| _id | d1b3b3926 |
| title |  |
| text | Stock Options
The following table summarizes stock option activity under the Company’s stock option plans during the fiscal years ended September 30, 2019, 2018, and 2017:

The Company recognized $0.7 million, $1.4 million, and $1.0 million in stock-based compensation expense related to outstanding stock options in the fiscal years ended September 30, 2019, 2018, and 2017, respectively. As of September 30, 2019, the Company had $2.0 million of unrecognized compensation expense related to outstanding stock options expected to be recognized over a weighted-average period of approximately three years.

Aggregate intrinsic value represents the value of the Company’s closing stock price on the last trading day of the fiscal period in excess of the weighted-average exercise price, multiplied by the number of options outstanding and exercisable. The total intrinsic value of options exercised during the fiscal years ended September 30, 2019, 2018, and 2017 was $11.1 million, $1.4 million, and $1.4 million, respectively. The per-share weighted-average fair value of options granted during the fiscal years ended

of options granted during the fiscal years ended September 30, 2019, 2018, and 2017 was $5.07, $4.56, and $4.28, respectively. The aggregate intrinsic value of options outstanding as of September 30, 2019 and 2018, was $4.9 million and $8.7 million, respectively.

 |
| table | | Number of Shares | Weighted-Average Exercise Price Per Share | Weighted-Average Remaining Contractual Term (in Years)
--------------------------------- | ---------------- | ----------------------------------------- | ------------------------------------------------------
Outstanding at September 30, 2016 | 3,015,374        | $3.95                                     | 6.4
Granted                           | 147,800          | $7.06                                     |
Exercised                         | (235,514)        | $2.92                                     |
Canceled                          | (81,794)         | $3.59                                     |
Outstanding at September 30, 2017 | 2,845,866        | $4.21                                     | 5.4
Granted                           | 299,397          | $8.60                                     |
Exercised                         | (250,823)        | $2.96                                     |
Canceled                          | (88,076)         | $5.23                                     |
Outstanding at September 30, 2018 | 2,806,364        | $4.75                                     | 4.6
Granted                           | 409,368          | $9.59                                     |
Exercised                         | (1,384,647)      | $3.25                                     |
Canceled                          | (144,183)        | $6.62                                     |
Outstanding at September 30, 2019 | 1,686,902        | 7.00                                      | 5.4 |


| _id | d1b34cc44 |
| title |  |
| text | £1.5m (2018: £1.4m) of scheme assets have a quoted market price in an active market.
The actual return on plan assets was a gain of £5.5m (2018: £1.0m loss).
The amounts recognised in the Company Statement of Financial Position are determined as follows:

 |
| table | | 2019   | 2018
-------------------------------------------------------------------------- | ------ | ------
                                                                           | £m     | £m
Fair value of scheme’s assets                                              | 59.5   | 56.4
Present value of funded scheme’s liabilities                               | (53.9) | (52.7)
Retirement benefit asset recognised in the Statement of Financial Position | 5.6    | 3.7
Related deferred tax                                                       | (0.9)  | (0.6)
Net pension asset                                                          | 4.7    | 3.1 |


| _id | d1b30a7d6 |
| title |  |
| text | Consolidated Statements of Financial Position Data:
* Adjusted IFRS balances to reflect the impact of the full retrospective adoption of IFRS 15. See Note 2 of the notes to our consolidated financial statements for further details.

 |
| table | |            |                       | As of June 30, |          |
------------------------------ | ---------- | --------------------- | -------------- | -------- | --------
                               | 2019       | 2018                  | 2017           | 2016     | 2015
                               |            | (U.S. $ in thousands) |                |          |
                               |            | *As Adjusted          | *As Adjusted   |          |
Cash and cash equivalents      | $1,268,441 | $1,410,339            | $244,420       | $259,709 | $187,094
Short-term investments         | 445,046    | 323,134               | 305,499        | 483,405  | 30,251
Derivative assets              | 215,233    | 99,995                | 3,252          | —        | —
Working capital                | (287,597)  | 1,377,145             | 296,984        | 542,038  | 50,477
Total assets                   | 2,977,258  | 2,421,828             | 1,282,117      | 990,973  | 397,161
Deferred revenue               | 468,820    | 342,871               | 245,195        | 181,068  | 136,565
Derivative liabilities         | 855,079    | 207,970               | —              | —        | —
Exchangeable senior notes, net | 853,576    | 819,637               | —              | —        | —
Total liabilities              | 2,411,791  | 1,514,508             | 379,424        | 259,310  | 207,107
Share capital                  | 24,199     | 23,531                | 22,726         | 21,620   | 18,461
Total equity                   | 565,467    | 907,320               | 902,693        | 731,663  | 190,054 |


| _id | d1b367724 |
| title |  |
| text | 23. Investments continued

IFRS 9 was applied for the first time on 1 April 2018 and introduces new classifications for financial instruments, including investments. Under IAS 39, we classified investments as available-for-sale, loans and receivables, and fair value through profit or loss. On transition to IFRS 9 we have reclassified them as fair value through other comprehensive income, fair value through profit or loss, and amortised cost, as set out in note 1. The current year figures in the following table reflect the

year figures in the following table reflect the classifications under IFRS 9, and the prior year figures reflect the previous classifications under IAS 39.

Investments held at amortised cost consist of investments previously classified as loans and receivables and relate to money market investments denominated in sterling of £2,687m (2017/18: £416m, 2016/17: £35m), in US dollars of £26m (2017/18: £27m, 2016/17: £30m) in euros of £499m (2017/18: £nil, 2016/17: £nil) and in other currencies £2m (2017/18: £4m, 2016/17: £18m). They also include investments in liquidity funds of £2,522m (2017/18: £2,575m, 2016/17: £1,437m) held to collect contractual cash flows.

£1,437m) held to collect contractual cash flows. In prior years these were classified as available-for-sale.

 |
| table | At 31 March                                   | 2019 £m | 2018 £m | 2017 £m
--------------------------------------------- | ------- | ------- | -------
Non-current assets                            | 48      | -       | -
Fair value through other comprehensive income | -       | 46      | 37
Available-for-sale                            | 6       | 7       | 7
Fair value through profit or loss             | 54      | 53      | 44
Current assets                                |         |         |
Fair value through other comprehensive income | -       | -       | -
Available-for-sale                            | -       | 2,575   | 1,437
Investments held at amortised cost            | 3,214   | -       | -
Loans and receivables                         | -       | 447     | 83
                                              | 3,214   | 3,022   | 1,520 |


| _id | d1a7285e4 |
| title |  |
| text | Inventories and Inventory Valuation

Inventories are stated at the lower of first-in, first-out (FIFO) cost or market value. Market value is based upon an estimated average selling price reduced by estimated costs of disposal. Should actual market conditions differ from the Company’s estimates, the Company’s future results of operations could be materially affected. Reductions in inventory valuation are included in Cost of revenue in the accompanying Consolidated Statements of Operations. The Company reviews inventory for excess quantities

Company reviews inventory for excess quantities and obsolescence based on its best estimates of future demand, product lifecycle status and product development plans. The Company uses historical information along with these future estimates to reduce the inventory cost basis. Subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. Prices anticipated for future inventory demand are compared to current and committed inventory values.

The components of inventories are as follows:

 |
| table | March 31,         |        |
----------------- | ------ | ------
(in thousands)    | 2019   | 2018
Raw materials     | $3,445 | $2,969
Finished goods    | 6,356  | 6,253
Total inventories | $9,801 | $9,222 |


| _id | d1b30db52 |
| title |  |
| text | Notes to Consolidated Financial Statements - (Continued) Fiscal Years Ended May 26, 2019, May 27, 2018, and May 28, 2017 (columnar dollars in millions except per share amounts)  During fiscal 2019, we recognized the following pre-tax expenses for the Pinnacle Integration Restructuring Plan:
Included in the above results are $163.5 million of charges that have resulted or will result in cash outflows and $4.7 million in non-cash charges.

 |
| table | | International | Pinnacle Foods | Corporate | Total
---------------------------------------------------- | ------------- | -------------- | --------- | ------
Other cost of goods sold                             | $—            | $3.7           | $—        | $3.7
Total cost of goods sold .                           | —             | 3.7            | —         | 3.7
Severance and related costs                          | 0.7           | 0.6            | 110.8     | 112.1
Accelerated depreciation                             | —             | —              | 4.7       | 4.7
Contract/lease termination .                         | —             | 0.8            | 0.3       | 1.1
Consulting/professional fees .                       | 0.2           | —              | 38.1      | 38.3
Other selling, general and administrative expenses . | 0.1           | —              | 8.2       | 8.3
Total selling, general and administrative expenses   | 1.0           | 1.4            | 162.1     | 164.5
Consolidated total                                   | $1.0          | $5.1           | $162.1    | $168.2 |


| _id | d1b2e2ab0 |
| title |  |
| text | COMMON SHARES AND CLASS B SHARES
BCE’s articles of amalgamation provide for an unlimited number of voting common shares and non-voting Class B shares, all without par value. The common shares and the Class B shares rank equally in the payment of dividends and in the distribution of assets if BCE is liquidated, dissolved or wound up, after payments due to the holders of preferred shares. No Class B shares were outstanding at December 31, 2019 and 2018.

The following table provides details about the outstanding common shares of BCE.
In Q1 2018, BCE repurchased and canceled 3,085,697 common shares for a total cost of $175 million through a NCIB. Of the total cost, $69 million represents stated capital and $3 million represents the reduction of the contributed surplus attributable to these common shares. The remaining $103 million was charged to the deficit.
CONTRIBUTED SURPLUS

CONTRIBUTED SURPLUS
Contributed surplus in 2019 and 2018 includes premiums in excess of par value upon the issuance of BCE common shares and share-based compensation expense net of settlements.

 |
| table | |      | 2019             |                | 2018             |
----------------------------------------------- | ---- | ---------------- | -------------- | ---------------- | --------------
                                                | NOTE | NUMBER OF SHARES | STATED CAPITAL | NUMBER OF SHARES | STATED CAPITAL
Outstanding, January 1                          |      | 898,200,415      | 20,036         | 900,996,640      | 20,091
Shares issued for the acquisition of AlarmForce | 34   | –                | –              | 22,531           | 1
Shares issued under employee stock option plan  | 28   | 4,459,559        | 251            | 266,941          | 13
Repurchase of common shares                     |      | –                | –              | (3,085,697)      | (69)
Shares issued under ESP                         |      | 1,231,479        | 75             | –                | –
Shares issued under DSP                         |      | 16,729           | 1              | –                | –
Outstanding, December 31                        |      | 903,908,182      | 20,363         | 898,200,415      | 20,036 |


| _id | d1b37f428 |
| title |  |
| text | Fiscal Year Ended 2019 and 2018 Revenues
* Adjusted IFRS balances to reflect the impact of the full retrospective adoption of IFRS 15. See Note 2 of the notes to our consolidated financial statements for further details.

Total revenues increased $329.1 million, or 37%, in the fiscal year ended June 30, 2019 compared to the fiscal year ended June 30, 2018. Growth in total revenues was attributable to increased demand for our products from both new and existing customers. Of total revenues recognized in the fiscal year ended June 30, 2019, over 90% was attributable to sales to customer accounts existing on or before June 30, 2018. Our number of total customers increased to 152,727 at June 30, 2019 from 125,796 at June 30,

152,727 at June 30, 2019 from 125,796 at June 30, 2018.

Subscription revenues increased $223.3 million, or 54%, in the fiscal year ended June 30, 2019 compared to the fiscal year ended June 30, 2018. The increase in subscription revenues was primarily attributable to additional subscriptions from our existing customer base. As customers increasingly adopt cloud-based, subscription services and term-based licenses of our Data Center products for their business needs, we expect our subscription revenues to continue to increase at a rate higher than the rate of

to increase at a rate higher than the rate of increase of our perpetual license revenues in future periods.

Maintenance revenues increased $68.0 million, or 21%, in the fiscal year ended June 30, 2019 compared to the fiscal year ended June 30, 2018. The increase in maintenance revenues was primarily attributable to growing renewal of software maintenance contracts from our customers related to our perpetual license software offerings.

Perpetual license revenues increased $10.4 million, or 13%, in the fiscal year ended June 30, 2019 compared to the fiscal year ended June 30, 2018. A substantial majority of the increase in perpetual license revenues was attributable to additional licenses to existing customers.

Other revenues increased $27.5 million, or 45%, in the fiscal year ended June 30, 2019 compared to the fiscal year ended June 30, 2018. The increase in other revenues was primarily attributable to an increase in revenue from sales of third-party apps through our Atlassian Marketplace.

 |
| table | | Fiscal Year Ended June 30, |                       |          |
----------------- | -------------------------- | --------------------- | -------- | --------
                  | 2019                       | 2018                  | $ Change | % Change
                  |                            | (U.S. $ in thousands) |          |
                  |                            | *As Adjusted          |          |
Subscription      | $633,950                   | $410,694              | $223,256 | 54%
Maintenance       | 394,526                    | 326,511               | 68,015   | 21
Perpetual license | 93,593                     | 83,171                | 10,422   | 13
Other             | 88,058                     | 60,602                | 27,456   | 45
Total revenues    | $1,210,127                 | $880,978              | $329,149 | 37 |


| _id | d1b33c6f0 |
| title |  |
| text | Net Investment in Direct Financing Leases and Sales-Type Leases

Teekay LNG owns a 70% ownership interest in Teekay BLT Corporation (or the Teekay Tangguh Joint Venture), which is a party to operating leases whereby the Teekay Tangguh Joint Venture leases two LNG carriers (or the Tangguh LNG Carriers) to a third party, which in turn leases the vessels back to the joint venture. The time charters for the two Tangguh LNG carriers are accounted for as direct financing leases. The Tangguh LNG Carriers commenced their time charters with their charterers in 2009.

In 2013, Teekay LNG acquired two 155,900-cubic meter LNG carriers, the WilPride and WilForce, from Norway-based Awilco LNG ASA (or Awilco) and chartered them back to Awilco on five- and four-year fixed-rate bareboat charter contracts (plus a one-year extension option), respectively, with Awilco holding a fixed-price purchase obligation at the end of the charters. The bareboat charters with Awilco were accounted for as direct financing leases.

However, in June 2017, Teekay LNG agreed to amend the charter contracts with Awilco to defer a portion of charter hire and extend the bareboat charter contracts and related purchase obligations on both vessels to December 2019. The amendments had the effect of deferring charter hire of between $10,600 per day and $20,600 per day per vessel from July 1, 2017 until December 2019, with such deferred amounts added to the purchase obligation amounts.

As a result of the contract amendments, both of the charter contracts with Awilco were reclassified as operating leases upon the expiry of their respective original contract terms in November 2017 and August 2018.

In September 2019, Awilco exercised its option to extend both charters from December 31, 2019 by up to 60 days with the ownership of both vessels transferring to Awilco at the end of this extension. In October 2019, Awilco obtained credit approval for a financing facility that would provide funds necessary for Awilco to satisfy its purchase obligation of the two LNG carriers.

As a result, both vessels were derecognized from the consolidated balance sheets and sales-type lease receivables were recognized based on the remaining amounts owing to Teekay LNG, including the purchase obligations. Teekay LNG recognized a gain of $14.3 million upon derecognition of the vessels for the year ended December 31, 2019, which was included in write-down and loss on sale of vessels in the Company's consolidated statements of loss (see Note 19). Awilco purchased both vessels in January 2020 (see

purchased both vessels in January 2020 (see Note 24(a)).

In addition, the 21-year charter contract for the Bahrain Spirit floating storage unit (or FSU) commenced in September 2018 and is accounted for as a direct finance lease. The following table lists the components of the net investments in direct financing leases and sales-type leases:

As at December 31, 2019, estimated minimum lease payments to be received by Teekay LNG related to its direct financing and sales-type leases in each of the next five succeeding fiscal years were approximately $324.7 million (2020), $64.2 million (2021), $64.2 million (2022), $64.0 million (2023), $64.3 million (2024) and an aggregate of $534.6 million thereafter. The leases are scheduled to end between 2020 and 2039.

As at December 31, 2018, estimated minimum lease payments to be received by Teekay LNG related to its direct financing leases in each of the next five years were approximately $63.9 million (2019), $64.3 million (2020), $64.2 million (2021), $64.2 million (2022), $64.0 million (2023) and an aggregate of $576.5 million thereafter.

 |
| table | | December 31, 2019 | December 31, 2018
---------------------------------------------------------- | ----------------- | -----------------
                                                           | $                 | $
Total minimum lease payments to be received                | 1,115,968         | 897,130
Estimated unguaranteed residual value of leased properties | 284,277           | 291,098
Initial direct costs and other                             | 296               | 329
Less unearned revenue                                      | (581,732)         | (613,394)
Total                                                      | 818,809           | 575,163
Less current portion                                       | (273,986)         | (12,635)
Long-term portion                                          | 544,823           | 562,528 |


| _id | d1b35377e |
| title |  |
| text | Other Current Liabilities
The components of other current liabilities are included in the following table (in thousands):

 |
| table | | December 31, |
------------------------------- | ------------ | -------
                                | 2019         | 2018
Operating lease liabilities     | $15,049      | $ —
Vendor financed licenses        | 9,667        | 3,551
Royalties payable               | 6,107        | 11,318
Accrued interest                | 9,212        | 8,407
Other                           | 36,936       | 38,412
Total other current liabilities | $76,971      | $61,688 |


| _id | d1b2efb8e |
| title |  |
| text | Net debt including IFRS 16 lease liabilities
A reconciliation between net debt and net debt including IFRS 16 lease liabilities is given below. A breakdown of the balances that are included within net debt is given within Note 24. Net debt excludes IFRS 16 lease liabilities to enable comparability with prior years.

 |
| table | | 2019  | 2018
-------------------------------------- | ----- | -----
                                       | £m    | £m
Net debt                               | 295.2 | 235.8
IFRS 16 lease liabilities              | 38.9  | –
Net debt and IFRS 16 lease liabilities | 334.1 | 235.8 |


| _id | d1b390e62 |
| title |  |
| text | EBITDA and EBITDA Margin
The following tables set forth EBITDA (in millions) and EBITDA Margin by segment for the periods presented:
Software Solutions
EBITDA was $567.2 million in 2018 compared to $516.5 million in 2017, an increase of $50.7 million, or 10%, with an EBITDA Margin of 59.0%, an increase of 190 basis points from the prior year. The increase was primarily driven by incremental margins on revenue growth.
Data and Analytics

Data and Analytics
EBITDA was $39.5 million in 2018 compared to $38.4 million in 2017, an increase of $1.1 million, or 3%, with an EBITDA Margin of 25.6%, an increase of 30 basis points from the prior year. The EBITDA Margin increase was primarily driven by incremental margins on revenue growth.

 |
| table | | Year ended December 31, |        | Variance |
------------------ | ----------------------- | ------ | -------- | ---
                   | 2018                    | 2017   | $        | %
Software Solutions | $567.2                  | $516.5 | $50.7    | 10%
Data and Analytics | 39.5                    | 38.4   | 1.1      | 3% |


| _id | d1b39336a |
| title |  |
| text | Asia Pacific
Asia Pacific net revenues decreased $1.4 million in 2019 compared to 2018 (see “Revenues” above). Asia Pacific expenses decreased $203,000 from 2018 to 2019. This decrease was primarily due to a $503,000 decrease of salary expense, offset partially by a $303,000 increase in member acquisition costs.

Foreign currency movements relative to the U.S. dollar negatively impacted our local currency loss from our operations in Asia Pacific by approximately $136,000 for 2019. Foreign currency movements relative to the U.S. dollar positively impacted our local currency loss from our operations in Asia Pacific by approximately $127,000 for 2018.

 |
| table | Year Ended December 31,                   |          |
----------------------------------------- | -------- | --------
                                          | 2019     | 2018
(In thousands)                            |          |
Revenues                                  | $6,490   | $7,859
(Loss) from operations                    | $(7,488) | $(6,322)
(Loss) from operations as a % of revenues | (115)%   | (80)% |


| _id | d1b3c1ada |
| title |  |
| text | Operating Metrics
The following operating metrics are key performance indicators that we use to evaluate our business. The key drivers of changes in our operating metrics are presented in the order of significance.
Net bookings and In-game net bookings

We monitor net bookings as a key operating metric in evaluating the performance of our business because it enables an analysis of performance based on the timing of actual transactions with our customers and provides more timely indication of trends in our operating results. Net bookings is the net amount of products and services sold digitally or sold-in physically in the period, and includes license fees, merchandise, and publisher incentives, among others. Net bookings is equal to net revenues excluding

Net bookings is equal to net revenues excluding the impact from deferrals. In-game net bookings primarily includes the net amount of downloadable content and microtransactions sold during the period, and is equal to in-game net revenues excluding the impact from deferrals.

Net bookings and in-game net bookings were as follows (amounts in millions):
Net bookings
The decrease in net bookings for 2019, as compared to 2018, was primarily due to:

a $572 million decrease in Blizzard net bookings primarily driven by (1) lower net bookings from Hearthstone and (2) overall lower net bookings from World of Warcraft expansion and in-game content sales, primarily due to World of Warcraft: Battle for Azeroth, which was released in August 2018, with no comparable release in 2019 (although net bookings from subscriptions increased due to the release of World of Warcraft Classic in August 2019);

a $239 million decrease in Activision net bookings primarily driven by (1) lower net bookings from the Destiny franchise (reflecting our sale of the publishing rights for Destiny to Bungie in December 2018) and (2) lower net bookings from Call of Duty franchise catalog titles, partially offset by net bookings from Sekiro: Shadows Die Twice, Crash Team Racing Nitro-Fueled, and Call of Duty: Mobile, which were new releases in March 2019, June 2019, and October 2019, respectively; and

a $55 million decrease in King net bookings primarily driven by lower net bookings from player purchases across various franchise titles, primarily driven by the Candy Crush franchise, partially offset by an increase in advertising net bookings.
In-game net bookings
The decrease in in-game net bookings for 2019, as compared to 2018, was primarily due to:

a $539 million decrease in Blizzard in-game net bookings primarily driven by (1) lower in-game net bookings from Hearthstone and (2) lower in-game net bookings from World of Warcraft, in part due to World of Warcraft: Battle for Azeroth;
a $167 million decrease in Activision in-game net bookings primarily due to lower in-game net bookings from the Destiny franchise, partially offset by in-game net bookings from Call of Duty: Mobile; and

a $131 million decrease in King in-game net bookings primarily due to lower in-game net bookings across various franchise titles, primarily driven by the Candy Crush franchise.

 |
| table | | For the Years Ended December 31, |        |
-------------------- | -------------------------------- | ------ | -------------------
                     | 2019                             | 2018   | Increase (Decrease)
Net bookings         | $6,388                           | $7,262 | $(874)
In-game net bookings | $3,366                           | $4,203 | $(837) |


| _id | d1b36f4e2 |
| title |  |
| text | Operating Expenses
The following table sets forth, for the periods indicated, the amount of operating expenses and their relative percentages of total net sales by the line items reflected in our consolidated statement of operations (dollars in thousands):

 |
| table | | Fiscal 2019 |                               | Fiscal 2018 |
----------------------------------- | ----------- | ----------------------------- | ----------- | -----------------------------
                                    | Amount      | Percentage of total net sales | Amount      | Percentage of total net sales
                                    |             | (Dollars in thousands)        |             |
Research and development            | $117,353    | 8.2%                          | $132,586    | 7.0%
Selling, general and administrative | 272,257     | 19.0%                         | 293,632     | 15.4%
Impairment and other charges        | —           | —%                            | 766         | —%
Amortization of intangible assets   | 13,760      | 1.0%                          | 10,690      | 0.6%
Total operating expenses            | $403,370    | 28.2%                         | $437,674    | 23.0% |


| _id | d1b304fca |
| title |  |
| text | Fees Paid to our Independent Auditor
The following table sets forth the fees billed to us by Ernst & Young LLP for services in fiscal 2019 and 2018, all of which
were pre-approved by the Audit Committee.
(1) In accordance with the SEC’s definitions and rules, “audit fees” are fees that were billed to Systemax by Ernst & Young LLP for
the audit of our annual financial statements, to be included in the Form 10-K, and review of financial statements included in the

Form 10-Qs; for the audit of our internal control over financial reporting with the objective of obtaining reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects; for the attestation of management’s
report on the effectiveness of internal control over financial reporting; and for services that are normally provided by the auditor
in connection with statutory and regulatory filings or engagements.

(2) “Audit-related fees” are fees for assurance and related services that are reasonably related to the performance of the audit or
review of our financial statements and internal control over financial reporting, including services in connection with assisting
Systemax in our compliance with our obligations under Section 404 of the Sarbanes-Oxley Act and related regulations.
(3) Ernst & Young LLP did not provide any professional services for tax compliance, planning or advice in 2019 or 2018.

(4) Consists of fees billed for other professional services rendered to Systemax.

 |
| table | Fee Category           | 2019 ($)  | 2018 ($)
---------------------- | --------- | ---------
Audit fees (1)         | 1,196,000 | 1,257,000
Audit-related fees (2) | 0         | 15,000
Tax fees (3)           | 0         | 0
All other fees (4)     | 2,000     | 2,000
Total                  | 1,198,000 | 1,274,000 |


| _id | d1b39bd9e |
| title |  |
| text | 23 Borrowings (continued)
The fair values of fixed rate borrowings and CMBS are assessed based on quoted market prices, and as such are categorised as Level 1 in the fair value hierarchy (see note 27 for definition). The fair values of unlisted floating rate borrowings are equal to their carrying values and are categorised as Level 2 in the fair value hierarchy.
The maturity profile of debt (excluding lease liabilities) is as follows:

Certain borrowing agreements contain financial and other conditions that, if contravened, could alter the repayment profile (further information is provided in financial covenants on pages 165 and 166)
At 31 December 2019 the Group had committed undrawn borrowing facilities of £238.5 million (2018: £274.2 million), maturing in 2021 and 2022. This includes £42.1 million of undrawn facilities in respect of development finance.

 |
| table | £m                                                            | 2019    | 2018
------------------------------------------------------------- | ------- | -------
Repayable within one year                                     | 65.8    | 46.7
Repayable in more than one year but not more than two years   | 901.8   | 30.5
Repayable in more than two years but not more than five years | 2,114.2 | 2,722.0
Repayable in more than five years                             | 1,569.6 | 2,155.9
                                                              | 4,651.4 | 4,955.1 |


| _id | d1b3878a8 |
| title |  |
| text | Free cash flow

We define free cash flow as net cash provided by (used in) operating activities less purchase of property and equipment. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can possibly be used for investing in our business and strengthening the balance sheet, but it is not intended to represent the residual cash flow available for discretionary expenditures. Free cash flow is not prepared

expenditures. Free cash flow is not prepared in accordance with U.S. GAAP, and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with U.S. GAAP.

The following table presents a reconciliation of net cash provided by (used in) operating activities to free cash flow:

(1) Our adoption of ASU 2016-09 on January 1, 2017 resulted in excess tax benefits for share-based payments recorded as a reduction of income tax expense and reflected within operating cash flows, rather than recorded within equity and reflected within financing cash flows. We elected to adopt this new standard retrospectively, which impacted the presentation for all periods prior to the adoption date.

 |
| table | |            |          | Year Ended December 31, |            |
------------------------------------------------------- | ---------- | -------- | ----------------------- | ---------- | ----------
                                                        | 2019       | 2018     | 2017                    | 2016       | 2015
                                                        |            |          | (in thousands)          |            |
Net cash provided by (used in) operating activities (1) | $(156,832) | $113,207 | $64,241                 | $138,720   | $141,257
Purchase of property and equipment                      | (36,531)   | (52,880) | (89,160)                | (78,640)   | (30,566)
Free cash flow                                          | $(193,363) | $60,327  | $(24,919)               | $60,080    | $110,691
Net cash provided by (used in) investing activities     | $25,761    | $17,496  | $(28,718)               | $(392,666) | $(170,027)
Net cash provided by (used in) financing activities (1) | $(8,406)   | $1,287   | $4,635                  | $19,794    | $368,953 |


| _id | d1b3aaa1a |
| title |  |
| text | Operating profit
Notes
1. Before exceptional items, acquisition related costs, acquired intangible asset amortisation and share-based payment amounting to $4.3 million in total (2018 $19.6 million).
2. Adjusted operating profit as a percentage of revenue in the period.
Adjusted operating profit increased by $15.8 million or 20.5 per cent to $92.9 million in 2019, compared with $77.1 million in 2018. Adjusted operating margin increased by 2.2 per cent to 18.4 per cent, from 16.2 per cent in 2018.

Reported operating profit was up by $31.1 million or 54.1 per cent to $88.6 million (2018 $57.5 million). Total adjusting items were lower in 2019 at $4.3 million, compared to $19.6 million in 2018, mainly due to exceptional items totalling $13.1 million charged last year (see below).

 |
| table | $ million                              | 2019  | Adjusted operating margin 1, 2 % | 2018   | Adjusted operating margin 1, 2 %
-------------------------------------- | ----- | -------------------------------- | ------ | --------------------------------
Networks & Security                    | 73.9  | 23.1                             | 56.4   | 19.8
Lifecycle Service Assurance            | 18.1  | 16.3                             | 17.4   | 15.4
Connected Devices                      | 9.5   | 13.1                             | 10.5   | 13.3
Corporate                              | (8.6) |                                  | (7.2)  |
Adjusted operating profit1             | 92.9  | 18.4                             | 77.1   | 16.2
Exceptional items                      | 0.5   |                                  | (13.1) |
Acquisition related costs              | (0.1) |                                  | –      |
Acquired intangible asset amortisation | (1.2) |                                  | (3.7)  |
Share-based payment                    | (3.5) |                                  | (2.8)  |
Reported operating profit              | 88.6  |                                  | 57.5   | |


| _id | d1b3610c2 |
| title |  |
| text | Write-offs of lease receivables and loan receivables were $15 million and $20 million, respectively, for the year ended December 31, 2018. Provisions for credit losses recorded for lease receivables and loan receivables were $14 million and $2 million, respectively, for the year ended December 31, 2018.

The average recorded investment of impaired leases and loans for Americas, EMEA and Asia Pacific was $138 million, $55 million and $73 million, respectively, for the year ended December 31, 2018. Both interest income recognized, and interest income recognized on a cash basis on impaired leases and loans were immaterial for the year ended December 31, 2018.

 |
| table | ($ in millions)                                            |          |        |              |
---------------------------------------------------------- | -------- | ------ | ------------ | --------
At December 31, 2018:                                      | Americas | EMEA   | Asia Pacific | Total
Recorded investment:                                       |          |        |              |
Lease receivables                                          | $ 3,827  | $1,341 | $1,152       | $ 6,320
Loan receivables                                           | 6,817    | 3,675  | 2,489        | 12,981
Ending balance                                             | $10,644  | $5,016 | $3,641       | $19,301
Recorded investment, collectively evaluated for impairment | $10,498  | $4,964 | $3,590       | $19,052
Recorded investment, individually evaluated for impairment | $   146  | $   52 | $   51       | $   249
Allowance for credit losses                                |          |        |              |
Beginning balance at January 1, 2018                       |          |        |              |
Lease receivables                                          | $    63  | $    9 | $   31       | $   103
Loan receivables                                           | 108      | 52     | 51           | 211
Total                                                      | $   172  | $   61 | $   82       | $   314
Write-offs                                                 | (10)     | (2)    | (23)         | (35)
Recoveries                                                 | 0        | 0      | 2            | 2
Provision                                                  | 7        | 9      | 0            | 16
Other*                                                     | (11)     | (3)    | (4)          | (19)
Ending balance at December 31, 2018                        | $   158  | $   65 | $   56       | $   279
Lease receivables                                          | $    53  | $   22 | $    24      | $    99
Loan receivables                                           | $   105  | $   43 | $    32      | $   179
Related allowance, collectively evaluated for impairment   | $    39  | $   16 | $    5       | $     59
Related allowance, individually evaluated for impairment   | $   119  | $   49 | $    51      | $   219 |


| _id | d1b32b54e |
| title |  |
| text | The Company estimates the fair values of stock options using the Black-Scholes option-pricing model on the date of grant.For the years ended December 31, 2019 and 2018, the assumptions used in the Black-Scholes option pricing model, which was used to estimate the grant date fair value per option, were as follows:

The risk-free interest rate is the United States Treasury rate for the day of the grant having a term equal to the life of the equity instrument. The volatility is a measure of the amount by which the Company’s share price has fluctuated or is expected to fluctuate; the Company used its common stock volatility along with the average of historic volatilities of comparative companies. The dividend yield is zero as the Company has not made any dividend payment and has no plans to pay dividends in the

payment and has no plans to pay dividends in the foreseeable future. The Company determines the expected term of its stock option awards by using the simplified method, which assumes each vesting tranche of the award has a term equal to average of the contractual term and the vesting period.

As of December 31, 2019, total compensation cost not yet recognized related to unvested stock options was approximately $0.8 million, which is expected to be recognized over a weighted-average period of 2.3 years.

 |
| table | | 2019            | 2018
---------------------------------------------------------------- | --------------- | ---------------
                                                                 | Employee Grants | Employee Grants
Weighted-average Black-Scholes option pricing model assumptions: |                 |
Volatility                                                       | 73.01%          | 82.00%
Expected term (in years)                                         | 6               | 6
Risk-free rate                                                   | 2.22%           | 2.24%
Expected dividend yield                                          | 0.0%            | 0.0%
Weighted average grant date fair value per share                 | $2.10           | $2.22 |


| _id | d1b3150c8 |
| title |  |
| text | 1 Interest on borrowings includes interest on short-term borrowings and on long-term debt. 2 See “Accounting Policies” for more information.

The 6% increase in finance costs this year was a result of: • interest on lease liabilities as a result of our adoption of IFRS 16; and • higher outstanding debt as a result of our debt issuances in April 2019, in large part to fund our acquisition of 600 MHz spectrum licences (see “Managing Our Liquidity and Financial Resources”); partially offset by • a $21 million loss on discontinuation of hedge accounting on certain bond forward derivatives recognized in 2018.

Interest on borrowings Interest on borrowings increased this year as a result of the net issuance of senior notes throughout the year, partially offset by a higher proportion of borrowings under our lower-interest US CP program compared to 2018. See “Managing Our Liquidity and Financial Resources” for more information about our debt and related finance costs.

Loss on repayment of long-term debt This year, we recognized a $19 million loss (2018 – $28 million loss) on repayment of long-term debt, reflecting the payment of redemption premiums associated with our redemption of $900 million (2018 – US$1.4 billion) of 4.7% senior notes in November 2019 that were otherwise due in September 2020 (2018 – 6.8% senior notes in April 2018 that were otherwise due in August 2018).

Foreign exchange and change in fair value of derivative instruments We recognized $79 million in net foreign exchange gains in 2019 (2018 – $136 million in net losses). These gains and losses were primarily attributed to our US dollar-denominated commercial paper (US CP) program borrowings.

These foreign exchange gains (2018 – losses) were offset by the $80 million loss related to the change in fair value of derivatives (2018 – $95 million gain) that was primarily attributed to the debt derivatives, which were not designated as hedges for accounting purposes, we used to offset the foreign exchange risk related to these US dollar-denominated borrowings.

During the year ended December 31, 2018, we determined that we would no longer be able to exercise certain ten-year bond forward derivatives within the originally designated time frame. Consequently, we discontinued hedge accounting on those bond forward derivatives and reclassified a $21 million loss from the hedging reserve within shareholders’ equity to finance costs (recorded in “change in fair value of derivative instruments”). We subsequently extended the bond forwards to May 31, 2019, with the

the bond forwards to May 31, 2019, with the ability to extend them further, and redesignated them as effective hedges. During the year ended December 31, 2019, we exercised our remaining bond forwards.

See “Managing Our Liquidity and Financial Resources” for more information about our debt and related finance costs.

 |
| table | FINANCE COSTS                                      | Years ended December 31 |      |
-------------------------------------------------- | ----------------------- | ---- | ----
(In millions of dollars)                           | 2019                    | 2018 | %Chg
Interest on borrowings 1                           | 746                     | 709  | 5
Interest on post-employment benefits liability     | 11                      | 14   | (21)
Loss on repayment of long-term debt                | 19                      | 28   | (32)
(Gain) loss on foreign exchange                    | (79)                    | 136  | n/m
Change in fair value of derivative instruments     | 80                      | (95) | n/m
Capitalized interest                               | (19)                    | (20) | (5)
Other                                              | 21                      | 21   | -
Finance costs before interest on lease liabilities | 779                     | 793  | (2)
Interest on lease liabilities 2                    | 61                      | -    | n/m
Total finance costs                                | 840                     | 793  | 6 |


| _id | d1b380ed6 |
| title |  |
| text | 1.2 Data Centres
Note: 1. Due to its business nature, the significant air emissions of the Group are GHG emissions, arising mainly from fuels and purchased electricity produced from fossil fuels.

2. The Group’s GHG inventory includes carbon dioxide, methane and nitrous oxide. GHG emissions data for the year ended 31 December 2019 is presented in carbon dioxide equivalent and is calculated based on the “2017 Baseline Emission Factors for Regional Power Grids in China for CDM and CCER Projects” issued by the Ministry of Ecology and Environment of China, and the “2006 IPCC Guidelines for National Greenhouse Gas Inventories” issued by the Intergovernmental Panel on Climate Change (IPCC).

3. Diesel is consumed by backup power generators.
4. Hazardous waste produced by the Group’s office buildings mainly includes waste toner cartridge and waste ink cartridge from printing equipment. Waste toner cartridge and waste ink cartridge are centralised and disposed of by printing suppliers. Such data covers all office buildings of the Group in Mainland China.

5. Non-hazardous waste produced by the Group’s office buildings mainly includes domestic waste and non-hazardous office waste. Domestic waste is disposed of by the property management companies and kitchen waste recycling vendors, and its data is not available, therefore estimation of domestic waste is made with reference to “Handbook on Domestic Discharge Coefficients for Towns in the First Nationwide Census on Contaminant Discharge” published by the State Council. Non-hazardous office waste is

the State Council. Non-hazardous office waste is centralised for disposal by vendors; hence such data covers all office buildings of the Group in Mainland China.

6. Hazardous waste produced by the Group’s data centres mainly includes waste lead-acid accumulators. Waste lead-acid accumulators are disposed of by qualified waste recycling vendors.
7. Non-hazardous waste produced by the Group’s data centres mainly includes waste servers and waste hard drives. Waste servers and destroyed waste hard drives are centralised and recycled by waste recycling vendors. Such data covers all the Group’s data centres.

 |
| table | Indicators                                    | For the year ended 31 December |
--------------------------------------------- | ------------------------------ | ----------
                                              | 2019                           | 2018
Total GHG emissions (Scopes 1 and 2) (tonnes) | 743,287.01                     | 612,521.16
Direct GHG emissions (Scope 1) (tonnes)       | 316.35                         | 36.76
Including: Diesel (tonnes)                    | 316.35                         | 36.76
Indirect GHG emissions (Scope 2) (tonnes)     | 742,970.66                     | 612,484.40
Including: Purchased electricity (tonnes)     | 742,970.66                     | 612,484.40
Hazardous waste (tonnes)                      | 8.00                           | –
Non-hazardous waste (tonnes)                  | 1,811.27                       | 1,350.76 |


| _id | d1b3686ec |
| title |  |
| text | d) Transaction with other related parties:
Net revenues/(expenses): The transactions with other related parties for the years ended December 31, 2019, 2018 and 2017 consisted of the following:

(i) The Cool Pool - On July 8, 2019 GasLog's vessel charter contracts had concluded and withdrew their participation from the Cool Pool. Following Gaslog's departure, we assumed sole responsibility for the management of the Cool Pool and consolidate the Cool Pool. From point of consolidation, the Cool Pool ceased to be a related party.

(ii) Magni Partners - Tor Olav Trøim is the founder of, and partner in, Magni Partners (Bermuda) Limited, a privately held Bermuda company, and is the ultimate beneficial owner of the company. Receivables and payables from Magni Partners comprise primarily of the cost (without mark-up) or part cost of personnel employed by Magni Partners who have providedadvisory and management services to Golar. These costs do not include any payment for any services provided by Tor Olav Trøim himself.

iii) Borr Drilling - Tor Olav Trøim is the founder, and director of Borr Drilling, a Bermuda company listed on the Oslo and NASDAQ stock exchanges. Receivables comprise primarily of management and administrative services provided by our Bermuda corporate office.
iv) 2020 Bulkers - 2020 Bulkers is a related party by virtue of common directorships. Receivables comprise primarily of management and administrative services provided by our Bermuda corporate office.

 |
| table | (in thousands of $) | 2019   | 2018    | 2017
------------------- | ------ | ------- | ------
The Cool Pool (i)   | 39,666 | 151,152 | 59,838
Magni Partners (ii) | (858)  | (375)   | (260)
Borr Drilling (iii) | 542    | —       | —
2020 Bulkers (iv)   | 265    | —       | —
Total               | 39,615 | 150,777 | 59,578 |


| _id | d1b31b4fa |
| title |  |
| text | 4. Prepaid expenses
Prepaid expenses consisted of the following:

 |
| table | October 31,            |         |
---------------------- | ------- | -------
                       | 2019    | 2018
(In thousands)         |         |
Parts and supplies     | $33,617 | $28,287
Prepaid insurance      | 8,859   | 8,232
Other prepaid expenses | 14,455  | 6,721
Total prepaid expenses | $56,931 | $43,240 |


| _id | d1b30bbfe |
| title |  |
| text | Uncertain Tax Positions
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
Out of $2.1 million of unrecognized tax benefits, there are no unrecognized tax benefits that would result in a change in the Company's effective tax rate if recognized in future years. The accrued interest and penalties related to uncertain tax positions was not significant for December 29, 2019, December 30, 2018 and December 31, 2017.

The Company is not currently under tax examination and the Company’s historical net operating loss and credit carryforwards may be adjusted bythe Internal Revenue Service, and other tax authorities until the statute closes on the year in which such tax attributes are utilized. The Company estimates that its unrecognized tax benefits will not change significantly within the next twelve months.

The Company is subject to U.S. federal income tax as well as income taxes in many U.S. states and foreign jurisdictions in which the Company operates. The U.S. tax years from 1999 forward remain effectively open to examination due to the carryover of unused net operating losses and tax credits.

 |
| table | | December 29, 2019 | December 30,2018 | December 31, 2017
------------------------------------------------------- | ----------------- | ---------------- | -----------------
Beginning balance of unrecognized tax benefits          | $2,161            | $2,107           | $2,014
Additions for tax positions related to the prior year   | (46)              | (2)              | 16
Additions for tax positions related to the current year | 88                | 125              | 77
Lapse of statutes of limitations                        | (86)              | (69)             | —
Ending balance of unrecognized tax benefits             | $2,117            | $2,161           | $2,107 |


| _id | d1b36b4aa |
| title |  |
| text | Profitability Measures
Net income:

The net income in the fiscal year ended February 28, 2018 was $16.6 million as compared to a net loss of $7.9 million in the same period last year. The increase is primarily the result of the $28.3 million non-operating gain from the legal settlement with a former supplier of LoJack, which was recognized during fiscal 2018. This gain was partially offset by higher tax expense in fiscal 2018 due to U.S. and foreign taxes on the $28.3 million legal settlement gain as well as the revaluation of our net

gain as well as the revaluation of our net deferred income tax assets that occurred in the fourth quarter of fiscal 2018 as we adopted the provisions of the Tax Cuts and Jobs Act which was enacted on December 22, 2017.

Adjusted EBITDA:
Adjusted EBITDA for Telematics Systems in the fiscal year ended February 28, 2018 increased $1.5 million compared to the same period last year due to higher MRM products revenue. Adjusted EBITDA for Software and Subscription Services increased $5.2 million compared to the same period last year due primarily to lower selling and marketing expenses and lower general and administrative expenses.

See Note 20 for a reconciliation of Adjusted EBITDA by reportable segments and a reconciliation to GAAP-basis net income (loss).

 |
| table | | Fiscal years ended |         |          |
-------------------------------- | ------------------ | ------- | -------- | --------
                                 | February 28,       |         |          |
(In thousands)                   | 2018               | 2017    | $ Change | % Change
Segment                          |                    |         |          |
Telematics Systems               | $48,943            | $47,432 | $1,511   | 3.2%
Software & Subscription Services | 8,233              | 3,075   | 5,158    | 167.7%
Satellite                        | -                  | 2,447   | (2,447)  | (100.0%)
Corporate Expense                | (4,794)            | (3,586) | (1,208)  | 33.7%
Total Adjusted EBITDA            | $52,382            | $49,368 | $3,014   | 6.1% |


| _id | d1b35e2be |
| title |  |
| text | ADVANCED ENERGY INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (in thousands, except per share amounts)
In February 2018, Advanced Energy acquired Trek Holding Co., LTD ("Trek"), a privately held company with operations in Tokyo, Japan and Lockport, New York, for $6.1 million, net of cash acquired. Trek has a 95% ownership interest in its U.S. subsidiary which is also its primary operation.

The components of the fair value of the total consideration transferred for our 2018 acquisitions are as follows:

 |
| table | | Trek    | Electrostatic Product Line | LumaSense | Total
------------------------- | ------- | -------------------------- | --------- | ---------
Cash paid for acquisition | $11,723 | $3,000                     | $94,946   | $ 109,669
Less cash acquired        | (5,651) | —                          | (10,262)  | (15,913)
Total purchase price      | $6,072  | $3,000                     | $84,684   | $ 93,756 |


| _id | d1b37796c |
| title |  |
| text | NOTE 7 — PROPERTY AND EQUIPMENT
The components of property and equipment were as follows:
During fiscal years 2019, 2018, and 2017, depreciation expense was $9.7 billion, $7.7 billion, and $6.1 billion, respectively. We have committed $4.0 billion for the construction of new buildings, building improvements, and leasehold improvements as of June 30, 2019.

 |
| table | (In millions)                   |           |
------------------------------- | --------- | ---------
June 30,                        | 2019      | 2018
Land                            | $ 1,540   | $ 1,254
Buildings and improvements      | 26,288    | 20,604
Leasehold improvements          | 5,316     | 4,735
Computer equipment and software | 33,823    | 27,633
Furniture and equipment         | 4,840     | 4,457
Total, at cost                  | 71,807    | 58,683
Accumulated depreciation        | (35,330)  | (29,223)
Total, net                      | $  36,477 | $  29,460 |


| _id | d1b323f38 |
| title |  |
| text | A.2.6 Calculation of return on capital employed
For purposes of calculating ROCE in interim periods, income before interest after tax is annualized. Average capital employed is determined using the average of the respective balances as of the quarterly reporting dates for the periods under review.
[1] Item Other interest expenses / income, net primarily consists of interest relating to corporate debt, and related hedging activities, as well as interest income on corporate assets.

 |
| table | (in millions of €)                                                         | 2019   | 2018
-------------------------------------------------------------------------- | ------ | ------
Net income                                                                 | 5,648  | 6,120
Less: Other interest expenses / income, net 1                              | (529)  | (482)
Plus: SFS Other interest expenses / income                                 | 763    | 721
Plus: Net interest expenses related to provisions for pensions and similar |        |
obligations                                                                | 148    | 164
Less: Interest adjustments                                                 |        |
(discontinued operations)                                                  | –      | –
Less: Taxes on interest adjustments                                        |        |
(tax rate (flat) 30%)                                                      | (115)  | (121)
(I) Income before interest after tax                                       | 5,916  | 6,401
(II) Average capital employed                                              | 53,459 | 50,715
(I) / (II) ROCE                                                            | 11.1 % | 12.6 % |


| _id | d1b3aeca0 |
| title |  |
| text | Segment Financial Results
Revenues
The following table sets forth revenues by segment for the periods presented (in millions):
(1) Revenues for Corporate and Other represent deferred revenue purchase accounting adjustments recorded in accordance with GAAP.
Software Solutions

Revenues were $962.0 million in 2018 compared to $904.5 million in 2017, an increase of $57.5 million, or 6%. Our servicing software solutions revenues increased 7%, or $52.5 million, primarily driven by loan growth on MSP® from new and existing  clients. Our origination software solutions revenues increased 3%, or $5.0 million, primarily driven by growth in our loan origination system solutions and a software license fee in our Lending Solutions business, partially offset by the effect of lower volumes on

offset by the effect of lower volumes on our Exchange and eLending platforms primarily as a result of the 26% decline in refinancing originations as reported by the Mortgage Bankers Association.

Data and Analytics
Revenues were $154.5 million in 2018 compared to $151.6 million in 2017, an increase of $2.9 million, or 2%. The increase was primarily driven by growth in our property data and multiple listing service businesses, partially offset by upfront revenues from long-term strategic license deals in 2017.

 |
| table | | Year ended December 31 |          | Variance |
---------------------- | ---------------------- | -------- | -------- | --
                       | 2018                   | 2017     | $        | %
Software Solutions     | $962.0                 | $904.5   | $57.5    | 6%
Data and Analytics     | 154.5                  | 151.6    | 2.9      | 2%
Corporate and Other(1) | (2.5)                  | (4.5)    | 2.0      | NM
Total                  | $1,114.0               | $1,051.6 | $62.4    | 6% |


| _id | d1b30b5d2 |
| title |  |
| text | Free Cash Flow
Free cash flow is a non-IFRS financial measure that we calculate as net cash provided by operating activities less net cash used in investing activities for capital expenditures.
Free cash flow increased by $140.9 million during the fiscal year ended June 30, 2019 due to a $154.9 million increase of net cash provided by operating activities, offset by a $14.0 million increase of capital expenditures as we continue to invest in our facilities.

For more information about net cash provided by operating activities, please see “Liquidity and Capital Resources”.

 |
| table | |          | Fiscal Year Ended June 30, |
----------------------------------------- | -------- | -------------------------- | --------
                                          | 2019     | 2018                       | 2017
Net cash provided by operating activities | $466,342 | $311,456                   | $199,381
Less: Capital expenditures                | (44,192) | (30,209)                   | (15,129)
Free cash flow                            | $422,150 | $281,247                   | $184,252 |


| _id | d1b3b4cea |
| title |  |
| text | Note 3: Balance Sheet Components
Prepaid expenses and other consist of the following (in thousands):

 |
| table | December 31,                     |        |
-------------------------------- | ------ | ------
                                 | 2019   | 2018
Prepaid expenses                 | $2,303 | $1,780
Other current assets             | 193    | 167
Total prepaid expenses and other | $2,496 | $1,947 |


| _id | d1b33f684 |
| title |  |
| text | Seasonality
The Company’s sales, income and cash flow from operations vary between quarters, and are generally lowest in the first quarter of the from operations vary between quarters, and are generally lowest in the first quarter of the year and highest in the fourth quarter. This is mainly a result of the seasonal purchase patterns of network operators.

 |
| table | Most recent three-year average seasonality |               |                |               |
------------------------------------------ | ------------- | -------------- | ------------- | --------------
                                           | First quarter | Second quarter | Third quarter | Fourth quarter
Sequential change, sales                   | -25%          | 11%            | 4%            | 17%
Share of annual sales                      | 22%           | 24%            | 25%           | 29% |


| _id | d1a720542 |
| title |  |
| text | IFRS cash flow
The key drivers of the decrease in cash and cash equivalents of £35.8 million in the year are discussed below.
Cash flows from operating activities of £11.1 million were £91.5 million lower than 2018, largely due to the reduction in underlying earnings of £65.9 million (see income statement section) and the early settlement of interest rate swaps of £52.4 million, partially offset by improvements in working capital of £32.2 million.

Cash flows from investing activities mainly reflected cash inflows related to the part disposal of intu Derby of £96.7 million and other sundry disposals of £75.3 million, partially offset by capital expenditure during the year of £127.7 million.
Cash flows from financing activities primarily reflected net borrowings repaid in the year (see debt activity section on page 36).

 |
| table | m                                       | 2019    | 2018
--------------------------------------- | ------- | ------
Cash flows from:                        |         |
operating activities                    | 11.1    | 102.6
investing activities                    | 75.5    | (0.4)
financing activities                    | (122.4) | (90.8)
Net change in cash and cash equivalents | (35.8)  | 11.4 |


| _id | d1a715e30 |
| title |  |
| text | The tax effect of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities consisted of the following:

The liability for gross unrecognized tax benefits at May 26, 2019 was $44.1 million, excluding a related liability of $11.7 million for gross interest and penalties. Included in the balance at May 26, 2019 are $1.0 million of tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, the disallowance of the shorter deductibility period would not affect the annual effective

period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period. Any associated interest and penalties imposed would affect the tax rate. As of May 27, 2018, our gross liability for unrecognized tax benefits was $32.5 million, excluding a related liability of $7.7 million for gross interest and penalties. Interest and penalties recognized in the Consolidated Statements of Operations was an expense of $1.2 million in fiscal 2019, an

was an expense of $1.2 million in fiscal 2019, an expense of $1.6 million in fiscal 2018, and a benefit of $0.3 million in fiscal 2017.

Notes to Consolidated Financial Statements - (Continued) Fiscal Years Ended May 26, 2019, May 27, 2018, and May 28, 2017 (columnar dollars in millions except per share amounts)

 |
| table | | May 26, 2019 |             | May 27, 2018 |
-------------------------------------------------------------- | ------------ | ----------- | ------------ | -----------
                                                               | Assets       | Liabilities | Assets       | Liabilities
Property, plant and equipment                                  | $—           | $240.7      | $—           | $141.0
Inventory                                                      | 15.2         | —           | 2.6          | —
Goodwill, trademarks and other intangible assets               | —            | 1,187.0     | —            | 406.2
Accrued expenses                                               | 11.8         | —           | 15.5         | —
Compensation related liabilities                               | 35.9         | —           | 34.1         | —
Pension and other postretirement benefits                      | 54.6         | —           | 45.8         | —
Investment in unconsolidated subsidiaries                      | —            | 185.4       | —            | 165.8
Other liabilities that will give rise to future tax deductions | 123.5        | —           | 109.7        | —
Net capital and operating loss carryforwards                   | 766.5        | —           | 762.5        | —
Federal credits                                                | 18.0         | —           | 3.5          | —
Other                                                          | 37.6         | 24.0        | 23.6         | 9.5
                                                               | 1,063.1      | 1,637.1     | 997.3        | 722.5
Less: Valuation allowance                                      | (738.1)      | —           | (739.6)      | —
Net deferred taxes                                             | $325.0       | $1,637.1    | $257.7       | $722.5 |


| _id | d1b3769fe |
| title |  |
| text | Long-lived assets by geographic area, which primarily include property and equipment, net, as of the periods presented were as follows (table in millions):
No individual country other than the U.S. accounted for 10% or more of these assets as of January 31, 2020 and February 1, 2019
VMware’s product and service solutions are organized into three main product groups:
• Software-Defined Data Center
• Hybrid and Multi-Cloud Computing
• Digital Workspace—End-User Computing

• Digital Workspace—End-User Computing
VMware develops and markets product and service offerings within each of these three product groups. Additionally, synergies are leveraged across these three product areas. VMware’s products and service solutions from each of its product groups may also be bundled as part of an enterprise agreement arrangement or packaged together and sold as a suite. Accordingly, it is not practicable to determine revenue by each of the three product groups described above.

 |
| table | | January 1, 2020 | February 1, 2019
------------- | --------------- | ----------------
United States | $860            | $849
International | 209             | 113
Total         | $1,069          | $962 |


| _id | d1a73715c |
| title |  |
| text | Geographic information
The Group is domiciled in the UK and the following tables detail external revenue by location of customers, trade receivables and non-current assets (excluding deferred tax) by geographic area:
Due to the large number of customers the Group serves, there are no individual customers whose revenue is greater than 10% of the Group’s total revenue in all periods presented in these financial statements.

 |
| table | | 2019  | 2018
------------- | ----- | -----
Revenue       | £m    | £m
UK            | 349.9 | 324.9
Ireland       | 5.2   | 5.2
Total revenue | 355.1 | 330.1 |


| _id | d1b36ef9c |
| title |  |
| text | The Systems gross profit margin increased 3.2 points to 53.1 percent in 2019 compared to the prior year. The increase was driven by actions taken in 2018 to better position the cost structure over the longer term, a mix to IBM Z hardware and operating systems and margin improvement in Storage Systems.

Pre-tax income of $701 million declined 22.4 percent and pre-tax margin of 8.4 percent decreased 1.8 points year to year driven by the declines in Power Systems and Storage Systems revenue and the continued investment in innovation across the Systems portfolio, mitigated by the benefit from the new hardware launches in the second-half 2019.

 |
| table | ($ in millions)                                         |        |        |
------------------------------------------------------- | ------ | ------ | --------------------------------
For the year ended December 31:                         | 2019   | 2018   | Yr.-to-Yr Percent/ Margin Change
Systems                                                 |        |        |
External Systems Hardware gross profit                  | $2,622 | $2,590 | 1.2%
External Systems Hardware gross profit margin           | 44.3%  | 40.7%  | 3.6pts.
External Operating Systems Software gross profit        | $1,412 | $1,412 | 0.0%
External Operating Systems Software gross profit margin | 83.8%  | 84.5%  | (0.7)pts.
External total gross profit                             | $4,034 | $4,002 | 0.8%
External total gross profit margin                      | 53.1%  | 49.8%  | 3.2pts.
Pre-tax income                                          | $701   | $904   | (22.4)%
Pre-tax margin                                          | 8.4%   | 10.2%  | (1.8)pts. |


| _id | d1b3a9f84 |
| title |  |
| text | This section presents the Group’s contractual obligation to make a payment in the future in relation to purchases of property, plant and equipment, and lease commitments.
Capital expenditure and operating lease commitments of the Group at the reporting date are as follows:

The commitments set out above do not include contingent turnover rentals, which are charged on many retail premises leased by the Group. These rentals are calculated as a percentage of the turnover of the store occupying the premises, with the percentage and turnover threshold at which the additional rentals commence varying with each lease agreement.

The Group leases retail premises and warehousing facilities which are generally for periods up to 40 years. The operating lease commitments include leases for the Norwest office and distribution centres. Generally the lease agreements are for initial terms of between five and 25 years and most include multiple renewal options for additional five to 10-year terms. Under most leases, the Group is responsible for property taxes, insurance, maintenance, and expenses related to the leased properties. However,

related to the leased properties. However, many of the more recent lease agreements have been negotiated on a gross or semi-gross basis, which eliminates or significantly reduces the Group’s exposure to operational charges associated with the properties.

From 1 July 2019, the Group adopted AASB 16 Leases and as a result the operating lease commitments set out above have been recognised in the Consolidated Statement of Financial Position, with the exception of the service component of lease payments. Refer to Note 1.2.6 for a reconciliation between the operating lease commitments at 30 June 2019 and the lease liabilities recognised at 1 July 2019.

 |
| table | | 2019   | 2018
----------------------------------------------------------------------- | ------ | ------
                                                                        | $M     | $M
Capital expenditure commitments                                         |        |
Estimated capital expenditure under firm contracts, payable:            |        |
Not later than one year                                                 | 398    | 416
Later than one year, not later than two years                           | –      | –
Later than two years, not later than five years                         | –      | –
Total capital expenditure commitments                                   | 398    | 416
Operating lease commitments                                             |        |
Future minimum rentals under non-cancellable operating leases, payable: |        |
Not later than one year                                                 | 1,998  | 2,089
Later than one year, not later than five years                          | 7,415  | 7,484
Later than five years                                                   | 12,378 | 13,331
Total operating lease commitments                                       | 21,791 | 22,904
Total commitments for expenditure                                       | 22,189 | 23,320 |


| _id | d1b382998 |
| title |  |
| text | During the year ended December 31, 2019, the Company completed a reorganization of certain of its foreign subsidiaries that resulted in the derecognition of the related deferred tax assets for net operating losses which were subject to a valuation allowance. As a result, the Company reduced both its net operating loss deferred tax assets and valuation allowance by approximately $19.7 million.

The Company accrued $2.7 million as of both December 31, 2019 and 2018, excluding penalties and interest, for the liability for unrecognized tax benefits, which was included in “Long-term income tax liabilities” in the accompanying Consolidated Balance Sheets. Had the Company recognized these tax benefits, approximately $2.7 million, along with the related interest and penalties, would have favorably impacted the effective tax rate in both 2019 and 2018. The Company does not anticipate that any of the

The Company does not anticipate that any of the unrecognized tax benefits will be recognized in the next twelve months.

The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes. The Company had $1.1 million and $0.6 million accrued for interest and penalties as of December 31, 2019 and 2018, respectively. Of the accrued interest and penalties at December 31, 2019 and 2018, $0.6 million and $0.4 million, respectively, relate to statutory penalties. The amount of interest and penalties, net, included in the provision for income taxes in the accompanying Consolidated

for income taxes in the accompanying Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017 was $0.4 million, $0.7 million and $(9.5) million, respectively.

The tabular reconciliation of the amounts of unrecognized net tax benefits is presented below (in thousands):

 |
| table | |        | Years Ended December 31, |
----------------------------------------------------------- | ------ | ------------------------ | --------
                                                            | 2019   | 2018                     | 2017
Balance at the beginning of the period                      | $2,720 | $1,342                   | $8,531
Current period tax position increases                       | —      | 2,950                    | —
Decreases from settlements with tax authorities             | —      | (191)                    | (10,865)
Decreases due to lapse in applicable statute of limitations | —      | (1,310)                  | (466)
Foreign currency translation increases (decreases)          | (9)    | (71)                     | 4,142
Balance at the end of the period                            | $2,711 | $2,720                   | $1,342 |


| _id | d1b3af100 |
| title |  |
| text | Disaggregation of Revenue
The tables below present the Company’s revenue disaggregated by type of revenue. Refer to Note 13, Reportable Segment Information, for disaggregated revenue by type and reportable segment. The majority of the Company’s revenue is earned domestically, with revenue from customers outside the United States comprising less than 1% of total revenue.

 |
| table | | Year Ended June 30, |            |
--------------------------- | ------------------- | ---------- | ----------
                            | 2019                | 2018       | 2017
Processing                  | $594,202            | $550,058   | $506,555
Outsourcing & Cloud         | 405,359             | 361,922    | 327,738
Product Delivery & Services | 231,982             | 251,743    | 256,794
In-House Support            | 321,148             | 307,074    | 297,203
Services & Support          | 958,489             | 920,739    | $881,735
Total Revenue               | $1,552,691          | $1,470,797 | $1,388,290 |


| _id | d1b339b76 |
| title |  |
| text | Assumptions used
The last triennial actuarial valuation of the Scheme was performed by an independent professional actuary at 30 April 2018 using the projected unit method of valuation. For the purposes of IAS 19 (revised) the actuarial valuation as at 30 April 2018 has been updated on an approximate basis to 31 March 2019. There have been no changes in the valuation methodology adopted for this year’s disclosures compared to the prior year’s disclosures.

The principal financial assumptions used to calculate the liabilities under IAS 19 (revised) are as follows:
The financial assumptions reflect the nature and term of the Scheme’s liabilities.

 |
| table | | 2019 | 2018
------------------------------------ | ---- | ----
                                     | %    | %
Discount rate for scheme liabilities | 2.45 | 2.60
CPI inflation                        | 2.35 | 2.25
RPI inflation                        | 3.45 | 3.35
Pension increases                    |      |
Pre 1988 GMP                         | –    | –
Post 1988 GMP                        | 2.10 | 2.10
Pre 2004 non GMP                     | 5.00 | 5.00
Post 2004                            | 3.35 | 3.25 |


| _id | d1b3105c8 |
| title |  |
| text | 6. Goodwill and Other Intangible Assets
The Company completed its annual impairment test for goodwill and indefinite-lived intangible assets during the fourth quarter of fiscal year 2019 and determined the fair values of the reporting units and the indefinite-lived intangible assets were in excess of the carrying values and that no impairment existed as of the date of the impairment test.

The following table presents the changes in goodwill allocated to the Company’s reportable segments, Electronics Manufacturing Services (“EMS”) and Diversified Manufacturing Services (“DMS”), during the fiscal years ended August 31, 2019 and 2018 (in thousands):
(1) Includes $8.2 million of goodwill reallocated between DMS and EMS during fiscal year 2018.

 |
| table | | EMS     | DMS      | Total
----------------------------------------- | ------- | -------- | --------
Balance as of August 31, 2017             | $52,574 | $555,610 | $608,184
Acquisitions and adjustments(1)           | 30,763  | (8,186)  | 22,577
Change in foreign currency exchange rates | (667)   | (2,349)  | (3,016)
Balance as of August 31, 2018             | 82,670  | 545,075  | 627,745
Change in foreign currency exchange rates | (702)   | (4,788)  | (5,490)
Balance as of August 31, 2019             | $81,968 | $540,287 | $622,255 |


| _id | d1b3174e0 |
| title |  |
| text | Audit and Non-Audit Fees
The following table presents fees billed for professional audit services rendered by PricewaterhouseCoopers LLP for the audit of the Company’s annual financial statements for the years ended June 29, 2019 and June 30, 2018 respectively, and fees billed for other services rendered by PricewaterhouseCoopers LLP and during those periods.

(1) Audit Fees are related to professional services rendered in connection with the audit of the Company’s annual financial statements, the audit of internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, reviews of financial statements included in the Company’s Quarterly Reports on Form 10-Q, and audit services provided in connection with other statutory and regulatory filings. Audit Fees in fiscal 2019 include fees for services performed by

2019 include fees for services performed by PricewaterhouseCoopers LLP in connection with the acquisitions of RPC Photonics, Inc. (“RPC”) and 3Z Telecom, Inc. (“3Z”). Audit Fees in fiscal 2018 include fees for the acquisitions of the AvComm and Wireless businesses of Cobham plc (“AW”) and Trilithic Inc. (“Trilithic”).

(2) Audit-Related Fees are related to due diligence services for our acquisition activities incurred in fiscal 2018.
(3) Tax Fees for fiscal 2019 and 2018 include professional services rendered in connection with transfer pricing consulting, tax audits, planning services and other tax consulting.
(4) All Other Fees are related to certain software subscription fees.

For fiscal year 2019, the Audit Committee considered whether audit-related services and services other than audit-related services provided by PricewaterhouseCoopers LLP are compatible with maintaining the independence of PricewaterhouseCoopers LLP and concluded that the independence of PricewaterhouseCoopers LLP was maintained.

 |
| table | | Fiscal 2019 | Fiscal 2018
---------------------- | ----------- | -----------
Audit Fees (1)         | $3,631,575  | $3,784,488
Audit-Related Fees (2) | 0           | 359,000
Tax Fees (3)           | 169,776     | 61,592
All Other Fees (4)     | 4,500       | 3,600
Total                  | $3,805,851  | $4,208,680 |


| _id | d1b37ec1c |
| title |  |
| text | 21 Called up share capital and reserves
Other reserves in the Consolidated Statement of Changes in Equity on pages 151 to 152 are made up as follows:
The change in translation reserve includes a £1.4m credit transferred from retained earnings.

 |
| table | | 1st January 2019 | Change in year | 31st December 2019
------------------------------ | ---------------- | -------------- | ------------------
                               | £m               | £m             | £m
Translation reserve            | 30.3             | (45.0)         | (14.7)
Net investment hedge reserve   | (7.4)            | 12.9           | 5.5
Cash flow hedges reserve       | –                | 3.3            | 3.3
Capital redemption reserve     | 1.8              | –              | 1.8
Employee Benefit Trust reserve | (2.5)            | (4.0)          | (6.5)
Total other reserves           | 22.2             | (32.8)         | (10.6) |


| _id | d1b39023c |
| title |  |
| text | In November 2016, the FASB issued guidance that requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The guidance is effective for annual reporting periods and interim periods within those annual reporting periods beginning after December 15, 2017, our fiscal 2019. The retrospective transition method should be applied. We adopted this guidance in the first quarter of fiscal 2019 and it did not have a

quarter of fiscal 2019 and it did not have a material impact on our consolidated financial statements.

In October 2016, the FASB issued guidance that requires companies to recognize the income tax effects of intercompany sales and transfers of assets, other than
inventory, in the period in which the transfer occurs. The guidance is effective for annual reporting periods and interim periods within those annual reporting
periods beginning after December 15, 2017, our fiscal 2019. The modified retrospective transition method should be applied. We adopted this guidance in the first

quarter of fiscal 2019 and it did not have a material impact on our consolidated financial statements.

In August 2016, the FASB issued guidance that aims to eliminate diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance is effective for annual reporting periods and interim periods within those annual reporting periods beginning after December 15, 2017, our fiscal 2019. The retrospective transition method should be applied. We adopted this guidance in the first quarter of fiscal 2019 and it did not have a material

of fiscal 2019 and it did not have a material impact on our consolidated financial statements.

n January 2016, the FASB issued guidance that requires most equity investments be measured at fair value, with subsequent other changes in fair value recognized in net income. The guidance also impacts financial liabilities under the fair value option and the presentation and disclosure requirements on the classification and measurement of financial instruments. The guidance is effective for annual reporting periods and interim periods within those annual reporting periods beginning after December 15,

reporting periods beginning after December 15, 2017, our fiscal 2019. It should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption, unless equity securities do not have readily determinable fair values, in which case the amendments should be applied prospectively. We adopted this guidance in the first quarter of fiscal 2019. We did not use prospective amendments for any investments and adoption did not have a material impact on our

adoption did not have a material impact on our consolidated financial statements.

The following reconciliations provide the effect of the reclassification of the net periodic benefit cost from operating expenses to other (income) expense in our consolidated statements of income for fiscal year 2018 and 2017 (in millions):

 |
| table | Twelve Months Ended September 29, 2018: | As Previously Reported | Adjustments | As Recast
--------------------------------------- | ---------------------- | ----------- | ---------
Cost of Sales                           | $34,926                | $30         | $34,956
Selling, General and Administrative     | $2,071                 | $(7)        | $2,064
Operating Income                        | $3,055                 | $(23)       | $3,032
Other (Income) Expense                  | $310                   | $(23)       | $287
Twelve Months Ended September 30, 2017: | As Previously Reported | Adjustments | As Recast
Cost of Sales                           | $33,177                | $21         | $33,198
Selling, General and Administrative     | $2,152                 | $(11)       | $2,141
Operating Income                        | $2,931                 | $(10)       | $2,921
Other (Income) Expense                  | $303                   | $(10)       | $293 |


| _id | d1b3b5dc0 |
| title |  |
| text | Note 14. Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):

 |
| table | | December 31, |
----------------------------------------------- | ------------ | --------
                                                | 2019         | 2018
Land                                            | $1,949       | $2,185
Buildings and leasehold improvements            | 138,755      | 129,582
Equipment, furniture and fixtures               | 307,559      | 298,537
Capitalized internally developed software costs | 38,466       | 41,883
Transportation equipment                        | 613          | 636
Construction in progress                        | 5,037        | 2,253
                                                | 492,379      | 475,076
Less: Accumulated depreciation                  | 366,389      | 339,658
                                                | $125,990     | $135,418 |


| _id | d1b327df4 |
| title |  |
| text | ADVANCED ENERGY INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (in thousands, except per share amounts)
NOTE 9. ACCOUNTS AND OTHER RECEIVABLE
Accounts and other receivable are recorded at net realizable value. Components of accounts and other receivable, net of reserves, are as follows:

Amounts billed, net consist of amounts that have been invoiced to our customers in accordance with terms and conditions, and are shown net of an allowance for doubtful accounts. These receivables are all short term in nature and do not include any financing components.

Unbilled receivables consist of amounts where we have satisfied our contractual obligations related to inventory stocking contracts with customers. Such amounts are typically invoiced to the customer upon their consumption of the inventory managed under the stocking contracts. We anticipate that substantially all unbilled receivables will be invoiced and collected over the next twelve months. These contracts do not include any financing components.

 |
| table | | December 31, 2019 | December 31, 2018
---------------------- | ----------------- | -----------------
Amounts billed, net    | $227,528          | $80,709
Unbilled receivables   | 19,036            | 19,733
Total receivables, net | $246,564          | $100,442 |


| _id | d1b319772 |
| title |  |
| text | Following is a summary of our cash flows provided by (used in) operating activities, investing activities and financing activities for the years endedD ecember 31, 2019 and 2018. A discussion of cash flows for the year ended December 31, 2017 has been omitted from this Annual Report on Form 10-K, but may be found in “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Liquidity and Capital Resources” in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 5, 2019, which discussion is incorporated herein by reference and which is available free of charge on the SEC’s website at www.sec.gov.
Cash Flows from Operating Activities

Cash Flows from Operating Activities
Net cash provided by operating activities was $78.3 million for the year ended December 31, 2019. Net cash provided by operating activities consisted of positive cash flow from operations including $101.1 million in non-cash expenses and $16.9 million in changes in operating assets and liabilities, partially offset by net loss of $19.9 million and deferred income taxes and excess tax benefits from stock-based compensation of $19.8 million.

Non-cash items included in net loss for the year ended December 31, 2019 primarily included depreciation and amortization of property, equipment, intangible assets and leased right-of-use assets of $66.4 million and stock-based compensation of $32.1 million.

During the year ended December 31, 2019, we also exited certain leased facilities, which resulted in impairment of leased right-of-use assets of$ 9.2 million and leasehold improvements of $1.4 million, which was partially offset by a gain on extinguishment of related lease liabilities of$ 10.4 million, all of which are non-cash items that did not affect cash flows.

Net cash provided by operating activities was $102.7 million for the year ended December 31, 2018. Net cash provided by operating activities consisted of positive cash flow from operations including $100.3 million in non-cash operating expenses and $28.6 million in changes in operating assets and liabilities, partially offset by net loss of $26.2 million.

Non-cash items included in net loss for the year ended December 31, 2018 primarily included depreciation and amortization of property, equipment and intangible assets of $79.0 million, stock-based compensation of $31.7 million, and impairment of intangible assets of $2.2 million, partially offset by deferred income taxes of $12.1 million and excess tax benefits on stock-based awards of $2.0 million.
Cash Flows from Investing Activities

Cash Flows from Investing Activities
Net cash used in investing activities was $7.0 million for the year ended December 31, 2019. Net cash used in investing activities primarily consisted of $6.9 million in purchases of property and equipment. Net cash used in investing activities was $7.8 million for the year ended December 31, 2018. Net cash used in investing activities consisted entirely of $7.8 million in purchases of property and equipment.
Cash Flows from Financing Activities

Cash Flows from Financing Activities
Net cash used in financing activities was $53.4 million for the year ended December 31, 2019. Net cash used in financing activities consisted primarily of cash outflows from aggregate prepayments of principal of $50.0 million and $12.0 million in minimum tax withholding paid on behalf of employees for restricted stock units, partially offset by cash inflows of $8.6 million in net proceeds from issuance of common stock upon exercise of stock options.

Net cash used in financing activities was $93.8 million for the year ended December 31, 2018. Net cash used in financing activities primarily consisted of cash outflows from $93.0 million in aggregate prepayments of principal on outstanding debt and $7.6 million in minimum tax withholding paid on behalf of employees for restricted stock units, partially offset by cash inflows of $6.8 million in net proceeds from issuance of common stock upon exercise of stock options.

We believe that our $92.7 million of cash and cash equivalents at December 31, 2019 will be sufficient to fund our projected operating requirements for at least the next twelve months. We have repaid $213.0 million of debt to date. The credit agreement permits the Company to request incremental loans in an aggregate principal amount not to exceed the sum of $160.0 million (subject to adjustments for any voluntary prepayments), plus an unlimited amount that is subject to pro forma compliance with certain

is subject to pro forma compliance with certain secured leverage ratio and total leverage ratio tests.

Incremental loans are subject to certain additional conditions, including obtaining additional commitments from the lenders then party to the credit agreement or new lenders. The term loan facility has a seven-year term and bears interest at either an Adjusted LIBOR or an Adjusted Base Rate, at our option, plus a fixed applicable margin.

Our cash and cash equivalents in recent years have been favorably affected by our implementation of an equity-based bonus program for our employees, including executives. In connection with that bonus program, in February 2019, we issued 0.3 million freely-tradable shares of our common stock in settlement of bonus awards for the 2018 performance period. We expect to implement a similar equity-based plan for fiscal 2019, but our compensation committee retains discretion to effect payment in cash, stock, or

discretion to effect payment in cash, stock, or a combination of cash and stock.

Notwithstanding the foregoing, we may need to raise additional capital or incur additional indebtedness to fund strategic initiatives or operating activities, particularly if we continue to pursue acquisitions.

Our future capital requirements will depend on many factors, including our rate of revenue growth, the expansion of our engineering, sales and marketing activities, the timing and extent of our expansion into new territories, the timing of introductions of new products and enhancements to existing products, the continuing market acceptance of our products and potential material investments in, or acquisitions of, complementary businesses, services or technologies. Additional funds may not be available on

Additional funds may not be available on terms favorable to us or at all.

If we are unable to raise additional funds when needed, we may not be able to sustain our operations or execute our strategic plans.

 |
| table | | Years Ended December 31, |
----------------------------------------------------------------------------- | ------------------------ | --------
                                                                              | 2019                     | 2018
                                                                              | (in thousands)           |
Net cash provided by operating activities                                     | $78,348                  | $102,689
Net cash used in investing activities                                         | (6,973)                  | (7,825)
Net cash used in financing activities                                         | (53,383)                 | (93,784)
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 934                      | (1,301)
Increase (decrease) in cash, cash equivalents and restricted cash             | $18,926                  | (221) |