| _id | d1b3979a6 |
| title |  |
| text | Contractual Obligations
The following table summarizes our contractual obligations as of September 30, 2019 (in thousands):

Our principal executive offices, as well as our research and development facility, are located in approximately 29,000 square feet of office space in San Diego, California and the term of the lease continues through June 30, 2024. The average annual base rent under this lease is approximately $1.0 million per year. In connection with this lease, we received tenant improvement allowances totaling approximately $1.0 million. These lease incentives are being amortized as a reduction of rent expense over the

amortized as a reduction of rent expense over the term of the lease.

Our other offices are located in Paris, France; Amsterdam, The Netherlands; New York, New York; Barcelona, Spain; and London, United Kingdom. The
term of the Paris, France lease continues through July 31, 2021, with an annual base rent of approximately €0.4 million (or $0.4 million). The term of the
Amsterdam, The Netherlands lease continues through December 31, 2022, with an annual base rent of approximately €0.2 million (or $0.2 million). The term of

the New York, New York lease continues through November 30, 2024, with an annual base rent of approximately $0.2 million. The term of the Barcelona, Spain lease continues through May 31, 2023, with an annual base rent of approximately €0.1 million (or $0.1 million). The term of the London, United Kingdom lease continues through May 31, 2020, with an annual base rent of approximately £63,000 (or approximately $78,000). Our other offices are located in Paris, France; Amsterdam, The Netherlands; New York, New

France; Amsterdam, The Netherlands; New York, New York; Barcelona, Spain; and London, United Kingdom. The term of the Paris, France lease continues through July 31, 2021, with an annual base rent of approximately €0.4 million (or $0.4 million). The term of the Amsterdam, The Netherlands lease continues through December 31, 2022, with an annual base rent of approximately €0.2 million (or $0.2 million). The term of the New York, New York lease continues through November 30, 2024, with an annual base rent of

November 30, 2024, with an annual base rent of approximately $0.2 million. The term of the Barcelona, Spain lease continues through May 31, 2023, with an annual base rent of approximately €0.1 million (or $0.1 million). The term of the London, United Kingdom lease continues through May 31, 2020, with an annual base rent of approximately £63,000 (or approximately $78,000).

Other than the lease for our office space in San Diego, California, we do not believe that the leases for our offices are material to the Company. We believe our existing properties are in good condition and are sufficient and suitable for the conduct of its business.

 |
| table | | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | Total
--------------------------- | ---------------- | --------- | --------- | ----------------- | ------
Operating lease obligations | $1,699           | $3,950    | $2,707    | $36               | $8,392
Other borrowings            | 131              | 145       | 219       | 61                | 556
Total                       | $1,830           | $4,095    | $2,926    | $97               | $8,948 |


| _id | d1b375216 |
| title |  |
| text | (8) Accounts Receivable
The following table presents details of our accounts receivable balances:

We are exposed to concentrations of credit risk from residential and business customers. We generally do not require collateral to secure our receivable balances. We have agreements with other communications service providers whereby we agree to bill and collect on their behalf for services rendered by those providers to our customers within our local service area. We purchase accounts receivable from other communications service providers primarily on a recourse basis and include these amounts in our

a recourse basis and include these amounts in our accounts receivable balance. We have not experienced any significant loss associated with these purchased receivables.

 |
| table | | As of December 31,    |
------------------------------------- | --------------------- | -----
                                      | 2019                  | 2018
                                      | (Dollars in millions) |
Trade and purchased receivables       | $1,971                | 2,094
Earned and unbilled receivables       | 374                   | 425
Other                                 | 20                    | 21
Total accounts receivable             | 2,365                 | 2,540
Less: allowance for doubtful accounts | (106)                 | (142)
Accounts receivable, less allowance   | $2,259                | 2,398 |


| _id | d1b328358 |
| title |  |
| text | ITEM 6. SELECTED FINANCIAL DATA.
The following selected financial data has been derived from our audited financial statements. This data should be read in conjunction with Item 7— “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes thereto included elsewhere in this Form 10-K. Our historical results are not necessarily indicative of operating results to be expected in the future.

 |
| table | Selected Financial Data (in thousands, except per share data) |          |           |                          |         |
------------------------------------------------------------- | -------- | --------- | ------------------------ | ------- | -------
                                                              |          |           | Year Ended September 30, |         |
                                                              | 2019     | 2018      | 2017                     | 2016    | 2015
Income Statement Data                                         |          |           |                          |         |
Revenue                                                       | $84,590  | $63,559   | $45,390                  | $34,701 | $25,367
Operating income (loss)                                       | $(4,590) | $(7,806)  | $2,769                   | $1,824  | $1,892
Net income (loss)                                             | $(724)   | $(11,807) | $14,092                  | $1,959  | $2,526
Net income (loss) per share—basic                             | $(0.02)  | $(0.33)   | $0.43                    | $0.06   | $0.08
Net income (loss) per share—diluted                           | $(0.02)  | $(0.33)   | $0.40                    | $0.06   | $0.08
Balance Sheet Data                                            |          |           |                          |         |
Working capital                                               | $34,082  | $17,221   | $41,342                  | $31,980 | $24,005
Total assets                                                  | $135,897 | $127,150  | $71,719                  | $48,385 | $38,746
Other borrowings                                              | $556     | $810      | $—                       | $—      | $—
Stockholders’ equity                                          | $107,333 | $95,394   | $61,408                  | $39,485 | $30,433 |


| _id | d1b34d45a |
| title |  |
| text | Net Loss per Share
The Company applies the two-class method to calculate its basic and diluted net loss per share as both classes of its voting shares are participating securities with equal participation rights and are entitled to receive dividends on a share for share basis.
The following table summarizes the reconciliation of the basic weighted average number of shares outstanding and the diluted weighted average number of shares outstanding:

In the years ended December 31, 2019 and 2018, the Company was in a loss position and therefore diluted loss per share is equal to basic loss per share.

 |
| table | | Years ended       |
------------------------------------------------------------------------------------------------------------------------------------- | ----------------- | -----------------
                                                                                | December 31, 2019 | December 31, 2018
Basic and diluted weighted average number of shares outstanding                                                                       | 113,026,424       | 105,671,839
The following items have been excluded from the diluted weighted average number of shares outstanding because they are anti-dilutive: |                   |
Stock options                                                                                | 3,812,242         | 5,476,790
Restricted share units                                                                                | 1,939,918         | 2,473,665
Deferred share units                                                                                | 673               | 347
                                                                                | 5,752,833         | 7,950,802 |


| _id | d1a73d944 |
| title |  |
| text | The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by Ernst & Young, our principal external auditors, for the years indicated.

(1) Audit fees consist of fees associated with the annual audit, review of our quarterly financial statements, statutory audits and internal control review. They also include fees billed for those services that are normally provided by the independent accountants in connection with statutory and regulatory filings.

(2) Audit-related fees consist of fees billed for assurance and services related to the performance of the audit or review of our financial statements but not described in footnote (1) above. These services include certification of our Singapore Branch to Singapore authorities and application for corporation registration.
(3) Tax fees include fees billed for professional services rendered by Ernst & Young, primarily in connection with our tax compliance activities.

All audit and non-audit services performed by Ernst & Young were pre-approved by our audit committee. In certain circumstances, the audit committee delegates to one designated member to pre-approve such audit and non-audit services. Pre-approval by a designated member should be reported to the audit committee at its upcoming meeting.

 |
| table | |        | Years ended December 31, |
---------------------- | ------ | ------------------------ | -----
                       | 2018   | 2019                     |
                       | NT$    | NT$                      | US$
                       |        | (in thousands)           |
Audit Fees (1)         | 52,794 | 62,040                   | 2,074
Audit-related Fees (2) | 1,283  | 1,095                    | 37
Tax Fees (3)           | 4,304  | 3,943                    | 132
Total                  | 58,381 | 67,078                   | 2,243 |


| _id | d1b2f751e |
| title |  |
| text | 12. Commitments and Contingencies

The Company leases its facilities under non-cancelable operating leases and build-to-suit leases with various expiration dates through March 2029. Rent expense related to the Company’s office facilities was $5.3 million, $4.8 million and $3.2 million for the years ended March 31, 2019, 2018 and 2017, respectively. The Company has also entered into various capital lease agreements for computer equipment with non-cancelable terms through January 2022 and has non-cancelable commitments related to its data

non-cancelable commitments related to its data centers.

Future minimum payments for our capital leases, facility operating leases (including Lexington MA – U.S. build-to-suit lease) and data center operating leases as of March 31, 2019 are as follows:
Certain amounts included in the table above relating to data center operating leases for the Company’s servers include usage-based charges in addition to base rent.

Future lease payments in the table above do not include amounts due to the Company for future minimum sublease rental income of $0.6 million under non-cancelable subleases through 2020.
The Company has outstanding letters of credit of $3.9 million and $3.8 million related to certain operating leases as of March 31, 2019 and 2018, respectively.

 |
| table | Year Ending March 31,                           | Capital Leases | Facility Leases | Data Centers
----------------------------------------------- | -------------- | --------------- | ------------
2020                                            | $ 918          | $ 10,649        | $ 21,216
2021                                            | 1,102          | 15,186          | 17,427
2022                                            | 326            | 14,111          | 13,010
2023                                            | —              | 13,825          | 2,774
2024                                            | —              | 13,686          | 356
Thereafter                                      | —              | 59,502          | —
Total minimum lease payments                    | $ 2,346        | $ 126,959       | $ 54,783
Less: Amount representing interest              | (121)          |                 |
Present value of capital lease obligations      | 2,225          |                 |
Less: Current portion                           | (844)          |                 |
Long-term portion of capital lease obligations  | $1,381         |                 | |


| _id | d1b37dea2 |
| title |  |
| text | Cubic Global Defense

Sales: CGD sales decreased 10% to $325.2 million in 2018 compared to $360.2 million in 2017. The year-over-year comparative sales and operating income were significantly impacted by an $8.0 million gain recognized on an equitable contract adjustment in fiscal 2017 for our littoral combat ship virtual training contract with the U.S. Navy. Sales were lower in fiscal 2018 on virtual training sales, air combat training system sales, and ground combat training system sales, while sales of international training

sales, while sales of international training support services increased between fiscal 2017 and 2018. The average exchange rates between the prevailing currency in our foreign operations and the U.S. dollar had no significant impact on CGD sales between 2017 and 2018.

Amortization of Purchased Intangibles: Amortization of purchased intangibles included in the CGD results amounted to $1.1 million in 2018 and $0.9 million in 2017.

Operating Income: CGD had operating income of $16.6 million in 2018 compared to $28.1 million in 2017. The decrease in operating income was primarily caused by the gain of $8.0 million recognized in fiscal 2017 due to the approval of a contract adjustment with the U.S. Navy described above. In fiscal 2018 an arbitrator awarded $1.7 million to a former reseller of our air combat training systems in the Far East, which was recorded as SG&A expense by CGD in 2018. In addition, CGD’s R&D expenditures increased

In addition, CGD’s R&D expenditures increased approximately $1.8 million year-over-year. The increase in R&D expenditures is indicative of the acceleration of our development of next generation live, virtual, constructive, and game-based training systems. These decreases in operating income in fiscal 2018 were partially offset by increased operating income from ground combat training systems, which was higher primarily due to improvements in expected total costs for the development of two ground combat

costs for the development of two ground combat training system contracts in the Far East. The average exchange rates between the prevailing currency in our foreign operations and the U.S. dollar had no significant impact on CGD operating income between 2017 and 2018.

Adjusted EBITDA: CGD Adjusted EBITDA was $26.3 million in 2018 compared to $39.4 million in 2017. The decrease in Adjusted EBITDA was primarily driven by the same factors that drove the decrease in operating income described above excluding the increase in amortization which is excluded from Adjusted EBITDA.

 |
| table | | Fiscal 2018 | Fiscal 2017   | % Change
---------------- | ----------- | ------------- | --------
                 |             | (in millions) |
Sales            | $  325.2    | $  360.2      | (10)%
Operating income | 16.6        | 28.1          | (41)
Adjusted EBITDA  | 26.3        | 39.4          | (33) |


| _id | d1b33198a |
| title |  |
| text | Cost of Revenues and Gross Margin

Subscription cost of revenues and gross margin. Cost of subscriptions revenues increased by $50.9 million, or 46%, during fiscal year 2019 as compared to fiscal year 2018. Primary drivers of the increase were increases in third-party costs to support our solution offerings of $21.5 million, infrastructure support costs of $19.8 million including amortization expense from acquired intangible assets, and headcount and personnel and contractor related costs of $9.6 million including share-based compensation

$9.6 million including share-based compensation expense. These factors resulted in a decrease in gross margin.

The increase in headcount and other expense categories described herein was driven primarily by investments in our infrastructure and capacity to improve the availability of our subscription offerings, while also supporting the growth in new customers and increased usage of our subscriptions by our existing customer base. We expect subscription gross margin to be within a relatively similar range in the future.

Other cost of revenues and gross margin. Cost of other revenues increased by $23.0 million, or 48%, during fiscal year 2019 as compared to fiscal year 2018. This was primarily due to the increase in services personnel costs of $11.1 million including share-based compensation expense, cost of product sales of $10.6 million, and overhead costs of $1.3 million. Other revenues gross margin fluctuates based on timing of completion of professional services projects and discounting on phones.

 |
| table | | Year ended December 31, |          |          |          | Year ended December 31, |          |          |
---------------------------------- | ----------------------- | -------- | -------- | -------- | ----------------------- | -------- | -------- | --------
(in thousands, except percentages) | 2019                    | 2018     | $ Change | % Change | 2018                    | 2017     | $ Change | % Change
Cost of revenues                   |                         |          |          |          |                         |          |          |
Subscriptions                      | $160,320                | $109,454 | $50,866  | 46%      | $109,454                | $89,193  | $20,261  | 23%
Other                              | 70,723                  | 47,675   | 23,048   | 48%      | 47,675                  | 32,078   | 15,597   | 49%
Total cost of revenues             | $231,043                | $157,129 | $73,914  | 47%      | $157,129                | $121,271 | $35,858  | 30%
Percentage of revenues             |                         |          |          |          |                         |          |          |
Subscriptions                      | 18%                     | 16%      |          |          | 16%                     | 18%      |          |
Other                              | 8%                      | 7%       |          |          | 7%                      | 6%       |          |
Gross margins                      |                         |          |          |          |                         |          |          |
Subscriptions                      | 80%                     | 82%      |          |          | 82%                     | 81%      |          |
Other                              | 17%                     | 22%      |          |          | 22%                     | 16%      |          |
Total gross margin %               | 74%                     | 77%      |          |          | 77%                     | 76%      |          | |


| _id | d1a724228 |
| title |  |
| text | Change in Product Mix and Technology Migration

Because the price of wafers processed with different technologies varies significantly, the mix of wafers that we produce is among the primary factors that affect our revenues and profitability. The value of a wafer is determined principally by the complexity and performance of the processing technology used to produce the wafer, as well as by the yield and defect density. Production of devices with higher levels of functionality and performance, with better yields and lower defect density as well as with

yields and lower defect density as well as with greater system-level integration requires better manufacturing expertise and generally commands higher wafer prices. The increase in price generally has more than offset associated increases in production cost once an appropriate economy of scale is reached.

Prices for wafers of a given level of technology generally decline over the processing technology life cycle. As a result, we have continuously been migrating to increasingly sophisticated technologies to maintain the same level of profitability. We began our volume production with 65-nanometer and 40-nanometer technologies in 2006 and 2009, respectively. We introduced our 28-nanometer technology to customers in 2011 and started large-scale commercial production in 2014. Our 28nm and below technologies

in 2014. Our 28nm and below technologies contributed approximately 17.1%, 15.2% and 11.3% of our foundry revenue in 2017, 2018 and 2019 respectively.

 |
| table | |       | Years Ended December 31, |
----------------------- | ----- | ------------------------ | -----
Process Technologies    | 2017  | 2018                     | 2019
                        | %     | %                        | %
14 nanometers and under | 0.9   | 2.6                      | 0.0
28 nanometers           | 16.2  | 12.6                     | 11.3
40 nanometers           | 28.4  | 25.3                     | 23.1
65 nanometers           | 12.3  | 12.5                     | 14.7
90 nanometers           | 4.9   | 8.3                      | 13.6
0.11/0.13 micron        | 11.5  | 11.6                     | 12.6
0.15/0.18 micron        | 12.4  | 13.7                     | 13.1
0.25/0.35 micron        | 10.0  | 10.1                     | 8.7
0.50 micron or higher   | 3.4   | 3.3                      | 2.9
Total                   | 100.0 | 100.0                    | 100.0 |


| _id | d1a7177a8 |
| title |  |
| text | NOTE 4 – REVENUE FROM CONTRACTS WITH CUSTOMERS

Revenue is recognized when, or as, performance obligations under terms of a contract are satisfied, which occurs when control of the promised service is transferred to a customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring services to a customer (“transaction price”). The Company will then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when, or as, the performance

obligation when, or as, the performance obligation is satisfied. When determining the transaction price of the contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. None of the Company’s licenses and collaboration agreements contained a significant financing component at either December 31, 2019 or 2018.

The Company’s existing license and collaboration agreements may contain a single performance obligation or may contain multiple performance obligations. Those which contain multiple performance obligations will require an allocation of the transaction price based on the estimated relative standalone selling prices of the promised services underlying each performance obligation.

The Company’s existing license and collaboration agreements contain customer options for the license of additional products and territories. We determined the option’s standalone selling prices based on the option product’s potential market size in the option territory as compared to the currently licensed product and U.S. territory. Some of our existing license and collaboration agreements contain a license to the technology as well as licenses to tradenames or trademarks. The Company determined that the

or trademarks. The Company determined that the licenses to the tradenames or trademarks were immaterial in context of the contract.

Sales-based Milestones and Royalty Revenues
The commercial sales-based milestones and sales royalties earned under the license and collaboration for Oxaydo and sales royalties earned under the license for the Nexafed products, are recorded in the period of the related sales by Zyla and MainPointe. Payments of sales-based milestones are generally due within 30 days after the end of a calendar year. Payments of royalties are generally due within 45 days after the end of a calendar quarter.

License and Collaboration Agreement Revenues

The achievement of milestones under the Company’s license and collaboration agreements will be recorded as revenue during the period the milestone’s achievement becomes probable, which may result in earlier recognition as compared to the previous accounting standards. The license fee of an option product or option territory under the Company’s license and collaboration agreements will be recorded as revenue when the option is exercised and any obligations on behalf of the Company, such as to transfer

on behalf of the Company, such as to transfer know-how, has been fulfilled. The monthly license fee under the Company’s LTX-03 license and collaboration agreement will be recorded as revenue upon the fulfillment of the monthly development activities. The out-of-pocket development expenses under the license and collaboration agreements will be recorded as revenue upon the performance of the service or delivery of the material during the month.

On June 28, 2019 we entered into an agreement with AD Pharma for the development and license of LTX-03 (hydrocodone bitartrate with acetaminophen) immediate-release tablets utilizing Acura’s patented LIMITx™ having a monthly license payment of $350 thousand from AD Pharma to us for a period of up to 18 months until November 2020. AD Pharma will pay directly for or reimburse Acura to the extent Acura pay’s for, all out-of-pocket development expenses. The first license payment was received July 2, 2019.

Disaggregation of Total Revenues

The Company has two license agreements for currently marketed products containing its technologies; the Oxaydo product containing the Aversion Technology has been licensed to Zyla and the Nexafed products containing the Impede Technology which have been licensed to MainPointe. On January 1, 2020, MainPointe assigned to AD Pharma, with Acura’s consent, all of its right, title and interest in the MainPointe Agreement between MainPointe and Acura. All of the Company’s royalty revenues are earned from these

Company’s royalty revenues are earned from these two license agreements by the licensee’s sale of products in the United States.

Royalty revenues by licensee are summarized below:
Contract Balance and Performance Obligations

Contract Balance and Performance Obligations
The Company had no contract assets and contract liability balances under the license and collaboration agreements at either December 31, 2019 or 2018. Contract assets may be reported in future periods under prepaid expenses or other current assets on the consolidated balance sheet. Contract liabilities may be reported in future periods consisting of deferred revenue as presented on the consolidated balance sheet.

 |
| table | |      | For the Year Ended
-------------------- | ---- | ------------------
                     |      | December 31,
                     | 2019 | 2018
                     |      | (in thousands)
Zyla (Oxaydo)        | $351 | $386
MainPointe (Nexafed) | 21   | 24
Royalty revenues     | 372  | $410 |


| _id | d1b33c20e |
| title |  |
| text | Expense
For the years ended December 31, 2019, 2018, and 2017, Teradyne’s net periodic postretirement benefit cost (income) was comprised of the following:

 |
| table | | 2019   | 2018           | 2017
---------------------------------------------------------------------------------------- | ------ | -------------- | ------
                                                                                |        | (in thousands) |
Components of Net Periodic Postretirement Benefit                                        |        |                |
Cost (income):                                                                           |        |                |
Service cost                                                                             | $41    | $39            | $34
Interest cost                                                                            | 347    | 196            | 201
Amortization of prior service credit                                                     | (191)  | (373)          | (496)
Net actuarial loss                                                                       | 717    | 25             | 398
Special termination benefits                                                             | —      | 3,708          | 591
Total net periodic postretirement benefit cost                                           | 914    | 3,595          | 728
Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income: |        |                |
Prior service cost                                                                       | —      | —              | —
Reversal of amortization items:                                                          |        |                |
Prior service credit                                                                     | 191    | 373            | 496
Total recognized in other comprehensive income                                           | 191    | 373            | 496
Total recognized in net periodic postretirement cost and other comprehensive income      | $1,105 | $3,968         | $1,224 |


| _id | d1b3c55fe |
| title |  |
| text | Cash Flow Information
Cash flows in foreign currencies have been converted to U.S. Dollars at an approximate weighted-average exchange rate for the respective reporting periods. The weighted-average exchange rates for the consolidated statements of operations were as follows:

 |
| table | | Years ended December 31, |
---------------- | ------------------------ | --------
                 | 2019                     | 2018
Swedish Krona    | 9.46                     | 8.70
Japanese Yen     | 109.01                   | 110.43
South Korean Won | 1,165.70                 | 1,100.50
Taiwan Dollar    | 30.90                    | 30.15 |


| _id | d1b303e86 |
| title |  |
| text | 10 Earnings per share
Basic and diluted earnings per share calculated on an adjusted profit basis are included in Note 2.
The dilution is in respect of unexercised share options and the Performance Share Plan.

 |
| table | | 2019   | 2018
----------------------------------------------- | ------ | ------
Profit attributable to equity shareholders (£m) | 166.6  | 223.1
Weighted average shares (million)               | 73.7   | 73.6
Dilution (million)                              | 0.2    | 0.2
Diluted weighted average shares (million)       | 73.9   | 73.8
Basic earnings per share                        | 226.2p | 303.1p
Diluted earnings per share                      | 225.5p | 302.0p |


| _id | d1a741ec2 |
| title |  |
| text | NOTE 21—EARNINGS PER SHARE

Basic earnings per share are computed by dividing net income, attributable to OpenText, by the weighted average number of Common Shares outstanding during the period. Diluted earnings per share are computed by dividing net income, attributable to OpenText, by the shares used in the calculation of basic earnings per share plus the dilutive effect of Common Share equivalents, such as stock options, using the treasury stock method. Common Share equivalents are excluded from the computation of diluted earnings

excluded from the computation of diluted earnings per share if their effect is anti-dilutive.

(1) Please also see note 14 "Income Taxes" for details relating to a one-time tax benefit of $876.1 million recorded during the three months ended September 30, 2016 in connection with an internal reorganization of our subsidiaries.
(2) Represents options to purchase Common Shares excluded from the calculation of diluted earnings per share because the exercise price of the stock options was greater than or equal to the average price of the Common Shares during the period.

 |
| table | |          | Year Ended June 30, |
-------------------------------------------------------- | -------- | ------------------- | -------------
                                                         | 2019     | 2018                | 2017
Basic earnings per share                                 |          |                     |
Net income attributable to OpenText                      | $285,501 | $242,224            | $1,025,659(1)
Basic earnings per share attributable to OpenText        | $1.06    | $0.91               | $4.04
Diluted earnings per share                               |          |                     |
Net income attributable to OpenText                      | $285,501 | $242,224            | $1,025,659(1)
Diluted earnings per share attributable to OpenText      | $1.06    | $0.91               | $4.01
Weighted-average number of shares outstanding (in 000's) |          |                     |
Basic                                                    | 268,784  | 266,085             | 253,879
Effect of dilutive securities                            | 1,124    | 1,407               | 1,926
Diluted                                                  | 269,908  | 267,492             | 255,805
Excluded as anti-dilutive(2)                             | 2,759    | 2,770               | 1,371 |


| _id | d1b312dd2 |
| title |  |
| text | Revenue and deferred revenue
The Group adopted IFRS 15 Revenue from Contracts with Customers in the current year and has therefore restated the results for the prior-year on a consistent basis, see note 2 of the Financial Statements for further details.

The Group’s revenue increased by $71.6 million, or 11.2 per cent, to $710.6 million in the year-ended 31 March 2019. Subscription revenue was notably strong in the period, with reported growth of 15.9 per cent, or 16.7 per cent on a constant currency basis, because of strong prior-period billings and incremental growth of the MSP channel in the current period.
1 Restated for the adoption of IFRS 15 as explained in note 2 of the Financial Statements

Revenue in the period of $710.6 million comprised $394.1 million from the recognition of prior-period deferred revenues and $316.5 million from in-period billings. The majority of the Group’s billings, which are recognised over the life of the contract, relate to subscription products (FY19: 84.8 per cent; FY18: 83.8 per cent), with the benefit from increased billings being spread over a number of years on the subsequent recognition of deferred revenue. The deferred revenue balance at the end of the period

deferred revenue balance at the end of the period of $742.1 million increased $13.5 million year-on-year, an increase of 1.9 per cent. This was mainly due to a net deferral of billings amounting to $49.7 million partially offset by a net currency revaluation of $36.2 million, a consequence of the weakening of the euro and sterling against the US dollar during the year. Deferred revenue due within one year at the balance sheet date of $428.6M increased by 5.1 per cent at actual rates or by 10.7 per cent in

per cent at actual rates or by 10.7 per cent in constant currency.

Revenue in the Americas increased by $29.7 million or 13.3 per cent to $253.3 million in the year-ended 31 March 2019, supported by the recognition of prior-period Enduser billings from the Sophos Central platform and the growth of the MSP channel in the current period.
EMEA revenue increased by $39.1 million or 12.0 per cent to $363.6 million in the year-ended 31 March 2019, with growth in Enduser in particular, but also aided by Network sales.

APJ revenue increased by $2.8 million, or 3.1 per cent to $93.7 million in the year-ended 31 March 2019, with good growth in Enduser products partially offset by a decline in Network sales following the legacy product transition.

 |
| table | | FY19          | FY18¹         | Growth %   | Growth %
------------------- | ------------- | ------------- | ---------- | --------
                    | $m (Reported) | $m (Reported) | (Reported) | (CC)
Revenue by Region:  |               |               |            |
– Americas          | 253.3         | 223.6         | 13.3       | 13.4
– EMEA              | 363.6         | 324.5         | 12.0       | 12.7
– APJ               | 93.7          | 90.9          | 3.1        | 6.2
                    | 710.6         | 639.0         | 11.2       | 12.0
Revenue by Product: |               |               |            |
– Network           | 328.5         | 316.5         | 3.8        | 4.7
– Enduser           | 348.4         | 291.8         | 19.4       | 20.2
– Other             | 33.7          | 30.7          | 9.8        | 10.0
                    | 710.6         | 639.0         | 11.2       | 12.0
Revenue by Type:    |               |               |            |
– Subscription      | 593.9         | 512.4         | 15.9       | 16.7
– Hardware          | 106.8         | 115.1         | (7.2)      | (6.3)
– Other             | 9.9           | 11.5          | (13.9)     | (12.8)
                    | 710.6         | 639.0         | 11.2       | 12.0 |


| _id | d1b304b42 |
| title |  |
| text | Gross margin
The Group achieved further gross margin expansion in 2019 with an increase of 1.0 percentage points, to 73.2 per cent from 72.2 per cent in 2018. This followed an increase of 0.7 percentage points last year. Once again, all the operating segments achieved an improvement in gross margin, benefiting from new product launches and a higher proportion of software sales.

 |
| table | $ million                   | 2019  | %    | 2018  | %
--------------------------- | ----- | ---- | ----- | ----
Networks & Security         | 232.3 | 72.6 | 205.3 | 72.0
Lifecycle Service Assurance | 88.6  | 79.7 | 87.9  | 77.9
Connected Devices           | 47.7  | 65.8 | 51.3  | 64.9
                            | 368.6 | 73.2 | 344.5 | 72.2 |


| _id | d1b347866 |
| title |  |
| text | Fiscal 2019 Restructuring Plan

During Fiscal 2019, we began to implement restructuring activities to streamline our operations (Fiscal 2019 Restructuring Plan), including in connection with our recent acquisitions of Catalyst and Liaison, to take further steps to improve our operational efficiency. The Fiscal 2019 Restructuring Plan charges relate to workforce reductions and facility consolidations. These charges require management to make certain judgments and estimates regarding the amount and timing of restructuring charges or

the amount and timing of restructuring charges or recoveries. Our estimated liability could change subsequent to its recognition, requiring adjustments to the expense and the liability recorded. On a quarterly basis, we conduct an evaluation of the related liabilities and expenses and revise our assumptions and estimates as appropriate.

As of June 30, 2019, we expect total costs to be incurred in conjunction with the Fiscal 2019 Restructuring Plan to be approximately $30.0 million, of which $28.3 million has already been recorded within "Special charges (recoveries)" to date. We do not expect to incur any further significant charges relating to this plan.
A reconciliation of the beginning and ending liability for the year ended June 30, 2019 is shown below.

 |
| table | Fiscal 2019 Restructuring Plan      | Workplace reduction | Facility costs | Total
----------------------------------- | ------------------- | -------------- | --------
Balance payable as at June 30, 2018 | $—                  | $—             | $—
Accruals and adjustments            | 12,460              | 15,858         | 28,318
Cash payments                       | (10,420)            | (4,739)        | (15,159)
Non-cash adjustments                | —                   | (3,393)        | (3,393)
Foreign exchange                    | (221)               | (2,438)        | (2,659)
Balance payable as at June 30, 2019 | $1,819              | $5,288         | $7,107 |


| _id | d1b38a288 |
| title |  |
| text | MEDIA FINANCIAL RESULTS
REVENUE
Media revenue is earned from:
• advertising sales across its television, radio, and digital media properties; • subscriptions to televised and OTT products; • ticket sales, fund redistribution and other distributions from MLB, and concession sales; and • retail product sales.

The 4% decrease in revenue this year was a result of: • the sale of our publishing business in the second quarter of 2019; and • lower revenue at the Toronto Blue Jays, primarily as a result of a distribution from Major League Baseball in 2018; partially offset by • higher revenue generated by Sportsnet and TSC. Excluding the sale of our publishing business and the impact of the distribution from Major League Baseball last year, Media revenue would have increased by 1% this year.
OPERATING EXPENSES

OPERATING EXPENSES
We record Media operating expenses in four primary categories:
• the cost of broadcast content, including sports programming
and production;
• Toronto Blue Jays player compensation;
• the cost of retail products sold; and
• all other expenses involved in day-to-day operations.
The 2% decrease in operating expenses this year was a result of:
• lower Toronto Blue Jays player compensation; and
• lower publishing-related costs due to the sale of this business;
partially offset by

partially offset by
• higher programming costs; and
• higher cost of sales as a result of higher revenue at TSC.
ADJUSTED EBITDA
The 29% decrease in adjusted EBITDA this year was a result of the
revenue and expense changes described above. Excluding the
impact of the sale of our publishing business in the second quarter
of 2019 and the distribution from Major League Baseball last year,
adjusted EBITDA would have increased by 1% this year.

 |
| table | |       | Years ended December 31 |
---------------------------------------- | ----- | ----------------------- | --------
(In millions of dollars, except margins) | 2019  | 2018                    | %Chg
Revenue                                  | 2,072 | 2,168                   | (4)
Operating expenses                       | 1,932 | 1,972                   | (2)
Adjusted EBITDA                          | 140   | 196                     | (29)
Adjusted EBITDA margin                   | 6.8%  | 9.0%                    | (2.2pts)
Capital expenditures                     | 102   | 90                      | 13 |


| _id | d1b33423e |
| title |  |
| text | 8 Auditor’s remuneration
1 Relates to the interim report review of the Group, and interim reviews of certain subsidiary undertakings.
2 2019 other non-audit assurance services relate primarily to reporting accountants’ work associated with the potential equity raise not completed.

The reporting accountants’ work surrounding the potential equity raise not completed includes a working capital report that requires the accountant to have detailed knowledge of the Group. If a firm other than the audit firm were to undertake this work, they would require a significant amount of additional time to become familiar with the Group. Deloitte was therefore chosen to undertake this work as it was considered to be sensible and more efficient both in terms of time and costs.

2018 other non-audit assurance services included £40,000 related to reporting accountants’ work associated with a year end significant change report and £190,000 related to reporting accountants’ work in connection with the Group’s Q3 profit estimate which was required at the time due to Takeover Code rules.

The work surrounding a significant change report and a profit estimate requires the accountant to have detailed knowledge of the Group. If a firm other than the audit firm were to undertake this work, they would require a significant amount of additional time to become familiar with the Group. PwC was therefore chosen to undertake this work as it was considered to be sensible and more efficient both in terms of time and costs.

As for all 2019 and 2018 non-audit work, consideration was given as to whether Deloitte’s (2019) and PwC’s (2018) independence could be affected by undertaking this work. It was concluded by the Audit Committee that this would not be the case.
Fees payable by the Group’s joint ventures in respect of 2019 were £156,000 (Group’s share), all of which relates to audit and audit-related services (2018: £121,000, all of which related to audit and audit-related services).

 |
| table | | 2019  | 2018
------------------------------------------------------------- | ----- | -----
                                                              | £000  | £000
Fees payable to the Company’s auditor and its associates for: |       |
The audit of the Company’s annual financial statements        | 559   | 382
The audit of the Company’s subsidiaries                       | 533   | 441
Fees related to the audit of the Company and its subsidiaries | 1,092 | 823
Audit-related assurance services1                             | 64    | 51
Total fees for audit and audit-related services               | 1,156 | 874
Other non-audit assurance services2                           | 534   | 230
Total fees                                                    | 1,690 | 1,104 |


| _id | d1b32ef28 |
| title |  |
| text | NOTE 3 – STAFF COSTS
Employee information
The majority of the staff on vessels are not employed by TORM. Staff costs included in operating expenses relate to the 108 seafarers (2018: 112, 2017: 131).
The average number of employees is calculated as a full-time equivalent (FTE).
The Executive Director is, in the event of termination by the Company, entitled to a severance payment of up to 12 months' salary.

 |
| table | USDm                                            | 2019  | 2018  | 2017
----------------------------------------------- | ----- | ----- | -----
Total staff costs                               |       |       |
Staff costs included in operating expenses      | 8.1   | 9.3   | 9.2
Staff costs included in administrative expenses | 37.7  | 36.9  | 34.6
Total                                           | 45.8  | 46.2  | 43.8
Staff costs comprise the following              |       |       |
Wages and salaries                              | 37.2  | 38.1  | 36.4
Share-based compensation                        | 1.9   | 2.1   | 1.9
Pension costs                                   | 3.5   | 3.3   | 3.1
Other social security costs                     | 0.9   | 0.6   | 0.3
Other staff costs                               | 2.3   | 2.1   | 2.1
Total                                           | 45.8  | 46.2  | 43.8
Average number of permanent employees           |       |       |
Seafarers                                       | 107.6 | 111.7 | 130.6
Land-based                                      | 313.5 | 302.2 | 286.6
Total                                           | 421.1 | 413.9 | 417.2 |


| _id | d1a73cf94 |
| title |  |
| text | 13. EARNINGS (LOSS) PER SHARE
Basic earnings per share (“EPS”) are computed by dividing net income (loss) by the weighted-average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income by the weighted-average number of common shares and dilutive common stock equivalents outstanding during the period.

On March 29, 2019, the Company launched an ATM program of our common shares for up to $40.0 million. The Company has issued 5,260,968 shares with net proceeds of $17.9 million under its At-the-Market as of December 31, 2019. The Company has not issued any shares subsequent to the balance sheet date.

The remaining available proceeds through the offering is $21.4 million as of the date of this report. Based on the share price of the Company of $3.47 per share as of April 3, 2020 it would have resulted in 6,173,500 new shares being issued, if fully utilizing the remaining balance available through the ATM.

 |
| table | All figures in USD except number of shares and earnings (loss) per common share | 2019        | 2018        | 2017
------------------------------------------------------------------------------- | ----------- | ----------- | -----------
Numerator:                                                                      |             |             |
Net Loss                                                                        | (10,352)    | (95,306)    | (204,969)
Denominator:                                                                    |             |             |
Basic - Weighted Average Common Shares Outstanding                              | 142,571,361 | 141,969,666 | 103,832,680
Dilutive – Weighted Average Common Shares Outstanding                           | 142,571,361 | 141,969,666 | 103,832,680
Loss per Common Share:                                                          |             |             |
Basic                                                                           | (0.07)      | (0.67)      | (1.97)
Diluted                                                                         | (0.07)      | (0.67)      | (1.97) |


| _id | d1b34fe9e |
| title |  |
| text | (18) Quarterly Financial Data (Unaudited)
During the first quarter of 2019, we recorded a non-cash, non-tax-deductible goodwill impairment charge of $6.5 billion for goodwill, see Note 4—Goodwill, Customer Relationships and Other Intangible Assets for further details.
During the fourth quarter of 2018, we recorded a non-cash, non-tax-deductible goodwill impairment charge of $2.7 billion for goodwill see Note 4—Goodwill, Customer Relationships and Other Intangible Assets for further details.

During the first quarter of 2018, we recognized $71 million of expenses related to our acquisition of Level 3 followed by acquisition-related expenses of $162 million, $43 million and $117 million in the second, third and fourth quarters of 2018, respectively. During 2019, we recognized expenses related to our acquisition of Level 3 of $34 million, $39 million, $38 million and $123 million in the first, second, third and fourth quarters of 2019, respectively.

 |
| table | | First Quarter | Second Quarter | Third Quarter                                   | Fourth Quarter | Total
---------------------------------------- | ------------- | -------------- | ----------------------------------------------- | -------------- | -------
                                         |               |                | (Dollars in millions, except per share amounts) |                |
2019                                     |               |                |                                                 |                |
Operating revenue                        | $5,647        | 5,578          | 5,606                                           | 5,570          | 22,401
Operating (loss) income                  | (5,499)       | 976            | 950                                             | 847            | (2,726)
Net (loss) income                        | (6,165)       | 371            | 302                                             | 223            | (5,269)
Basic (loss) earnings per common share   | (5.77)        | 0.35           | 0.28                                            | 0.21           | (4.92)
Diluted (loss) earnings per common share | (5.77)        | 0.35           | 0.28                                            | 0.21           | (4.92)
2018                                     |               |                |                                                 |                |
Operating revenue                        | $5,945        | 5,902          | 5,818                                           | 5,778          | 23,443
Operating income (loss)                  | 750           | 767            | 894                                             | (1,841)        | 570
Net income (loss)                        | 115           | 292            | 272                                             | (2,412)        | (1,733)
Basic earnings (loss) per common share   | 0.11          | 0.27           | 0.25                                            | (2.26)         | (1.63)
Diluted earnings (loss) per common share | 0.11          | 0.27           | 0.25                                            | (2.26)         | (1.63) |


| _id | d1b32ed66 |
| title |  |
| text | Plan Summaries
As of January 3, 2020, the Company had stock-based compensation awards outstanding under the following plans: the 2017 Omnibus Incentive Plan, 2006 Equity Incentive Plan, as amended, and the 2006 Employee Stock Purchase Plan, as amended ("ESPP"). Leidos issues new shares upon the issuance of the vesting of stock units or exercising of stock options under these plans.

In fiscal 2017, stockholders approved the 2017 Omnibus Incentive Plan which provides the Company and its affiliates' employees, directors and consultants the opportunity to receive various types of stock-based compensation awards, such as stock options, restricted stock units and performance-based awards, as well as cash awards.

The Company grants service-based awards that generally vest or become exercisable 25% a year over four years or cliff vest in three years. As of January 3, 2020, 4.4 million shares of Leidos' stock were reserved for future issuance under the 2017 Omnibus Incentive Plan and the 2006 Equity Incentive Plan.

The Company offers eligible employees the opportunity to defer restricted stock units into an equity-based deferred equity compensation plan, the Key Executive Stock Deferral Plan ("KESDP"). Prior to 2013, the Company offered an additional opportunity for deferrals into the Management Stock Compensation Plan ("MSCP"). Benefits from these plans are payable in shares of Leidos' stock that are held in a trust for the purpose of funding shares to the plans' participants.

Restricted stock units deferred under the KESDP are counted against the total shares available for future issuance under the 2017 Omnibus Incentive Plan. All awards under the MSCP are fully vested and the plan does not provide for a maximum number of shares available for future issuance.

The Company's ESPP allows eligible employees to purchase shares of Leidos' stock at a discount of up to 15% of the fair market value on the date of purchase. During the first half of fiscal 2018 and 2017, the discount was 5% of the fair market value on the date of purchase, thereby resulting in the ESPP being non-compensatory. Effective the second half of fiscal 2018, the Company increased the discount to 10% of the fair market value on the date of purchase, resulting in the ESPP being compensatory.

During fiscal 2019, 2018 and 2017, $25 million, $11 million and $10 million, respectively, was received from ESPP plan participants for the issuance of Leidos' stock. A total of 4.2 million shares remain available for future issuance under the ESPP.
Stock-based compensation and related tax benefits recognized under all plans were as follows:

 |
| table | |                 | Year Ended        |
----------------------------------------------------- | --------------- | ----------------- | -----------------
                                                      | January 3, 2020 | December 28, 2018 | December 29, 2017
                                                      |                 | (in millions)     |
Total stock-based compensation expense                | $52             | $44               | $43
Tax benefits recognized from stock-based compensation | 13              | 11                | 17 |


| _id | d1b374794 |
| title |  |
| text | Deferred Revenue The following table presents the breakdown of deferred revenue (in millions):

Deferred revenue decreased primarily due to the adoption of ASC 606 in the beginning of our first quarter of fiscal 2019. Of the total deferred revenue decrease related to the adoption of ASC 606 of $2.8 billion, $2.6 billion relates to deferred product revenue and $0.2 billion relates to deferred service revenue. Of the adjustment to deferred product revenue, $1.3 billion related to our recurring software and subscription offers, $0.6 billion related to two-tier distribution, and the remainder related to

distribution, and the remainder related to nonrecurring software and other adjustments. The decrease related to the adoption of ASC 606 was partially offset by an increase in product deferred revenue during the fiscal year. The increase in deferred service revenue was driven by the impact of contract renewals, partially offset by amortization of deferred service revenue.

 |
| table | | July 27, 2019 | July 28, 2018 | Increase (Decrease)
------------ | ------------- | ------------- | -------------------
Service      | $11,709       | $11,431       | $ 278
Product      | 6,758         | 8,254         | (1,496)
Total        | $18,467       | $19,685       | $(1,218)
Reported as: |               |               |
Current      | $10,668       | $11,490       | $(822)
Noncurrent   | 7,799         | 8,195         | (396)
Total        | $18,467       | $19,685       | $(1,218) |


| _id | d1b37bddc |
| title |  |
| text | For purposes of reconciling the Company’s provision for income taxes at the statutory rate and the Company’s provision (benefit) for income taxes at the effective tax rate, a notional 26% tax rate was applied as follows (in thousands):

The difference between the statutory federal income tax rate and the Company’s effective tax rate in 2019, 2018 and 2017 is primarily attributable to the effect of state income taxes, difference between the U.S. and foreign tax rates, deferred tax state rate adjustment, share-based compensation, true up of deferred taxes, other non-deductible permanent items, and change in valuation allowance. In addition, the Company’s foreign subsidiaries are subject to varied applicable statutory income tax rates for

varied applicable statutory income tax rates for the periods presented.

 |
| table | |           | Year Ended December 31, |
---------------------------------------------------------------------- | --------- | ----------------------- | --------
                                                                       | 2019      | 2018                    | 2017
Income tax at federal statutory rate                                   | $(10,883) | $(9,811)                | $(6,659)
Increase (decrease) in tax resulting from:                             |           |                         |
State income tax expense, net of federal tax effect                    | (3,657)   | (2,749)                 | (421)
Nondeductible permanent items                                          | 3,522     | (1,522)                 | 1,506
Foreign rate differential                                              | (367)     | 552                     | 599
Tax rate change                                                        | —         | 134                     | 7,226
Adjustment to deferred taxes                                           | (1,904)   | 307                     | 37
Change in valuation allowance                                          | 22,481    | 15,805                  | (2,291)
Uncertain tax positions                                                | 128       | 143                     | 76
Nonqualified stock option and performance award windfall upon exercise | (9,128)   | (1,983)                 | —
Other                                                                  | 233       | (80)                    | (26)
Total                                                                  | $425      | $796                    | $47 |


| _id | d1b3aad30 |
| title |  |
| text | Interest Expense and Interest Income and Other Expense, net
The table below sets forth the changes in interest expense and interest income and other expense, net, for the fiscal year ended December 29, 2019, as compared to fiscal year ended December 30, 2018 (in thousands, except percentage data):

The $242,000 increase in interest expense was attributable to higher line of credit balance in 2019 compared to 2018. The $112,000 increase in interest income and other expenses was attributable to increase in interest income from money market account with Heritage Bank.

 |
| table | | Fiscal Years |        | Year-Over-Year Change |
-------------------------------------- | ------------ | ------ | --------------------- | ----------
                                       | 2019         | 2018   | Amount                | Percentage
Interest expense                       | $(350)       | $(108) | $(242)                | 224%
Interest income and other expense, net | 189          | 77     | 112                   | 145%
                                       | $(161)       | $(31)  | $(130)                | 419% |


| _id | d1b2fb01a |
| title |  |
| text | 5.2 Key Management Personnel Compensation
Notes: (1) Comprise base salary, bonus, contributions to defined contribution plans and other benefits, but exclude performance share and share option expenses disclosed below.

(2) The Group Chief Executive Officer, an executive director of Singtel, was awarded up to 1,030,168 (2018: 1,712,538) ordinary shares of Singtel pursuant to Singtel performance share plans, subject to certain performance criteria including other terms and conditions being met. The performance share award in the previous financial year included a one-off Special Share Award (“SSA”). The performance share expense computed in accordance with SFRS(I) 2, Share-based Payment, was S$1.5 million (2018: S$3.3

Payment, was S$1.5 million (2018: S$3.3 million).

(3) The other key management personnel of the Group comprise the Chief Executive Officers of Consumer Singapore, Consumer Australia, Group Enterprise, Group Digital Life and International Group, as well as the Group Chief Corporate Officer, Group Chief Financial Officer, Group Chief Human Resources Officer, Group Chief Information Officer and Group Chief Technology Officer. The other key management personnel were awarded up to 3,537,119 (2018: 4,391,498) ordinary shares of Singtel pursuant to Singtel

ordinary shares of Singtel pursuant to Singtel performance share plans, subject to certain performance criteria including other terms and conditions being met. The performance share award in the previous financial year included a one-off SSA. The performance share expense computed in accordance with SFRS(I) 2 was S$6.1 million (2018: S$8.5 million).

(4) Directors’ remuneration comprises the following: (i) Directors’ fees of S$2.7 million (2018: S$2.5 million), including fees paid to certain directors in their capacities as members of the Optus Advisory Committee and the Technology Advisory Panel, and as director of Singtel Innov8 Pte. Ltd. (ii) Car-related benefits of the Chairman of S$24,557 (2018: S$20,446). In addition to the Directors’ remuneration, Venkataraman Vishnampet Ganesan, a non-executive director of Singtel, was awarded 831,087 (2018:

director of Singtel, was awarded 831,087 (2018: Nil) of share options pursuant to the Amobee Long-Term Incentive Plan during the financial year, subject to certain terms and conditions being met. The share option expense computed in accordance with SFRS(I) 2 was S$104,278 (2018: S$21,607).

 |
| table | |        | Group
----------------------------------------- | ------ | ------
                                          | 2019   | 2018
                                          | S$ Mil | S$ Mil
Key management personnel compensation (1) |        |
Executive director (2)                    | 3.5    | 6.1
Other key management personnel (3)        | 15.9   | 22.4
                                          | 19.4   | 28.5
Directors' remuneration (4)               | 2.7    | 2.5
                                          | 22.1   | 31.0 |


| _id | d1b301e4c |
| title |  |
| text | GreenSky, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (United States Dollars in thousands, except per share data, unless otherwise stated)
Disaggregated revenue
Revenue disaggregated by type of service was as follows for the periods presented:

(1) For the year ended December 31, 2019, includes a $30,459 change in fair value of our servicing asset primarily associated with increases to the contractually specified fixed servicing fees for certain Bank Partners. Refer to Note 3 for additional information.

(2) Other revenue includes miscellaneous revenue items that are individually immaterial. Other revenue is presented separately herein in order to clearly present merchant, interchange and servicing fees, which are more integral to our primary operations and better enable financial statement users to calculate metrics such as servicing and merchant fee yields.
No assets were recognized from the costs to obtain or fulfill a contract with a customer as of December 31,

2019 and 2018. We recognized bad debt expense arising from our contracts with customers of $950, $1,294 and
$817 during the years ended December 31, 2019, 2018 and 2017, respectively, which is recorded within general and
administrative expense in our Consolidated Statements of Operations.

 |
| table | |          | Year Ended December 31, |
------------------- | -------- | ----------------------- | --------
                    | 2019     | 2018                    | 2017
Merchant fees       | $361,755 | $297,776                | $234,548
Interchange fees    | 44,150   | 51,128                  | 44,410
Transaction fees    | 405,905  | 348,904                 | 278,958
Servicing fees(1)   | 123,697  | 65,597                  | 46,575
Other(2)            | 44       | 172                     | 354
Servicing and other | 123,741  | 65,769                  | 46,929
Total revenue       | $529,646 | $414,673                | $325,887 |


| _id | d1b33382a |
| title |  |
| text | Restricted Stock Units
The Company intends to settle all vested restricted stock unit payments held by United States-based participants in shares of the Company’s common stock and classifies these awards as equity awards in its Consolidated Balance Sheets. Awards held by participants who are based outside of the United States will be settled in cash and are classified within accrued and other current liabilities on the Consolidated Balance Sheets as of December 31, 2019 and 2018

The following table summarizes the activity related to the unvested restricted stock units during the years ended December 31, 2019 and 2018:
Unrecognized compensation expense related to unvested restricted stock units was $731 at December 31, 2019, which is expected to be recognized as expense over the weighted-average period of 0.7 years.

During the years ended December 31, 2019 and 2018, the Company issued 642,520 and 782,364 shares, respectively, of common stock to participants of the 2016 Plan based in the United States, after withholding approximately 261,335 and 472,965 shares, respectively, to satisfy tax withholding obligations. The Company made a cash payment of $181 and $1,495 to cover employee withholding taxes upon the settlement of these vested restricted stock units during the years ended December 31, 2019 and 2018,

the years ended December 31, 2019 and 2018, respectively. During the years ended December 31, 2019 and 2018, the Company also paid $0 and $300 to cash-settle 16 and 100,025 vested restricted stock units by agreement with the Chief Operating Officer in relation to certain grants made to him and to pay cash in lieu of fractional shares for vested units held by participants based in the United States.

 |
| table | | Number of Units | Weighted-Average Grant-Date Fair Value
--------------------------------------------------------------- | --------------- | --------------------------------------
Unvested restricted stock units outstanding - December 31, 2017 | 3,106,024       | $3.43
Granted                                                         | 853,736         | 1.46
Vested                                                          | (1,583,399)     | 3.18
Forfeited                                                       | (563,400)       | 3.39
Unvested restricted stock units outstanding - December 31, 2018 | 1,812,961       | $2.74
Granted                                                         | 60,000          | $0.98
Vested                                                          | (904,096)       | $2.67
Forfeited                                                       | (263,450)       | $2.71
Unvested restricted stock units outstanding - December 31, 2019 | 705,415         | $2.68 |


| _id | d1b338460 |
| title |  |
| text | Basic and Diluted Net Income Per Share
Basic net income per share is computed using net income divided by the weighted average number of shares of common stock
outstanding (“Weighted Shares”) for the period presented.

Diluted net income per share is computed using net income divided by Weighted Shares and the treasury stock method effect of common equivalent shares (“CESs”) outstanding for each period presented. In the following table, we present a reconciliation of earnings per share and the shares used in the computation of earnings per share for the years ended December 31, 2019, 2018 and 2017 (in thousands, except per share data):

common equivalent shares (“CESs”) outstanding for each period presented. In the following table, we present a reconciliation of
earnings per share and the shares used in the computation of earnings per share for the years ended December 31, 2019, 2018 and
2017 (in thousands, except per share data):
The number of anti-dilutive CESs in 2019, 2018 and 2017 was immaterial. See Note 2 for further information on those securities.

 |
| table | |            | Year Ended December 31,                  |
---------------------------------- | ---------- | ---------------------------------------- | ---------
                                   | 2019       | 2018                                     | 2017
                                   |            | (in thousands, except per share data)    |
Net income                         | $ 85,762   | $ 104,690                                | $ 116,481
Earnings per share：                |            |                                          |
Basic                              | $ 1.33     | $ 1.58                                   | $ 1.68
Effect of CESs                     | (0.01 )    | -                                        | -
Diluted                            | $ 1.32     | $ 1.58                                   | $ 1.68
Weighted average number of shares: |            |                                          |
Basic                              | 64,397     | 66,201                                   | 69,175
Effect of CESs                     | 706        | 233                                      | 249
Diluted                            | 65,103     | 66,434                                   | 69,424 |


| _id | d1b326d46 |
| title |  |
| text | Year Ended December 31, 2018 Compared to the Year Ended December 31, 2017
Our management reviews and analyzes several key financial measures in order to manage our business and assess the quality of and variability of our service revenue, operating results and cash flows. The following summary tables present a comparison of our results of operations with respect to certain key financial measures. The comparisons illustrated in the tables are discussed in greater detail below.

(1) Includes non-cash equity-based compensation expense of $895 and $604 for 2018 and 2017, respectively.
(2) Includes non-cash equity-based compensation expense of $16,813 and $12,686 for 2018 and 2017, respectively.

Service Revenue. Our service revenue increased 7.2% from 2017 to 2018. Exchange rates positively impacted our increase in service revenue by approximately $4.0 million. All foreign currency comparisons herein reflect results for 2018 translated at the average foreign currency exchange rates for 2017. We increased our total service revenue by increasing the number of sales representatives selling our services, by expanding our network, by adding additional buildings to our network, by increasing our

buildings to our network, by increasing our penetration into the buildings connected to our network and by gaining market share by offering our services at lower prices than our competitors.

Revenue recognition standards include guidance relating to any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include, but is not limited to, gross receipts taxes, Universal Service Fund fees and certain state regulatory fees. We record these taxes billed to our customers on a gross basis (as service revenue and network operations expense) in our consolidated statements of operations. The impact of these taxes

of operations. The impact of these taxes including the Universal Service Fund resulted in an increase to our revenues from 2017 to 2018 of approximately $1.6 million.

Our net-centric customers tend to purchase their service on a price per megabit basis. Our corporate customers tend to utilize a small portion of their allocated bandwidth on their connections and tend to purchase their service on a per connection basis. Revenues from our corporate and net-centric customers represented 64.9% and 35.1% of total service revenue, respectively, for 2018 and represented 62.3% and 37.7% of total service revenue, respectively, for 2017. Revenues from corporate customers increased

2017. Revenues from corporate customers increased 11.8% to $337.8 million for 2018 from $302.1 million for 2017 primarily due to an increase in our number of our corporate customers. Revenues from our net-centric customers decreased by 0.4% to $182.3 million for 2018 from $183.1 million for 2017 primarily due to an increase in our number of net-centric customers being offset by a decline in our average price per megabit. Our revenue from our net- centric customers has declined as a percentage of our total

has declined as a percentage of our total revenue and grew at a slower rate than our corporate customer revenue because net-centric customers purchase our services based upon a price per megabit basis and our average price per megabit declined by 25.9% from 2017 to 2018. Additionally, the net-centric market experiences a greater level of pricing pressure than the corporate market and net-centric customers who renew their service with us expect their renewed service to be at a lower price than their current

service to be at a lower price than their current price. We expect that our average price per megabit will continue to decline at similar rates which would result in our corporate revenues continuing to represent a greater portion of our total revenues and our net-centric revenues continuing to grow at a lower rate than our corporate revenues. Additionally, the impact of foreign exchange rates has a more significant impact on our net- centric revenues.

Our on-net revenues increased 8.1% from 2017 to 2018. We increased the number of our on-net customer connections by 12.1% at December 31, 2018 from December 31, 2017. On-net customer connections increased at a greater rate than on-net revenues primarily due to the 5.1% decline in our on-net ARPU, primarily from a decline in ARPU for our net-centric customers. ARPU is determined by dividing revenue for the period by the average customer connections for that period. Our average price per megabit for our

period. Our average price per megabit for our installed base of customers is determined by dividing the aggregate monthly recurring fixed charges for those customers by the aggregate committed data rate for the same customers. The decline in on-net ARPU is partly attributed to volume and term based pricing discounts. Additionally, on-net customers who cancel their service from our installed base of customers, in general, have an ARPU that is greater than the ARPU for our new customers due to declining

the ARPU for our new customers due to declining prices primarily for our on-net services sold to our net-centric customers. These trends resulted in the reduction to our on-net ARPU and a 25.9% decline in our average price per megabit for our installed base of customers.

Our off-net revenues increased 5.2% from 2017 to 2018. Our off-net revenues increased as we increased the number of our off-net customer connections by 10.3% at December 31, 2018 from December 31, 2017. Our off-net customer connections increased at a greater rate than our off-net revenue primarily due to the 6.8% decrease in our off-net ARPU.

Network Operations Expenses. Network operations expenses include the costs of personnel associated with service delivery, network management, and customer support, network facilities costs, fiber and equipment maintenance fees, leased circuit costs, access and facilities fees paid to building owners and excise taxes billed to our customers and recorded on a gross basis. Non-cash equity-based compensation expense is included in network operations expenses consistent with the classification of the employee's

with the classification of the employee's salary and other compensation. Our network operations expenses, including non-cash equity-based compensation expense, increased 4.9% from 2017 to 2018 as we were connected to 11.9% more customer connections and we were connected to 170 more on-net buildings as of December 31, 2018 compared to December 31, 2017. The increase in network operations expense is primarily attributable to an increase in costs related to our network and facilities expansion activities and

network and facilities expansion activities and the increase in our off- net revenues. When we provide off-net services we also assume the cost of the associated tail circuits.

Selling, General, and Administrative Expenses (“SG&A”). Our SG&A expenses, including non-cash equity- based compensation expense, increased 4.6% from 2017 to 2018. Non cash equity-based compensation expense is included in SG&A expenses consistent with the classification of the employee's salary and other compensation and was $16.8 million for 2018 and $12.7 million for 2017. SG&A expenses increased primarily from an increase in salaries and related costs required to support our expansion and increases in

to support our expansion and increases in our sales efforts and an increase in our headcount partly offset by a $1.1 million decrease in our legal fees primarily associated with U.S. net neutrality and interconnection regulatory matters and by the $1.3 million reduction in commission expense from the impact of the new revenue accounting standard which requires us to capitalize certain commissions paid to our sales agents and sales employees. Our sales force headcount increased by 7.8% from 574 at December

headcount increased by 7.8% from 574 at December 31, 2017 to 619 at December 31, 2018 and our total headcount increased by 4.8% from 929 at December 31, 2017 to 974 at December 31, 2018.

Depreciation and Amortization Expenses. Our depreciation and amortization expenses increased 7.0% from 2017 to 2018. The increase is primarily due to the depreciation expense associated with the increase related to newly deployed fixed assets more than offsetting the decline in depreciation expense from fully depreciated fixed assets.

Gains on Equipment Transactions. We exchanged certain used network equipment and cash consideration for new network equipment resulting in gains of $1.0 million for 2018 and $3.9 million for 2017. The gains are based upon the excess of the estimated fair value of the new network equipment over the carrying amount of the returned used network equipment and the cash paid. The reduction in gains from 2017 to 2018 was due to purchasing more equipment under the exchange program in 2017 than we purchased in

the exchange program in 2017 than we purchased in 2018.

Interest Expense. Interest expense results from interest incurred on our $445.0 million of senior secured notes, interest incurred on our $189.2 million of senior unsecured notes, interest on our installment payment agreement and interest on our finance lease obligations. Our interest expense increased by 5.3% for 2018 from 2017 primarily due to the issuance of $70.0 million of senior secured notes in August 2018 and an increase in our finance lease obligations.

Income Tax Expense. Our income tax expense was $12.7 million for 2018 and $25.2 million for 2017. The decrease in our income tax expense was primarily related to an increase in deferred income tax expense for 2017 primarily due to the impact of the Tax Cuts and Jobs Act (the "Act"). On December 22, 2017, the President of the United States signed into law the Act. The Act amended the Internal Revenue Code and reduced the corporate tax rate from a maximum rate of 35% to a flat 21% rate. The rate reduction

of 35% to a flat 21% rate. The rate reduction was effective on January 1, 2018 and may reduce our future income taxes payable once we become a cash taxpayer in the United States. As a result of the reduction in the corporate income tax rate and other provisions under the Act, we were required to revalue our net deferred tax asset at December 31, 2017 resulting in a reduction in our net deferred tax asset of $9.0 million and we also recorded a transition tax of $2.3 million related to our foreign operations

of $2.3 million related to our foreign operations for a total income tax expense of approximately $11.3 million, which was recorded as additional noncash income tax expense in 2017.

Buildings On-net. As of December 31, 2018 and 2017 we had a total of 2,676 and 2,506 on-net buildings connected to our network, respectively.

 |
| table | | Year Ended December 31, |          | Change
------------------------------------------------ | ----------------------- | -------- | -------
                                                 | 2018                    | 2017     | Percent
                                                 | (in thousands)          |          |
Service revenue                                  | $520,193                | $485,175 | 7.2%
On-net revenues                                  | 374,555                 | 346,445  | 8.1%
Off-net revenues                                 | 145,004                 | 137,892  | 5.2%
Network operations expenses(1)                   | 219,526                 | 209,278  | 4.9%
Selling, general, and administrative expenses(2) | 133,858                 | 127,915  | 4.6%
Depreciation and amortization expenses           | 81,233                  | 75,926   | 7.0%
Gains on equipment transactions                  | 982                     | 3,862    | (74.6)%
Interest expense                                 | 51,056                  | 48,467   | 5.3%
Income tax expense                               | 12,715                  | 25,242   | (49.6)% |


| _id | d1a7265a0 |
| title |  |
| text | 13. Income Taxes
On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into U.S. Law. As of December 31, 2018, the Company had completed its accounting for the tax effects related to the enactment of the Tax Act.

The Tax Act reduced the U.S. federal corporate income tax rate from 35% to 21%, effective January 1, 2018. During the year ended December 31, 2017, the Company remeasured certain deferred tax assets and liabilities and recorded a $15.0 million provisional tax charge. During the year ended December 31, 2018, the Company reduced the initial provisional tax charge by recording a $4.9 million benefit related to accelerated tax deductions claimed on the 2018 U.S. Federal Income Tax Return.

The Tax Act required U.S. companies to pay a one-time transition tax on certain unremitted foreign earnings. During the year ended December 31, 2017, the Company recorded a $20.9 million provisional tax charge based on post-1986 earnings and profits of foreign subsidiaries that were previously deferred from U.S. income taxes. Upon further analysis, the Company reduced the initial provisional tax charge by recording an $8.1 million benefit during the year ended December 31, 2018.

During the year ended December 31, 2018, the Company recorded a $15.5 million valuation allowance on its deferred tax asset related to U.S. foreign tax credits based upon business conditions and tax laws in effect at that time.

During the year ended December 31, 2019, following the acquisition of Speedpay, the Company determined it will more likely than not be able to utilize foreign tax credits in future years due to additional income generated by Speedpay; therefore, the Company released the $15.5 million valuation allowance that had been established on this deferred tax asset.

The Tax Act subjects a U.S. shareholder to tax on global intangible low-taxed income ("GILTI") earned by certain foreign subsidiaries. The Company has elected to account for GILTI in the year the tax is incurred.

Prior to 2018, the Company considered all earnings in foreign subsidiaries to be indefinitely reinvested, and accordingly, recorded no deferred income taxes related to unremitted earnings. As of December 31, 2019 and 2018, the Company considered only the earnings in its Indian subsidiaries to be indefinitely reinvested. The earnings of all other foreign subsidiaries are no longer considered indefinitely reinvested. The Company is also permanently reinvested for outside book/tax basis differences related to

for outside book/tax basis differences related to foreign subsidiaries.

For financial reporting purposes, income before income taxes includes the following components (in thousands):

 |
| table | |         | Years Ended December 31, |
------------- | ------- | ------------------------ | -------
              | 2019    | 2018                     | 2017
United States | -16,317 | $16,312                  | -42,863
Foreign       | 88,527  | 75,487                   | 86,435
Total         | $72,210 | $91,799                  | $43,572 |


| _id | d1b3c6bc0 |
| title |  |
| text | Consolidated Comparison of Fiscal Year 2019 to Fiscal Year 2018
Net Sales
Net sales of $1.4 billion in fiscal year 2019 increased 15.2% from $1.2 billion in fiscal year 2018 primarily due to an increased in Solid Capacitor net sales $164.6 million. In addition, Film and Electrolytic net sales increased by $4.3 million, and MSA net sales increased by $13.8 million.

The increase in Solid Capacitors net sales was primarily driven by a $111.8 million increase in distributor sales across the Americas, APAC, and EMEA regions. The $111.8 million increase consisted of a $72.8 million increase in Ceramic product line sales and a $39.0 million increase in Tantalum product line sales. Also contributing to the increase in net sales was a $30.6 million increase in OEM sales across the APAC, EMEA, and JPKO regions, and a $28.0 million increase in EMS sales across all regions.

million increase in EMS sales across all regions. These increases in net sales were partially offset by a $3.2 million decrease in distributor sales in the JPKO region and a $2.7 million decrease in OEM sales in the Americas region. In addition, Solid Capacitors net sales was unfavorably impacted by $0.5 million from foreign currency exchange due to the change in the value of the Euro compared to the U.S. dollar.

The increase in Film and Electrolytic net sales was primarily driven by a $10.5 million increase in distributor sales across the Americas and EMEA regions. Also contributing to the increase in net sales was $1.7 million increase in EMS sales in the Americas region and a $0.8 million increase in OEM sales in the JPKO region. These increases in net sales were partially offset by a $5.6 million decrease in OEM sales across the APAC and EMEA regions and a $3.1 million decrease in distributor sales across the

million decrease in distributor sales across the APAC and JPKO regions. In addition, there was an unfavorable impact of $0.1 million from foreign currency exchange primarily due to the change in the value of the Euro compared to the U.S. dollar.

The increase in MSA net sales was primarily driven by a $15.0 million increase in OEM sales in the JPKO region. Also contributing to the increase in net sales was a $4.3 million increase in EMS sales across all regions and a $3.7 million increase in distributor sales across the Americas and EMEA regions. These increase in net sales were partially offset by a $5.5 million decrease in distributor sales across the APAC and JPKO regions and a $3.8 million decrease in OEM sales across the Americas, APAC, and

in OEM sales across the Americas, APAC, and JPKO regions.

In fiscal years 2019 and 2018, net sales by channel and the percentages of net sales by region to total net sales were as follows (dollars in thousands):

 |
| table | | Fiscal Year 2019 |            | Fiscal Year 2018 |
-------- | ---------------- | ---------- | ---------------- | ----------
         | Net Sales        | % of Total | Net Sales        | % of Total
APAC     | $533,340         | 38.6%      | $479,987         | 40.0%
EMEA     | 315,535          | 22.8%      | 277,898          | 23.1%
Americas | 337,842          | 24.4%      | 259,105          | 21.6%
JPKO     | 196,101          | 14.2%      | 183,191          | 15.3%
Total    | $1,382,818       |            | $1,200,181       | |


| _id | d1b32921c |
| title |  |
| text | BIG W’s Store‐controllable VOC and VOC NPS improved on the prior year with higher customer scores translating into sales, with an increase in F19 of 4.2% on a normalised basis to $3.8 billion. Comparable sales increased by 5.3% in F19 and 7.2% in Q4 (Easter‐adjusted) with growth in all customer universes.

BIG W’s growth continues to be driven by an increase in customer transactions (F19: 4.0%) and customers increasingly putting more items in their baskets with comparable items per basket growth of 4.4%. Together this drove comparable item growth of 8.6%. Excluding reusable bags, comparable items increased by 5.2%.

With BIG W’s turnaround gaining momentum, and to build a sustainable network for the future, a store and DC network review was announced in April. BIG W intends to close approximately 30 stores over the next three years and two distribution centres at the end of their leases. The review of the store network is ongoing, with three stores recently announced to be closed in F20.
BIG W has remained price competitive, improved ranges and built a convenient online and in‐store experience in F19.

Normalised Online sales increased by 128% in F19 with Pick up consistently delivering strong sales growth. Apparel, which has been more challenging, improved steadily through H2 due to a focus on range, stock flow and in‐store execution.
Normalised gross profit declined 49 bps for F19 reflecting continued challenges in stockloss as well as slow sell‐through of seasonal apparel in H1. Category mix improved in H2 with improved apparel sell‐through.

Normalised CODB declined 132 bps resulting from store efficiencies and sales growth fractionalising fixed costs.
The LBIT of $85 million before significant items excludes a $371 million charge identified as part of the network review.
Funds employed declined primarily due to significant items provisions. Inventory quality has improved as a result of solid sales and improved apparel sell‐through in H2.

In F20, BIG W will focus on creating a sustainable business that is simpler to operate, and continue providing customers with low prices and more convenient, connected solutions in‐store and online.

 |
| table | | F19      | F18      |           | CHANGE
----------------------------- | -------- | -------- | --------- | ----------
$ MILLION                     | 53 WEEKS | 52 WEEKS | CHANGE    | NORMALISED
Sales                         | 3,797    | 3,566    | 6.5%      | 4.2%
LBITDA before                 |          |          |           |
significant items             | (5)      | (30)     | (82.2)%   | (88.7)%
Depreciation and amortisation | (80)     | (80)     | 0.7%      | 0.7%
LBIT before significant items | (85)     | (110)    | (22.2)%   | (24.0)%
Significant items             | (371)    | –        | n.m.      | n.m.
LBIT after significant items  | (456)    | (110)    | 315.5%    | 313.7%
Gross margin (%)              | 31.1     | 31.7     | (59) bps  | (49) bps
Cost of doing business (%)    | 33.4     | 34.8     | (142) bps | (132) bps
LBIT 2 to sales (%)           | (2.3)    | (3.1)    | 83 bps    | 84 bps
Sales per square metre ($)$)  | 3,629    | 3,369    | 7.7%      | 5.4%
Funds employed                | 204      | 502      | (59.4)%   |
ROFE (%)                      | (23.0)   | (23.3)   | 24 bps    | 77 bps |


| _id | d1b2f65ce |
| title |  |
| text | Summary Disclosures about Contractual Obligations and Commercial Commitments

Our material capital commitments consist of obligations under facilities and operating leases. Some of these leases have free or escalating rent payment provisions. We recognize rent expense under leases on a straight-line basis. We anticipate that we will experience an increase in our capital expenditures and lease commitments as a result of our anticipated growth in operations, infrastructure, personnel and resources devoted to building our brand name.

The following table summarizes our obligations as of March 31, 2019 (dollars in thousands):
We generally do not enter into binding purchase obligations. The purchase obligations above relate primarily to marketing and IT services. The contractual obligations table above excludes unrecognized tax benefits, plus related interest and penalties totaling $1.1 million because we cannot reasonably estimate in which future periods these amounts will ultimately be settled.

We have certain software royalty commitments associated with the shipment and licensing of certain products. Royalty expense is generally based on a fixed cost per unit shipped or a fixed fee for unlimited units shipped over a designated period. Royalty expense, included in cost of software and products revenues was $12.3 million in fiscal 2019 and $4.5 million million in fiscal 2018.

We offer a 90-day limited product warranty for our software. To date, costs relating to this product warranty have not been material.

 |
| table | |         |                  | Payments Due by Period |           |
--------------------------- | ------- | ---------------- | ---------------------- | --------- | -----------------
                            | Total   | Less Than 1 Year | 2-3 Years              | 4-5 Years | More Than 5 Years
Operating lease obligations | $23,673 | $9,008           | $10,907                | $2,827    | $931
Purchase obligations        | 20,520  | 16,748           | 3,669                  | 103       | —
Total                       | $44,193 | $25,756          | $14,576                | $2,930    | $931 |


| _id | d1a71a764 |
| title |  |
| text | NAVIOS MARITIME HOLDINGS INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. dollars — except share data)
NOTE 5: ACCOUNTS RECEIVABLE, NET
Accounts receivable consisted of the following:

 |
| table | | December 31, 2019 | December 31,2018
---------------------------------------- | ----------------- | ----------------
Accounts receivable                      | $68,309           | $76,376
Less: provision for doubtful receivables | (16,377)          | (16,086)
Accounts receivable, net                 | $51,932           | $60,290 |


| _id | d1b332632 |
| title |  |
| text | Acquisition Related and Other Expenses: Acquisition related and other expenses consist of personnel related costs and stock-based compensation for transitional and certain other employees, integration related professional services, and certain business combination adjustments including certain adjustments after the measurement period has ended and certain other operating items, net. Stock-based compensation expenses included in acquisition related and other expenses resulted from unvested restricted

other expenses resulted from unvested restricted stock-based awards and stock options assumed from acquisitions whereby vesting was accelerated generally upon termination of the employees pursuant to the original terms of those restricted stock-based awards and stock options.

* Not meaningful
On a constant currency basis, acquisition related and other expenses decreased in fiscal 2019 compared to fiscal 2018 primarily due to certain favorable business combination related adjustments that were recorded in fiscal 201 9 .

 |
| table | |      |        | Year Ended May 31, |
--------------------------------------------- | ---- | ------ | ------------------ | ----
                                              |      |        | Percent Change     |
(Dollars in millions)                         | 2019 | Actual | Constant           | 2018
Transitional and other employee related costs | $49  | 3%     | 4%                 | $48
Stock-based compensation                      | —    | -100%  | -100%              | 1
Professional fees and other, net              | 16   | 373%   | 426%               | 3
Business combination adjustments, net         | (21) | *      | *                  | —
Total acquisition related and other expenses  | $44  | -15%   | -13%               | $52 |