| _id | d1a73652c |
| title |  |
| text | 3. MARKETABLE SECURITIES
As of December 31, 2019, the Company did not hold any marketable securities.

 |
| table | |                | December 31, 2018 |                   |
--------------- | -------------- | ----------------- | ----------------- | ----------
(in thousands)  | Amortized Cost | Unrealized Gains  | Unrealized Losses | Fair Value
Municipal bonds | $44,802        | $13               | $(110)            | $44,705
Corporate bonds | 48,499         | 23                | (226)             | 48,296
                | $93,301        | $36               | $(336)            | $93,001 |


| _id | d1b3507e0 |
| title |  |
| text | 21 Share-based payments
(a) Performance rights

The performance rights plan was established by the Board of Directors to provide long-term incentives to the Group’s Senior Executives based on total shareholder returns (TSR) taking into account the Group’s financial and operational performance. Under the Plan, eligible participants may be granted performance rights on terms and conditions determined by the Board from time to time. Performance rights were granted during the course of FY17, FY18 and FY19. The vesting conditions for grants relate to TSR

The vesting conditions for grants relate to TSR exceeding the ASX 200 Accumulation Index over the measurement period. Vesting of the rights will be tested on or around the day following the release of each of the annual results for the years ended 30 June 2019, 2020 and 2021 respectively.

Performance rights are granted by the Company for nil consideration. The Board has discretion to determine if the value will be provided in shares, cash or a combination of shares and cash. Rights granted under the plan carry no dividend or voting rights.

The fair value of the rights at the date of valuation was determined using the Black-Scholes Option Pricing Model to be equal to the volume weighted-average price (VWAP) ending on the day before the grant date, less the dividends expected over the period from the expected grant date to the completion of the measurement period, adjusted for the expected probability of achieving the vesting conditions.

 |
| table | | 30 June 2019     | 30 June 2019       | 30 June 2018     | 30 June 2018
------------------------- | ---------------- | ------------------ | ---------------- | ------------------
                          | Number of Rights | Average Fair Value | Number of Rights | Average Fair Value
Opening balance           | 2,948,960        | $1.87              | 3,460,195        | $1.26
Granted during the year   | 828,285          | $3.07              | 762,577          | $3.32
Vested during the year    | (1,307,885)      | $1.19              | (1,273,812)      | $1.09
Forfeited during the year | -                | $0.00              | -                | $0.00
Closing balance           | 2,469,360        | $2.64              | 2,948,960        | $1.87 |


| _id | d1b30388c |
| title |  |
| text | Other financial assets and liabilities consists of derivatives, the Group’s holdings in listed and unlisted investments, and loans provided to related parties.

The Group’s investments in listed equity securities are designated as financial assets at fair value through other comprehensive income. Investments are initially measured at fair value net of transaction costs and, in subsequent periods, are measured at fair value with any change recognised in other comprehensive income. Upon disposal, the cumulative gain or loss recognised in other comprehensive income is transferred to retained earnings.

Associates are those entities in which the Group has significant influence but not control or joint control over the financial and operating policies. Investments in associates are initially recognised at cost including transaction costs and are accounted for using the equity method by including the Group’s share of profit or loss and other comprehensive income of associates in the carrying amount of the investment until the date on which significant influence ceases. Dividends received reduce the carrying

ceases. Dividends received reduce the carrying amount of the investment in associates.

 |
| table | | 2019 | 2018
--------------------------------------------- | ---- | ----
                                              | $M   | $M
Current                                       |      |
Derivatives                                   | 45   | 53
Total current other financial assets          | 45   | 53
Non‑current                                   |      |
Derivatives                                   | 501  | 366
Listed equity securities                      | 91   | 96
Investments in associates                     | 59   | 57
Loans provided to related parties             | 41   | 3
Total non‑current other financial assets      | 692  | 522
Total other financial assets                  | 737  | 575
Current                                       |      |
Derivatives                                   | 58   | 50
Total current other financial liabilities     | 58   | 50
Non‑current                                   |      |
Derivatives                                   | 24   | 61
Total non‑current other financial liabilities | 24   | 61
Total other financial liabilities             | 82   | 111 |


| _id | d1a72b474 |
| title |  |
| text | 24. Government grants
The following government grants are included within trade and other payables:
Government grants have been received to accelerate and support research and development in the vulnerability of global navigation satellite systems and other high technology projects.

 |
| table | | 2019      | 2018
-------------------------------- | --------- | ---------
                                 | $ million | $ million
At 1 January                     | 2.3       | 2.6
Received during the year         | 0.3       | 0.1
Released to the income statement | (0.6)     | (0.4)
At 31 December                   | 2.0       | 2.3 |


| _id | d1b3b6c7a |
| title |  |
| text | Order intake increased in all businesses year-over-year due to a higher volume from large orders. Sharp order growth in Asia, Australia included two large orders for offshore wind-farms including service in Taiwan totaling € 2.3 billion. SGRE also recorded sharply higher orders in the Americas region, driven by several large orders in the onshore business mainly in the U. S. In contrast, orders came in substantially lower in the region Europe, C. I. S., Africa, Middle East which in the prior year had

Africa, Middle East which in the prior year had included an order for an offshore wind-farm, including service, in the U. K.

worth € 1.3 billion.
Revenue was up significantly year-over-year, with substantial growth in the offshore and service businesses and clear growth in the onshore business. On a geographic basis, revenue rose substantially in Europe, C. I. S., Africa, Middle East, while it declined clearly in the other two reporting regions.

Adjusted EBITA was on the prior-year level as positive effects from productivity improvements and higher revenue were offset by price declines, a less favorable project mix and higher expenses for integration costs and capacity adjustments including severance. Severance charges were € 32 million in fiscal 2019 and
€ 77 million in fiscal 2018. SGRE’s order backlog was € 26 billion at end of the fiscal year, of which € 9 billion are expected to be converted into revenue in fiscal 2020.

These results were achieved in markets that grew substantially in fiscal 2019 in terms of installed capacity due to higher demand in both the onshore and offshore markets, with the latter growing faster. Market volume in euros was subject to adverse price development. On a regional basis, growth in the onshore business was again driven primarily by China where the largest national wind market in the world for onshore generation remains largely closed to foreign manufacturers, and secondarily by the

U. S. In contrast, the onshore market in Germany declined significantly.

In the offshore market, growth was driven by the U. K. and China. SGRE expects global onshore wind installations to grow clearly in fiscal 2020, driven by growth in the U. S. and India. Global offshore wind power markets are expected to grow in fiscal 2020. The driver of this growth is China which offsets a slight decline in European markets. Market volume in euros is expected to be subject to adverse price development in the offshore business, reflecting the trends discussed above, and currency

the trends discussed above, and currency translation effects.

 |
| table | |        | Fiscal year |        | % Change
--------------------- | ------ | ----------- | ------ | --------
(in millions of €)    | 2019   | 2018        | Actual | Comp.
Orders                | 12,749 | 11,875      | 7 %    | 7 %
Revenue               | 10,227 | 9,122       | 12 %   | 12 %
Adjusted EBITA        | 482    | 483         | 0 %    |
Adjusted EBITA margin | 4.7 %  | 5.3 %       |        | |


| _id | d1b3bf8a2 |
| title |  |
| text | Cash provided by operating activities for the year ended December 31, 2018 as compared to the year ended December 31, 2017:
Net cash provided by operating activities increased by $7.5 million to $55.6 million for the year ended December 31, 2018, as compared to $48.1 million for the year ended December 31, 2017. In determining net cash provided by operating activities, net loss is adjusted for the effects of certain non-cash items, which may be analyzed in detail as follows:

 |
| table | (in thousands of U.S. dollars)                                                  | Year Ended December 31, 2018 | Year Ended December 31, 2017
------------------------------------------------------------------------------- | ---------------------------- | ----------------------------
Net loss                                                                        | $(265,511)                   | $(164,787)
Adjustments to reconcile net loss to net cash provided by operating activities: |                              |
Depreciation and amortization                                                   | 102,839                      | 104,112
Amortization and write-off of deferred financing costs                          | 7,880                        | 6,391
Amortization of deferred drydock and special survey costs                       | 13,828                       | 14,727
Provision for losses on accounts receivable                                     | 575                          | 269
Share based compensation                                                        | 4,556                        | 4,296
Gain on bond and debt extinguishment                                            | (6,464)                      | (185)
Bargain gain upon obtaining control                                             | (58,313)                     | —
Income tax benefit                                                              | (1,108)                      | (3,192)
Impairment losses                                                               | 200,657                      | 50,565
Gain on sale of assets                                                          | (894)                        | (1,064)
Loss/(equity) in affiliates, net of dividends received                          | 84,317                       | 4,610
Net income adjusted for non-cash items                                          | $82,362                      | $15,742 |


| _id | d1b375a7c |
| title |  |
| text | (11) Other Non-Current Assets
Other non-current assets consist of the following (in millions):

 |
| table | | December 31, |
----------------------------------------- | ------------ | ------
                                          | 2019         | 2018
Property records database                 | $60.1        | $59.9
Contract assets                           | 37.8         | 17.0
Right-of-use assets                       | 26.4         | —
Deferred compensation plan related assets | 15.2         | 11.1
Unbilled receivables                      | 3.5          | 5.0
Prepaid expenses                          | 8.1          | 18.3
Unrealized gains on interest rate swaps   | —            | 6.2
Other                                     | 7.7          | 4.3
Other non-current assets                  | $158.8       | $121.8 |


| _id | d1b322912 |
| title |  |
| text | The following tabl e reconciles total operating segment revenues to total revenues as well as total operating segment margin to income before provision for income taxes:

(1) Cloud and license revenues presented for management reporting included revenues related to cloud and license obligations that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in our consolidated statements of operations for the periods presented due to business combination accounting requirements. See Note 9 for an explanation of these adjustments and this table for a reconciliation of our total operating segment revenues to our total

our total operating segment revenues to our total revenues as reported in our consolidated statements of operations.

 |
| table | Year Ended May 31,                              |         |         |
----------------------------------------------- | ------- | ------- | -------
(in millions)                                   | 2019    | 2018    | 2017
Total revenues for operating segments           | $39,526 | $39,430 | $37,963
Cloud and license revenues (1)                  | (20)    | (47)    | (171)
Total revenues                                  | $39,506 | $39,383 | $37,792
Total margin for operating segments             | $23,981 | $23,857 | $23,208
Cloud and license revenues (1)                  | (20)    | (47)    | (171)
research and development                        | (6,026) | (6,084) | (6,153)
General and administrative                      | (1,265) | (1,282) | (1,172)
Amortization of intangible assets               | (1,689) | (1,620) | (1,451)
Acquisition related and other                   | (44)    | (52)    | (103)
restructuring                                   | (443)   | (588)   | (463)
Stock-based compensation for operating segments | (518)   | (505)   | (415)
Expense allocations and other, net              | (441)   | (415)   | (367)
Interest expense                                | (2,082) | (2,025) | (1,798)
Non-operating income, net                       | 815     | 1,185   | 565
Income before provision for income taxes        | $12,268 | $12,424 | $11,680 |


| _id | d1b39eb34 |
| title |  |
| text | 16. SHARE-BASED PAYMENTS
a. Employee Share Plan

The Employee Share Plan (ESP) is available to all eligible employees each year to acquire ordinary shares in the Company from future remuneration (before tax). Shares to be issued or transferred under the ESP will be valued at the volume-weighted average price of the Company’s shares traded on the Australian Securities Exchange during the five business days immediately preceding the day the shares are issued or transferred. Shares issued under the ESP are not allowed to be sold, transferred or otherwise

not allowed to be sold, transferred or otherwise disposed until the earlier of the end of an initial three-year period, or the participant ceasing continuing employment with the Company.

Details of the movement in employee shares under the ESP are as follows:
The consideration for the shares issued on 22 May 2019 was $3.72 (7 May 2018: $4.24).

 |
| table | | 2019          | 2018
---------------------------------------------------------------------- | ------------- | -------------
                                                                       | No. of Shares | No. of Shares
Number of shares at beginning of year                                  | 114,758       | 137,227
Number of shares distributed to employees                              | 45,560        | 42,480
Number of shares transferred to main share registry and/or disposed of | (44,526)      | (64,949)
Number of shares at year end                                           | 115,792       | 114,758 |


| _id | d1b31567c |
| title |  |
| text | The principal components of deferred tax assets and liabilities are as follows:

The valuation allowance provided against our deferred tax assets as of March 29, 2019, increased primarily due to a corresponding increase in unrealized capital losses from equity investments, certain acquired tax loss and tax credits carryforwards, and California research and development credits. Based on our current operations, these attributes are not expected to be realized, and a valuation allowance has been recorded to offset them.

As of March 29, 2019, we have U.S. federal net operating losses attributable to various acquired companies of approximately $147 million, which, if not used, will expire between fiscal 2020 and 2037. We have U.S. federal research and development credits of approximately $11 million. The research and development credits, if not used, will expire between fiscal 2020 and 2036. $89 million of the net operating loss carryforwards and $11 million of the U.S. federal research and development tax credits are

federal research and development tax credits are subject to limitations which currently prevent their use, and therefore these attributes are not expected to be realized. The remaining net operating loss carryforwards and U.S. federal research and development tax credits are subject to an annual limitation under U.S. federal tax regulations but are expected to be fully realized. We have $3 million of foreign tax credits which, if not used, will expire beginning in fiscal 2028. Furthermore, we have U.S.

in fiscal 2028. Furthermore, we have U.S. state net operating loss and credit carryforwards attributable to various acquired companies of approximately $68 million and $51 million, respectively. If not used, our U.S. state net operating losses will expire between fiscal 2020 and 2037, and the majority of our U.S. state credit carryforwards can be carried forward indefinitely. In addition, we have foreign net operating loss carryforwards attributable to various foreign companies of approximately $118

various foreign companies of approximately $118 million, $24 million of which relate to Japan, and will expire beginning in fiscal 2028, and the rest of which, under current applicable foreign tax law, can be carried forward indefinitely.

 |
| table | | As of          |
-------------------------------------------------------- | -------------- | --------------
(In millions)                                            | March 29, 2019 | March 30, 2018
Deferred tax assets:                                     |                |
Tax credit carryforwards                                 | $54            | $30
Net operating loss carryforwards of acquired companies   | 51             | 32
Other accruals and reserves not currently tax deductible | 64             | 66
Deferred revenue                                         | 54             | 94
Intangible assets                                        | 384            | —
Loss on investments not currently tax deductible         | 35             | 9
Stock-based compensation                                 | 87             | 141
Other                                                    | 25             | 18
Gross deferred tax assets                                | 754            | 390
Valuation allowance                                      | (105)          | (19)
Deferred tax assets, net of valuation allowance          | $649           | $371
Deferred tax liabilities:                                |                |
Property and equipment                                   | $(17)          | $(5)
Goodwill                                                 | (13)           | (20)
Intangible assets                                        | —              | (459)
Unremitted earnings of foreign subsidiaries              | (316)          | (396)
Prepaids and deferred expenses                           | (43)           | (23)
Discount on convertible debt                             | (7)            | (14)
Deferred tax liabilities                                 | (396)          | (917)
Net deferred tax assets (liabilities)                    | $253           | $(546) |


| _id | d1b306d8e |
| title |  |
| text | Non-GAAP Financial Measures

To complement our Consolidated Statements of Operations and Cash Flows, we use non-GAAP financial measures of Adjusted gross margin, Adjusted operating income, Adjusted net income, and Adjusted EBITDA. We believe that Adjusted gross margin, Adjusted operating income, Adjusted net income, and Adjusted EBITDA are complements to U.S. GAAP amounts and such measures are useful to investors. The presentation of these non-GAAP measures is not meant to be considered in isolation or as an alternative to net income

in isolation or as an alternative to net income as an indicator of our performance, or as an alternative to cash flows from operating activities as a measure of liquidity.

The following table provides a reconciliation from U.S. GAAP Gross margin to non-GAAP Adjusted gross margin (amounts in thousands):
(1) Fiscal years ending March 31, 2018 and 2017 adjusted due to the adoption of ASC 606.

(2) $0.9 million in costs incurred during fiscal year 2018 related to the relocation of the Company's tantalum powder facility equipment from Carson City, Nevada to its existing Matamoros, Mexico plant were reclassified from “Plant start-up costs” to “Restructuring charges” during fiscal year 2019.

 |
| table | |            | Fiscal Years Ended March 31, |
----------------------------------------- | ---------- | ---------------------------- | --------
                                          | 2019       | 2018                         | 2017
Net sales (1)                             | $1,382,818 | $1,200,181                   | $757,338
Cost of sales (1)                         | 924,276    | 860,744                      | 571,944
Gross Margin (GAAP) (1)                   | 458,542    | 339,437                      | 185,394
Gross margin as a % of net sales          | 33.2%      | 28.3%                        | 24.5%
Non-GAAP adjustments:                     |            |                              |
Plant start-up costs (2)                  | (927)      | 929                          | 427
Stock-based compensation expense          | 2,756      | 1,519                        | 1,384
Adjusted gross margin (non-GAAP) (1)      | $460,371   | $341,885                     | $187,205
Adjusted gross margin as a % of net sales | 33.3%      | 28.5%                        | 24.7% |


| _id | d1b307068 |
| title |  |
| text | The following tables summarize information for operating income (loss), depreciation and amortization, restructuring charges, gain (loss) on write down and disposal of long-lived assets, and capital expenditures by reportable segment for the fiscal years ended 2019, 2018 and 2017 and total assets by reportable segment for the fiscal years ended 2019 and 2018 (amounts in thousands): The following tables summarize information for operating income (loss), depreciation and amortization, restructuring charges,

and amortization, restructuring charges, gain (loss) on write down and disposal of long-lived assets, and capital expenditures by reportable segment for the fiscal years ended 2019, 2018 and 2017 and total assets by reportable segment for the fiscal years ended 2019 and 2018 (amounts in thousands):

(1) March 31, 2018 adjusted due to the adoption of ASC 606.

 |
| table | | March 31,  |
------------------------- | ---------- | ----------
                          | 2019       | 2018
Total assets:             |            |
Solid Capacitors          | $794,402   | $704,851
Film and Electrolytic (1) | 219,711    | 240,968
MSA                       | 234,419    | 254,193
Corporate                 | 69,563     | 22,911
                          | $1,318,095 | $1,222,923 |


| _id | d1b3115b8 |
| title |  |
| text | Key Performance Indicators
In addition to traditional financial metrics, such as revenue and revenue growth trends, we monitor several other key performance indicators to help us evaluate growth trends, establish budgets, measure the effectiveness of our sales and marketing efforts and assess operational efficiencies. The key performance indicators that we monitor are as follows:

(1) Adjusted EBITDA and revenue constant currency growth rate are non-GAAP financial measures. For a reconciliation of Adjusted EBITDA and revenue constant currency growth rate to the nearest comparable GAAP measures, see Item 6. “Selected Financial Data.” (2) Reflects the customer count on the last day of the period rounded to the nearest hundred customers.

Revenue constant currency growth rate. We believe revenue constant currency growth rate is a key indicator of our operating results. We calculate revenue constant currency growth rate by translating revenue from entities reporting in foreign currencies into U.S. dollars using the comparable foreign currency exchange rates from the prior fiscal periods.

For further explanation of the uses and limitations of this non-GAAP measure and a reconciliation of our revenue constant currency growth rate to revenue, as reported, the most directly comparable U.S. GAAP measure, see Item 6. “Selected Financial Data.” As our total revenue grew over the past three years, our revenue constant currency growth rate has decreased over the same period, as the incremental growth from period to period represented a smaller percentage of total revenue as compared to the prior

of total revenue as compared to the prior period.

As our total revenue grows, we expect our constant currency growth rate will decline as the incremental growth from period to period is expected to represent a smaller percentage of total revenue as compared to the prior period.

Revenue retention rate. We believe that our ability to retain customers is an indicator of the stability of our revenue base and the long-term value of our customer relationships. Our revenue retention rate is driven by our customer renewals and upsells. We calculate our revenue retention rate by annualizing constant currency revenue recorded on the last day of the measurement period for only those customers in place throughout the entire measurement period.

We include add-on, or upsell, revenue from additional employees and services purchased by existing customers. We divide the result by revenue on a constant currency basis on the first day of the measurement period for all customers in place at the beginning of the measurement period. The measurement period is the trailing twelve months.

The revenue on a constant currency basis is based on the average exchange rates in effect during the respective period. Our revenue retention rate in fiscal 2019 was relatively consistent with fiscal 2018. We expect our revenue retention rate to remain relatively consistent for fiscal 2020.

Total customers. We believe the total number of customers is a key indicator of our financial success and future revenue potential. We define a customer as an entity with an active subscription contract as of the measurement date. A customer is typically a parent company or, in a few cases, a significant subsidiary that works with us directly. We expect to continue to grow our customer base through the addition of new customers in each of our markets.

Gross profit percentage. Gross profit percentage is calculated as gross profit divided by revenue. Our gross profit percentage has been relatively consistent over the past three years; however, it has fluctuated and will continue to fluctuate on a quarterly basis due to timing of the addition of hardware and employees to serve our growing customer base. More recently, gross profit has also included amortization of intangible assets related to acquired businesses.

We provide our services in each of the regions in which we operate. Costs related to supporting and hosting our product offerings and delivering our services are incurred in the region in which the related revenue is recognized. As a result, our gross profit percentage in actual terms is consistent with gross profit on a constant currency basis.

Adjusted EBITDA. We believe that Adjusted EBITDA is a key indicator of our operating results. We define Adjusted EBITDA as net (loss) income, adjusted to exclude: depreciation, amortization, disposals and impairment of long-lived assets, acquisition-related gains and expenses, litigation-related expenses, share-based compensation expense, restructuring expense, interest income and interest expense, the provision for income taxes and foreign exchange income (expense).

Adjusted EBITDA also includes rent paid in the period related to locations that are accounted for as build-to-suit facilities. For further explanation of the uses and limitations of this non-GAAP measure and a reconciliation of our Adjusted EBITDA to the most directly comparable U.S. GAAP measure, net (loss) income, see Item 6. “Selected Financial Data.”

We expect that our Adjusted EBITDA will continue to increase; however, we expect that our operating expenses will also increase in absolute dollars as we focus on expanding our sales and marketing teams and growing our research and development capabilities.

 |
| table | |         | Year Ended March 31,    |
----------------------------------------- | ------- | ----------------------- | -------
                                          | 2019    | 2018                    | 2017
                                          |         | (dollars in thousands)  |
Revenue constant currency growth rate (1) | 32%     | 38%                     | 39%
Revenue retention rate                    | 111%    | 110%                    | 111%
Total customers (2)                       | 34,400  | 30,400                  | 26,400
Gross profit percentage                   | 73%     | 73%                     | 73%
Adjusted EBITDA (1)                       | $54,008 | $25,752                 | $12,457 |


| _id | d1b33709c |
| title |  |
| text | A10 NETWORKS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)

 |
| table | | Years Ended December 31, |           |
----------------------------------------------- | ------------------------ | --------- | ---------
                                                | 2019                     | 2018      | 2017
Net loss                                        | $(17,819)                | $(27,617) | $(10,751)
Other comprehensive loss, net of tax:           |                          |           |
Unrealized gain (loss) on marketable securities | 395                      | (21)      | (78)
Comprehensive loss                              | $(17,424)                | $(27,638) | $(10,829) |


| _id | d1b39b09c |
| title |  |
| text | Liquidity and Capital Resources
Our principal sources of liquidity are cash and cash equivalents, investments and accounts receivable. The following table shows net cash provided by operating activities, net cash used in investing activities, and net cash provided by (used in) financing activities for the years ended March 31, 2019, 2018 and 2017:

In November 2015, we raised net proceeds of $68.3 million in our initial public offering after deducting underwriting discounts and commissions and offering expenses paid by us. In the years ended March 31, 2019, 2018 and 2017, we incurred operating losses of $1.2 million, $7.0 million and $10.4 million, respectively. While we expect to generate an operating loss in the year ending March 31, 2020, we expect to continue to generate positive cash flows from operating activities.

 |
| table | In the year ending March 31, 2020, we plan to continue to invest in the development and expansion of our Mime | OS™ platform to improve on our existing solutions in order to provide more capabilities to our customers. Investments in capital expenditures in the year ended March 31, 2019 were $28.8 million of which $25.8 million related to the expansion of our grid architecture.
We expect fiscal year 2020 capital expenditures to increase significantly as we expect to incur one-time costs related to the build out and expansion of facilities in the U.K. and other locations and additional data center expansion primarily in the U.S.
As of March 31, 2019 and 2018, we had cash, cash equivalents and investments of $173.5 million and $137.2 million, respectively. Based on our current operating plan, we believe that our current cash and cash equivalents, investments and operating cash flows will be sufficient to fund our operations for at least the next twelve months. Our future capital requirements may vary materially from those planned and will depend on certain factors, such as our growth and our operating results.
If we require additional capital resources to grow our business or to acquire complementary technologies and businesses in the future, we may seek to sell additional equity or raise funds through debt financing or other sources. We may also seek to invest in or acquire complement ary businesses, applications or technologies, any of which could also require us to seek additional equity or debt financing.
We cannot provide assurance that additional financing will be available at all or on terms favorable to us. We had no material commitments for capital expenditures as of March 31, 2019 or 2018. |


| _id | d1a714a58 |
| title |  |
| text | (7) Property and Equipment
Property and equipment consist of the following (in millions):
On December 31, 2019, we entered into finance lease agreements for certain computer equipment. The leased equipment was valued at $13.7 million, net of prepaid maintenance and $0.3 million of imputed interest, and is included in Property and equipment, net on the Consolidated Balance Sheets. Refer to Note 12 — Long-Term Debt for additional information related to our finance leases.

 |
| table | | December 31, |
----------------------------------------- | ------------ | -------
                                          | 2019         | 2018
Land                                      | $11.9        | $11.9
Buildings and improvements                | 81.2         | 71.1
Leasehold improvements                    | 7.1          | 6.7
Computer equipment                        | 234.1        | 208.9
Furniture, fixtures and other equipment   | 11.2         | 11.0
Property and equipment                    | 345.5        | 309.6
Accumulated depreciation and amortization | (168.6)      | (132.5)
Property and equipment, net               | $176.9       | $177.1 |


| _id | d1b3bb298 |
| title |  |
| text | Tax Carryforwards
The amount and expiration dates of income tax net operating loss carryforwards and tax credit carryforwards, which are available to reduce future taxes, if any, as of August 31, 2019 are as follows:
(1) Net of unrecognized tax benefits.
(2) Calculated based on the deferral method and includes foreign investment tax credits

 |
| table | (dollars in thousands)                          | Last Fiscal Year of Expiration | Amount
----------------------------------------------- | ------------------------------ | --------
Income tax net operating loss carryforwards:(1) |                                |
Domestic–state                                  | 2039                           | $57,299
Foreign                                         | 2039 or indefinite             | $565,609
Tax credit carryforwards:(1)                    |                                |
Domestic–federal                                | 2029                           | $39,784
Domestic–state                                  | 2027                           | $3,313
Foreign(2)                                      | 2027 or indefinite             | $15,345 |


| _id | d1b30513c |
| title |  |
| text | Unrecognized Tax Benefits
Activity related to unrecognized tax benefits is as follows (in thousands):

During the year ended July 31, 2019, the Company’s unrecognized tax benefits increased by $1.3 million, primarily associated with the Company’s U.S. Federal and California R&D credits. As of July 31, 2019, the Company had unrecognized tax benefits of $6.2 million that, if recognized, would affect the Company’s effective tax rate. An estimate of the range of possible change within the next 12 months cannot be made at this time.

The Company, or one of its subsidiaries, files income taxes in the U.S. Federal jurisdiction and various state and foreign jurisdictions. If the Company utilizes net operating losses or tax credits in future years, the U.S. Federal, state and local, and non-U.S. tax authorities may examine the tax returns covering the period in which the net operating losses and tax credits arose. As a result, the Company’s tax returns in the U.S. and California remain open to examination from fiscal years 2002 through

to examination from fiscal years 2002 through 2019. As of July 31, 2019, the Company has no income tax audits in progress in the U.S. or foreign jurisdictions.

 |
| table | |         | Fiscal years ended July 31, |
---------------------------------------------- | ------- | --------------------------- | ------
                                               | 2019    | 2018                        | 2017
Unrecognized tax benefit - beginning of period | $10,321 | $9,346                      | $7,687
Gross increases - prior period tax positions   | 98      | 729                         | 712
Gross decreases - prior period tax positions   | (88)    | (878)                       | (691)
Gross increases - current period tax positions | 1,302   | 1,124                       | 1,638
Unrecognized tax benefit - end of period       | $11,633 | $10,321                     | $9,346 |


| _id | d1b32d57e |
| title |  |
| text | Issuer Purchases of Equity Securities
The following table contains information about shares of our previously-issued common stock that we withheld from employees upon vesting of their stock-based awards during the fourth quarter of 2019 to satisfy the related tax withholding obligations:

 |
| table | | Total Number of Shares Withheld for Taxes | Average Price Paid Per Share
------------- | ----------------------------------------- | ----------------------------
Period        |                                           |
October 2019  | 16,585                                    | $11.57
November 2019 | 185,887                                   | 13.15
December 2019 | 12,368                                    | 13.70
Total         | 214,840                                   | |


| _id | d1b3bf97e |
| title |  |
| text | DSU plan

The Corporation also offers a Deferred Share Unit ("DSU") Plan for members of the Board to assist in the attraction and retention of qualified individuals to serve on the Board of the Corporation. Each existing or new member of the Board may elect to be paid a percentage of the annual retainer in the form of DSUs with the balance, if any, being paid in cash. The number of DSUs that a member is entitled to receive is based on the average closing price of the subordinate shares on the TSX for the twenty

the subordinate shares on the TSX for the twenty consecutive trading days immediately preceding by one day the date of issue. Dividend equivalents are awarded with respect to DSUs in a member's account on the same basis as if the member was a shareholder of record of subordinate shares on the relevant record date, and the dividend equivalents are credited to the individual's account as additional DSUs. DSUs are redeemable and payable in cash or in shares, upon an individual ceasing to be a member of the

upon an individual ceasing to be a member of the Board or in the event of the death of the member.

Under the DSU Plan, the following DSUs were issued by the Corporation and are outstanding at August 31:
A compensation expense of $1,792,000 (compensation expense reduction of $181,000 in 2018) was recorded for the year ended August 31, 2019 related to this plan.

 |
| table | Years ended August 31,             | 2019     | 2018
---------------------------------- | -------- | -------
Outstanding, beginning of the year | 42,607   | 40,446
Issued                             | 11,328   | 6,662
Redeemed                           | (12,351) | (5,549)
Dividend equivalents               | 1,095    | 1,048
Outstanding, end of the year       | 42,679   | 42,607 |


| _id | d1b39f78c |
| title |  |
| text | Central Overheads declined by $76 million in F19 to $60 million due to a one‐off payment from Caltex of $50 million and a reversal of impairment on a property subsequently classified as held for sale of $37 million. Central Overheads are still expected to be approximately $150 million on an annual basis before taking into account any impact from the Endeavour Group transaction.

A small increase in inventory to $4,280 million was primarily due to higher closing inventory in New Zealand and BIG W to improve availability. Closing inventory days declined 0.9 days to 37.2 days and average inventory days from continuing operations declined by 0.2 days to 38.8 days.

Net investment in inventory of $939 million remained broadly consistent with prior year. Adjusting for the impact of an extra New Zealand Food payment run in the 53rd week of $153 million, net investment in inventory declined by 19%.

Other creditors and provisions of $4,308 million decreased $40 million compared to the prior year. Excluding significant items relating to the BIG W network review and cash utilisation of F16 significant items provisions, the decrease in other creditors and provisions was primarily driven by a reduction in accruals associated with store team costs.

Fixed assets, investments and loans to related parties of $9,710 million increased by $528 million. Additions of fixed assets of $2,040 million during the year mainly related to store refurbishments, supply chain and IT infrastructure and included $203 million related to property development activity. This was partially offset by depreciation and amortisation, disposals and an impairment of $166 million associated with the BIG W network review.

Net assets held for sale of $225 million decreased by $575 million mainly as a result of the sale of the Petrol business to EG Group on 1 April 2019.
Intangible assets of $6,526 million increased by $61 million driven by an increase in goodwill and brand names in New Zealand due to the strengthening of the New Zealand dollar, a minor increase in goodwill associated with the acquisition of businesses partially offset by an impairment to the carrying value of Summergate of $21 million.

Net tax balances of $227 million increased $66 million due to an increase in deferred tax assets associated with the provisions raised as a result of the BIG W network review.
Net debt of $1,599 million increased by $377 million largely due to the timing of New Zealand creditor payments, higher net capital expenditure (excluding the proceeds from the sale of the Petrol business) and an increase in dividends paid during the year.

Normalised Return on Funds Employed (ROFE) from continuing operations was 24.2%, 11 bps up on the prior year. Normalised AASB 16 estimated ROFE was 14.1%.

Cash flow from operating activities before interest and tax was $3,858 million, an increase of 0.5% on the prior year. Excluding the impact of significant items, higher EBITDA was offset by the impact of the New Zealand payment run in week 53 and a movement in provisions and accruals. The cash flow benefit from an extra week of trading is offset by nine months of EBITDA from the Petrol business compared to a full year in F18.

The cash realisation ratio was 74.1%. Excluding the timing of the New Zealand payment run, and charges associated with the BIG W network review and gain on sale of the Petrol business, the cash realisation ratio was 98.4%, impacted by the cash utilisation of provisions and accruals offset by trade working capital improvements.

Net interest paid of $166 million declined by 9.8% compared to the prior year due to the early repayment of US Private Placement Notes in the prior year reducing average borrowing costs.

 |
| table | Group Profit or Loss                                                      | F19      | F18      |          | CHANGE
------------------------------------------------------------------------- | -------- | -------- | -------- | ----------
for the 53 weeks ended 30 June 2019                                       | 53 WEEKS | 52 WEEKS | CHANGE   | NORMALISED
MARGINS – continuing operations                                           |          |          |          |
Gross profit (%)                                                          | 29.1     | 29.3     | (24) bps | (23) bps
Cost of doing business (%)                                                | 24.6     | 24.9     | (31) bps | (30) bps
EBIT (%)                                                                  | 4.5      | 4.5      | 7 bps    | 7 bps
EARNINGS PER SHARE AND DIVIDENDS                                          |          |          |          |
Weighted average ordinary shares on issue (million)                       | 1,305.7  | 1,300.5  | 0.4%     |
Total Group basic EPS (cents) before significant items                    | 142.8    | 132.6    | 7.7%     | 5.8%
Total Group basic EPS (cents) after significant items                     | 206.2    | 132.6    | 55.5%    | 53.7%
Basic EPS (cents) – from continuing operations before significant items   | 134.2    | 123.4    | 8.8%     | 6.8%
Basic EPS (cents) – from continuing operations after significant items    | 114.3    | 123.4    | (7.4)%   | (9.3)%
Diluted EPS (cents) – from continuing operations before significant items | 133.4    | 123.1    | 8.4%     | 6.4%
Diluted EPS (cents) – from continuing operations after significant items  | 113.6    | 123.1    | (7.7)%   | (9.7)%
Interim dividend per share (cents)                                        | 45       | 43       | 4.7%     |
Final dividend per share (cents) 1                                        | 57       | 50       | 14.0%    |
Special dividend per share (cents) 1                                      | –        | 10       | n.m.     |
Total dividend per share (cents)                                          | 102      | 103      | (1.0)%   | |


| _id | d1b39c6ea |
| title |  |
| text | NOTE 19—RESTRUCTURING

In 2019, we initiated projects to restructure and modify our supply chain strategy, functional responsibilities, methods, capabilities, processes and rationalize suppliers with the goal of reducing ongoing costs and increasing the efficiencies of our worldwide procurement organization. The majority of the costs associated with these restructuring activities are related to consultants that we have engaged in connection with these efforts, and such costs have been recognized by our corporate entity. The

have been recognized by our corporate entity. The total costs of this restructuring project are expected to exceed amounts incurred to date by $0.9 million and these efforts are expected to be completed early in fiscal 2020. Also, in fiscal 2019 our CTS and CGD segments incurred restructuring charges, consisting primarily of employee severance costs related to headcount reductions initiated to optimize our cost positions. The total costs of each of these restructuring plans initiated thus far are not

restructuring plans initiated thus far are not expected to be significantly greater than the charges incurred to date.

Our fiscal 2018 restructuring activities related primarily to expenses incurred by our corporate entity to establish a North American shared services center. Our fiscal 2017 restructuring activities included corporate efforts to increase the centralization and efficiency of our manufacturing processes, as well as restructuring charges incurred by our CGD businesses related to the elimination of a level of management in the CGD simulator business.

Restructuring charges incurred by our business segments were as follows (in millions):

 |
| table | |         | Years Ended September 30, |
------------------------------ | ------- | ------------------------- | ------
                               | 2019    | 2018                      | 2017
Restructuring costs:           |         |                           |
Cubic Transportation Systems   | $  3.2  | $  0.4                    | $  0.4
Cubic Mission Solutions        | —       | 0.2                       | —
Cubic Global Defense           | 3.3     | 1.3                       | 0.9
Unallocated corporate expenses | 8.9     | 3.1                       | 1.0
Total restructuring costs      | $  15.4 | $  5.0                    | $  2.3 |


| _id | d1b3295f0 |
| title |  |
| text | The total annual compensation of the Supervisory Board members is as follows:
Supervisory Board Compensation
The Supervisory Board members do not receive any share-based payment for their services. As far as members who are employee representatives on the Supervisory Board receive share-based payment, such compensation is for their services as employees only and is unrelated to their status as members of the Supervisory Board.

 |
| table | € thousands                    | 2019  | 2018  | 2017
------------------------------ | ----- | ----- | -----
Total compensation             | 3,770 | 3,702 | 3,663
Thereof fixed compensation     | 3,218 | 3,162 | 3,135
Thereof committee remuneration | 553   | 540   | 528 |


| _id | d1b2e3c26 |
| title |  |
| text | Cloud & Cognitive Software
* Recast to reflect segment changes.
** 2019 results were impacted by Red Hat purchase accounting.

Cloud & Cognitive Software revenue of $23,200 million increased 4.5 percent as reported (6 percent adjusted for currency) in 2019 compared to the prior year. There was strong growth in Cloud & Data Platforms, as reported and at constant currency, driven primarily by the acquisition of Red Hat in the third quarter of 2019. Red Hat had continued strong performance since the acquisition, in Red Hat Enterprise Linux (RHEL), application development and emerging technologies, led by OpenShift and Ansible. Red

technologies, led by OpenShift and Ansible. Red Hat and IBM are driving synergies with strong adoption of Cloud Paks since their introduction, expansion of our combined client base and more than 2,000 clients using our hybrid cloud platform. Cognitive Applications also grew as reported and at constant currency. Transaction Processing Platforms declined year to year as reported, but grew 1 percent adjusted for currency driven by strong fourth-quarter performance.

Cognitive Applications revenue of $5,765 million grew 2.3 percent as reported (4 percent adjusted for currency) compared to the prior year, driven by double-digit growth as reported and adjusted for currency in Security, and growth in industry verticals such as IoT. The Security performance included continued strong results in threat management software and services offerings. Within IoT, we had good revenue performance across the portfolio as we continued to invest in new offerings and industry-specific

to invest in new offerings and industry-specific solutions.

Cloud & Data Platforms revenue of $9,499 million increased 10.4 percent as reported (12 percent adjusted for currency) compared to the prior year. Performance was driven by the addition of RHEL and OpenShift and the continued execution of the combined Red Hat and IBM hybrid strategy.

Transaction Processing Platforms revenue of $7,936 million decreased 0.5 percent as reported, but grew 1 percent adjusted for currency in 2019, compared to the prior year. Revenue performance reflects the ongoing investment in IBM platforms, and the timing of larger transactions that are tied to client business volumes and buying cycles.

Within Cloud & Cognitive Software, cloud revenue of $4.2 billion grew 40 percent as reported and 42 percent adjusted for currency year to year, reflecting the acquisition of Red Hat and client adoption of our hybrid cloud offerings.

 |
| table | ($ in millions)                             |         |         |                              |
------------------------------------------- | ------- | ------- | ---------------------------- | --------------------------------------------------
For the year ended December 31:             | 2019    | 2018    | Yr.-to-Yr. Percent Change ** | Yr.-to-Yr. Percent Change Adjusted for Currency **
Cloud & Cognitive Software external revenue | $23,200 | $22,209 | 4.5%                         | 6.2%
Cognitive Applications                      | $ 5,765 | $ 5,633 | 2.3%                         | 3.9%
Cloud & Data Platforms                      | 9,499   | 8,603   | 10.4                         | 12.3
Transaction Processing Platforms            | 7,936   | 7,974   | (0.5)                        | 1.4 |


| _id | d1b39800e |
| title |  |
| text | NOTE 11 - STOCK CAPITAL (Cont.)
Share-based compensation to employees and to directors: (Cont.)
Restricted Stock:

The Company awards stock and restricted stock to certain employees, officers, directors, and/or service providers. The restricted stock vests in accordance with such conditions and restrictions determined by the GNC Committee. These conditions and restrictions may include the achievement of certain performance goals and/or continued employment with the Company through a specified restricted period. The purchase price (if any) of shares of restricted stock is determined by the GNC Committee. If the

stock is determined by the GNC Committee. If the performance goals and other restrictions are not attained, the grantee will automatically forfeit their unvested awards of restricted stock to the Company. Compensation expense for restricted stock is based on fair market value at the grant date.

The total compensation expense recorded by the Company in respect of its stock and restricted stock awards to certain employees, officers, directors, and service providers for the year ended December 31, 2019 and 2018 amounted to $392 and $506, respectively.

 |
| table | | Number of Restricted Stock | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term (Years)
--------------------------------- | -------------------------- | -------------------------------------- | ---------------------------------------------------
Nonvested as of December 31, 2017 | 126,808                    | 4.25                                   | 1.31
Granted                           | 144,447                    | 3.59                                   |
Vested                            | 118,347                    | 3.81                                   |
Forfeitures                       | -                          | -                                      |
Nonvested as of December 31, 2018 | 152,908                    | 3.96                                   | 1.56
Granted                           | 113,012                    | 3.98                                   |
Vested                            | 64,535                     | 3.88                                   |
Forfeitures                       | -                          | -                                      |
Nonvested as of December 31, 2019 | 201,385                    | 4.00                                   | 1.95 |


| _id | d1b376936 |
| title |  |
| text | (c) Allowance for Credit Loss Rollforward
The allowances for credit loss and the related financing receivables are summarized as follows (in millions):

 |
| table | |                   |                  | CREDIT LOSS ALLOWANCES     |
--------------------------------------------- | ----------------- | ---------------- | -------------------------- | -----
                                              | Lease Receivables | Loan Receivables | Financed Service Contracts | Total
Allowance for credit loss as of July 28, 2018 | $135              | $60              | $10                        | $205
Provisions (benefits)                         | (54)              | 11               | 27                         | (16)
Recoveries (write-offs), net                  | (14)              | —                | (28)                       | (42)
Foreign exchange and other                    | (21)              | —                | —                          | (21)
Allowance for credit loss as of July 27, 2019 | $46               | $71              | $9                         | $126 |


| _id | d1b39cd20 |
| title |  |
| text | Significant components of our deferred tax assets and liabilities consist of the following:

The United States Tax Cuts and Jobs Act (the “Tax Act”) was enacted on December 22, 2017 and introduced significant changes to the income tax law in the United States. Effective in 2018, the Tax Act reduced the United States statutory tax rate from 35% to 21% and created new taxes on certain foreign-sourced earnings and certain related-party payments, which are referred to as the global intangible low-taxed income tax and the base erosion tax, respectively.

In addition, in 2017 we were subject to a one-time transition tax on accumulated foreign subsidiary earnings not previously subject to income tax in the United States.

Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, we made reasonable estimates of the effects and recorded provisional expense of $15.3 million in our financial statements for the year ended December 31, 2017 in accordance with guidance in Staff Accounting Bulletin No. 118 (“SAB 118”), which allows a measurement period of up to one year after the enactment date to finalize the recording of the related tax impacts.

This provisional expense included $10.1 million expense for the remeasurement of deferred tax balances to reflect the lower federal rate and expense of $5.2 million for the one-time transition tax on accumulated foreign subsidiary earnings not previously subject to income tax in the United States.

Adjustments to these provisional amounts that we recorded in 2018 did not have a significant impact on our consolidated financial statements. Our accounting for the effects of the enactment of U.S. Tax Reform is now complete. Due to our divestiture of our investment in Netsmart, the amounts noted above do not include the provisional amounts recorded by Netsmart in 2017.

We had federal net operating loss (“NOL”) carryforwards of $174 million and $164 million as of December 31, 2019, and 2018, respectively. The federal NOL carryforward includes US NOL carryovers of $8 million and Israeli NOL carryovers of $56 million that do not expire. As of December 31, 2019 and 2018, we had state NOL carryforwards of $1 million and $2 million, respectively.

The NOL carryforwards expire in various amounts starting in 2020 for both federal and state tax purposes. The utilization of the federal NOL carryforwards is subject to limitation under the rules regarding changes in stock ownership as determined by the Internal Revenue Code.

 |
| table | | December 31, |
----------------------------------------- | ------------ | ---------
(In thousands)                            | 2019         | 2018
Deferred tax assets                       |              |
Accruals and reserves, net                | $29,627      | $31,565
Allowance for doubtful accounts           | 11,507       | 11,378
Stock-based compensation, net             | 10,382       | 10,595
Deferred revenue                          | 21,786       | 8,160
Operating and finance lease liabilities   | 22,085       | 0
Net operating loss carryforwards          | 37,717       | 36,649
Research and development tax credit       | 899          | 899
Other                                     | 7,488        | 10,784
Less:  Valuation Allowance                | (19,219)     | (18,734)
Total deferred tax assets                 | 122,272      | 91,296
Deferred tax liabilities                  |              |
Prepaid expense                           | (5,372)      | (6,733)
Property and equipment, net               | (3,695)      | (7,442)
Acquired intangibles, net                 | (111,284)    | (129,879)
Operating and finance right-to-use assets | (17,255)     | 0
Other                                     | 0            | (676)
Total deferred tax liabilities            | (137,606)    | (144,730)
Net deferred tax liabilities              | $(15,334)    | $(53,434) |


| _id | d1b3239fc |
| title |  |
| text | Assets and Liabilities Measured at Fair Value
The following table presents our assets and liabilities measured at fair value on a recurring or non-recurring basis at December 31,
2019:
The carrying amount of money market funds approximates fair value as of each reporting date because of the short maturity of those
instruments.
The Company did not have any non-financial assets or non-financial liabilities that were recognized or disclosed at fair value as of
December 31, 2019.

 |
| table | | Level 1        | Level 2 | Level 3
------------------------------------------- | -------------- | ------- | -------
                                            | (In thousands) |         |
Assets                                      |                |         |
Cash equivalents: Money market funds        | $256,915       | $ -     | $ -
Other current assets:                       |                |         |
Indemnification - Sale of SSL               | $ -            | $ -     | $ 598
Liabilities                                 |                |         |
Long term liabilities:                      |                |         |
Indemnification - Globalstar do Brasil S.A. | $ -            | $ -     | $145 |


| _id | d1b3a4d04 |
| title |  |
| text | FNF

We are party to certain agreements with FNF, including agreements that were entered into when we were related parties. As a result of the Distribution, FNF no longer has an ownership interest in us, but was still considered a related party until December 1, 2019 due to the combination of certain shared board members, members of senior management and various agreements. As of December 1, 2019, the Chairman of our Board of Directors no longer serves as one of our executive officers, and FNF is no longer

of our executive officers, and FNF is no longer considered a related party.

We have various agreements with FNF to provide software, data and analytics services, as well as corporate shared services and information technology. We are also a party to certain other agreements under which we incur other expenses or receive revenues from FNF.
A detail of the revenues and expenses, net from FNF is as follows (in millions):
(1) Transactions with FNF are summarized through November 30, 2019, the date after which FNF is no longer considered a related party.

We paid to FNF a guarantee fee of 1.0% of the outstanding principal of the Senior Notes (as defined in Note 12 — Long Term Debt) in exchange for the guarantee by FNF of the Senior Notes. For the year ended December 31, 2017, the guarantee fee was included in Interest expense, net on the Consolidated Statements of Earnings and Comprehensive Earnings. On April 26, 2017, the Senior Notes were redeemed, and we are no longer required to pay a guarantee fee.

 |
| table | |          | Year ended December 31, |
------------------ | -------- | ----------------------- | -----
                   | 2019 (1) | 2018                    | 2017
Revenues           | $59.5    | $57.6                   | $56.8
Operating expenses | 12.5     | 12.1                    | 12.3
Guarantee fee      | —        | —                       | 1.2 |


| _id | d1b3420e6 |
| title |  |
| text | Subsequent to the year end, we have received the final ratifications required for full planning to become effective and therefore we expect the positive impact on retained earnings to reverse once these arrangements are formally concluded. In this event EPRA NAV per share would have been 143 pence.
Debt measures
A Debt to asset ratio

Debt measures
A Debt to asset ratio
Our debt to assets ratio increased to 67.8 per cent in 2019 due to the property revaluation deficit in the year. This reduces to 65.3 per cent when adjusted for expected disposal proceeds from intu Puerto Venecia and intu Asturias.
B Interest cover
Interest cover of 1.67x remains above our target minimum level of 1.60x although it has reduced in 2019 as a result of the reduction in net rental income.
C Immediately available cash and facilities

Immediately available cash and facilities has reduced in the year by £5.3 million to £241.5 million at 31 December 2019. This excludes the rents collected at the end of December 2019 which relate to the first quarter of 2020 and remain in the debt structures until interest payments are made. At 10 March 2020, immediately available cash and facilities is £200.3 million, which will be augmented by the intu Puerto Venecia sales proceeds expected to be received in early April.

 |
| table | | Notes | 2019      | 2018      | Change
------------------------------------------------------ | ----- | --------- | --------- | ----------
Debt to assets ratio                                   | A     | 67.8%     | 53.1%     | 14.7%
Interest cover                                         | B     | 1.67x     | 1.91x     | –0.24x
Weighted average debt maturity                         |       | 5.0 years | 5.8 years | –0.8 years
Weighted average cost of gross debt (excluding RCF)    |       | 4.3%      | 4.2%      | –0.1%
Proportion of gross debt with interest rate protection |       | 88%       | 84%       | 4%
Immediately available cash and facilities              | C     | £241.5m   | £246.8m   | £(5.3)m |


| _id | d1b396d94 |
| title |  |
| text | Summary of Results
The following table sets forth, for the periods indicated, certain key operating results and other financial information (in thousands, except per share data):

 |
| table | |             | Fiscal Year Ended August 31, |
------------------------------------ | ----------- | ---------------------------- | -----------
                                     | 2019        | 2018                         | 2017
Net revenue                          | $25,282,320 | $22,095,416                  | $19,063,121
Gross profit                         | $1,913,401  | $1,706,792                   | $1,545,643
Operating income                     | $701,356    | $542,153                     | $410,230
Net income attributable to Jabil Inc | $287,111    | $86,330                      | $129,090
Earnings per share – basic           | $1.85       | $0.50                        | $0.71
Earnings per share – diluted         | $1.81       | $0.49                        | $0.69 |


| _id | d1a734614 |
| title |  |
| text | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except for share and per share data)
The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for those Pension Plans with accumulated benefit obligation in excess of fair value of plan assets is shown below:

 |
| table | | As of December 31, |
------------------------------ | ------------------ | ------
                               | 2019               | 2018
Projected benefit obligation   | $3,778             | $3,848
Accumulated benefit obligation | $2,999             | $3,028
Fair value of plan assets      | $1,418             | $1,426 |


| _id | d1b368e9e |
| title |  |
| text | Unrecognized Tax Benefits

The Company operates in multiple jurisdictions throughout the world and the income tax returns of its subsidiaries in various jurisdictions are subject to periodic examination by the tax authorities. The Company regularly assesses the status of these  examinations and the various outcomes to determine the adequacy of its provision for income taxes. The amount of gross unrecognized tax benefits totaled $3.1 million and $1.4 million at April 27, 2019 and April 28, 2018, respectively. These amounts represent

28, 2018, respectively. These amounts represent the amount of unrecognized benefits that, if recognized, would favorably impact the effective tax rate if resolved in the Company’s favor.

The following table presents a reconciliation of the beginning and ending amounts of unrecognized tax benefits:
At April 27, 2019, it is not possible to reasonably estimate the expected change to the total amount of unrecognized tax benefits in the next twelve months.

The U.S. federal statute of limitations remains open for fiscal years ended on or after 2016 and for state tax purposes on or after fiscal year 2013. Tax authorities may have the ability to review and adjust net operating losses or tax credits that were generated prior to these fiscal years. In the major foreign jurisdictions, fiscal 2012 and subsequent periods remain open and subject to examination by taxing authorities.

The continuing practice of the Company is to recognize interest and penalties related to income tax matters in the provision for income taxes. The Company had $0.1 million accrued for interest and no accrual for penalties at April 27, 2019.

 |
| table | (Dollars in Millions)                               | April 27, 2019 | April 28, 2018
--------------------------------------------------- | -------------- | --------------
Balance at Beginning of Fiscal Year                 | $1.4           | $1.3
Increases for Positions Related to the Prior Years  | 1.8            | —
Increases for Positions Related to the Current Year | 0.9            | 0.1
Decreases for Positions Related to the Prior Years  | —              | —
Lapsing of Statutes of Limitations                  | (1.0)          | —
Balance at End of Fiscal Year                       | $3.1           | $1.4 |


| _id | d1b2e8f00 |
| title |  |
| text | Deferred Revenues
Deferred revenues consist primarily of prepayments for license fees, and other products or services for which we have been paid in advance, and earn the revenue when we transfer control of the product or service. Deferred revenues may also include upfront payments for consulting services to be performed in the future, such as non-recurring engineering services.

We defer license fees until we have met all accounting requirements for revenue recognition, which is when a license is made available to a customer and that customer has a right to use the license. Engineering development fee revenues are deferred until engineering services have been completed and accepted by our customers. We defer AirBar and sensor modules revenues until distributors sell the products to their end customers

Under U.S. GAAP, companies may make reasonable aggregations and approximations of returns data to accurately estimate returns. Our AirBar and sensor module returns and warranty experience to date has enabled us to make reasonable returns estimates, which are supported by the fact that our product sales involve homogenous transactions. The reserve for future sales returns is recorded as a reduction of our accounts receivable and revenue and was insignificant as of December 31, 2019 and 2018.

The following table presents our deferred revenues by source (in thousands);

 |
| table | | Years ended December 31, |
-------------------------------- | ------------------------ | ----
                                 | 2019                     | 2018
Deferred license fees revenues   | $28                      | $-
Deferred NRE revenues            | 20                       | -
Deferred AirBar revenues         | 6                        | 59
Deferred sensor modules revenues | 13                       | 16
                                 | $67                      | $75 |


| _id | d1b3a2414 |
| title |  |
| text | Quarterly Financial Data (Unaudited)
Quarterly sales and earnings results are normally influenced by seasonal factors. Historically, the first two fiscal quarters (three months ending September 30 and December 31) are typically the lowest principally because of annual plant vacation and maintenance shutdowns by the Company and by many of its customers. However, the timing of major changes in the general economy or the markets for certain products can alter this pattern.

During the quarter ended December 31, 2017, the Company recorded an income tax benefit. See Note 17, Income Taxes to Notes to Consolidated Financial Statements included in Item 8. “Financial Statements and Supplementary Data”.

 |
| table | ($ in millions)       | First Quarter | Second Quarter | Third Quarter | Fourth Quarter
--------------------- | ------------- | -------------- | ------------- | --------------
Results of Operations |               |                |               |
Fiscal Year 2019      |               |                |               |
Net sales             | $572.4        | $556.5         | $609.9        | $641.4
Gross profit          | $91.7         | $107.0         | $123.2        | $122.9
Operating income      | $45.0         | $55.4          | $73.2         | $67.9
Net income            | $31.5         | $35.5          | $51.1         | $48.9
Fiscal Year 2018      |               |                |               |
Net sales             | $479.8        | $487.8         | $572.2        | $618.0
Gross profit          | $85.6         | $85.7          | $96.1         | $114.9
Operating income      | $42.2         | $41.4          | $45.7         | $60.0
Net income            | $23.4         | $92.1          | $30.2         | $42.8 |


| _id | d1b385a12 |
| title |  |
| text | NOTE 10. EARNINGS PER SHARE
The following table reflects the reconciliation between basic and diluted earnings per share.

Per share information is based on the weighted average number of common shares outstanding for each of the fiscal years. Stock options and restricted stock have been included in the calculation of earnings per share to the extent they are dilutive. The two-class method for computing EPS has not been applied because no outstanding awards contain non-forfeitable rights to participate in dividends. There were no anti-dilutive stock options and restricted stock excluded for fiscal 2019, 41 shares excluded for

excluded for fiscal 2019, 41 shares excluded for fiscal 2018, and 32 shares excluded for fiscal 2017.

 |
| table | | Year Ended June 30, |          |
------------------------------------------------------------------ | ------------------- | -------- | --------
                                                                   | 2019                | 2018     | 2017
Net Income                                                         | $271,885            | $365,034 | $229,561
Common share information:                                          |                     |          |
Weighted average shares outstanding for basic earnings per share   | 77,160              | 77,252   | 77,856
Dilutive effect of stock options and restricted stock              | 187                 | 333      | 399
Weighted average shares outstanding for diluted earnings per share | 77,347              | 77,585   | 78,255
Basic earnings per share                                           | $3.52               | $4.73    | $2.95
Diluted earnings per share                                         | $3.52               | $4.70    | $2.93 |


| _id | d1b395656 |
| title |  |
| text | 11. Reportable Segments, Geographic Information and Major Customers
Reportable 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 group, in assessing performance and allocating resources. The Company uses an internal management reporting system, which

provides important financial data to evaluate performance and allocate the Company’s resources on a regional basis. Net sales for the segments are attributed to the
region in which the product is manufactured or the service is performed. The services provided, manufacturing processes used, class of customers serviced and
order fulfillment processes used are similar and generally interchangeable across the segments. A segment’s performance is evaluated based upon its operating

income (loss). A segment’s operating income (loss) includes its net sales less cost of sales and selling and administrative expenses, but excludes corporate and
other expenses. Corporate and other expenses primarily represent corporate selling and administrative expenses, and restructuring costs and other charges, if any, such as the $1.7 million of restructuring costs in

fiscal 2019 and the $13.5 million one-time employee bonus paid to full-time, non-executive employees during fiscal 2018 due to the Company's ability to access
overseas cash as a result of Tax Reform (the "one-time employee bonus"). These costs are not allocated to the segments, as management excludes such costs when
assessing the performance of the segments. Inter-segment transactions are generally recorded at amounts that approximate arm’s length transactions. The

accounting policies for the segments are the same as for the Company taken as a whole.
The following information is provided in accordance with the required segment disclosures for fiscal 2019, 2018 and 2017. Net sales were based on the Company’s location providing the product or service (in thousands):

As the Company operates flexible manufacturing facilities and processes designed to accommodate customers with multiple product lines and configurations, it is impracticable to report net sales for individual products or services or groups of similar products and services.
Long-lived assets as of September 28, 2019 and September 29, 2018 exclude other long-term assets, deferred income tax assets and intangible assets, which totaled $78.4 million and $74.2 million, respectively.

 |
| table | | September 28,
2019 | September 29,
2018
------------------ | ------------------ | ------------------
Long-lived assets: |                    |
United States      | $106,757           | $108,694
Malaysia           | 101,636            | 89,938
Mexico             | 73,864             | 43,078
Romania            | 31,033             | 34,316
China              | 22,378             | 21,878
United Kingdom     | 7,344              | 6,171
Other Foreign      | 6,751              | 5,646
Corporate          | 34,461             | 31,585
                   | 384,224            | 341,306 |


| _id | d1b39034a |
| title |  |
| text | NOTE 8. INVENTORIES
The changes in the allowance for obsolescence are as follows:
On December 31, 2019, our allowance for inventory obsolescence amounted to €12,527, which is 6.7% of total inventory. The major part of the allowance is related to components and raw materials. The additions for the years 2018 and 2019 mainly relate to inventory items which ceased to be used due to technological developments and design changes which resulted in obsolescence of certain parts.

The cost of inventories recognized as costs and included in cost of sales amounted to €510.2 million (2018: €365.8 million).

 |
| table | | December 31, |
----------------------------------- | ------------ | --------
                                    | 2018         | 2019
Balance at beginning of year        | (12,749)     | (13,364)
Charged to cost of sales            | (2,958)      | (4,748)
Reversals                           | 723          | 915
Utilization of the provision        | 1,978        | 4,994
Foreign currency translation effect | (358)        | (324)
Balance at end of year              | (13,364)     | (12,527) |


| _id | d1b3c3e8e |
| title |  |
| text | Disaggregation of Revenue
The Company operates in two business segments, Specialty Alloys Operations (“SAO”) and Performance Engineered Products (“PEP”). Revenue is disaggregated within these two business segments by diversified end-use markets and by geographical location. Comparative information of the Company’s overall revenues by end-use markets and geography for years ended June 30, 2019, 2018 and 2017 were as follows:

 |
| table | End-Use Market Data     | Year Ended June 30, | Year Ended June 30, | Year Ended June 30,
----------------------- | ------------------- | ------------------- | -------------------
($ in millions)         | 2019                | 2018                | 2017
Aerospace and Defense   | $1,327.9            | $1,182.3            | $973.3
Medical                 | 205.0               | 175.3               | 125.5
Energy                  | 181.7               | 146.5               | 138.0
Transportation          | 157.7               | 157.0               | 143.9
Industrial and Consumer | 371.5               | 364.9               | 298.2
Distribution            | 136.4               | 131.7               | 118.7
Total net sales         | $2,380.2            | $2,157.7            | $1,797.6 |


| _id | d1a73a08c |
| title |  |
| text | NAVIOS MARITIME HOLDINGS INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. dollars — except share data)
Revenue by Geographic Region

Vessels operate on a worldwide basis and are not restricted to specific locations. Accordingly, it is not possible to allocate the assets of these operations to specific countries. The total net book value of long-lived assets for dry bulk vessels amounted to $741,347 and $933,784 at December 31, 2019 and 2018, respectively. For the Logistics Business, all long-lived assets are located in South America. The total net book value of long-lived assets for the Logistics Business amounted to $536,342 (including

Business amounted to $536,342 (including constructions in progress of $4,046, referred to in Note 7) and $556,713 at December 31, 2019 and 2018, respectively. The total net book value of long-lived assets for the Containers Business amounted to at December 31, 2018 $399,979.

 |
| table | | Year ended December 31, 2019 | Year ended December 31, 2018 | Year ended December 31, 2017
------------- | ---------------------------- | ---------------------------- | ----------------------------
North America | $2,259                       | $4,248                       | $5,513
Europe        | 179,009                      | 142,688                      | 124,857
Asia          | 67,468                       | 135,614                      | 91,552
South America | 232,394                      | 208,751                      | 212,616
Other         | 1,319                        | 26,438                       | 28,511
Total         | $482,449                     | $517,739                     | $463,049 |


| _id | d1b3a7f9a |
| title |  |
| text | (g) Prepaid Expenses and Other Current Assets:
A summary of prepaid expenses and other current assets is as follows (in millions):
Prepaid inventory represents inventory in-transit that has been paid for but not received.

 |
| table | | September 2019 | September 2018
----------------- | -------------- | --------------
Prepaid expenses  | $1.8           | $1.6
Prepaid inventory | 5.3            | 3.3
                  | $7.1           | $4.9 |


| _id | d1a71d5a4 |
| title |  |
| text | Accumulated Other Comprehensive Income
The following tables present the changes in the components of accumulated other comprehensive income (AOCI) for the years ended March 31, 2019 and 2018:

 |
| table | | Unrealized Holding Gains (Losses) Available-for-sale Securities | Minimum Pension Liability | Foreign Currency | Total
----------------------------------------------------------------------- | --------------------------------------------------------------- | ------------------------- | ---------------- | -------
Balance at March 31, 2017                                               | $0.3                                                            | $(5.3)                    | $(9.4)           | $(14.4)
Other comprehensive loss before reclassifications                       | (13.6)                                                          | (5.6)                     | —                | (19.2)
Amounts reclassified from accumulated other comprehensive income (loss) | 15.2                                                            | 0.8                       | —                | 16.0
Net other comprehensive loss                                            | 1.6                                                             | (4.8)                     | —                | (3.2)
Balance at March 31, 2018                                               | $1.9                                                            | $(10.1)                   | $(9.4)           | $(17.6) |


| _id | d1b2fda22 |
| title |  |
| text | Segment Operating Profit (Earnings before general corporate expenses, pension and postretirement non-service income, interest expense, net, income taxes, and equity method investment earnings)

Grocery & Snacks operating profit for fiscal 2018 was $724.8 million, an increase of $69.4 million, or 11%, compared to fiscal 2017. Gross profits were $21.9 million lower in fiscal 2018 than in fiscal 2017. The lower gross profit was driven by investments with retailers (i.e., trade spending reflected as a reduction of net sales), as well as higher input costs and transportation expenses, partially offset by supply chain realized productivity. The Frontera acquisition, Thanasi acquisition, and the

acquisition, Thanasi acquisition, and the acquisition of Angie's Artisan Treats, LLC, which occurred in September 2016, April 2017, and October 2017, respectively, contributed $47.4 million to Grocery & Snacks gross profit during fiscal 2018 through the one-year anniversaries of the acquisitions (if reached). Advertising and promotion expenses for fiscal 2018 decreased by $19.5 million compared to fiscal 2017. Operating profit of the Grocery & Snacks segment was impacted by charges totaling $4.0 million in

was impacted by charges totaling $4.0 million in fiscal 2018 for the impairment of our HK Anderson® , Red Fork® , and Salpica® brand assets and $68.3 million in fiscal 2017 primarily for the impairment of our Chef Boyardee® brand asset. Grocery & Snacks also incurred $11.4 million of expenses in fiscal 2018 related to acquisitions and divestitures, charges of $31.4 million in fiscal 2017 related to the pending divestiture of the Wesson® oil business, and charges of $14.1 million and $23.6 million in

and charges of $14.1 million and $23.6 million in connection with our restructuring plans in fiscal 2018 and 2017, respectively.

Refrigerated & Frozen operating profit for fiscal 2018 was $479.4 million, an increase of $33.6 million, or 8%, compared to fiscal 2017. Gross profits were $3.6 million lower in fiscal 2018 than in fiscal 2017, driven by continuing increases in input costs and transportation inflation as well as investments to drive distribution, enhanced shelf presence, and trial, partially offset by increased sales volumes and supply chain realized productivity. The acquisition of the Sandwich Bros. of Wisconsin®

acquisition of the Sandwich Bros. of Wisconsin® business contributed $4.6 million to gross profit in the segment during fiscal 2018. Advertising and promotion expenses for fiscal 2018 decreased by $23.4 million compared to fiscal 2017. Operating profit of the Refrigerated & Frozen segment was impacted by charges totaling approximately $7.7 million in fiscal 2017 related to a product recall, as well as charges of $0.1 million and $6.2 million in connection with our restructuring plans in fiscal 2018 and

with our restructuring plans in fiscal 2018 and 2017, respectively.

International operating profit for fiscal 2018 was $86.5 million, compared to an operating loss of $168.9 million for fiscal 2017. The operating loss in fiscal 2017 includes charges totaling $235.9 million for the impairment of goodwill and an intangible brand asset in our Canadian and Mexican operations. Gross profits were $18.6 million higher in fiscal 2018 than in fiscal 2017, as a result of improved price/mix, the favorable impact of foreign exchange, and the planned discontinuations of certain 33

and the planned discontinuations of certain 33 lower-performing products. Operating profit of the International segment was impacted by charges of $1.5 million and $0.9 million in connection with our restructuring plans, in fiscal 2018 and 2017, respectively

Foodservice operating profit for fiscal 2018 was $121.8 million, an increase of $16.7 million, or 16%, compared to fiscal 2017. Gross profits were $13.9 million higher in fiscal 2018 than in fiscal 2017, primarily reflecting the impact of inflation-driven increases in pricing and supply chain realized productivity, partially offset by lower sales volumes and increased input costs. Operating profit of the Foodservice segment was impacted by charges of $1.8 million in fiscal 2017 in connection with our

million in fiscal 2017 in connection with our restructuring plans.

Commercial operating profit was $202.6 million in fiscal 2017. The Company sold the Spicetec and JM Swank businesses in the first quarter of fiscal 2017, recognizing pre-tax gains totaling $197.4 million. The Spicetec and JM Swank businesses comprise the entire Commercial segment following the presentation of Lamb Weston as discontinued operations. There are no further operations in the Commercial segment.

 |
| table | ($ in millions)       |                              |                              |
--------------------- | ---------------------------- | ---------------------------- | -----------
Reporting Segment     | Fiscal 2018 Operating Profit | Fiscal 2017 Operating Profit | % Inc (Dec)
Grocery & Snacks      | $724.8                       | $655.4                       | 11%
Refrigerated & Frozen | 479.4                        | 445.8                        | 8%
International         | 86.5                         | (168.9)                      | N/A
Foodservice           | 121.8                        | 105.1                        | 16%
Commercial            | -                            | 202.6                        | (100)% |


| _id | d1b3503e4 |
| title |  |
| text | 1 Segment performance (continued)
(c) Other segment information
(i) Profit/(loss) before tax
Management assesses the performance of the operating segments based on a measure of EBITDA. Interest income and expenditure are not allocated to segments, as this type of activity is driven by the central treasury function, which manages the cash position of the Group. On adoption of AASB 16 from 1 July 2018, associated lease interest is allocated to the respective segments as a finance charge.

 |
| table | | 30 June 2019 | 30 June 2018
---------------------------------------------- | ------------ | ------------
                                               | $'000        | $'000
Total segment profit before tax                | 62,583       | 61,449
Employee benefits expense (non-facility staff) | (23,036)     | (20,752)
Interest revenue                               | 8,220        | 5,778
Distributions from investments                 | 1,344        | 3,191
Other income                                   | 3,034        | 284
Finance costs                                  | (45,612)     | (25,452)
Head office depreciation                       | (2,079)      | (1,909)
Overheads and other expenses                   | (20,527)     | (11,698)
Profit/(loss) before tax                       | (16,073)     | 10,891 |


| _id | d1b362436 |
| title |  |
| text | NON-GAAP FINANCIAL MEASURES

Non-GAAP operating income, net income, and diluted EPS are non-GAAP financial measures which exclude the net tax impact of transfer of intangible properties, the net tax impact of the TCJA, and restructuring expenses. We believe these non-GAAP measures aid investors by providing additional insight into our operational performance and help clarify trends affecting our business. For comparability of reporting, management considers non-GAAP measures in conjunction with GAAP financial results in evaluating

with GAAP financial results in evaluating business performance. These non-GAAP financial measures presented should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

The following table reconciles our financial results reported in accordance with GAAP to non-GAAP financial results:
* Not meaningful.

 |
| table | (In millions, except percentages and per share amounts) | 2019    | 2018    | 2017      | Percentage Change 2019 Versus 2018 | Percentage Change 2018 Versus 2017
------------------------------------------------------- | ------- | ------- | --------- | ---------------------------------- | ----------------------------------
Operating income                                        | $42,959 | $35,058 | $  29,025 | 23%                                | 21%
Net tax impact of transfer of intangible properties     | 0       | 0       | 0         | *                                  | *
Net impact of the TCJA                                  | 0       | 0       | 0         | *                                  | *
Restructuring expenses                                  | 0       | 0       | 306       | *                                  | *
Non-GAAP operating income                               | $42,959 | $35,058 | $ 29,331  | 23%                                | 20%
Net income                                              | $39,240 | $16,571 | $ 25,489  | 137%                               | (35)%
Net tax impact of transfer of intangible properties     | (2,567) | 0       | 0         | *                                  | *
Net tax impact of the TCJA                              | 157     | 13,696  | 0         |                                    |
Restructuring expenses                                  | 0       | 0       | 243       | *                                  | *
Non-GAAP net income                                     | $36,830 | $30,267 | $ 25,732  | 22%                                | 18%
Diluted earnings per share                              | $5.06   | $2.13   | $ 3.25    | 138%                               | (34)%
Net tax impact of transfer of intangible properties     | (0.33)  | 0       | 0         | *                                  | *
Net tax impact of the TCJA                              | 0.02    | 1.75    | 0         | *                                  | *
Restructuring expenses                                  | 0       | 0       | 0.04      | *                                  | *
Non-GAAP diluted earnings per share                     | $4.75   | $3.88   | $ 3.29    | 22%                                | 18%
* not meaningful                                        |         |         |           |                                    | |


| _id | d1b38f58a |
| title |  |
| text | (2) Includes property and equipment acquired under capital leases:
Depreciation and amortization expense was $25.2 million, $17.5 million, and $11.8 million for the years ended March 31, 2019, 2018 and 2017, respectively. Depreciation and amortization expense in the years ended March 31, 2019, 2018 and 2017 included $1.2 million, $0.9 million and $0.1 million related to property and equipment acquired under capital leases.

 |
| table | | As of March 31, |
------------------------------ | --------------- | ------
                               | 2019            | 2018
Computer equipment             | $4,754          | $4,713
Less: Accumulated amortization | (2,228)         | (990)
                               | $2,526          | $3,723 |


| _id | d1b32a2ac |
| title |  |
| text | REMUNERATION COMMITTEE REPORT
The table above shows the actual expenditure of the Group for employee pay and distributions to shareholders compared to the retained earnings of the Group.

 |
| table | RELATIVE IMPORTANCE OF SPEND ON PAY                 |       |       |
--------------------------------------------------- | ----- | ----- | -----
Expenditure USDm                                    | 2019  | 2018  | 2017
Dividends paid                                      | -     | -     | 1.2
Purchase of outstanding treasury shares in TORM A/S | -     | -     | -
Purchase/disposals of treasury shares               | -     | -     | -
Total                                               | -     | -     | 1.2
Staff costs                                         | 45.8  | 46.2  | 43.8
Retained earnings                                   | 920.0 | 752.0 | 786.0 |


| _id | d1b3bba2c |
| title |  |
| text | Results of Continuing Operations
The analysis presented below is organized to provide the information we believe will facilitate an understanding of our historical performance and relevant trends going forward, and should be read in conjunction with our Consolidated Financial Statements, including the notes thereto, in Item 8 "Financial Statements and Supplementary Data" of this Annual Report on Form 10 - K.

The following table sets forth, for the periods indicated, the percentage of sales represented by certain items reflected in our Consolidated Statements of Operations:

 |
| table | | Year Ended December 31, |
------------------------------------------------------ | ----------------------- | -------
                                                       | 2019                    | 2018
Sales                                                  | 100.0 %                 | 100.0 %
Gross profit                                           | 40.0                    | 50.9
Operating expenses                                     | 33.1                    | 27.0
Operating income from continuing operations            | 6.9                     | 23.9
Other income (expense), net                            | 1.6                     | 0.1
Income from continuing operations before income taxes  | 8.5                     | 24.0
Provision for income taxes                             | 1.4                     | 3.5
Income from continuing operations, net of income taxes | 7.2 %                   | 20.5 % |


| _id | d1b34706e |
| title |  |
| text | 6 Other assets (continued)
(a) Security deposits
Included in the security deposits was $8.8 million (2018: $4.2 million) relating to deposits held as security for bank guarantees.
(b) Customer incentives
Where customers are offered incentives in the form of free or discounted periods, the dollar value of the incentive is capitalised and amortised on a straight-line basis over the expected life of the contract.
(c) Contract Costs

(c) Contract Costs
From 1 July 2018, eligible costs that are expected to be recovered will be capitalised as a contract cost and amortised over the expected customer life.

 |
| table | NON-CURRENT                      | Note | 30 June 2019 $'000 | 30 June 2018 $'000
-------------------------------- | ---- | ------------------ | ------------------
Customer incentives              | 6(b) | 1,091              | 1,145
Capitalised transaction costs    |      | 3,359              | 5,490
Contract costs                   | 6(c) | 448                | -
Total other assets - non-current |      | 4,898              | 6,635 |