019 and 2018 , unamortized portion of the key money was $ 1,896,000 and $ 2,000,000 , respectively , and are included in related party and other notes payable in the consolidated balance sheets . during the years ended june 30 , 2019 and 2018 , interstate management fees were $ 1,206,000 and $ 957,000 , respectively , and are included in hotel operating expenses in the consolidated statements of operations . note 13 – concentration of credit risk as of june 30 , 2019 and 2018 , all accounts receivables are related to hotel customers . the hotel had one account that accounted for 32 % , or $ 272,000 of accounts receivable at june 30 , 2019 , and two customers that accounted for 32 % , or $ 572,000 of accounts receivable at june 30 , 2018. the partnership maintains its cash and cash equivalents and restricted cash with various financial institutions that are monitored regularly for credit quality . at times , such cash and cash equivalents holdings may be in excess of the federal deposit insurance corporation ( “ fdic ” ) or other federally insured limits . note 14 – income taxes the provision for the company 's income tax expense is comprised story_separator_special_tag story_separator_special_tag border-bottom : black 1pt solid '' > 20 the following table sets forth the average daily room rate , average occupancy percentage and room revenue per available room ( “ revpar ” ) of the hotel for the year ended june 30 , 2019 and 2018. replace_table_token_5_th the hotel was able to grow occupancy while increasing rate resulting in a 9 % revpar growth , far exceeding market performance . the hotel successfully grew midweek rate while slightly increasing occupancy in a market that is seeing occupancy declines . we believe that enhancing the hotel 's technology is critical to remain competitive in the market place and to that end , we are currently working with all hilton approved vendors to upgrade all technical aspects of the hotel . implementation of state-of-the-art systems such as the new internet system from cisco and 4k smart televisions that are in every room and common areas will set us apart from our competitors . we have made ten additional rooms available by eliminating the justice administrative office from the hotel and relocating the accounting department to administrative space and eliminated the unprofitable wellness center that was added by previous management . we anticipate that the additional ten rooms will be placed into service within the fiscal year ending june 30 , 2020 as design delays pushed the project into our next fiscal year . additionally , the fitness center which is occupying the equivalent of five rooms and the executive lounge which is occupying the equivalent of three rooms , will be relocated to a different area within the hotel . the eight equivalent rooms will be placed back into service . part of this renovation will be funded by the hotel 's furniture , fixture and equipment reserve account with our lender as well as the $ 2,000,000 key money incentive provided by interstate . lastly , we anticipate the completion of the installation of a complete exterior building maintenance system by the end of our quarter ending december 31 , 2019 which will enable periodic window washing . real estate operations revenue from real estate operations increased to $ 14,872,000 for the year ended june 30 , 2019 from $ 14,480,000 for the year ended june 30 , 2018 primarily as a result of increased occupancy . real estate operating expenses increased to $ 7,810,000 from $ 7,579,000 primarily as a result of increased utility cost and real estate taxes . management continues to review and analyze the company 's real estate operations to improve occupancy and rental rates and to reduce expenses and improve efficiencies . story_separator_special_tag investment transactions the company had a net loss on marketable securities of $ 1,733,000 for the year ended june 30 , 2019 compared to a net loss on marketable securities of $ 1,777,000 for the year ended june 30 , 2018. for the year ended june 30 , 2019 , the company had a net unrealized loss of $ 254,000 and zero realized loss , related to the company 's investment in the common stock of comstock mining inc. ( “ comstock ” - nyse mkt : lode ) . for the year ended june 30 , 2018 , the company had an unrealized loss of $ 2,337,000 and a realized loss of $ 6,007,000 , related to the company 's investment in the common stock of comstock . as of june 30 , 2019 and 2018 , investments in comstock represent approximately 7 % of the company 's investment portfolio . for the year ended june 30 , 2019 , the company had a net realized loss of $ 806,000 and a net unrealized loss of $ 927,000. for the year ended june 30 , 2018 , the company had a net realized loss of $ 5,375,000 and a net unrealized gain of $ 3,598,000. gains and losses on marketable securities may fluctuate significantly from period to period in the future and could have a significant impact on the company 's results of operations . however , the amount of gain or loss on marketable securities for any given period may have no predictive value and variations in amount from period to period may have no analytical value . for a more detailed description of the composition of the company 's marketable securities see the marketable securities section below . during the years ended june 30 , 2019 and 2018 , the company performed an impairment analysis of its other investments and determined that its investments had other than temporary impairment and recorded impairment losses of $ 98,000 and $ 200,000 , respectively . the company and its subsidiaries , portsmouth and santa fe , compute and file income tax returns and prepare discrete income tax provisions for financial reporting . the income tax benefit ( expense ) during the years ended june 30 , 2019 and 2018 represents primarily the combined income tax effect of portsmouth 's pretax income which includes its share in net income from the hotel and the pre-tax loss from intergroup ( standalone ) . 21 marketable securities and other investments as of june 30 , 2019 and 2018 , the company had investments in marketable equity securities of $ 9,696,000 and $ 13,841,000 , respectively . the following table shows the composition of the company 's marketable securities portfolio by selected industry groups : replace_table_token_6_th replace_table_token_7_th the company 's investment portfolio is diversified with 29 different equity positions the company holds three equity securities that comprised more than 10 % of the equity value of the portfolio . the largest security position represents 17.9 % of the portfolio and consists of the common stock of american realty investors , inc. which is included in the reits and real estate companies industry group . the following table shows the net loss on the company 's marketable securities and the associated margin interest and trading expenses for the respective years . replace_table_token_8_th financial condition and liquidity the company 's cash flows are primarily generated from its hotel operations , general partner management fees from justice investors , and its real estate operations . the company may also receive cash generated from the investment of its cash and marketable securities and other investments . 22 to fund the redemption of limited partnership interests and to repay the prior mortgage , justice obtained a $ 97,000,000 mortgage loan and a $ 20,000,000 mezzanine loan in december of 2013. the mortgage loan is secured by the partnership 's principal asset , the hotel . the mortgage loan bears an interest rate of 5.275 % per annum and matures in january 2024. as additional security for the mortgage loan , there is a limited guaranty executed by the company in favor of mortgage lender . the mezzanine loan is secured by the operating membership interest held by mezzanine and is subordinated to the mortgage loan . the mezzanine loan bears interest at 9.75 % per annum and matures in january 2024. as additional security for the mezzanine loan , there is a limited guaranty executed by the company in favor of mezzanine lender . effective as of may 12 , 2017 , intergroup agreed to become an additional guarantor under the limited guaranty and an additional indemnitor under the environmental indemnity for justice investors limited partnership 's $ 97,000,000 mortgage loan and the $ 20,000,000 mezzanine loan . on july 31 , 2019 , mezzanine refinanced the mezzanine loan by entering into a new mezzanine loan agreement ( “ new mezzanine loan agreement ” ) with cred reit holdco llc in the amount of $ 20,000,000. the prior mezzanine loan was paid off . interest rate on the new mezzanine loan is 7.25 % and the loan matures on january 1 , 2024. interest only payments are due monthly . see note 19 – subsequent events . management believes that its cash , securities assets , real estate and the cash flows generated from those assets and from partnership management fees , will be adequate to meet the company 's current and future obligations . additionally , management believes there is significant appreciated value in the hotel and other real estate properties to support additional borrowings if necessary . material contractual obligations the following table provides a summary of the company 's material financial obligations which also includes interest . replace_table_token_9_th off-balance sheet arrangements the company has no material off balance sheet arrangements . impact of inflation hotel room rates are typically impacted by supply and demand factors , not inflation , since rental of a hotel room is
| results of operations as of june 30 , 2019 , the company owned approximately 82.2 % of the common shares of its subsidiary , santa fe , and santa fe owned approximately 68.8 % of the common shares of portsmouth square , inc. intergroup also directly owns approximately 13.4 % of the common shares of portsmouth . the company 's principal sources of revenue continue to be derived from the general and limited partnership interests of its subsidiary , portsmouth , in the justice investors limited partnership ( “ justice ” or the “ partnership ” ) , rental income from its investments in multi-family and commercial real estate properties , and income received from investment of its cash and securities assets . justice owns a 544-room hotel property located at 750 kearny street , san francisco , california 94108 , known as the “ hilton san francisco financial district ” ( the “ hotel ” or the “ property ” ) and related facilities , including a five-level underground parking garage . the financial statements of justice have been consolidated with those of the company . the hotel is operated by the partnership as a full-service hilton brand hotel pursuant to a license agreement with hilton . the partnership entered into the license agreement on december 10 , 2004. the term of the license agreement was for an initial period of 15 years commencing on the reopening date , upon completion of a major renovation , with an option to extend the license agreement for another five years , subject to certain conditions . on june 26 , 2015 , the partnership and hilton entered into an amended franchise agreement which extended the license agreement through 2030 , modified the monthly royalty rate , extended geographic protection to the partnership and also provided the partnership certain key money cash incentives to be earned through 2030 in the form of a self-exhausting , interest free note . the key money cash incentive of $ 4,750,000 was received on july 1 , 2015.
| 7,488 |
as of december 25 , 2011 , we were in compliance with the covenants included in this debt agreement . 8.5 % senior subordinated notes on february 27 , 2004 , solo delaware issued $ 325.0 million of 8.5 % senior subordinated notes due 2014 under an indenture among the issuer , the initial guarantors identified therein and u.s. bank national association , as trustee . the senior subordinated notes mature on february story_separator_special_tag executive summary we are a leading producer and marketer of single-use products used to serve food and beverages in the home , quick-service restaurants , and other foodservice settings . we manufacture and supply a broad portfolio of single-use products , including cups , lids , take-out and other food containers , plates , bowls , portion cups , cutlery and straws , with products available in plastic , paper , foam , post-consumer recycled content and annually renewable materials . we serve two primary customer groups , foodservice and consumer . sales to foodservice customers , including foodservice and specialty distributors , and foodservice operators , accounted for approximately 79 % of our net sales in 2011. sales to consumer customers , retailers that sell convenience tableware to consumers , such as grocery stores , mass merchandisers , warehouse clubs , value channel stores and other retail outlets , accounted for the remaining 21 % . manufacturing footprint optimization during 2011 , as we completed the execution of our plan to further optimize our manufacturing footprint , we closed our manufacturing facilities in owings mills , maryland ; north andover , massachusetts ; and springfield , missouri . over the life of the plan , we incurred costs of approximately $ 132 million . of these costs , approximately $ 35 million were cash expenditures , including severance payments and equipment relocation and related costs . the other costs consist of a pension plan curtailment loss , a charge attributable to lease payments that we remain obligated to make in periods after we ceased use of the related facility , a lease termination charge , asset impairment charges related to these three plant closures , and accelerated depreciation for certain property , plant and equipment that would not be used after the facilities were closed , as follows ( in millions ) : replace_table_token_3_th ( 1 ) the asset impairment charges in 2010 related to equipment that we no longer expected to utilize in our operations and a charge to adjust the carrying value of our springfield property to fair value less costs to sell . the asset impairment charges in 2011 related primarily to a charge to adjust the carrying value of our owings mills property to fair value less costs to sell . excluding the asset impairment charges , all of the amounts included in the above table are reflected in cost of goods sold . plant closure and consolidation costs included in cost of goods sold decreased by $ 5 million to $ 49 million in 2011 compared to $ 54 million in 2010. excluding these costs in both years , gross profit as a percentage of net sales was 10.9 % for 2011 compared to 12.5 % for 2010. the decline in gross profit was primarily driven by the economic and industry conditions that our company has faced in recent years , as described below . economic and industry conditions our results of operations were significantly affected directly and indirectly by economic and industry conditions . the economic downturn has reduced the discretionary income of consumers and negatively affected demand for single-use products used to serve food and beverages . we believe this decline was driven by a variety of external factors such as consumers eating out less frequently and higher unemployment rates , which contracted the market for our foodservice operators . lower consumer discretionary spending translated into a smaller consumer market , as did a shift from national brands to private label products , which are traditionally offered at lower prices . all of these factors have resulted in increased competition and pressure on the price at which our products may be offered . concurrently , raw material , particularly resins utilized to manufacture plastic products and paperboard has risen . resin prices are influenced by other input prices such as crude oil , natural gas , benzene , ethylene , propylene and paraxylene , as well as availability of supply and changes in demand . paper prices are driven by global supply and demand as well as input costs for energy , fiber , chemicals , polyethylene and transportation . as a result of these economic and industry conditions , we experienced a decline in sales volume in 2011 compared to 2010 which had a significant impact on gross profit . partially offsetting the gross profit impact of lower sales volume was an increase in average realized sales price driven by both pricing increases and a favorable shift in product mix . 16 results of operations for fiscal years 2011 , 2010 and 2009 replace_table_token_4_th * not meaningful * * our fiscal year is the 52- or 53-week period ending on the last sunday in december . fiscal year 2011 ended on december 25 , 2011 , fiscal year 2010 ended on december 26 , 2010 , and fiscal year 2009 ended on december 27 , 2009. each was a 52-week period . fiscal year 2011 compared to fiscal year 2010 replace_table_token_5_th consolidated net sales increased by $ 53.4 million , or 3.4 % , for the year ended december 25 , 2011 from the comparable prior-year period . the increase resulted from a 8.6 % increase in average realized sales price and a 0.7 % increase in net sales attributable to foreign currency fluctuations , partially offset by a 5.9 % decline in sales volume driven by our north american segment . north america - net sales for our north american segment increased by $ 48.9 million , or 3.3 % , for the year ended december 25 , 2011 from the comparable prior-year period . story_separator_special_tag gross margin , or gross profit as a percentage of net sales , was 9.1 % in 2010 versus 13.7 % in 2009. the decrease in gross margin was primarily driven by the decrease in the difference between sales prices and raw material costs and the increase in plant consolidation costs , partially offset by a favorable shift in product mix and lower operating costs as described above . 19 selling , general and administrative expenses selling , general and administrative expenses increased slightly to $ 150.4 million in fiscal year 2010 from $ 150.1 million in fiscal year 2009. an increase in employee-related costs to normalized levels in 2010 compared to 2009 , when we reduced such costs in response to the uncertain global economy , were mostly offset by reductions in professional fees and lower expenses for advertising and trade fund spending . as a percentage of net sales , selling , general and administrative expenses were 9.5 % for fiscal year 2010 versus 10.0 % for fiscal year 2009 , driven by the increase in sales volume and a continuing focus on the management of selling , general and administrative expenses . loss on asset disposals loss on asset disposals was $ 3.9 million for fiscal year 2010 compared to $ 9.0 million for fiscal year 2009. the losses in both years reflect the disposal of production equipment in connection with plant closures and consolidation . the 2009 loss also includes adjustments made to record approximately $ 5.8 million of equipment retirements that should have been reflected in prior periods . we determined that the adjustments were immaterial to our current- and prior-period consolidated financial statements . asset impairment as a result of our decision in the second fiscal quarter of 2010 to close three manufacturing facilities , we recognized approximately $ 13.2 million of asset impairment related to equipment that we no longer expect to utilize in our operations . in addition , during the third fiscal quarter of 2010 , we entered into a contract to sell our springfield , missouri manufacturing facility and recorded $ 3.4 million of asset impairment to adjust the carrying value of the facility to fair value less costs to sell . we completed the sale transaction in december 2010 and recognized a loss of approximately $ 0.9 million . in the fourth fiscal quarter of 2010 , we recorded impairment of approximately $ 3.9 million to reduce the carrying amounts of certain real estate to estimated fair value less costs to sell . interest expense , net interest expense , net increased by $ 7.5 million , or 11.9 % , to $ 70.6 million for fiscal year 2010 compared to $ 63.1 million for fiscal year 2009. the increase in interest expense was driven primarily by higher average interest rates in 2010 compared to 2009 as a result of our july 2009 refinancing , which included the issuance of our 10.5 % senior secured notes . to a lesser extent , the increase in interest expense was driven by an increase in average outstanding borrowings year over year . foreign currency exchange loss ( gain ) , net we recognized a net foreign currency exchange loss of $ 2.2 million for fiscal year 2010 compared to a net gain of $ 2.6 million for fiscal year 2009. the fluctuation was primarily the exchange rate impact on our united kingdom subsidiary 's financial statements driven by their u.s. dollar intercompany payable , which resulted in a net loss in 2010 compared to a net gain in 2009. to a lesser extent , the net foreign currency exchange loss for 2010 reflects the net loss on our forward contracts that we use to hedge the net foreign currency exposure in each our foreign subsidiaries . gain from bargain purchase we recognized a bargain purchase gain of approximately $ 1.7 million on our march 31 , 2010 acquisition , which represents the excess of the fair value of the assets acquired , net of liabilities assumed , over the acquisition consideration of $ 24 million . income tax provision ( benefit ) income tax provision was $ 1.9 million for fiscal year 2010 compared to an income tax benefit of $ 6.3 million for fiscal year 2009. the 2010 income tax provision primarily reflects income tax expense from foreign jurisdictions with a minimal offsetting domestic income tax benefit resulting from pension activity included in other comprehensive income . in the united states , we are in a net operating loss carryforward position and our deferred income tax assets are subject to a full valuation allowance ; therefore , any loss before income taxes does not generate a corresponding income tax benefit . the benefit in 2009 includes a $ 5.1 million adjustment made during the first fiscal quarter of 2009 to correct an error in our previously reported deferred tax liabilities . if the adjustment had been recorded in the corresponding prior period financial statements , it would have increased ( decreased ) income tax provision by approximately $ 0.7 million , $ 2.4 million and $ ( 8.0 ) million in fiscal years 2008 , 2007 and 2006 , respectively , and increased other comprehensive income by $ 0.2 million in fiscal year 2008. excluding the $ 5.1 million adjustment , the remaining income tax benefit in 2009 of approximately $ 1.2 million reflects a u.s. tax benefit relating to current year pension activity included in other comprehensive income and the acceleration of taxable temporary differences associated with the goodwill impairment charge related to our europe reporting unit , partially offset by income tax provision related to our foreign entities . 20 liquidity and capital resources operating cash flows we rely on cash flows from operations and borrowings under our asset-based revolving credit facilities to finance our working capital requirements .
| executive summary above , and , to a lesser extent , our strategic decision to eliminate certain unprofitable business . 17 europe - net sales for our european segment increased by $ 10.8 million , or 9.8 % , for the year ended december 25 , 2011 from the comparable prior-year period . the increase in net sales resulted from a 4.2 % increase attributable to foreign currency fluctuations , a 3.2 % increase in average realized sales price , and a 2.4 % increase in sales volume . inter-segment eliminations primarily consist of intercompany sales from north america to europe which increased from the prior period due to higher sales volume driven by increased demand . gross profit for the year ended december 25 , 2011 , consolidated gross profit decreased by $ 13.2 million , or 9.2 % , from the comparable prior-year period . consolidated gross margin , or gross profit as a percentage of net sales , was 8.0 % for fiscal year 2011 versus 9.1 % for fiscal year 2010. excluding plant consolidation costs , consolidated gross margin for fiscal year 2011 was 10.9 % compared to 12.5 % for fiscal year 2010 , primarily due to the impact of lower sales volumes and lower production volumes on fixed cost absorption for our north america segment , all as described below .
| 7,489 |
under the terms of the 2012 credit facility , amounts outstanding bear interest at a per annum rate equal to a daily three month libor ( as defined in the credit agreement ) , plus an interest rate margin , which is determined quarterly , based on the following thresholds : level thresholds interest rate margin i liquidity £ $ 20,000 at any time during the period ; or excess availability £ $ 7,500 at any time during the period ; or fixed charge coverage ratio < 1.0:1.0 4.00 percentage points ii liquidity > $ 20,000 at all times during the period ; and liquidity £ $ 30,000 at any time during story_separator_special_tag the following discussion and analysis should be read in conjunction with our consolidated financial statements and the notes thereto , set forth in item 8 , financial statements and supplementary data of this form 10-k. for additional information , see disclosure regarding forward looking statements in part i of this form 10-k. overview executive overview please refer to item 1 . business of this form 10-k for a discussion of the company 's services and corporate strategy . integrated electrical services , inc. , a delaware corporation , is a holding company that owns and manages diverse operating subsidiaries , comprised of providers of industrial products and infrastructure services to a variety of end markets . our operations are currently organized into four principal business segments : communications , residential , commercial & industrial , and infrastructure solutions . industry trends our performance is affected by a number of trends that drive the demand for our services . in particular , the markets in which we operate are exposed to many regional and national trends such as the demand for single and multi-family housing , the need for mission critical facilities as a result of technology-driven advancements , the degree to which in-house maintenance departments outsource maintenance and repair work , output levels and equipment utilization at heavy industrial facilities , capital investment in locomotives by railroad companies , and changes in commercial , institutional , public infrastructure and electric utility spending . over the long term , we believe that there are numerous factors that could positively drive demand and affect growth within the industries in which we operate , including ( i ) population growth , which will increase the need for commercial and residential facilities , ( ii ) aging public infrastructure , which must be replaced or repaired , ( iii ) increased emphasis on environmental and energy efficiency , which may lead to both increased public and private spending , and ( iv ) the low price of natural gas combined with an increase in domestic oil and gas output and increase in spending on unconventional oil and gas exploration and production , which is expected to spur the construction of and modifications to heavy industrial facilities . however , there can be no assurance that we will not experience a decrease in demand for our services due to economic , technological or other factors . for a further discussion of the industries in which we operate , please see item 1 . business operating segments of this form 10-k. business outlook while differences exist among the company 's segments , on an overall basis , demand for the company 's services increased in fiscal 2013 as compared to fiscal 2012 resulting in aggregate year-over-year revenue growth . in addition , the company 's previous investment in growth initiatives and other business-specific factors discussed below contributed to year-over-year revenue growth . among our segment , year-over-year revenue growth rates during fiscal 2013 were led primarily by growth in our residential segment . the combination of increasing revenue , increasing project bid margins , effective project execution , and efficient scaling of operations as the economy improves have resulted in a significant reduction in operating losses . provided that no significant deterioration in general economic conditions occurs , the company expects total revenues from existing businesses to increase on a year-over-year basis during fiscal 2014 due to an increase in overall demand for the services we provide . despite this expectation of growth within certain segments , we remain focused on controlled growth within certain markets which continue to experience competitive margins and volatile commodity and lab costs . to service our indebtedness and to fund working capital , we require a significant amount of cash . our ability to generate cash depends on many factors that are beyond our control , including demand for our products and services , the availability of projects at margins acceptable to us , the ultimate collectability of our receivables and our ability to borrow on our 2012 credit facility , among many other factors . we anticipate that the combination of cash on hand , cash flows and available capacity under our 2012 credit facility will provide sufficient cash to enable us to meet our working capital needs , debt service requirements and capital expenditures for property and equipment through the next twelve months . we expect that our fixed asset requirements will range from $ 2.0 to $ 2.5 million for the fiscal year ending on september 30 , 2014 , and we may acquire these assets either through capital expenditures or through lease agreements . 19 story_separator_special_tag revenue remained unchanged during 2012. exclusive of our san diego operations , which were established in the fourth quarter of 2011 , gross profit increased 0.9 % . selling , general and administrative expenses . story_separator_special_tag our commercial & industrial segment 's gross profit during the year ended september 30 , 2013 decreased by $ 3.6 million , or 18.9 % , as compared to the year ended september 30 , 2012. commercial & industrial 's gross margin percentage decreased 1.8 % to 7.6 % during the year ended september 30 , 2013. the decrease in margin was primarily due to a total of $ 2.1 million of job underperformance on four projects in one of our commercial branches , and $ 3.0 million due to the recognition of higher projected costs on a significant commercial project that commenced in 2009 and is scheduled to be completed in 2015. the higher costs related 23 to this significant commercial project are due to various delays and other impacts resulting in lower productivity rates than originally estimated and which are anticipated to continue for the remainder of the project . these projected costs resulted in a lower anticipated gross profit percentage on the project and a reduction in gross profit recognized to date . while we expect the project to be completed profitably , the project is outside of the maximum size and duration criteria within our risk management parameters that were implemented in mid-2011 . this decrease in margin was offset by improvements in gross profits in multiple projects . while we have experienced some reprieve in project bid margins , particularly in our industrial branches , the competitive market that has existed during the prolonged recession has continued to constrain significant increases in project bid margins in most commercial markets . selling , general and administrative expenses . our commercial & industrial segment 's selling , general and administrative expenses during the year ended september 30 , 2013 decreased by $ 2.8 million , or 16.3 % , compared to the year ended september 30 , 2012. selling , general and administrative expenses as a percentage of revenues in the commercial & industrial segment decreased by 1.3 % during the year ended september 30 , 2013 , reflective of lower personnel costs and , to a lesser extent , a reduction in other costs as the segment continues to scale to a level necessary to return to profitability . 2012 compared to 2011 replace_table_token_12_th revenue . revenues in our commercial & industrial segment decreased $ 3.2 million during the year ended september 30 , 2012 , a decrease of 1.5 % compared to the year ended september 30 , 2011. our commercial & industrial segment is impacted not only by industry construction trends , but also specific industry and local economic trends . impacts from these trends on our revenues may be delayed due to the long lead time of our projects . our revenues were also impacted by a refocusing of our business development strategy on projects within our demonstrated areas of expertise and with increased margin expectations . projects in all sectors remain subject to delays or cancellation with little advance notice . in many of our commercial markets , we continue to experience increased competition from new entrants , including residential contractors or contractors from other geographic markets . gross profit . our commercial & industrial segment 's gross profit during the year ended september 30 , 2012 increased $ 5.9 million , or 44.8 % , as compared to the year ended september 30 , 2011. commercial & industrial 's gross margin percentage increased to 9.4 % during the year ended september 30 , 2012 , primarily due to improved execution of projects in all locations . although the competitive market that has existed during the prolonged recession has continued to depress project bid margins , we have begun to experience some reprieve . in 2011 , we experienced margin erosion and project difficulties due to a combination of project management turnover , projects outside our historical area of expertise , and delays in receipt of material and labor productivity , all of which significantly increased our cost on those projects . in 2012 , we focused our efforts on winning projects within our areas of expertise , and significantly reduced the project inefficiencies due to delay and labor turnover . selling , general and administrative expenses . our commercial & industrial segment 's selling , general and administrative expenses during the year ended september 30 , 2012 decreased $ 4.6 million , or 21.2 % , compared to the year ended september 30 , 2011. selling , general and administrative expenses as a percentage of revenues in the commercial & industrial segment decreased to 8.4 % of segment revenue during the year ended september 30 , 2012. this decrease is primarily attributed to the consolidation of back offices in several locations late in fiscal 2011. restructuring charges in the second quarter of our 2011 fiscal year , we began the 2011 restructuring plan that was designed to consolidate operations within our commercial & industrial business . pursuant to the 2011 restructuring plan , we planned to either sell or close certain underperforming facilities within our commercial & industrial operations . the 2011 restructuring plan was a key element of our 24 commitment to return the company to profitability . the results of operations related to the 2011 restructuring plan are included in the net loss from discontinued operations within our consolidated statements of comprehensive income for the years ended september 30 , 2012 and 2011. the facilities directly affected by the 2011 restructuring plan were in several locations throughout the country , including arizona , florida , iowa , louisiana , massachusetts , nevada and texas . these facilities were selected due to their business prospects at that time and the extended time frame needed to return the facilities to a profitable position .
| results of operations we report our operating results across our four operating segments : communications , residential , commercial & industrial and infrastructure solutions . expenses associated with our corporate office are classified as a fifth segment . the following table presents selected historical results of operations of ies . the infrastructure solutions segment was added in connection with the acquisition of miscor on september 13 , 2013. our consolidated results of operations include infrastructure solutions ' operations subsequent to closing . as these results are not significant , no separate discussion of infrastructure solutions ' results is provided below . replace_table_token_6_th ( 1 ) 2013 expense includes transaction costs $ 3.0 million incurred in connection with our acquisitions . consolidated revenues for the year ended september 30 , 2013 were $ 38.5 million greater than for the year ended september 30 , 2012 , an increase of 8.4 % . revenues increased primarily due to growth within our residential segment . revenues at our communications segment increased to a lesser degree , offset by a reduction at our commercial & industrial segment . infrastructure solutions contributed $ 2.2 million in revenues for the year ended september 30 , 2013. our overall gross profit percentage increased to 13.5 % during the year ended september 30 , 2013 as compared to 12.7 % during the year ended september 30 , 2012. the increase in overall gross profit percentage combined with the increase in activity resulted in an $ 8.9 million increase in our consolidated gross profit for the year ended september 30 , 2013 , as compared to the year ended september 30 , 2012. the increase in gross profit was attributable to the residential and communications segments , offset by a decrease in our commercial & industrial segment . infrastructure solutions contributed $ 0.4 million to our consolidated gross profit , which included a net impact of purchase accounting adjustments of $ 0.2 million .
| 7,490 |
credit facility in october 2010 , we entered into a credit facility with a syndicate of bank lenders , which we amended and restated on march 9 , 2018. we refer to this amended and restated credit facility , as further amended to date , as the credit facility . ninety-five percent of our obligations under the credit facility are insured by bpiae . the credit facility consists of two tranches , with draws and repayments applied pro rata in respect of each tranche : tranche a – $ 1,537,500,000 at a fixed rate of 4.96 % ; and tranche b – $ 262,500,000 at a floating rate equal to libor , plus 1.95 % . the amendment and restatement of the credit facility in 2018 ( i ) allowed us to issue $ 360.0 million in senior unsecured notes , or the notes , ( ii ) delayed a portion of the principal repayments scheduled under the credit facility for 2018 , 2019 and 2020 into 2023 and 2024 pursuant to an amended repayment installment schedule , ( iii ) allows us to access up to $ 87.0 million from the debt service reserve account , or dsra , in the future if our projected cash level falls below $ 75.0 million , and ( iv ) adjusted our financial covenants , including eliminating covenants that required us to receive cash flows from hosted payloads and adding a covenant that requires us to receive $ 200.0 million in hosting fees from aireon llc , our primary hosted payload customer , by december 2023. in the event that ( a ) our cash balance exceeds $ 140.0 million after september 30 , 2019 ( subject to specified exceptions ) or ( b ) we receive hosting fees from aireon , we would be required pursuant to the credit facility to use 50 % of such excess cash and up to $ 200.0 million of hosting fees to prepay the credit facility . in addition , if any of the notes remain outstanding on october 15 , 2022 , which is six months prior to the scheduled maturity thereof , the maturity of all amounts remaining outstanding under the credit facility would be accelerated from september 30 , 2024 to october 15 , 2022. lender fees incurred related to the amended and restated credit facility were $ 10.3 million , which were capitalized as deferred financing costs and are being amortized over the remaining term of the credit facility . for the year ended december 31 , 2018 , using hosting fees received from aireon , we extinguished principal under the credit facility of $ 43.1 million , which resulted in a $ 3.3 million loss on extinguishment of debt recorded within interest expense , representing premiums paid for early prepayment and the write-off of unamortized debt issuance costs . there were no prepayments or related interest expense during the year ended december 31 , 2017. we began making scheduled semi-annual principal repayments in 2018 , with such payments scheduled to be paid each march 30 and september 30. the credit facility will mature september 30 , 2024. during the repayment period , we will pay interest in cash on the same date as the principal repayments . prior to 2018 , we made interest-only payments on a semi-annual basis in april and october . we may prepay the borrowings subject to the payment of interest makeup costs . we may not subsequently borrow any amounts that we repay . we must repay the loans in full upon a delisting of our common stock , a change in control of our company or our ceasing to own 100 % of any of the other obligors , or the sale of all or substantially all of our assets . we must apply all or a portion of specified capital raise proceeds , insurance proceeds , condemnation proceeds , proceeds from the disposal of any interests in aireon and 100 % of any hosting fees received from aireon to the prepayment of the loans . the credit facility includes customary representations and events of default . under the terms of the credit facility , we are required to maintain a dsra , and the minimum amount required to be in the dsra was $ 189.0 million as of december 31 , 2018 , which is classified as restricted cash and cash equivalents on our consolidated balance sheet . 46 in addition to the minimum debt service reserve levels , financial covenants under the credit facility include : an available cash balance of at least $ 25 million ; a debt-to-equity ratio , which is calculated as the ratio of total net debt to the aggregate of total net debt and total stockholders ' equity , of no more than 0.7 to 1 , measured each june 30 and december 31 ; specified maximum levels of annual capital expenditures ( excluding expenditures on the construction of iridium next satellites ) through the year ending december 31 , 2024 ; a debt service coverage ratio of not less than 1.5 to 1 , measured each june 30 and december 31 through the year ending december 31 , 2020 , not less than 1.25 to 1 for june 30 and december 31 , 2021 , and not less than 1.5 to 1 , for each june 30 and december 31 thereafter through 2024 ; specified maximum leverage levels that decline from a ratio of 8.24 to 1 for the year ended december 31 , 2018 to a ratio of 2.00 to 1 for the year ending december 31 , 2024 ; and a requirement that we receive at least $ 200.0 million in hosting fees from aireon by december 31 , 2023. our available cash balance , as defined by the credit facility , was $ 273.4 million as of december 31 , 2018. our debt-to-equity ratio was 0.53 to 1 as of december 31 , 2018. our debt service coverage ratio was 3.4 to 1 as of december 31 , 2018 , and our leverage story_separator_special_tag nonetheless , we face a number of challenges and uncertainties in operating our business , including : our ability to maintain the health , capacity , control and level of service of our satellites ; our ability to develop and launch new and innovative products and services ; our ability to generate sufficient internal cash flows to support our ongoing business and to satisfy our debt service obligations ; changes in general economic , business and industry conditions , including the effects of currency exchange rates ; our reliance on a single primary commercial gateway and a primary satellite network operations center ; competition from other mobile satellite service providers and , to a lesser extent , from the expansion of terrestrial-based cellular phone systems and related pricing pressures ; market acceptance of our products ; regulatory requirements in existing and new geographic markets ; rapid and significant technological changes in the telecommunications industry ; reliance on our wholesale distribution network to market and sell our products , services and applications effectively ; reliance on single-source suppliers for the manufacture of most of our subscriber equipment and for some of the components required in the manufacture of our end-user subscriber equipment and our ability to purchase parts that are periodically subject to shortages resulting from surges in demand , natural disasters or other events ; and 48 reliance on a few significant customers , particularly agencies of the u.s. government , for a substantial portion of our revenue , as a result of which the loss or decline in business with any of these customers may negatively impact our revenue and collectability of related accounts receivable . critical accounting policies and estimates the discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states , or u.s. gaap . the preparation of these financial statements requires the use of estimates and judgments that affect the reported amounts of assets , liabilities , revenue and expenses , and related disclosure of contingent assets and liabilities . on an ongoing basis , we evaluate our estimates , including those related to revenue recognition , income taxes , useful lives of property and equipment , loss contingencies , and other estimates . we base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances . actual results may differ from these estimates under different assumptions or conditions . the accounting policies we believe to be most critical to understanding our financial results and condition and that require complex and subjective management judgments are discussed below . our accounting policies are more fully described in note 2 in item 8 “ financial statements and supplementary data ” included in this report . please see the notes to our consolidated financial statements for a full discussion of these significant accounting policies . revenue recognition we sell services and equipment through contracts with our customers . we evaluate whether a contract exists as it relates to collectibility of the contract . once a contract is deemed to exist , we evaluate the transaction price including both fixed and variable consideration . the variable consideration contained within our contracts with customers may include discounts , credits and other similar items . when a contract includes variable consideration , we evaluate the estimate of the variable consideration to determine whether the estimate needs to be constrained . therefore , we include constrained consideration in the transaction price only to the extent that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration or collectibility is subsequently resolved . variable consideration estimates are updated at the end of each quarter and collectibility assessments are evaluated with new customers , or on an ongoing basis if initially deemed not probable , and updated as facts and circumstances change . we sell prepaid services in the form of e-vouchers and prepaid cards . a liability is established equal to the cash paid upon purchase for the e-voucher or prepaid card . we recognize revenue from the prepaid services upon the use of the e-voucher or prepaid card by the customer . on january 1 , 2018 , upon the adoption of accounting standards update no . 2014-09 , revenue from contracts with customers , we began estimating the expected revenue that will expire unused on an ongoing basis and we recognize this revenue in a manner consistent with the usage period . while the terms of prepaid e-vouchers can be extended by the purchase of additional e-vouchers , prepaid e-vouchers may not be extended beyond three or four years , dependent on the initial expiry period when purchased . we do not offer refunds for unused prepaid services . revenue associated with some of our fixed-price engineering services arrangements is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligation . we recognize revenue on cost-plus-fixed-fee arrangements to the extent of estimated costs incurred plus the applicable fees earned . if actual results are not consistent with our estimates or assumptions , we may be exposed to changes to earned and unearned revenue that could be material to our results of operations . income taxes we account for income taxes using the asset and liability approach . this approach requires that we recognize deferred tax assets and liabilities based on differences between the financial statement bases and tax bases of our assets and liabilities . deferred tax assets and liabilities are recorded based upon enacted tax rates for the period in which the deferred tax items are expected to reverse . changes in tax laws or tax rates in various jurisdictions are reflected in the period of change .
| overview of our business we are engaged primarily in providing mobile voice and data communications services using a constellation of orbiting satellites . we are the only commercial provider of communications services offering true global coverage , connecting people , organizations and assets to and from anywhere , in real time . our unique l-band satellite network provides reliable communications services to regions of the world where terrestrial wireless or wireline networks do not exist or are limited , including remote land areas , open ocean , airways , the polar regions and regions where the telecommunications infrastructure has been affected by political conflicts or natural disasters . we provide voice and data communications services to businesses , the u.s. and foreign governments , non-governmental organizations and consumers via our recently completed iridium next satellite network , which has an architecture of 66 operational satellites with in-orbit and ground spares and related ground infrastructure . we utilize an interlinked mesh architecture to route traffic across the satellite constellation using radio frequency crosslinks between satellites . this unique architecture minimizes the need for ground facilities to support the constellation , which facilitates the global reach of our services and allows us to offer services in countries and regions where we have no physical presence . iridium next is compatible with all of our end-user equipment and supports more bandwidth and higher data speeds for our new products , including our recently introduced iridium certus broadband product . we sell our products and services to commercial end users through a wholesale distribution network , encompassing approximately 130 service providers , 230 value-added resellers , or vars , and 90 value-added manufacturers , or vams , who either sell directly to the end user or indirectly through other service providers , vars or dealers .
| 7,491 |
business segments the company 's businesses are grouped into five reportable segments for management and internal financial reporting purposes : europe , north american retail , asia , north american wholesale and licensing . information regarding these segments is summarized in note 15 to the consolidated financial statements . management evaluates segment performance based primarily on revenues and earnings from operations . the company believes this segment reporting reflects how its five business segments are managed and each segment 's performance is evaluated . the europe segment includes the company 's wholesale and retail operations in europe and the middle east . the north american retail segment includes the company 's retail operations in north america . the asia segment includes the company 's wholesale and retail operations in asia . the north american wholesale segment includes the company 's wholesale operations in north america and export sales to central and south america . the licensing segment includes the worldwide licensing operations of the company . the business segment operating results exclude corporate overhead costs , which consist of shared costs of the organization . these costs are presented separately and generally include , among other things , the following unallocated corporate costs : information technology , human resources , global advertising and marketing , accounting and finance , executive compensation , facilities and legal . products we derive our net revenue from the sale of guess ? , marciano , guess kids and g by guess men 's and women 's apparel and our licensees ' products through our worldwide network of retail stores , wholesale customers and distributors , as well as our on-line sites . we also derive royalty revenues from worldwide licensing activities . recent global economic developments economic and market conditions have continued to be volatile and uncertain in many markets around the world and consumer behavior remains cautious . in north america , the relatively weaker levels of consumer confidence and the highly promotional conditions among retailers may persist for some time . in europe , sovereign debt issues , government austerity programs , and bank credit issues continue to affect the capital markets of numerous european countries , resulting in reduced consumer confidence and discretionary spending in those countries . these circumstances have had , and are expected to continue to have , a negative impact on our business , particularly in our more mature markets in southern europe . these conditions could have a greater impact in our multi-brand wholesale channel , particularly in italy , where many customers are relatively small and not well capitalized . the company experienced some inflationary pressures on raw materials , labor , freight and other commodities , including oil , in fiscal 2012 and during the first half of fiscal 2013. foreign currency volatility we continue to experience significant volatility in the global currency markets . since the majority of our international operations are conducted in currencies other than the u.s. dollar ( primarily the euro , canadian dollar and korean won ) , currency fluctuations can have a significant impact on the translation of our international revenues and earnings into u.s. dollar amounts . during fiscal 2013 , the average u.s. dollar rate was stronger against these currencies versus the average rate in fiscal 2012 . this had an overall negative impact on the translation of our international revenues and earnings for the fiscal year ended february 2 , 2013 compared to the prior fiscal year . 29 in addition , some of our transactions that occur in europe , canada and south korea are denominated in u.s. dollars , swiss francs and british pounds , exposing them to exchange rate fluctuations when converted to their functional currencies . fluctuations in exchange rates can impact the operating margins of our foreign operations and reported earnings and are largely dependent on the transaction timing and magnitude during the period that the currency fluctuates . on average , the euro was weaker versus the u.s. dollar during fiscal 2013 than during fiscal 2012 , increasing the cost of u.s. dollar denominated purchases of merchandise in our european operations . if the euro continues to weaken versus the u.s. dollar in fiscal 2014 , our product margins in europe could continue to be unfavorably impacted . the company enters into derivative financial instruments to offset some but not all of the exchange risk on foreign currency transactions . for additional discussion regarding our exposure to foreign currency risk , forward contracts designated as cash flow hedges and forward contracts not designated as cash flow hedges , refer to “ item 7a . quantitative and qualitative disclosures about market risk. ” strategy international growth . despite the difficult economic conditions described above , our key long-term strategies remain unchanged . global expansion continues to be the cornerstone of our long-term growth strategy . our combined revenue outside of the u.s. and canada represented approximately half of the total company 's revenue in fiscal 2013 , compared to one-fifth in fiscal 2005. we expect to continue to expand in both our existing european and asian markets . at the same time , we plan to develop key markets such as brazil , china , germany , india , japan , the middle east , mexico and russia . our goal is also to drive growth by enhancing the productivity of our existing operations . during the first quarter of fiscal 2014 , the company implemented plans to streamline its operational structure and reduce expenses in both europe and north america . we will continue to regularly assess and implement initiatives that we believe will build brand equity , grow our business and enhance long-term profitability in each region . europe . in europe , over the long-term , we will continue to focus on developing new markets in northern and eastern europe where our brand is well known but still under-penetrated while expanding on our past success in western and southern europe . story_separator_special_tag product margins declined due primarily to more retail markdowns in europe and north america , the unfavorable impact of currencies on product costs and pricing changes in canada . the company 's gross margin may not be comparable to other entities since some entities include all of the costs related to their distribution in cost of product sales and others , like the company , generally exclude the wholesale related distribution costs from gross margin , including them instead in sg & a expenses . additionally , some entities include retail store occupancy costs in sg & a expenses and others , like the company , include retail store occupancy costs in cost of product sales . selling , general and administrative expenses . sg & a expenses in creased by $ 54.3 million , or 7.4 % , to $ 792.6 million for fiscal 2013 , from $ 738.3 million in fiscal 2012. the in crease in sg & a expenses , which included the favorable impact of currency translation , was due primarily to higher selling expenses and higher global advertising and marketing expenses , partially offset by lower performance-based compensation costs . 33 the company 's sg & a rate in creased by 230 basis points to 29.8 % for fiscal 2013 , compared to 27.5 % in fiscal 2012. the sg & a rate was negatively impacted by deleveraging of expenses resulting from negative comparable store sales in north america and europe and a decline in european wholesale shipments , increased investments in advertising and marketing and higher store selling expenses due to our international retail expansion , partially offset by lower performance-based compensation costs . settlement charge . during fiscal 2012 , the company experienced a temporary disruption in service with a former third party logistics service provider in europe and subsequently entered into a settlement agreement with this service provider to facilitate a transition to a new service provider . as a result , the company recorded a $ 19.5 million settlement charge in fiscal 2012 related to amounts paid in connection with this agreement . the company did not have any expenses related to this settlement in fiscal 2013. pension curtailment expense . during fiscal 2012 , the company recorded a serp curtailment expense of $ 1.2 million that did not occur in fiscal 2013. earnings from operations . earnings from operations de creased by $ 122.7 million , or 30.9 % , to $ 274.5 million for fiscal 2013 , from $ 397.2 million in fiscal 2012. currency translation fluctuations relating to our foreign operations unfavorably impacted earnings from operations by $ 6.8 million . operating margin de creased 450 basis points to 10.3 % for fiscal 2013 , compared to 14.8 % in fiscal 2012. operating margin was negatively impacted by lower overall gross margins and a higher sg & a rate , partially offset by the negative impact in the prior year of the $ 19.5 million settlement charge . interest income , net . interest income , net was $ 0.4 million for fiscal 2013 , compared to interest income , net of $ 1.1 million in fiscal 2012 and includes the impact of hedge ineffectiveness of foreign currency forward contracts designated as cash flow hedges . the decrease in interest income , net for fiscal 2013 compared to the prior year was due primarily to lower average invested cash balances . other income , net . other income , net was $ 5.7 million for fiscal 2013 , compared to other income , net of $ 1.0 million in fiscal 2012. other income , net in fiscal 2013 consisted primarily of net unrealized gains on non-operating assets and net realized mark-to-market revaluation gains on foreign currency contracts and other foreign currency balances . other income , net in fiscal 2012 consisted primarily of net unrealized mark-to-market revaluation gains on foreign currency contracts and other foreign currency balances . income taxes . income tax expense for fiscal 2013 was $ 99.1 million , or a 35.3 % effective tax rate , compared to income tax expense of $ 128.7 million , or a 32.2 % effective tax rate , in fiscal 2012. in fiscal 2013 , the company settled a tax audit dispute in italy , resulting in a charge of $ 12.8 million , in excess of amounts previously reserved , which was partially offset by unrelated tax benefits of $ 4.0 million . these adjustments increased the income tax expense by $ 8.8 million and negatively impacted the effective tax rate for fiscal 2013 by 310 basis points . the effective income tax rate in fiscal 2012 included the discrete impact of a $ 19.5 million european supply chain settlement charge and a $ 1.9 million reduction to income tax expense as a result of the charge . these adjustments unfavorably impacted the mix of taxable income among the company 's tax jurisdictions and increased the effective tax rate for the prior year by 100 basis points . excluding the impact of these respective adjustments , the effective income tax rate was 32.2 % for fiscal 2013 , compared to 31.2 % for fiscal 2012. references to financial results excluding the impact of the net settlement charges are non-gaap measures and are addressed below under `` non-gaap measures . '' net earnings attributable to noncontrolling interests . net earnings attributable to noncontrolling interests in subsidiaries for fiscal 2013 was $ 2.7 million , net of taxes , compared to $ 5.2 million , net of taxes , in fiscal 2012. the de crease was due to the purchase of the remaining 25 % interest in our now wholly-owned subsidiary , focus , during fiscal 2013 and lower earnings in our majority-owned european subsidiaries . net earnings attributable to guess ? , inc. net earnings attributable to guess ?
| executive summary overview net earnings attributable to guess ? , inc. de creased 32.7 % to $ 178.7 million , or diluted earnings of $ 2.05 per common share , for fiscal 2013 , compared to net earnings attributable to guess ? , inc. of $ 265.5 million , or diluted earnings of $ 2.86 per common share , in fiscal 2012. in the fourth quarter of fiscal 2013 , the company settled a tax audit dispute in italy , resulting in a charge of $ 12.8 million , in excess of amounts previously reserved , which was partially offset by unrelated tax benefits of $ 4.0 million , or a net impact of $ 0.10 per share . in fiscal 2012 , the company recorded a pre-tax settlement charge of $ 19.5 million ( or $ 17.6 million after considering a $ 1.9 million reduction to income tax as a result of the charge ) , or $ 0.19 per share . the charge related to a settlement agreement with a former third party logistics service provider in europe to facilitate the transition to a new service provider . adjusted diluted earnings , excluding the net settlement charges , were $ 2.15 and $ 3.05 per common share for fiscal years 2013 and 2012 , respectively . references to financial results excluding the impact of the net settlement charges are non-gaap measures and are addressed below under `` non-gaap measures . '' highlights of the company 's performance for fiscal 2013 compared to the prior year are presented below , followed by a more comprehensive discussion under `` results of operations '' : operations total net revenue de creased 1.1 % to $ 2.66 billion for fiscal 2013 , from $ 2.69 billion in the prior year . in constant u.s. dollars , revenue increased by 1.6 % .
| 7,492 |
shares purchased under and compensation expense associated with the plan for the years reported are as follows : replace_table_token_36_th f-17 myriad genetics , inc. and subsidiaries notes to consolidated financial statements ( continued ) june 30 , 2011 , 2010 and 2009 the fair value of shares issued under the plan for each period reported was calculated using the black-scholes option-pricing model using the following weighted-average assumptions : replace_table_token_37_th in connection with the separation of mpi , the company issued a dividend of one mpi stock option for every four stock options held by company option holders as of june 30 , 2009. accordingly , the company adjusted the exercise price of its stock options to adjust for the spin-off of mpi . all other terms of the stock options remain the same . however , the vesting and expiration of the options are based on the option holder 's continuing employment or service with the company or mpi , as applicable . the adjusted exercise price of each revalued option was determined in accordance with section 409a and section 422 of the internal revenue code . as a result of the option modifications that occurred in connection with the separation of mpi from the company , the company measured the potential accounting impact of these option modifications . based upon the analysis that included a comparison of the fair value of the modified options granted to our employees and directors immediately after the modification with the fair value of the original option immediately prior to the modification , the company determined there was no incremental compensation expense . all remaining unrecognized story_separator_special_tag overview we are a leading molecular diagnostic company focused on developing and marketing novel predictive medicine , personalized medicine , and prognostic medicine tests . we believe that the future of medicine lies in a shift from a treatment paradigm to a prevention paradigm . by understanding the genetic basis of disease , we believe that individuals who have a greater risk of developing disease can be identified and physicians can use this information to improve patient outcomes and better manage patient healthcare . we employ a number of proprietary technologies that help us to understand the genetic basis of human disease and the role that genes and their related proteins may play in the onset , progression and treatment of disease . we use this information to guide the development of new molecular diagnostic tests that are designed to assess an individual 's risk for developing disease later in life ( predictive medicine ) , identify a patient 's likelihood of responding to drug therapy and help guide a patient 's dosing to ensure optimal treatment ( personalized medicine ) , or assess a patient 's risk of disease progression and disease recurrence ( prognostic medicine ) . our goal is to provide physicians with this critical information that may guide the healthcare management of their patients to diagnose the disease at an earlier stage when it may be more treatable , determine the most appropriate therapy , assess the aggressiveness of the disease or even potentially prevent disease . on may 31 , 2011 , we completed the acquisition of the privately-held molecular diagnostic company , rules-based medicine , inc. of austin , texas , for a cash purchase price of approximately $ 80.0 million . the newly acquired company has been consolidated into our operations as myriad rbm . the acquisition expands our product pipeline into new disease states , including neuroscience disorders , infectious diseases and inflammatory diseases , and adds eight new molecular diagnostic test candidates to our current pipeline . we believe that myriad rbm 's strategic collaborations with over 20 major pharmaceutical and biotechnology companies , coupled with our position in parp inhibitors and pi3k inhibitors , will allow us to create a leading franchise in companion diagnostics . in addition , our acquisition of myriad rbm provides us with access to samples from additional patient cohorts for our diagnostic product development and is expected to enhance our industry-leading dna and rna technologies with in protein discovery and analysis . on june 30 , 2009 , we separated our main molecular diagnostic business from our research and drug development businesses by transferring our research and drug development businesses along with $ 188.0 million of cash and marketable securities into our then wholly-owned subsidiary , myriad pharmaceuticals , inc. ( mpi ) . all outstanding shares of mpi were then distributed to our stockholders as a pro-rata , tax-free dividend on june 30 , 2009 by issuing one share of mpi common stock for every four shares of our common stock to stockholders of record on june 17 , 2009. the separation resulted in mpi operating as a completely independent publicly-traded entity . the results of operations for the former research and drug development activities conducted by us and by mpi until june 30 , 2009 are included as part of this report for the periods prior to that date as discontinued operations . we do not have any ownership in mpi subsequent to the separation . mpi subsequently changed its name to myrexis , inc. during the fiscal year ended june 30 , 2011 , we devoted our resources to supporting our predictive medicine , personalized medicine and prognostic medicine tests , as well as to the research and development of future molecular diagnostic candidates . we are also formulating our plans for future international expansion . see note 10 segment and related information in the notes to our consolidated financial statements for information regarding our operating segments . our consolidated revenues primarily consisted of sales of molecular diagnostic tests through our myriad genetic laboratories subsidiary and companion diagnostic service revenue through our myriad rbm subsidiary . during the year ended june 30 , 2011 , we reported net income from continuing operations of $ 100.7 million and diluted earnings per share of $ 1.10 that included income tax expense of $ 58.9 million . story_separator_special_tag it is possible that we may need to adjust our estimates in future periods . after a review of our allowance for doubtful accounts as of june 30 , 2011 and 2010 , we have determined that a hypothetical ten percent increase in our allowance for doubtful accounts would result in additional bad debt expense and an increase to our allowance for doubtful accounts of $ 370,000 and $ 385,000 , respectively . share-based payment expense . we recognize share-based equity compensation in our consolidated statements of income at the grant-date fair value of our stock options and other equity-based compensation . the determination of grant-date fair value is estimated using an option-pricing model , which includes variables such as the expected volatility of our share price , the exercise behavior of our employees , interest rates , and dividend yields . these variables are projected based on our historical data , experience , and other factors . changes in any of these variables could result in material increases to the valuation of options granted in future periods and increases in the expense recognized for share-based payments . goodwill . we test goodwill for impairment on an annual basis and in the interim by reporting segment if events and circumstances indicate that goodwill may be impaired . the events and circumstances that are considered include business climate , legal factors , operating performance indicators and competition . impairment of goodwill is evaluated using a two-step process . the first step involves a comparison of the fair value of the reporting segment with its carrying amount . if the carrying amount of the reporting segment exceeds its fair value , the second step of the process involves a comparison of the fair value and the carrying amount of the goodwill of that reporting segment . if the carrying amount of the goodwill of the reporting segment exceeds the fair value of that goodwill , an impairment loss would be recognized in an amount equal to the excess of carrying value over fair value . if an event occurs that would cause a revision to the estimates and assumptions used in analyzing the value of the goodwill , the revision could result in a non-cash impairment charge that could have a material impact on the financial results . income taxes . our income tax provision is based on income before taxes and is computed using the liability method in accordance with accounting standards codification ( asc ) 740 income taxes . deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using tax rates projected to be in effect for the year in which the differences are expected to reverse . significant estimates are required in determining our provision for income taxes . some of these estimates are based on interpretations of existing tax laws or regulations , or the expected results from any future tax examinations . various internal and external factors may have favorable or unfavorable effects on our future 41 provision for income taxes . those factors include , but are not limited to , changes in tax laws , regulations and or rates , the results of any future tax examinations , changing interpretations of existing tax laws or regulations , changes in estimates of prior years ' items , past levels of r & d spending , acquisitions , changes in our corporate structure , and changes in overall levels of income before taxes all of which may result in periodic revisions to our provision for income taxes . developing our provision for income taxes , including our effective tax rate and analysis of potential uncertain tax positions , if any , requires significant judgment and expertise in federal and state income tax laws , regulations and strategies , including the determination of deferred tax assets and liabilities and any estimated valuation allowance we deem necessary to offset deferred tax assets . during the fiscal year ended june 30 , 2010 , we determined that a valuation allowance was not required for our deferred tax assets because we have established a sufficient history of taxable income from operations . however , if we do not maintain taxable income from operations in future periods , we may increase the valuation allowance for our deferred tax assets and record material adjustments to our income tax expense . our judgment and tax strategies are subject to audit by various taxing authorities . while we believe we have provided adequately for our uncertain income tax positions in our consolidated financial statements , adverse determination by these taxing authorities could have a material adverse effect on our consolidated financial condition , results of operations or cash flows . interest and penalties on income tax items are included as a component of overall income tax expense . story_separator_special_tag > interest income for the fiscal year ended june 30 , 2011 was $ 2.2 million , compared to $ 5.7 million for the prior fiscal year . the decrease was due primarily to lower market interest rates , the repurchase of approximately $ 200.5 million of myriad common stock , and the $ 80 million of cash used in the acquistion of rules-based medicine , inc. income tax expense for the fiscal year ended june 30 , 2011 was $ 58.9 million , for an effective rate of approximately 37 % , compared to income tax benefit of $ 11.5 million in the 2010 period . income tax benefit for the fiscal year ended june 30 , 2010 consisted of the reversal in full of our valuation allowance previously offsetting our net deferred tax assets . income tax expense for the year ended june 30 , 2011 was based on the application of an annual effective tax rate and contained no benefit from the reversal of previous valuation allowances . our annual effective tax rate differs from the u.s. federal statutory rate of 35 % primarily due to state income taxes .
| results of operations years ended june 30 , 2011 and 2010 revenue is comprised of sales of our molecular diagnostic tests and companion diagnostic services revenue . total revenue for the fiscal year ended june 30 , 2010 was $ 402.1 million compared to $ 362.6 million for the prior fiscal year , an increase of 11 % . of this 11 % increase in revenue , approximately 7.5 % is attributable to increased testing volume , approximately 2.5 % is attributable to price increases and approximately 1 % is due to new companion diagnostic service revenue in connection with our acquisition of myriad rbm on may 31 , 2011. sales of our brac analysis test account for approximately 86.4 % of our total revenues . we believe that increased sales , marketing , and education efforts resulted in wider acceptance of our tests by the medical community and increased patient testing volumes . while the markets in which we operate are still experiencing high unemployment , the economy appears to be improving and physician office visits were stable during the fiscal year ended june 30 , 2011. there can be no assurance that revenues will continue to increase or remain at current levels or that we will be successful in expanding the sale of our tests outside the united states . total revenues of our molecular diagnostic tests and companion diagnostic services for the fiscal years ended june 30 , 2011 and 2010 were as follows : replace_table_token_6_th 42 our sales force is focused on two major markets , oncology and women 's health . sales of molecular diagnostic tests in each market for the fiscal years ended june 30 , 2011 and 2010 were as follows : replace_table_token_7_th cost of molecular diagnostic revenue is comprised primarily of salaries and related personnel costs , laboratory supplies , royalty payments , equipment costs and facilities expense .
| 7,493 |
story_separator_special_tag financial cond ition and results of operations . the following discussion of our financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements and the related footnotes thereto . overview we are a pharmaceutical company focused on the acquisition , development , and commercialization of therapies for serious rare and life-threatening diseases with significant unmet medical needs . our pipeline includes three clinical-stage candidates : edsivo ( celiprolol ) for the treatment of vascular ehlers-danlos syndrome ( “ veds ” ) in patients with a confirmed type iii collagen ( col3a1 ) mutation ; acer-001 ( a taste-masked , immediate release formulation of sodium phenylbutyrate ) for the treatment of various inborn errors of metabolism , including urea cycle disorders ( “ ucd ” ) and maple syrup urine disease ( “ msud ” ) and osanetant for the treatment of induced vasomotor symptoms ( “ ivms ” ) where hormone replacement therapy ( “ hrt ” ) is likely contraindicated . our product candidates are believed to present a comparatively de-risked profile , having one or more of a favorable safety profile , clinical proof-of-concept data , mechanistic differentiation , and or accelerated paths for development through specific programs and procedures established by the united states ( “ u.s. ” ) food and drug administration ( “ fda ” ) . merger and reverse stock split on september 19 , 2017 , the company ( then a texas corporation known as opexa therapeutics , inc. ) completed its business combination with acer therapeutics inc. , a delaware corporation ( “ private acer ” ) , in accordance with the terms of the agreement and plan of merger and reorganization , dated as of june 30 , 2017 , by and among the company , opexa merger sub , inc. ( “ merger sub ” ) and private acer ( the “ merger agreement ” ) , pursuant to which merger sub merged with and into private acer , with private acer surviving as a wholly-owned subsidiary of the company ( the “ merger ” ) . this transaction was approved by the company 's stockholders at a special meeting of its stockholders on september 19 , 2017. also on september 19 , 2017 , in connection with , and prior to the completion of , the merger , the company effected a 1-for-10.355527 reverse stock split of its then outstanding common stock ( the “ reverse split ” ) and immediately following the merger , the company changed its name to “ acer therapeutics inc. ” pursuant to amendments to its certificate of formation filed with the texas secretary of state on september 19 , 2017. all share numbers have been adjusted to reflect the reverse split . following the completion of the merger , the business conducted by the company became primarily the business conducted by private acer . for accounting and financial reporting purposes , private acer was considered to have acquired the company in the merger . private acer was incorporated on december 26 , 2013 as part of a reorganization whereby acer therapeutics , llc was converted into a corporation organized under the laws of the state of delaware . delaware reincorporation and subsidiary merger on may 15 , 2018 , we changed our state of incorporation from the state of texas to the state of delaware ( the “ reincorporation ” ) pursuant to a plan of conversion , dated may 15 , 2018. immediately following the reincorporation , we eliminated our holding company structure by merging our wholly-owned subsidiary private acer with and into the company ( the “ subsidiary merger ” ) . the company was the surviving corporation in connection with the subsidiary merger . restructuring in june 2019 , we received a complete response letter from the fda regarding our new drug application ( “ nda ” ) for edsivo tm ( celiprolol ) for the treatment of veds . the complete response letter stated that it will be necessary to conduct an adequate and well-controlled trial to determine whether celiprolol reduces the risk of clinical events in patients with veds . in order to reduce operating expense and conserve cash resources , in june 76 2019 , we initiated a corporate restructuring , which included a reduction of approximately 60 % of our full-time workforce of 48 employees and halted precommercial activities for edsivo tm . we recorded a one-time severance-related charge of approximately $ 1.5 million associated with the workforce reduction in the quar ter ended june 30 , 2019. we expect the restructuring to align the resources needed for us to conduct our planned business operations and maintain sufficient capital to conduct our business as planned through the end of 2020 , excluding support for edsivo tm development and precommercial activities and the planned osanetant clinical trial . going concern the accompanying financial statements have been prepared in conformity with gaap , which contemplate our continuation as a going concern . we have not established a source of revenues and , as such , have been dependent on funding operations through the sale of equity securities . since inception , we have experienced significant losses and incurred negative cash flows from operations . we expect to incur further losses over the next several years as we develop our business . we have spent , and expect to continue to spend , a substantial amount of funds in connection with implementing our business strategy , including our planned product development efforts and potential precommercial activities . as of december 31 , 2019 , we had cash and cash equivalents of $ 12.1 million . our cash and cash equivalents available at december 31 , 2019 are expected to fund operations through the end of 2020 , excluding support for edsivo development and precommercial activities and the planned osanetant clinical trial . story_separator_special_tag we expect that general and administrative expenses will be substantial in the future . 78 other income , ne t other income , net consists primarily of interest income . we earn interest income from interest-bearing accounts and money market funds , which we classify as cash and cash equivalents . additionally , we record as part of other income , net , transactional gains and losses on foreign currency denominated assets and liabilities when they are revalued each period due to changes in underlying exchange rates . critical accounting policies and estimates this management 's discussion and analysis of financial condition and results of operations is based on our consolidated financial statements , which have been prepared in accordance with accounting principles generally accepted in the u.s. ( “ gaap ” ) . the preparation of these consolidated financial statements requires our management to make estimates and judgments that affect the reported amounts of assets , liabilities and expenses . on an ongoing basis , we evaluate these estimates and judgments . we base our estimates on historical experience and on various assumptions that we believe to be reasonable under the circumstances . these estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources . actual results may differ materially from these estimates . we believe that the accounting policies discussed below are critical to understanding our historical and future performance , as these policies relate to the more significant areas involving our judgments and estimates . goodwill goodwill represents the excess of the purchase price ( consideration paid plus net liabilities assumed ) of an acquired business over the fair value of the underlying net tangible and intangible assets . we evaluate according to accounting standards update no . 2017-04 , intangibles – goodwill and other ( topic 350 ) the recoverability of goodwill annually or more frequently , if events or changes in circumstances indicate that the carrying value of goodwill might be impaired . we may opt to perform a qualitative assessment or a quantitative impairment test to determine whether goodwill is impaired . if we were to determine based on a qualitative assessment that it was more likely than not that the fair value of the reporting unit was less than its carrying value , a quantitative impairment test would then be performed . the quantitative impairment test compares the fair value of the reporting unit with its carrying amount , including goodwill . if the estimated fair value of the reporting unit is less than its carrying amount , a goodwill impairment would be recognized for the difference . we review intangible assets annually to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment . if the carrying value of an asset exceeds its undiscounted cash flows , we write down the carrying value of the intangible asset to its fair value in the period identified . in-process research and development in-process research and development ( “ iprd ” ) represents the value of the three g-protein-coupled receptor targets from the gpcr target pools of anchor that we obtained the rights to in the march 20 , 2015 , acquisition of anchor . iprd was recorded at fair value in conjunction with the anchor acquisition during 2015 and is an indefinite-lived intangible asset . as such , it is tested at least annually for impairment . stock-based compensation we account for stock-based compensation expense related to stock options granted under our 2018 stock incentive plan , our 2013 stock incentive plan , as amended , and our 2010 stock incentive plan , as amended and restated , by estimating the fair value of each stock option on the date of grant using the black-scholes model . we recognize stock-based compensation expense for stock options and restricted stock units on a straight-line basis over the vesting term . 79 research and development expenses research and development costs are expensed as incurred and include compensation and related benefits , license fees and outside contracted research and manufacturing consultants . we often make nonrefundable advance payments for goods and services that will be used in future research and development activities . these payments are capitalized and recorded as an expense in the period that we receive the goods or when the services are performed . clinical trial and preclinical study expenses we make estimates of prepaid and or accrued expenses as of each balance sheet date in our consolidated financial statements based on certain facts and circumstances at that time . our accrued expenses for clinical trials and preclinical studies are based on estimates of costs incurred for services provided by contract research organizations ( “ cro ” ) , manufacturing organizations , and for other trial- and study-related activities . payments under our agreements with external service providers depend on a number of factors such as site initiation , patient screening , enrollment , delivery of reports , and other events . in recording expenses associated with these activities , we obtain information from various sources and estimate the level of effort allocated to each period . adjustments to our research and development expenses may be necessary in future periods as our estimates change . as these activities are generally material to our overall financial statements , subsequent changes in estimates may result in a material change in our accruals . no material change in estimates were recognized in the year ended december 31 , 2019. at december 31 , 2019 , our accounts payable and accrued expenses included $ 0.6 million for costs associated with clinical trials . story_separator_special_tag product candidates . in addition , subject to obtaining regulatory approval of any of our product candidates and thereafter successfully commercializing any such product candidates , we anticipate that we will need substantial additional funding in connection with our continuing operations .
| results of operations comparison of the years ended december 31 , 2019 and 2018 the following table summarizes our results of operations for the years ended december 31 , 2019 and 2018 : replace_table_token_1_th research and development expenses research and development expenses were approximately $ 13.9 million for the year ended december 31 , 2019 , as compared to approximately $ 12.5 million for the year ended december 31 , 2018. this increase of approximately $ 1.4 million was primarily due to increases in spending related to contract manufacturing services , regulatory consulting , and medical affairs services during the first half of 2019 in preparation for the potential launch of edsivo tm , as well as to an increase in employee-related expenses . the increase in employee-related expenses was driven by increased headcount during the first half of 2019 , as well as $ 0.5 million restructuring expense , and increased stock-based compensation expense . these increases were partially offset by a decrease in spending related to licenses . research and development expense for the year ended december 31 , 2019 was primarily comprised of approximately $ 7.5 million directly related to edsivo tm and approximately $ 5.5 million directly related to acer-001 . 80 general and administrative expense s general and administrative expenses were approximately $ 16.0 million for the year ended december 31 , 2019 , as compared to approximately $ 9.3 million for the year ended december 31 , 2018. this increase of approximately $ 6.7 million was primarily due to a $ 4.6 million increase in employee-related expenses , which included expense of $ 1.0 million related to the restructuring , increased headcount and travel during the first half of 2019 , and increased stock-based compensation expense . the remaining increase in general and administrative expenses was primarily due to an increase in expenses related to precommercial activities . other income , net other income , net of approximately $ 0.5 million and $ 0.4
| 7,494 |
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 services on an as-requested basis during installation of its products , as well as rework and reconditioning services for customer-owned dril-quip products and rental of running tools for use in connection with 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 , average wti crude oil and natural gas ( henry hub ) closing prices are listed below for periods covered by this report : replace_table_token_6_th in 2010 , wti crude oil prices began the year at $ 81.52 per barrel and reached a peak in december at $ 91.48 per barrel . however , crude oil prices averaged $ 79.48 per barrel for 2010. in 2011 , wti crude oil prices ranged between $ 75.40 per barrel and $ 113.39 per barrel . crude oil ended the year at $ 98.83 per barrel . in 2012 , the wti oil price ranged between a low of $ 77.72 per barrel and a high of $ 109.39 per barrel with an average of $ 94.05 per barrel and ended the year at $ 91.83 per barrel . according to the january 2013 release of the short-term energy outlook published by the eia , wti crude oil prices are projected to average $ 89.54 per barrel in 2013 and $ 91.00 in 2014. these projections are based upon the assumption that the u.s. real gross domestic product ( gdp ) will grow by 1.8 % in 2013 and by 2.6 % in 2014. in its january 2013 report , the eia expects henry hub natural gas prices to average $ 3.86 per mcf in 2013 and $ 4.02 per mcf in 2014. henry hub natural gas price was $ 3.54 per mcf at the end of december 2012 . 28 in its january 2013 oil market report , the international energy agency projected global oil demand to be 90.8 million barrels per day in 2013. according to the eia , between january 1 , 2013 and february 5 , 2013 , the price of wti crude oil ranged from $ 92.97 per barrel to $ 97.98 per barrel , closing at $ 96.68 per barrel on february 5 , 2013. for the same period , henry hub natural gas price ranged from $ 3.18 per mcf to $ 3.74 per mcf , closing at $ 3.44 per mcf on february 5 , 2013. rig count detailed below is the average contracted offshore rig count for the company 's geographic regions for the years ended december 31 , 2012 , 2011 and 2010. 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 end users of the company 's products . replace_table_token_7_th the table above represents rigs under contract and includes rigs currently drilling as well as rigs committed , but not yet drilling . according to ods-petrodata rigbase , as of december 31 , 2012 , there were 69 rigs under contract ( 38 floating rigs and 31 jack-up rigs ) in the u.s. gulf of mexico , 65 of which were actively drilling ( 34 floating rigs and 31 jack-up rigs ) . as of december 31 , 2011 , there were 64 rigs under contract in the u.s. gulf of mexico ( 29 floating rigs and 35 jack-up rigs ) , of which 57 were actively drilling ( 22 floating rigs and 35 jack-up rigs ) , and as of december 31 , 2010 , there were 55 rigs under contract ( 26 floating rigs and 29 jack-up rigs ) , of which 35 were actively drilling ( 7 floating rigs and 28 jack-up rigs ) . the company believes that the number of rigs ( semi-submersibles , drillships and jack-up rigs ) under construction impacts its 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 . story_separator_special_tag in case of a change or termination , the customer is required to pay the company for work performed and other costs necessarily incurred as a result of the change or termination . generally , the company attempts to raise its prices as its costs increase . however , the actual pricing of the company 's products and services is impacted by a number of factors , including competitive pricing pressure , the level of utilized capacity in the oil service sector , maintenance of market share , the introduction of new products and general market conditions . the company accounts for larger and more complex projects that have relatively longer manufacturing time frames on a percentage-of-completion basis . during 2012 and 2011 there were 21 and 18 projects , respectively , that were accounted for using the percentage-of-completion method , which represented approximately 20 % for both years of the company 's total revenues and 24 % and 23 % of the company 's product revenues in each year , respectively . during 2010 , there were 19 projects representing 19 % of the company 's total revenues and 23 % 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 when 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. the following table sets forth , for the periods indicated , a breakdown of the company 's u.s. gulf of mexico products and services revenues : replace_table_token_9_th as a result of the u.s. gulf of mexico drilling moratorium and subsequent delays in the issuance of permits , many of the company 's customers in the u.s. gulf of mexico still have unused inventory of the company 's subsea wellhead equipment . however , the number of floating rigs actively drilling in the u.s. gulf of mexico averaged 29 for 2012 as compared to 18 for 2011. the company believes that the effects of the u.s. gulf of mexico drilling moratorium and related permitting delays have had little or no impact on revenues related to offshore rig equipment . the change in offshore rig equipment revenues in 2012 compared to 2011 resulted primarily from a reduction of revenues from projects accounted for under the percentage-of-completion method . the company 's u.s. gulf of mexico service revenues , which decreased in each quarter of 2010 as a percentage 31 of worldwide revenues as a result of the u.s. gulf of mexico drilling moratorium , have increased since the beginning of 2011. in 2011 , u.s. gulf of mexico service revenues were 4.3 % , or approximately $ 25.8 million , of total worldwide revenue and increased to 6.9 % , or approximately $ 50.3 million , of total worldwide revenue in 2012. the company will continue to monitor any remaining effects of the u.s. drilling moratorium and the subsequent permitting delays on its ongoing business operations . 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 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 , 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 production activities . story_separator_special_tag with offshore rig equipment components . product revenues increased in the eastern hemisphere by $ 33.3 million and $ 0.9 million in asia-pacific , partially offset by a decrease in the western hemisphere of $ 8.7 million . service revenues increased by approximately $ 9.5 million resulting from increased service revenues in the eastern hemisphere of $ 2.9 million , $ 5.6 million in asia-pacific and $ 1.0 million in the western hemisphere . the majority of the increases in service revenues related to increased technical advisory services and the rental of running and installation tools , slightly offset by decreases in reconditioning services . cost of sales . cost of sales increased by $ 39.2 million , or approximately 12.2 % , to $ 361.8 million for 2011 from $ 322.6 million for the same period in 2010. as a percentage of revenues , cost of sales were approximately 60.2 % in 2011 and 57.0 % in 2010. cost of sales as a percentage of revenue increased in 2011 due to changes in the product mix and increases in unabsorbed manufacturing overhead expenses . selling , general and administrative expenses .
| 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_10_th ( 1 ) see discussion on pages 33 and 35 under special items. 32 the following table sets forth , for the periods indicated , a breakdown of our products and service revenues : replace_table_token_11_th year ended december 31 , 2012 compared to year ended december 31 , 2011 revenues . revenues increased by $ 131.7 million , or approximately 21.9 % , to $ 733.0 million in 2012 from $ 601.3 million in 2011. product revenues increased by approximately $ 98.6 million for the year ended december 31 , 2012 compared to the same period in 2011 as a result of increased revenues of $ 95.9 million in subsea equipment and $ 11.5 million in surface equipment , partially offset by a $ 8.8 million decrease in offshore rig equipment . the decrease in offshore rig equipment revenue was primarily due to the reduction in the number of long-term projects with offshore rig equipment components . product revenues increased in the western hemisphere by $ 33.8 million , $ 32.2 million in the eastern hemisphere , and in asia-pacific by $ 32.6 million . service revenues increased by approximately $ 33.1 million resulting from increased service revenues in the western hemisphere of $ 31.4 million and $ 4.0 million in the eastern hemisphere , and partially offset by a slight decrease of $ 2.3 million in asia-pacific . the majority of the increases in service revenues related to increased technical advisory services and increased rental of running and installation tools . cost of sales .
| 7,495 |
the standard introduces story_separator_special_tag this annual report on form 10-k and the documents incorporated by reference herein contain forward-looking statements regarding future events and results that are subject to the `` safe harbor '' provisions of the private securities litigation reform act of 1995. all statements , other than statements of historical facts , are statements that could be deemed forward-looking statements . see `` private securities litigation reform act of 1995 safe harbor cautionary statement '' for further information on forward-looking statements . story_separator_special_tag href= '' https : //www.sec.gov/archives/edgar/data/0000716133/000071613317000007/ # sd79e0121395c5eb0917d28c800ccbcf0 '' style= '' font-family : inherit ; font-size:8pt ; '' > form 10-k part ii cincinnati bell inc. income tax expense fluctuates accordingly based on changes in income from continuing operations before income taxes . the company uses federal and state net operating loss carryforwards to defray payment of federal and state tax liabilities . as a result , the company had cash income tax payments , net of refunds , totaling $ 1.7 million in 2016 . in periods without tax law changes , the company expects its effective tax rate to exceed statutory rates due to non-deductible expenses . non-deductible expenses were higher in prior years due to non-deductible interest expense on securities originally issued to acquire its broadband business ( the `` broadband securities '' ) . the broadband securities were repaid in full during 2015. effective march 31 , 2015 , we discontinued operating our wireless business as there were no subscribers remaining on the network . as a result , we no longer required the use of the spectrum being leased . therefore , the $ 112.6 million gain on sale of wireless spectrum licenses , which had previously been deferred , was recognized during the three months ended march 31 , 2015. on april 1 , 2015 , we transferred certain other wireless assets to the purchaser , including leases to certain wireless towers and related equipment and other assets , which resulted in a gain of $ 15.9 million in the second quarter of 2015. these gains were partially offset by operating losses as we continued to incur costs during the wind down of the wireless business . 31 form 10-k part ii cincinnati bell inc. discussion of operating segment results the company manages its business based upon product and service offerings . for the years ended december 31 , 2016 , 2015 , and 2014 , we operated two business segments : entertainment and communications and it services and hardware . the closing of our wireless operations , effective march 31 , 2015 , represented a strategic shift in our business . therefore , certain wireless assets , liabilities and results of operations are reported as discontinued operations in our financial statements . for further details of discontinued operations , see note 1 and note 16 of notes to consolidated financial statements . certain corporate administrative expenses have been allocated to our business segments based upon the nature of the expense and the relative size of the segment . intercompany transactions between segments have been eliminated . 32 form 10-k part ii cincinnati bell inc. entertainment and communications the entertainment and communications segment provides products and services such as high-speed internet , video , local voice , long distance , voip , data transport and other services . cbt , a subsidiary of the company , is the ilec for a geography that covers a radius of approximately 25 miles around cincinnati , ohio , and includes parts of northern kentucky and southeastern indiana . cbt has operated in this territory for over 140 years . voice and data services beyond its ilec territory , particularly in dayton and mason , ohio , are provided through the operations of cbet , a clec and subsidiary of cbt . the company provides long distance and voip services primarily through its cbad and evolve subsidiaries . 33 form 10-k part ii cincinnati bell inc. entertainment and communications , continued $ change % change $ change % change ( dollars in millions ) 2016 2015 2016 vs. 2015 2016 vs. 2015 2014 2015 vs. 2014 2015 vs. 2014 revenue : data $ 344.8 $ 322.8 $ 22.0 7 % $ 309.6 $ 13.2 4 % voice 275.0 291.9 ( 16.9 ) ( 6 ) % 313.5 ( 21.6 ) ( 7 ) % video 125.7 96.6 29.1 30 % 75.5 21.1 28 % services and other 23.3 32.4 ( 9.1 ) ( 28 ) % 42.1 ( 9.7 ) ( 23 ) % total revenue 768.8 743.7 25.1 3 % 740.7 3.0 0 % operating costs and expenses : cost of services and products 359.5 331.5 28.0 8 % 306.2 25.3 8 % selling , general and administrative 141.6 150.9 ( 9.3 ) ( 6 ) % 136.2 14.7 11 % depreciation and amortization 168.6 129.2 39.4 30 % 115.7 13.5 12 % restructuring and severance charges ( reversals ) 7.7 1.6 6.1 n/m ( 0.5 ) 2.1 n/m other 0.8 0.6 0.2 33 % 4.2 ( 3.6 ) ( 86 ) % total operating costs and expenses 678.2 613.8 64.4 10 % 561.8 52.0 9 % operating income $ 90.6 $ 129.9 $ ( 39.3 ) ( 30 ) % $ 178.9 $ ( 49.0 ) ( 27 ) % operating margin 11.8 % 17.5 % ( 5.7 ) 24.2 % ( 6.7 ) capital expenditures $ 272.5 $ 269.5 $ 3.0 1 % $ 163.7 $ 105.8 65 % metrics ( in thousands ) : fioptics units passed 533.4 432.0 101.4 23 % 335.0 97.0 29 % internet subscribers : dsl 105.6 133.7 ( 28.1 ) ( 21 ) % 156.2 ( 22.5 ) ( 14 ) % fioptics 197.6 153.7 43.9 29 % 113.7 40.0 35 % total internet subscribers 303.2 287.4 15.8 5 % 269.9 17.5 6 % fioptics video subscribers 137.6 114.4 23.2 20 % 91.4 23.0 25 % residential voice lines : legacy 117.5 146.4 ( 28.9 ) ( 20 ) % 181.6 ( 35.2 ) ( 19 ) % fioptics 83.8 71.4 12.4 17 % 56.7 story_separator_special_tag we also reduced the useful life of our copper assets in the fourth quarter of 2015 . 36 form 10-k part ii cincinnati bell inc. severance charges in 2016 were primarily related to a voluntary severance program to reduce costs associated with our legacy copper network . restructuring charges in 2015 were primarily related to employee severance as we identified opportunities to integrate the business markets within each of our segments . the reversal of restructuring charges in 2014 was due to re-occupying certain office space previously vacated . other includes impairment charges totaling $ 4.6 million during 2014 were for the abandonment of an internal use software project . capital expenditures replace_table_token_17_th capital expenditures are incurred to expand our fioptics product suite , upgrade and increase capacity for our networks , and to maintain our fiber and copper networks . during 2016 , 2015 and 2014 , we passed 101,400 , 97,000 and 59,000 addresses with fioptics , respectively . as of december 31 , 2016 , the company is able to provide its fioptics services to 533,400 residential and business addresses , or 67 % of our operating territory . fioptics installation costs increased in both 2016 and 2015 due to increased fioptics internet and video activations combined with upgrading set-top boxes and wireless modems . other fioptics related investments include costs to expand core network capacity and for enhancements to the customer experience . other strategic capital expenditures are for success-based fiber builds for business and carrier projects . 37 form 10-k part ii cincinnati bell inc. it services and hardware the it services and hardware segment provides a full range of managed it solutions , including managed infrastructure services , telephony and it equipment sales and professional it staffing services . these services and products are provided through the company 's subsidiaries in various geographic areas throughout the united states , canada and europe . by offering a full range of equipment and outsourced services in conjunction with the company 's fiber and copper networks , the it services and hardware segment provides end-to-end it and telecommunications infrastructure management designed to reduce cost and mitigate risk while optimizing performance for its customers . replace_table_token_18_th 38 form 10-k part ii cincinnati bell inc. revenue the following it services and hardware products have been classified as either strategic or integration : replace_table_token_19_th the growth in strategic management and monitoring , unified communications and cloud services has primarily been driven by the increase in devices monitored , voice profiles and virtual machines within our current customer base . a new end user support project also contributed $ 2.4 million to the growth in cloud services revenue in 2016 compared to 2015. revenue growth in 2015 was impacted by signing new contracts with enterprise customers and expanding an existing statewide unified communications engagement with a government entity . strategic professional services revenue decreased from the prior year as increased billable headcount was more than offset by the $ 4.3 million decline in one-time build projects . professional services revenue growth in 2015 was attributable to increased billable headcount and utilization . additionally , revenue in 2015 includes one-time charges of $ 5.3 million for the design and build of new customers ' managed service infrastructure . integration revenue is primarily driven by the volume of telecom and it hardware sales reflecting the cyclical fluctuation in capital spending by our enterprise customers , which may be influenced by many factors , including the timing of customers ' capital spend , the size of their capital budgets and general economic conditions . operating costs and expenses cost of services and products is primarily impacted by changes in telecom and it hardware sales and headcount related costs . in 2016 , costs of telecom and it hardware sales decreased $ 21.8 million compared to 2015. these costs decreased $ 32.0 million in 2015 as compared to 2014. these decreases are partially offset by increases in the cost to support the growth of our strategic products in both periods , primarily related to payroll costs . selling , general and administrative expenses also increased during both periods due to increased payroll and headcount related costs to support strategic revenue growth . restructuring and severance related charges in 2016 were primarily related to increased in-sourcing of it professionals by our customers . in 2015 , restructuring charges consisted of employee severance and project related costs for the integration of each segment 's business markets and the discontinuation of our advanced cyber-security product offering in the first quarter of 2015. we also abandoned office space in canada that is no longer in use . capital expenditures the variance in capital expenditures is driven by the nature of customer related projects and spending on equipment to support the growth of our strategic products . 39 form 10-k part ii cincinnati bell inc. corporate corporate is comprised primarily of general and administrative costs that have not been allocated to the business segments . corporate costs totaled $ 20.8 million in 2016 , $ 22.5 million in 2015 and $ 21.8 million in 2014 . corporate costs decreased by $ 1.7 million in 2016 compared to 2015 primarily due to lower transaction costs of $ 1.4 million . corporate costs increased by $ 0.7 million in 2015 compared to 2014 , driven largely by $ 1.7 million in additional stock-based compensation expense as a result of changes in our stock price and additional restructuring charges . these increases were partially offset by lower legal expenses . 40 form 10-k part ii cincinnati bell inc. financial condition , liquidity , and capital resources capital investment , resources and liquidity short-term view our primary source of cash is generated by operations . in 2016 , 2015 and 2014 , we generated $ 173.2 million , $ 110.9 million and $ 175.2 million , respectively , of cash flows from operations . in 2016 , 2015 and 2014 , proceeds from the monetization of our cyrusone investment totaled $ 189.7 million , $ 643.9 million and $ 355.9 million , respectively .
| executive summary segment results described in the executive summary and consolidated results of operations section are net of intercompany eliminations . consolidated revenue totaling $ 1,185.8 million for the year ended december 31 , 2016 increased $ 18.0 million compared to the prior year as strategic revenue growth more than offset declines from legacy and integration products . revenue from our strategic products totaled $ 637.5 million in 2016 , up 19 % compared to 2015. operating income in 2016 was $ 93.0 million , down from the prior year due in large part to increased depreciation expense associated with the impact of accelerating the construction of our fiber network and reducing the estimated useful life of certain set-top boxes and the related software as we upgrade customers to new technology . we also reduced the estimated useful life of our copper assets in the fourth quarter of 2015. income from continuing operations totaled $ 101.8 million for the year ended december 31 , 2016 , primarily due to the $ 157.0 million gain on the sale of a portion of our cyrusone investment . the company sold a combined 4.1 million cyrusone common shares for cash totaling $ 189.7 million during 2016. the cash generated from these transactions was primarily used to manage our debt and fund the expansion of our fiber network . in the third quarter of 2016 the company issued $ 425.0 million of 7 % senior notes due 2024. the proceeds of the debt were primarily used to repay the remaining $ 397.1 million of 8 3 / 8 % senior unsecured notes due 2020. in the fourth quarter of 2016 , the company issued an additional $ 200.0 million of 7 % senior notes due 2024 at 105.000 % and the proceeds were used to repay $ 208.0 million of the corporate credit agreement - tranche b term loan .
| 7,496 |
you should review the `` risk factors '' section of this annual report on form 10-k for a discussion of important factors that could cause actual results to differ materially from the results described in , or implied by , the forward-looking statements contained in this annual report on form 10-k. story_separator_special_tag quarter of 2011. the increase in sales volume was largely a result of the above average snow season ending march 31 , 2011. net sales of parts and accessories increased in the year ended december 31 , 2011 from the year ended december 31 , 2010 by 24.0 % , from $ 25.0 million to $ 31.0 million . net sales of parts and accessories remained comparatively high in 2011 , exceeding the preceding ten-year average by approximately 51.2 % . as discussed above , the comparatively strong sales of parts and accessories was due in large part to above average snowfall resulting in increased equipment usage and subsequent repair . additionally , equipment sales were only slightly higher ( 1 % above the immediately preceding ten-year average ) , as many end-users continue to repair their existing snow and ice control equipment instead of purchasing new equipment . cost of sales . cost of sales was $ 137.0 million for the year ended december 31 , 2011 compared to $ 116.5 million in 2010 , an increase of $ 20.5 million , or 17.6 % . this increase was driven primarily by increased volume as cost of sales as a percentage of total sales did not fluctuate significantly . cost of sales as a percentage of net sales decreased slightly from 65.9 % for the year ended december 31 , 2010 to 65.6 % for the year ended december 31 , 2011. negative inflationary commodity experience throughout the year was more than offset by lower costs per unit resulting from increases in volume of equipment units and parts and accessories . as a percentage of cost of sales , fixed and variable costs were approximately 15 % and 85 % , respectively , for the year ended december 31 , 2011 versus approximately 19 % and 81 % , respectively for the year ended december 31 , 2010. gross profit . gross profit was $ 71.8 million for the year ended december 31 , 2011 compared to $ 60.3 million in 2010 , an increase of $ 11.5 million , or 19.1 % , due to the increase in net sales volume described above under `` net sales '' and `` cost of sales . '' as a percentage of net sales , gross profit increased from 34.1 % for the year ended december 31 , 2010 to 34.4 % for the corresponding period in 2011 , as a result of the factors discussed above under `` net sales '' and `` cost of sales . '' selling , general and administrative expense . selling , general and administrative expenses , including intangible asset amortization and management fees , were $ 31.6 million for the year ended december 31 , 2011 compared to $ 38.9 million for the year ended december 31 , 2010 , a decrease of $ 7.3 million , or 18.7 % , driven by non-recurring expenses incurred at the time of the ipo in 2010. the non-recurring charges associated with the ipo totaled $ 8.5 million , and were comprised of the buyout of the management services agreement at $ 5.8 million , compensation expense associated with net exercises of stock options totaling $ 1.7 million and the expense and payment of cash bonuses under the our liquidity bonus plan of $ 1.0 million . additionally , in 2010 there was non-recurring compensation expense associated with net exercises of stock options subsequent to the ipo totaling $ 1.2 million . in addition , the closure costs associated with the johnson city facility were $ 0.7 million in the prior year . amortization expense decreased $ 0.8 million compared to 2010 due to certain intangible assets becoming fully amortized . additionally , contributing to the reduction , in 2011 , we spent $ 0.9 million less on legal and consulting fees compared to 2010 in order to defend patents and explore potential acquisitions . meanwhile , offsetting the decreases , in 2011 we incurred higher incentive based 26 compensation of $ 2.1 million due to better operating results . recurring stock based compensation increased $ 0.8 million compared to 2010 due to a full year as a public company in the current year . we spent $ 1.3 million in 2011 on offering costs to allow our former principal stockholders to dispose of their remaining holdings in our common stock . finally , health insurance costs increased $ 0.6 million in the year ended december 31 , 2011 compared to 2010. as a percentage of net sales , selling , general and administrative expenses , including intangibles amortization and management fees , decreased from 22.0 % for the year ended december 31 , 2010 to 15.2 % for the corresponding period in 2011 due to items discussed above . interest expense . interest expense was $ 8.9 million for the year ended december 31 , 2011 compared to $ 10.9 million in the corresponding period in 2010 , a decrease of $ 2.0 million . this decrease was due to less interest expense as a result of the redemption of our 7 3 / 4 % senior notes due 2012 ( `` senior notes '' ) with proceeds from the ipo , additional borrowings under our senior credit facilities and cash on hand . additionally , interest expense was lower for year ending december 31 , 2011 compared to 2010 as we incurred a favorable rate as a result of the april 2011 refinancing . loss on extinguishment of debt . story_separator_special_tag selling , general and administrative expenses , including intangible asset amortization and management fees , were $ 38.9 million for the year ended december 31 , 2010 compared to $ 27.6 million for the year ended december 31 , 2009 , an increase of $ 11.3 million , or 40.9 % , driven by non-recurring expenses incurred at the time of the ipo . the non-recurring charges associated with the ipo totaled $ 8.5 million , and were comprised of the buyout of the management services agreement at $ 5.8 million , compensation expense associated with net exercises of stock options totaling $ 1.7 million and the expense and payment of cash bonuses under our liquidity bonus plan of $ 1.0 million . additionally , there was non-recurring compensation expense associated with net exercises of stock options subsequent to the ipo totaling $ 1.2 million . we also spent $ 1.3 million more in 2010 on defending our patents compared to 2009. finally , the closure costs associated with the johnson city facility increased $ 0.4 million compared to the prior year . as a percentage of net sales , selling , general and administrative expenses , including intangibles amortization and management fees , increased from 15.8 % for the year ended december 31 , 2009 to 22.0 % for the corresponding period in 2010 due to the non-recurring charges discussed above . interest expense . interest expense was $ 10.9 million for the year ended december 31 , 2010 compared to $ 15.5 million in the corresponding period in 2009 , a decrease of $ 4.6 million . this decrease was due to less interest expense as a result of the redemption of our 7 3 / 4 % senior notes due 2012 ( `` senior notes '' ) with proceeds from the ipo , additional borrowings under our senior credit facilities and cash on hand . loss on extinguishment of debt . loss on extinguishment of debt totaling $ 8.0 million for the year ended december 31 , 2010 was entirely driven by costs associated with the amendment of our senior credit facilities and the redemption of the senior notes , including both the call premium on the redemption of our senior notes , and the write-off of unamortized deferred financing costs relating to the redemption of our senior notes and the amendment of our senior credit facilities . 28 income taxes . deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes . the largest item affecting deferred taxes is the difference between book and tax amortization of goodwill and other intangibles amortization . our effective combined federal and state tax rate for 2010 was 34.4 % compared to 28.8 % for 2009. the effective tax rate for the year ended december 31 , 2010 is higher than 2009 due to state net operating loss allowances ( `` nols '' ) related to the closure of the johnson city , tennessee facility . additionally , the 2009 effective rate was lower due to the release of a valuation allowance for wisconsin nols in the first quarter of 2009 due to a tax law change in the state of wisconsin resulting in the ability to utilize the nols in future periods . net income . net income for the year ended december 31 , 2010 was $ 1.7 million compared to net income of $ 9.8 million for the corresponding period in 2009 , a decrease of $ 8.1 million , or 82.7 % . this decrease was driven by the factors described above , and primarily by the non-recurring charges associated with the ipo . non-gaap financial measures this annual report on form 10-k contains financial information calculated other than in accordance with u.s. generally accepted accounting principles ( `` gaap '' ) . these non-gaap measures include : free cash flow ; adjusted net income ; and adjusted ebitda . these non-gaap disclosures should not be construed as an alternative to the reported results determined in accordance with gaap . free cash flow ( as defined below ) for the year ended december 31 , 2011 was $ 45.4 million compared to $ 12.8 million in the corresponding period in 2010 , an increase in cash provided of $ 32.6 million , or 255.2 % . the increase in cash provided is primarily a result of $ 32.0 million less cash used by operating activities , as discussed below under liquidity and capital resources . in addition to the changes in cash used by operating activities , capital expenditures decreased by $ 0.6 million . in 2010 , there were higher capital expenditures to accommodate the increased production demands in milwaukee and rockland because of the closure of our johnson city , tn manufacturing plant in the first half of the year . free cash flow is a non-gaap financial measure , which we define as net cash provided by operating activities less capital expenditures . free cash flow should be evaluated in addition to , and not considered a substitute for , other financial measures such as net income and cash flow provided by operations . we believe that free cash flow represents our ability to generate additional cash flow from our business operations . the following table reconciles net cash provided by operating activities , a gaap measure , to free cash flow , a non-gaap measure .
| results of operations overview in assessing our results of operations in a given period , one of the primary factors we consider is the level of snowfall experienced within the prior snow season . we typically compare the snowfall level in a given period both to the snowfall level in the prior season and to those snowfall levels we consider to be average . references to `` average snowfall '' levels below refer to the aggregate average inches of snowfall recorded in 66 cities in 26 snow-belt states in the united states during the annual snow season , from october 1 through march 31 , from 1980 to 2011. during this period , snowfall averaged 3,038 inches , with the low in such period being 2,094 inches and the high being 4,502 inches . 23 during the six-month snow seasons ending march 31 , 2009 , 2010 and 2011 , we experienced above average snowfall ( approximately 20 % , 18 % and 37 % above average during the six months ending march 31 , 2009 , 2010 and 2011 snow seasons , respectively ) . despite above average snowfalls during these periods , we believe that the economic downturn resulted in lower sales of snowplows and sand and salt spreaders , but increased sales of our parts and accessories as a percentage of total net sales during the years ended december 31 , 2009 , 2010 and 2011 as compared to prior periods . we experienced lower equipment and higher parts and accessories sales as weakened economic conditions tend to cause our end-users to delay purchase of replacement snow and ice control equipment and instead repair their existing equipment .
| 7,497 |
shares reserved for issuance the following are shares reserved for issuance ( in thousands ) : june 30 , 2012 employee stock purchase plan 2,571 employee stock options 18,524 total shares reserved for issuance 21,095 5. employee benefit plans ( including share-based compensation ) as of june 30 , 2012 , the company has the following share-based compensation plans : 2005 equity incentive plan the 2005 equity incentive plan ( the “ 2005 plan ” ) was adopted by the company 's board of directors on october 20 , 2005 , story_separator_special_tag business overview we develop and sell network infrastructure equipment and offer related services contracts for extended warranty and maintenance to our enterprise , data center and metropolitan telecommunications service provider customers . substantially all of our revenue is derived from the sale of our networking equipment and related service contracts . in our fiscal year ended june 30 , 2012 , our revenue decreased $ 11.7 million , gross profit decreased $ 0.1 million , operating profit increased $ 10.8 million and net income increased $ 13.2 million as compared to fiscal 2011 . we believe that understanding the following key developments is helpful to an understanding of our operating results for the fiscal year ended june 30 , 2012 . impact of the global economic developments although our net income and earnings per share both increased in fiscal 2012 , we believe that the credit market crisis , slow economic recovery in the united states , and other challenges affecting global economic conditions placed significant limitations on our financial performance . we operate in three regions : americas , which includes the united states , canada , mexico , central america and south america ; emea , which includes europe , middle east , and africa ; and apac which includes asia pacific , south asia and japan . sales in the apac and some european countries were most impacted as a result of the soft global economy and the global credit crisis in the financial market and certain european countries . we believe that limited access to credit , conservative purchasing patterns and delays or cancellation of it infrastructure plans in the face of continued uncertainty regarding the global economy , may continue to negatively impact overall demand for networking solutions , including ethernet equipment . we have taken and plan to continue to take other steps to manage our business in the current economic environment . for example , we have managed from time to time our contingent work force , reduced travel and other discretionary spending , realigned our product portfolio and organization to grow revenue and operating income , and controlled all hiring activities . increasing demand for bandwidth we believe that the continued increase in demand for bandwidth will over time drive future demand for high performance ethernet solutions . wide-spread adoption of electronic communications in all aspects of our lives , proliferation of next generation converged mobile devices and deployment of triple-play services to residences and businesses alike , continues to generate demand for greater network performance across broader geographic locations . in parallel to these transformational forces within society and the community at large , the accelerating adoption of internet and intranet “ cloud ” solutions within business enterprises is enabling organizations to offer greater business scalability to improve efficiency and through more effective operations , improve profitability . in order to realize the benefits of these developments , customers require additional bandwidth and high performance from their network infrastructure at affordable prices . we are seeing the initial indications that the ethernet segment of the networking equipment market will return to growth as enterprise , data center and carrier customers continue to recognize the performance and operating cost benefits of ethernet technology . expanding product portfolio we believe that continued success in our marketplace is dependent upon a variety of factors that includes , but is not limited to , our ability to design , develop and distribute new and enhanced products employing leading-edge technology . during the past year we further extended our ethernet product portfolio through the addition of the blackdiamond bd-x , a highly-scalable core switch for it and cloud data centers , the summit x440 for the intelligent edge , the summit x670 for data center top-of-rack deployments , the e4g cell site router family for mobile backhaul , and a revamp of our ridgeline network management platform industry developments the market for network infrastructure equipment is highly competitive and dominated by a few large companies . the current economic climate has further driven consolidation of vendors within the ethernet networking market and with vendors from adjacent markets , including storage , security , wireless and voice applications . we believe that the underpinning technology for all of these adjacent markets is ethernet . as a result , independent ethernet switch vendors are being acquired or merged with larger , adjacent market vendors to enable them to deliver complete and broad solutions . as an independent ethernet switch vendor , we must provide products that , when combined with the products of our large strategic partners , create compelling solutions for end user customers . our approach is to focus on the intelligence and automation layer that spans our hardware products and that facilitates end-to-end solutions , as opposed to positioning extreme networks as a low-cost-vendor with point products . lower overall market growth has also created an environment of declining margins due to increased competition between the remaining vendors in this space . during the last year , overall ethernet port counts have grown , while industry revenues have decreased , signaling a decline in average selling price . our product life cycle and operational cost reduction efforts are therefore even more 26 critical for margin preservation . realignment of corporate strategies in fiscal 2011 , we commenced a strategy to focus on growing revenue in specific market verticals and on improving operational effectiveness . story_separator_special_tag research and development expenses remained flat in fiscal 2011 as compared to fiscal 2010 primarily due to a $ 3.5 million increase in engineering project expenses offset by a $ 2.4 million decrease in salaries and benefits due to a reduction in headcount , a $ 0.5 million decrease in professional fees related to development work , and a $ 0.6 million decrease in stock-based compensation expense . general and administrative expenses general and administrative expenses increased in fiscal 2012 as compared to fiscal 2011 primarily due to increased legal expense of $ 2.0 million , increased contract labor expense for accounting and finance of $ 1.0 million , increased stock based compensation expense of $ 0.8 million , increased international accounting fees of $ 0.8 million offset by lower salaries and benefits 30 expense of $ 0.8 million due to fewer headcount . general and administrative expenses decreased in fiscal 2011 as compared to fiscal 2010 primarily due to a $ 1.7 million decrease in litigation expenses . restructuring charge , net of reversal during the fiscal 2012 , 2011 and 2010 , we recorded restructuring charges of $ 1.6 million , $ 3.8 million , and $ 4.2 million , respectively . fiscal 2012 restructuring during fiscal 2012 , we incurred total charges of $ 2.2 million , including $ 1.8 million related to severance , $ 0.1 million of contract termination fees , and $ 0.2 million other charges . a portion of this restructuring activity is related to the liquidation of our japan subsidiary with a cost of $ 0.5 million at june 30 , 2012. we substantially liquidated the subsidiary in japan in the fourth quarter or fiscal 2012 , as part of our broad restructuring effort . we will dispose the remaining immaterial assets and liabilities and complete the liquidation process by the end of fiscal 2013. fiscal 2011 restructuring during fiscal 2011 , we commenced a strategy to focus on growing revenue in specific market verticals and on improving operational effectiveness . as part of the strategy , we reduced headcount and incurred total restructuring charges of $ 4.2 million , of which $ 1.0 million and $ 3.2 million were recognized in the third and fourth quarter of fiscal 2011 , respectively . during the fourth quarter of fiscal 2011 , the lease term for the excess leased facilities ended . we recognized a restructuring reversal of $ 0.4 million related to the true up of operating and rent expenses . fiscal 2010 restructuring during fiscal 2010 , we incurred charges of $ 4.6 million related to the restructuring or the organization from a business unit organization to a functional organization . total termination benefits were $ 4.1 million . we incurred $ 0.2 million increase in facilities operating expenses related to one of the facilities ; $ 0.5 million reversal of restructuring expense due to higher projected sublease receipt from sublease renewal arrangement . $ 0.1 million reversal of restructuring expense related to the settlement of employment termination benefits incurred in the third fiscal quarter of 2009. litigation settlement during the fourth quarter of fiscal 2012 , from a judgment related to our lawsuit with enterasys networks for patent infringement , we received $ 0.6 million from enterasys including a first trial damage award of $ 0.2 million , reimbursement of legal costs from the first trial of $ 0.4 million , and interest . interest income interest income was $ 1.2 million in fiscal 2012 , $ 1.3 million in fiscal 2011 and $ 1.5 million in fiscal 2010 , representing a decrease of $ 0.1 million in fiscal 2012 from fiscal 2011 , and a decrease of $ 0.2 million in fiscal 2011 from fiscal 2010 . the decrease in interest income in fiscal 2012 from fiscal 2011 was due to a decrease in the average interest yield from 1.2 % in fiscal 2011 to 0.95 % in fiscal 2012. the decrease in interest income in fiscal 2011 from fiscal 2010 was due to a decrease in the average interest yield from 1.6 % in fiscal 2010 to 1.2 % in fiscal 2011. interest expense interest expense was $ 0.1 million for each fiscal year 2012 , 2011 and 2010 . interest expense in fiscal 2012 and fiscal 2011 were primarily related to interest amortization of technology agreements . other income ( expense ) , net other income ( expense ) net , was income of $ 2.0 million in fiscal 2012 , expense of $ 0.6 million in fiscal 2011 and expense of $ 0.1 million in fiscal 2010 . other income in fiscal 2012 was primarily comprised of $ 1.9 million in foreign currency translation gains that were reclassified from other comprehensive income ( loss ) due to the substantial liquidation of our japan subsidiary . provision ( benefit ) for income taxes we recorded an income tax provision of $ 1.2 million for fiscal 2012. the effective tax rate in fiscal 2012 was 7.0 % which differs from the federal statutory tax rate of 35 % due primarily to the tax impact of income from foreign operations and the change 31 in valuation allowance . we recorded an income tax provision of $ 1.2 million for fiscal 2012 due to profits in our foreign subsidiaries , utilization of the us entity 's net operating losses , and the release of foreign tax reserves . the income tax provision of $ 1.0 million and income tax benefit of $ 0.4 million for fiscal 2011 and 2010 , respectively , were recorded for taxes due on income generated in u.s federal , certain states and foreign tax jurisdictions . the effective tax rate was 26.9 % for fiscal 2011 which differs from the federal statutory tax rate of 35 % due primarily to the tax impact of income from foreign operations and the change in valuation allowance .
| results of operations effective june 30 , 2012 , we changed our fiscal period to coincide with calendar month-end . previously , we used a fiscal 52/53 week manufacturing calendar year . accordingly , the fiscal year ended june 30 , 2012 has 52 weeks compared to 53 weeks in 2011 and 52 weeks in fiscal 2010. our operations and financial performance have been affected by the economic factors described above , and during fiscal 2012 , we achieved the following results : net revenue of $ 322.7 million , a decrease of 4 % from fiscal 2011 net revenue of $ 334.4 million . product revenue of $ 261.9 million , a decrease of 5 % from fiscal 2011 product revenue of $ 274.4 million . service revenue of $ 60.8 million , roughly equal to fiscal 2011 service revenue of $ 60.0 million total gross margin was 55.7 % of net revenue in fiscal 2012 ( including share-based compensation expense of $ 0.7 million ) , compared to 53.8 % in fiscal 2011 . net income was $ 15.9 million in fiscal 2012 ( including share-based compensation expense of $ 6.2 million and restructuring charges of $ 1.6 million ) , an increase from net income of $ 2.7 million in fiscal 2011 . cash flow provided by operating activities was $ 13.8 million , compared to cash flow provided by operating activities of $ 16.8 million in fiscal 2011 , a decrease of $ 3.0 million . cash and cash equivalents , short-term investments and marketable securities were $ 153.5 million as of june 30 , 2012 , an increase of $ 6.5 million from fiscal 2011 was primarily due to cash provided by operating activities .
| 7,498 |
at december 31 , 2012 , we had cash and cash equivalents of $ 196,478 compared to cash and cash equivalents of $ 16,864 at december 31 , 2011. at december 31 , 2012 , we had working capital of $ 262,421 , compared to working capital of $ 581,159 at december 31 , 2011. the decline in our working capital is due primarily to an increase in our accounts payable related to purchases of materials , which has significantly increased in 2012. net cash provided by ( used in ) operating activities during the year ended december 31 , 2012 , net cash provided by operating activities was $ 854,934 compared to net cash used by operating activities of $ 989,917 for the year ended december 31 , 2011. cash used in operating activities relates primarily to funding net losses and changes in operating assets and liabilities , offset by non-cash compensation related to stock options and depreciation . in 2012 , cash provided by operating activities included an increase in deferred rent of $ 901,000 related to lease incentives received from our landlord . 24 net cash used in investing activities net cash used in investing activities totaled $ 1,150,320 during the year ended december 31 , 2012 , and $ 91,430 during the year ended december 31 , 2011. cash used in investing activities was due primarily to the increase in tenant improvements related to our expanded manufacturing facility and the purchase of equipment . net cash provided by financing activities net cash provided by financing activities was $ 475,000 and $ 1,095,000 during the years ended december 31 , 2012 and 2011 , respectively . cash provided by financing activities resulted from funding from two existing shareholders under the existing facilities . at december 31 , 2012 , the unused portion of the facilities was approximately $ 900,000. outlook in 2013 , biolife management expects revenue to be in the range of $ 6.5 million to $ 7.0 million . this increase will be driven by continued increases in sales to existing customers , the addition of new customers in the regenerative medicine market as our customers continue to move their cell and tissue based therapies and products through the clinical trial and regulatory approval processes , and continued focus on sales through our existing distribution network . we expect gross margin as a percentage of revenue of approximately 38 % - $ 41 % in 2013 with fluctuation occurring as a result of changes in the mix of core product sales and contract manufacturing services revenue . we expect operating expenses in 2013 to increase 10 % - 20 % over 2012 , with increases expected in all areas primarily in personnel related costs . we will continue to focus on generating positive operating income in 2013 , and expect the results for the full year to increase over 2012. we believe cash generated from customer collections will provide sufficient funds to operate our business . critical accounting policies and significant judgments and estimates management 's discussion and analysis of our financial condition and results of operations is based on our financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states . the preparation of financial statements requires that we 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 reported revenues and expenses during the reporting periods . on an ongoing basis , we evaluate estimates , including , but not limited to those related to accounts receivable allowances , determination of fair value of share-based compensation , contingencies , income taxes , and expense accruals . we base our estimates on historical experience and on other factors that we believes 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 . actual results may differ materially from these estimates under different assumptions or conditions . share-based compensation we account for share-based compensation by estimating the fair value of share-based compensation using the black-scholes option pricing model on the date of grant . we utilize assumptions related to stock price volatility , stock option term and forfeiture rates that are based upon both historical factors as well as management 's judgment . non-cash compensation expense is recognized on a straight-line basis over the applicable requisite service period of one to four years , based on the fair value of such share-based awards on the grant date . 25 income taxes we follow the asset and liability method of accounting for income taxes . under this method , deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and on the expected future tax benefits to be derived from net operating loss carryforwards measured using current tax rates . a valuation allowance is established if it is more likely than not that some portion or all of the deferred tax assets will not be realized . we have not recorded any liabilities for uncertain tax positions or any related interest and penalties . our tax returns are open to audit for the years ending december 31 , 2009 to 2012. off-balance sheet arrangements as of december 31 , 2012 , we did not have any off-balance sheet financing arrangements . contractual obligations in november of 2012 we signed an amended lease agreement , which expanded the premises leased by us from the landlord to approximately 26,000 rentable square feet . the term of the lease was extended to july 31 , 2021. the amendment includes two ( 2 ) options to extend the term of the lease , each option is for an additional period of five ( 5 ) years , with story_separator_special_tag at december 31 , 2012 , we had cash and cash equivalents of $ 196,478 compared to cash and cash equivalents of $ 16,864 at december 31 , 2011. at december 31 , 2012 , we had working capital of $ 262,421 , compared to working capital of $ 581,159 at december 31 , 2011. the decline in our working capital is due primarily to an increase in our accounts payable related to purchases of materials , which has significantly increased in 2012. net cash provided by ( used in ) operating activities during the year ended december 31 , 2012 , net cash provided by operating activities was $ 854,934 compared to net cash used by operating activities of $ 989,917 for the year ended december 31 , 2011. cash used in operating activities relates primarily to funding net losses and changes in operating assets and liabilities , offset by non-cash compensation related to stock options and depreciation . in 2012 , cash provided by operating activities included an increase in deferred rent of $ 901,000 related to lease incentives received from our landlord . 24 net cash used in investing activities net cash used in investing activities totaled $ 1,150,320 during the year ended december 31 , 2012 , and $ 91,430 during the year ended december 31 , 2011. cash used in investing activities was due primarily to the increase in tenant improvements related to our expanded manufacturing facility and the purchase of equipment . net cash provided by financing activities net cash provided by financing activities was $ 475,000 and $ 1,095,000 during the years ended december 31 , 2012 and 2011 , respectively . cash provided by financing activities resulted from funding from two existing shareholders under the existing facilities . at december 31 , 2012 , the unused portion of the facilities was approximately $ 900,000. outlook in 2013 , biolife management expects revenue to be in the range of $ 6.5 million to $ 7.0 million . this increase will be driven by continued increases in sales to existing customers , the addition of new customers in the regenerative medicine market as our customers continue to move their cell and tissue based therapies and products through the clinical trial and regulatory approval processes , and continued focus on sales through our existing distribution network . we expect gross margin as a percentage of revenue of approximately 38 % - $ 41 % in 2013 with fluctuation occurring as a result of changes in the mix of core product sales and contract manufacturing services revenue . we expect operating expenses in 2013 to increase 10 % - 20 % over 2012 , with increases expected in all areas primarily in personnel related costs . we will continue to focus on generating positive operating income in 2013 , and expect the results for the full year to increase over 2012. we believe cash generated from customer collections will provide sufficient funds to operate our business . critical accounting policies and significant judgments and estimates management 's discussion and analysis of our financial condition and results of operations is based on our financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states . the preparation of financial statements requires that we 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 reported revenues and expenses during the reporting periods . on an ongoing basis , we evaluate estimates , including , but not limited to those related to accounts receivable allowances , determination of fair value of share-based compensation , contingencies , income taxes , and expense accruals . we base our estimates on historical experience and on other factors that we believes 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 . actual results may differ materially from these estimates under different assumptions or conditions . share-based compensation we account for share-based compensation by estimating the fair value of share-based compensation using the black-scholes option pricing model on the date of grant . we utilize assumptions related to stock price volatility , stock option term and forfeiture rates that are based upon both historical factors as well as management 's judgment . non-cash compensation expense is recognized on a straight-line basis over the applicable requisite service period of one to four years , based on the fair value of such share-based awards on the grant date . 25 income taxes we follow the asset and liability method of accounting for income taxes . under this method , deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and on the expected future tax benefits to be derived from net operating loss carryforwards measured using current tax rates . a valuation allowance is established if it is more likely than not that some portion or all of the deferred tax assets will not be realized . we have not recorded any liabilities for uncertain tax positions or any related interest and penalties . our tax returns are open to audit for the years ending december 31 , 2009 to 2012. off-balance sheet arrangements as of december 31 , 2012 , we did not have any off-balance sheet financing arrangements . contractual obligations in november of 2012 we signed an amended lease agreement , which expanded the premises leased by us from the landlord to approximately 26,000 rentable square feet . the term of the lease was extended to july 31 , 2021. the amendment includes two ( 2 ) options to extend the term of the lease , each option is for an additional period of five ( 5 ) years , with
| results of operations summary of 2012 achievements ● revenue from our core products , cryostor® , hypothermosol® , and bloodstor® grew 23 % over 2011 as we expanded our market share in the regenerative medicine , biobanking , and drug discovery segments and ended 2012 with over $ 3 million in revenue from core customers . ● we executed a significant confidential multi-year contract manufacturing services agreement to perform aseptic media formulation , fill , and finish of several biopreservation solutions for a new multinational customer and delivered over $ 2.5 million in product to this customer in 2012 . ● we signed a lease amendment to increase the size of the corporate headquarters and manufacturing capacity by approximately 100 % with the addition of a second good manufacturing practice ( cgmp ) clean room suite . ● we expanded our team from 12 people at the end of 2011 to 28 people at the end of 2012 , to meet growing demand for our products and services . team members were added to our production team and both direct and indirect sales professionals in the period . ● we signed a new private-label distribution agreement to supply hypothermosol® and cryostor® to a leading life sciences cell culture tools provider . ● we achieved positive cash flow from operations during the last quarter of the year for the first time in company history . comparison of annual results of operations percentage comparisons have been omitted within the following table where they are not considered meaningful . revenue and gross margin replace_table_token_2_th core product sales . our core products are sold through both direct and indirect channels to the customers in the biobanking , drug discovery , and regenerative medicine markets .
| 7,499 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.