| _id | d1b2e819a |
| title |  |
| text | SG&A costs during fiscal 2018 were $222.0 million, an increase of $5.7 million compared to the $216.3 million of SG&A during fiscal 2017. The following table shows the components of SG&A costs for the twelve months ended October 31, 2018 and 2017.

Regarding the table above, the change in start-up expense in any particular period relates to the stage of the start-up process in which a facility under construction is in during the period. Non-construction related expenses, such as labor, training and office-related expenses for a facility under construction are recorded as start-up expense until the facility begins operations. As a facility moves closer to actual start-up, the expenses incurred for labor, training, etc. increase. As a result, amounts

training, etc. increase. As a result, amounts classified as start-up expenses will increase period over period until the facility begins production. Once production begins, the expenses from that point forward are recorded as costs of goods sold. The increase in legal expenses was primarily attributable to our ongoing defense of the litigation described in “Part II, Item 3. Legal Proceedings” of this Form 10-K. The increases in trainee expense and administrative salaries were primarily attributable to

salaries were primarily attributable to increases in personnel that coincide with the Company's growth plans. The decrease in bonus expense, payouts of which are based on profitability, was the result of profitability not reaching the required levels for payout of that incentive. The decrease in ESOP expense, payouts of which are based on profitability, was attributable to the difference in the level of profitability between fiscal 2018 and 2017. The increase in all other SG&A expenses was the result of a

in all other SG&A expenses was the result of a net increase in various other categories of SG&A costs.

 |
| table | Selling, General and Administrative Costs (in thousands) |                                      |                                      |
-------------------------------------------------------- | ------------------------------------ | ------------------------------------ | --------------------
Description                                              | Twelve months ended October 31, 2018 | Twelve months ended October 31, 2017 | Increase/(Decrease)
Start-up expense (Tyler, Texas complex)                  | $13,394                              | $403                                 | $ 12,991
Legal services expense                                   | 17,573                               | 7,879                                | 9,694
All other SG&A                                           | 68,863                               | 61,847                               | 7,016
Administrative salary expense                            | 42,288                               | 36,193                               | 6,095
Trainee expense                                          | 21,553                               | 16,182                               | 5,371
Charter aircraft expense                                 | 2,167                                | 900                                  | 1,267
Depreciation expense - machinery and equipment           | 5,801                                | 4,555                                | 1,246
Stock compensation expense                               | 15,702                               | 16,952                               | (1,250)
Marketing expense                                        | 32,624                               | 34,272                               | (1,648)
Start-up expense (St. Pauls, North Carolina complex)     | —                                    | 4,022                                | (4,022)
Bonus award program expense                              | —                                    | 15,098                               | (15,098)
Employee Stock Ownership Plan ("ESOP") expense           | 2,000                                | 18,000                               | (16,000)
Total SG&A                                               | $221,965                             | $216,303                             | $ 5,662 |


| _id | d1a7250b0 |
| title |  |
| text | The following table summarizes the potentially dilutive common shares that were excluded from diluted weighted-average common shares outstanding because including them would have had an anti-dilutive effect (in thousands):

Since the Company expects to settle the principal amount of its outstanding convertible senior notes in cash and any excess in cash or shares of the Company’s Class A Common Stock, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The conversion spread will have a dilutive impact on diluted net income per share of common stock when the average market price of the Company’s Class A Common Stock

price of the Company’s Class A Common Stock for a given period exceeds the conversion price of $81.45 per share for the Notes.

 |
| table | |       | Year Ended December 31, |
------------------------------------------------------------------------ | ----- | ----------------------- | ------
                                                                         | 2019  | 2018                    | 2017
Shares of common stock issuable under equity incentive plans outstanding | 6,832 | 8,943                   | 10,806
Convertible senior notes                                                 | 1,905 | 79                      | -
Potential common shares excluded from diluted net loss per share         | 8,737 | 9,022                   | 10,806 |


| _id | d1b395dea |
| title |  |
| text | 29 Employee Share Ownership Plan (ESOP)
The cost of shares in intu properties plc held by the Trustee of the ESOP operated by the Company is accounted for as a deduction from equity.

The purpose of the ESOP is to acquire and hold shares which will be transferred to employees in the future under the Group’s employee incentive arrangements as described in note 7 including joint ownership of shares in its role as Trustee of the Joint Share Ownership Plan. During 2019, no dividends in respect of these shares have been waived by agreement (2018: £1.6 million).

 |
| table | |                | 2019  |                | 2018
-------------- | -------------- | ----- | -------------- | -----
               | Shares million | £m    | Shares million | £m
At 1 January   | 11.2           | 37.0  | 11.6           | 39.1
Acquisitions   | 0.2            | 0.1   | 0.6            | 0.9
Disposals      | (1.1)          | (3.5) | (1.0)          | (3.0)
At 31 December | 10.3           | 33.6  | 11.2           | 37.0 |


| _id | d1b2fab74 |
| title |  |
| text | The components of our income tax provision for the years ended December 31, 2019, 2018 and 2017 are as follows (in thousands):
As a result of a loss in a foreign location, we have a net operating loss carry-forward (“NOL”) of approximately $0.3 million
available to offset future income. All $0.3 million of the NOL expires in 2025. We have established a valuation allowance for this
NOL because the ability to utilize it is not more likely than not.

We have tax credit carry-forwards of approximately $5.1 million available to offset future state tax. These tax credit carry-forwards
expire in 2020 to 2029. These credits represent a deferred tax asset of $4.0 million after consideration of the federal benefit of state tax
deductions. A valuation allowance of $1.8 million has been established for these credits because the ability to use them is not more
likely than not.

likely than not.
At December 31, 2019 we had approximately $58.2 million of undistributed earnings and profits. The undistributed earnings and
profits are considered previously taxed income and would not be subject to U.S. income taxes upon repatriation of those earnings, in
the form of dividends. The undistributed earnings and profits are considered to be permanently reinvested, accordingly no provision

for local withholdings taxes have been provided, however, upon repatriation of those earnings, in the form of dividends, we could be
subject to additional local withholding taxes.

 |
| table | |              | Year Ended December 31,    |
---------------------------------- | ------------ | -------------------------- | --------
                                   | 2019         | 2018                       | 2017
Current:                           |              |                            |
Federal                            | $ 18,682     | $ 22,606                   | $ 53,998
State                              | 5,711        | 6,182                      | 6,595
Foreign                            | 7,323        | 7,018                      | 6,185
                                   | 31,716       | 35,806                     | 66,778
Deferred:                          |              |                            |
Federal                            | (863 )       | (3,127 )                   | 1,590
State                              | (326 )       | (674 )                     | 35
Foreign                            | (212 )       | (464 )                     | (51 )
                                   | (1,401 )     | (4,265 )                   | 1,574
Total                              | $ 30,315     | $ 31,541                   | $ 68,352 |


| _id | d1a7138d8 |
| title |  |
| text | Contractual Obligations
The following table summarizes our significant contractual obligations at March 31, 2019, and the effect such obligations are expected to have on our liquidity and cash flows in future periods (in millions):
(1) Operating lease obligations include $18.1 million of future lease payments which is recorded as a liability on the balance sheet as of March 31, 2019. This obligation is due under an operating lease from our acquisition of Atmel for a building in San Jose, California.

(2) Capital purchase obligations represent commitments for construction or purchases of property, plant and equipment. These obligations were not recorded as liabilities on our balance sheet as of March 31, 2019, as we have not yet received the related goods or taken title to the property.
(3) Other purchase obligations and commitments include payments due under various types of licenses and outstanding purchase commitments with our wafer foundries.
(4) The Term Loan Facility matures on May 29, 2025.

(5) For purposes of this table, we have assumed that the principal of our 2023 revolving loans outstanding at March 31, 2019 will be paid on May 18, 2023, which is the maturity date of such borrowings.
(6) For purposes of this table, we have assumed that the principal of our 2017 senior convertible debt will be paid on February 15, 2027, which is the maturity date of such debt.

(7) For purposes of this table, we have assumed that the principal of our 2015 Senior Convertible Debt will be paid on February 15, 2025, which is the maturity date of such debt.
(8) For purposes of this table, we have assumed that the principal of our 2017 Junior Convertible Debt will be paid on February 15, 2037, which is the maturity date of such debt.

(9) For purposes of this table, pension obligations due in more than 5 years represent the expected pension payments from 2025 through 2029. It excludes pension obligations subsequent to 2029.

(10) During fiscal 2018, we recognized a provisionary one-time transition tax on accumulated unrepatriated foreign earnings, estimated at $644.7 million, as a result of the recent U.S. tax reform. As of December 31, 2018, with the conclusion of the measurement period in accordance with SAB 118, we increased this amount by $13.1 million to $657.8 million, of which we expect cash payments of approximately $280.7 million after offsets by the utilization of various tax attribute carryforwards in the United

various tax attribute carryforwards in the United States. Our first payment on this obligation of $35.0 million was made in the quarter ended September 30, 2018 and we expect future cash payments of approximately $245.7 million. This tax is to be paid over a period of eight years, with 8% of the transition tax paid each year for fiscal 2019 through fiscal 2023, and 15%, 20%, and 25%, respectively, to be paid during fiscal 2024, 2025, and 2026.

(11) The contractual obligations do not include amounts related to uncertain tax positions because reasonable estimates cannot be made.

Purchase orders or contracts for the purchase of raw materials and other goods and services, with the exception of commitments to our wafer foundries, are not included in the table above. We are not able to determine the aggregate amount of such purchase orders that represent contractual obligations, as purchase orders may represent authorizations to purchase rather than binding agreements. For the purpose of this table, contractual obligations for the purchase of goods or services are defined as

the purchase of goods or services are defined as agreements that are enforceable and legally binding on us and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Our purchase orders are based on our current manufacturing needs and are fulfilled by our vendors with short time horizons. We do not have significant agreements for the purchase of raw materials or other goods

for the purchase of raw materials or other goods specifying minimum quantities or set prices that exceed our expected requirements for three months. We also enter into contracts for outsourced services; however, the obligations under these contracts were not significant and the contracts generally contain clauses allowing for cancellation without significant penalty.

The expected timing of payment of the obligations discussed above is estimated based on current information. Timing of payments and actual amounts paid may be different depending on the time of receipt of goods or services or changes to agreed-upon amounts for some obligations.

 |
| table | |           |                  | Payments Due by Period |             |
---------------------------------------------- | --------- | ---------------- | ---------------------- | ----------- | -----------------
                                               | Total     | Less than 1 year | 1 – 3 years            | 3 – 5 years | More than 5 years
Operating lease obligations (1)                | $167.1    | $49.0            | $68.4                  | $27.1       | $22.6
Capital purchase obligations (2)               | 18.8      | 18.8             | —                      | —           | —
Other purchase obligations and commitments (3) | 205.6     | 194.9            | 10.5                   | 0.2         | —
Term Loan Facility (4)                         | 2,435.4   | 72.5             | 174.7                  | 174.4       | 2,013.8
Revolving Credit Facility (5)                  | 3,879.0   | 147.0            | 294.0                  | 3,438.0     | —
2023 and 2021 Senior Notes                     | 2,293.0   | 82.5             | 1,145.5                | 1,065.0     | —
2017 Senior Convertible Debt (6)               | 2,339.1   | 33.6             | 67.3                   | 67.3        | 2,170.9
2015 Senior Convertible Debt (7)               | 1,893.2   | 28.0             | 56.1                   | 56.1        | 1,753.0
2017 Junior Convertible Debt (8)               | 964.0     | 15.4             | 30.9                   | 30.9        | 886.8
Pension obligations (9)                        | 20.7      | 1.3              | 3.4                    | 4.1         | 11.9
Transition tax obligation (10)                 | 245.7     | 9.9              | 44.9                   | 64.6        | 126.3
Total contractual obligations (11)             | $14,461.6 | $652.9           | $1,895.7               | $4,927.7    | $6,985.3 |


| _id | d1b396b78 |
| title |  |
| text | The failed-sale-leaseback accounting treatment had the following effects on our consolidated results of operations for the years ended December 31, 2018 and 2017:

After factoring in the costs to sell the data centers and colocation business, excluding the impact from the failed-sale-leaseback accounting treatment, the sale resulted in a $20 million gain as a result of the aggregate value of the proceeds we received exceeding the carrying value of the assets sold and liabilities assumed. Based on the fair market values of the failed-sale-leaseback assets, the failed-sale-leaseback accounting treatment resulted in a loss of $102 million as a result of the requirement

of $102 million as a result of the requirement to treat a certain amount of the pre-tax cash proceeds from the sale of the assets as though it were the result of a financing obligation. The combined net loss of $82 million was included in selling, general and administrative expenses in our consolidated statement of operations for the year ended December 31, 2017.

Effective November 3, 2016, which is the date we entered into the agreement to sell a portion of our data centers and colocation business, we ceased recording depreciation of the property, plant and equipment to be sold and amortization of the business’s intangible assets in accordance with applicable accounting rules. Otherwise, we estimate that we would have recorded additional depreciation and amortization expense of $67 million from January 1, 2017 through May 1, 2017.

Upon adopting ASU 2016-02, accounting for the failed sale leaseback is no longer applicable based on our facts and circumstances, and the real estate assets and corresponding financing obligation were derecognized from our consolidated financial statements. Please see “Leases” (ASU 2016-02) in Note 1— Background and Summary of Significant Accounting Policies for additional information on the impact the new lease standard will have on the accounting for the failed-sale-leaseback.

 |
| table | | Positive (Negative) Impact to Net Income |
-------------------------------------------------------------------------------------------- | ---------------------------------------- | -----
                                                                                | December 31,                             |
                                                                                | 2018                                     | 2017
                                                                                | (Dollars in millions)                    |
Increase in revenue                                                                          | $74                                      | 49
Decrease in cost of sales                                                                    | 22                                       | 15
Increase in loss on sale of business included in selling, general and administrative expense | —                                        | (102)
Increase in depreciation expense (one-time)                                                  | —                                        | (44)
Increase in depreciation expense (ongoing)                                                   | (69)                                     | (47)
Increase in interest expense                                                                 | (55)                                     | (39)
Decrease in income tax expense                                                               | 7                                        | 65
Decrease in net income                                                                       | $(21)                                    | (103) |


| _id | d1b39a6ce |
| title |  |
| text | Contractual Obligations and Contingent Liabilities and Commitments
Our principal commitments consist primarily of obligations under operating and financing leases, which include among others, certain leases of our offices, colocations and servers as well as contractual commitment related network infrastructure and data center operations. The following table summarizes our commitments to settle contractual obligations in cash as of December 31, 2019:

(1) Finance leases are related to servers and network infrastructure and our data center operations.
As of December 31, 2019, we had severance agreements with certain employees which would require us to pay up to approximately $6.4 million if all such employees were terminated from employment with our Company following a triggering event (e.g., change of control) as defined in the severance agreements.

 |
| table | | Payments Due by Year Ending December 31, 2020 |            |             |             |
---------------------------------------------- | --------------------------------------------- | ---------- | ----------- | ----------- | --------------
(In thousands)                                 | Total                                         | Year 1 (1) | Years 2 & 3 | Years 4 & 5 | Beyond 5 Years
Operating leases, including imputed interest   | 12,807                                        | 3,519      | 5,102       | 4,186       | —
Finance leases, including imputed interest (1) | 2,165                                         | 1,423      | 736         | 6           | —
Total contractual obligations                  | $ 14,972                                      | $ 4,942    | $ 5,838     | $ 4,192     | $ — |


| _id | d1b31ed3a |
| title |  |
| text | AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular amounts in millions, unless otherwise disclosed)
Additional information relating to the total assets of the Company’s operating segments is as follows for the years ended December 31,:
(1) Total assets in each of the Company’s property segments includes the Right-of-use asset recognized in connection with the Company’s adoption of the new lease accounting standard.

(2) Balances are translated at the applicable period end exchange rate, which may impact comparability between periods.
(3) Balances include corporate assets such as cash and cash equivalents, certain tangible and intangible assets and income tax accounts that have not been allocated to specific segments.

 |
| table | | 2019 (1)  | 2018      | 2017
-------------------------- | --------- | --------- | ---------
U.S. property              | $22,624.6 | $18,782.0 | $19,032.6
Asia property (2)          | 5,307.8   | 4,938.8   | 4,770.8
Africa property (2)        | 4,711.1   | 1,929.7   | 1,673.4
Europe property (2)        | 1,535.3   | 1,438.1   | 1,540.2
Latin America property (2) | 8,125.5   | 5,594.7   | 5,868.4
Services                   | 26.8      | 46.3      | 42.3
Other (3)                  | 470.5     | 280.8     | 286.6
Total assets               | $42,801.6 | $33,010.4 | $33,214.3 |


| _id | d1b390a2a |
| title |  |
| text | Prepaid expenses and other current assets
Prepaid expenses and other current assets consisted of the following at December 31, 2019 and 2018 (in thousands):

(1) In November 2014 and February 2016, we entered into a term loan agreement and a convertible loan agreement, respectively, with Clean Energy Collective, LLC (“CEC”). Our term loan bears interest at 16% per annum, and our convertible loan bears interest at 10% per annum. In November 2018, we amended the terms of the loan agreements to (i) extend their maturity to June 2020, (ii) waive the conversion features on our convertible loan, and (iii) increase the frequency of interest payments, subject to

the frequency of interest payments, subject to certain conditions. In January 2019, CEC finalized certain restructuring arrangements, which resulted in a dilution of our ownership interest in CEC and the loss of our representation on the company’s board of managers. As a result of such restructuring, CEC no longer qualified to be accounted for under the equity method. As of December 31, 2019, the aggregate balance outstanding on the loans was $23.9 million and was presented within “Prepaid expenses and

and was presented within “Prepaid expenses and other current assets.” As of December 31, 2018, the aggregate balance outstanding on the loans was $22.8 million and was presented within “Notes receivable, affiliate.”

(2) See Note 9. “Derivative Financial Instruments” to our consolidated financial statements for discussion of our derivative instruments.

 |
| table | | 2019     | 2018
----------------------------------------- | -------- | --------
Prepaid expenses                          | $137,927 | $90,981
Prepaid income taxes .                    | 47,811   | 59,319
Indirect tax receivables .                | 29,908   | 26,327
Restricted cash                           | 13,697   | 19,671
Notes receivable (1)                      | 23,873   | 5,196
Derivative instruments (2) .              | 1,199    | 2,364
Other current assets                      | 22,040   | 39,203
Prepaid expenses and other current assets | $276,455 | $243,061 |


| _id | d1b334a2c |
| title |  |
| text | Summary cash flow information is set forth below for the years ended December 31, (in millions):

We use our cash flows to fund our operations and investments in our business, including tower maintenance and improvements, communications site construction and managed network installations and tower and land acquisitions. Additionally, we use our cash flows to make distributions, including distributions of our REIT taxable income to maintain our qualification for taxation as a REIT under the Code. We may also repay or repurchase our existing indebtedness or equity from time to time. We typically fund our

equity from time to time. We typically fund our international expansion efforts primarily through a combination of cash on hand, intercompany debt and equity contributions.

In April 2019, Tata Teleservices and Tata Sons Limited, two of our minority holders in India, delivered notice of exercise
of their put options with respect to their remaining combined holdings in our Indian subsidiary, ATC TIPL (see note 15 to our
consolidated financial statements included in this Annual Report). Accordingly, we expect to pay an amount equivalent to INR
24.8 billion (approximately $347.6 million at the December 31, 2019 exchange rate) to redeem the put shares in the first half of

2020, subject to regulatory approval. In connection with the closing of the Eaton Towers Acquisition,

In April 2019, Tata Teleservices and Tata Sons Limited, two of our minority holders in India, delivered notice of exercise of their put options with respect to their remaining combined holdings in our Indian subsidiary, ATC TIPL (see note 15 to our consolidated financial statements included in this Annual Report). Accordingly, we expect to pay an amount equivalent to INR 24.8 billion (approximately $347.6 million at the December 31, 2019 exchange rate) to redeem the put shares in the first half of 2020,

redeem the put shares in the first half of 2020, subject to regulatory approval. In connection with the closing of the Eaton Towers Acquisition,  In April 2019, Tata Teleservices and Tata Sons Limited, two of our minority holders in India, delivered notice of exercise of their put options with respect to their remaining combined holdings in our Indian subsidiary, ATC TIPL (see note 15 to our consolidated financial statements included in this Annual Report). Accordingly, we expect to pay an amount

Report). Accordingly, we expect to pay an amount equivalent to INR 24.8 billion (approximately $347.6 million at the December 31, 2019 exchange rate) to redeem the put shares in the first half of 2020, subject to regulatory approval. In connection with the closing of the Eaton Towers Acquisition, we entered into an agreement with MTN to acquire MTN’s noncontrolling interests in each of our joint ventures in Ghana and Uganda for total consideration of approximately $523.0 million. The transaction is

approximately $523.0 million. The transaction is expected to close in the first quarter of 2020, subject to regulatory approval and other closing conditions. In April 2019, Tata Teleservices and Tata Sons Limited, two of our minority holders in India, delivered notice of exercise of their put options with respect to their remaining combined holdings in our Indian subsidiary, ATC TIPL (see note 15 to our consolidated financial statements included in this Annual Report). Accordingly, we expect to pay an

Annual Report). Accordingly, we expect to pay an amount equivalent to INR 24.8 billion (approximately $347.6 million at the December 31, 2019 exchange rate) to redeem the put shares in the first half of 2020, subject to regulatory approval. In connection with the closing of the Eaton Towers Acquisition

As of December 31, 2019, we had total outstanding indebtedness of $24.2 billion, with a current portion of $2.9 billion. During the year ended December 31, 2019, we generated sufficient cash flow from operations to fund our capital expenditures and debt service obligations, as well as our required distributions. We believe the cash generated by operating activities during the year ending December 31, 2020, together with our borrowing capacity under our credit facilities and cash on hand, will be sufficient

facilities and cash on hand, will be sufficient to fund our required distributions, capital expenditures, debt service obligations (interest and principal repayments) and signed acquisitions. As of December 31, 2019, we had $1.3 billion of cash and cash equivalents held by our foreign subsidiaries, of which $583.0 million was held by our joint ventures. While certain subsidiaries may pay us interest or principal on intercompany debt, it has not been our practice to repatriate earnings from our foreign

practice to repatriate earnings from our foreign subsidiaries primarily due to our ongoing expansion efforts and related capital needs. However, in the event that we do repatriate any funds, we may be required to accrue and pay certain taxes.

 |
| table | | 2019      | 2018      | 2017
---------------------------------------------------------------------------------------------------------- | --------- | --------- | ---------
Net cash provided by (used for):                                                                           |           |           |
Operating activities                                                                                | $3,752.6  | $3,748.3  | $2,925.6
Investing activities                                                                                | (3,987.5) | (2,749.5) | (2,800.9)
Financing activities                                                                                | 521.7     | (607.7)   | (113.0)
Net effect of changes in foreign currency exchange rates on cash and cash equivalents, and restricted cash | (13.7)    | (41.1)    | 6.7
Net increase in cash and cash equivalents, and restricted cash                                             | $273.1    | $350.0    | $18.4 |


| _id | d1b3443e6 |
| title |  |
| text | Orders for Digital Industries declined due to lower demand in the short-cycle factory automation and motion control businesses, which faced increasingly adverse market conditions during the course of the fiscal year, particularly in the automotive and machine building industries. These declines were only partly offset by clear growth in the process automation business and a moderate increase in the software business, which was due to positive currency translation effects and new volume from recent

translation effects and new volume from recent acquisitions, particularly including Mendix.

The latter two businesses were also the drivers for revenue growth, as year-overyear revenue growth for the short-cycle businesses in the first half of fiscal 2019 gave way to declines in the second half. On a geographic basis, orders declined in the regions Europe, C. I. S., Africa, Middle East and in the Americas, only partly offset by an increase in the Asia, Australia region. Revenue rose in all three reporting regions. The software business strengthened its contribution to Adjusted EBITA with a

its contribution to Adjusted EBITA with a double-digit increase.

Higher expenses related to new cloud-based offerings were partly offset by a € 50 million gain from the sale of an equity investment. The process automation business showed a moderate increase in Adjusted EBITA, due mainly to higher revenue. Nevertheless, Adjusted EBITA for Digital Industries overall came in slightly lower year-over-year due to clear declines in the short-cycle businesses. Severance charges were € 92 million in fiscal 2019, up from € 75 million a year earlier. Digital Industries’ order

million a year earlier. Digital Industries’ order backlog was € 5 billion at the end of the fiscal year, of which € 4 billion are expected to be converted into revenue in fiscal 2020.

Digital Industries achieved its results in a market environment that lost momentum in the course of fiscal 2019. In particular, demand for investment goods eroded notably in the second half of the fiscal year. All regions were impacted by the slowdown, and countries with strong focus on investment goods and strong export ties to China suffered notably. While process industries still benefited from positive development of raw material prices, discrete industries faced headwinds from low demand including

faced headwinds from low demand including destocking effects. The automotive industry was hit by production cuts in Europe and weak demand in China. This, among other factors, also impacted the machine building industry, particularly affecting customers in Germany and Japan.

Production
growth in the pharmaceutical and chemicals industries flattened

during the course of fiscal 2019, due in part to spillover effects from the automotive industry on related chemicals segments. The food and beverage industry grew modestly and global electronics and semiconductor production expanded but prices were under pressure. For fiscal 2020, the market environment for Digital Industries is expected to weaken further. Manufacturing investments are expected to decrease at least moderately but then begin to stabilize in the second half of fiscal 2020. An overall decline

second half of fiscal 2020. An overall decline in investment sentiment caused by global trade tensions, among other factors, dampens short-term expectations and fuels increasing cautiousness for investments globally. A weakening of growth in China could lead to spillover effects in other Asian

countries and also in Europe.

 |
| table | |        | Fiscal year |        | % Change
-------------------------- | ------ | ----------- | ------ | --------
(in millions of €)         | 2019   | 2018        | Actual | Comp.
Orders                     | 15,944 | 16,287      | (2) %  | (4) %
Revenue                    | 16,087 | 15,587      | 3 %    | 2 %
therein: software business | 4,039  | 3,560       | 13%    | 8%
Adjusted EBITA             | 2,880  | 2,898       | (1) %  |
Adjusted EBITA margin      | 17.9 % | 18.6 %      |        | |


| _id | d1b36783c |
| title |  |
| text | Finite-lived Intangible Assets
Other intangible assets, net consisted of the following:
The remaining $152 of intangible asset at December 31, 2019 is expected to be amortized in 2020.

 |
| table | |          | December 31,
----------------------------------------------------- | -------- | ------------
                                                      | 2019     | 2018
Recipes                                               | $ 44     | $ 44
Customer lists and other customer related intangibles | 4,529    | 4,529
Customer relationships                                | 985      | 985
Trade names                                           | 2,248    | 2,248
Formula                                               | 438      | 438
                                                      | 8,244    | 8,244
Accumulated amortization                              | (8,092 ) | (7,900 )
Intangible assets, net                                | $ 152    | $ 344 |


| _id | d1a72135c |
| title |  |
| text | The following table presents the components of impairment and other charges, net, in each fiscal year (in thousands):

Restructuring costs decreased by $2.2 million as a result of lower severance expenses, as our general and administrative cost reduction initiative came to its conclusion as planned. Costs of closed restaurants and other increased by $3.8 million, primarily due to a $3.5 million charge recorded in 2019 related to the write- off of software development costs associated with a discontinued technology project. Gains on disposition of property and equipment, net, increased by $7.9 million, primarily due to a

increased by $7.9 million, primarily due to a $5.7 million gain related to a sale of property and a$0.8 million gain related to an eminent domain transaction in 2019.

Refer to Note 9, Impairment and Other Charges, Net, of the notes to the consolidated financial statements for additional information regarding these charges.

 |
| table | | 2019    | 2018
------------------------------------------------------------ | ------- | -------
Restructuring costs                                          | $8,455  | $10,647
Costs of closed restaurants and other                        | 8,628   | 4,803
(Gains) losses on disposition of property and equipment, net | (6,244) | 1,627
Accelerated depreciation                                     | 1,616   | 1,130
Operating restaurant impairment charges                      | —       | 211
                                                             | $12,455 | $18,418 |


| _id | d1b334f90 |
| title |  |
| text | Item 6. Selected Financial Data

The following selected consolidated financial data set forth below was derived from our historical audited consolidated financial statements and should be read in conjunction with Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 8 – Financial Statements and Supplementary Data, and other financial data included elsewhere in this Annual Report on Form 10-K. Our historical results of operations are not indicative of our future results of operations.

(2) Fiscal 2018 and 2017 have been adjusted for our retrospective adoption of the new accounting standard Revenue from Contracts with Customers (ASC 606). Refer to Note 7 – Revenue of the Notes to Consolidated Financial Statements for details.

 |
| table | | April 26, 2019 | April 27, 2018 (2) | April 28, 2017 (2) | April 29, 2016 | April 24, 2015
------------------------------------------------------------- | -------------- | ------------------ | ------------------ | -------------- | --------------
                                                              |                |                    |                    | (In millions)  |
Cash, cash equivalents and short-term investments             | $ 3,899        | $ 5,391            | $ 4,921            | $ 5,303        | $ 5,326
Working capital                                               | $ 1,743        | $ 3,421            | $ 2,178            | $ 2,786        | $ 4,064
Total assets                                                  | $ 8,741        | $ 9,991            | $ 9,562            | $ 10,037       | $ 9,401
Total debt                                                    | $ 1,793        | $ 1,926            | $ 1,993            | $ 2,339        | $ 1,487
Total deferred revenue and financed unearned services revenue | $ 3,668        | $ 3,363            | $ 3,213            | $ 3,385        | $ 3,197
Total stockholders' equity                                    | $ 1,090        | $ 2,276            | $ 2,949            | $ 2,881        | $ 3,414 |


| _id | d1a736054 |
| title |  |
| text | Results of Operations
Consolidated Results
Total Revenue

Total revenue for 2019 decreased 23% as compared to 2018 primarily due to pricing declines resulting from the challenging memory market environment in 2019. Sales of DRAM products for 2019 decreased 28% as compared to 2018 primarily due to declines in average selling prices of approximately 30% resulting from supply and demand imbalances, customer inventory corrections, and CPU shortages. Sales of NAND products for 2019 decreased 12% as compared to 2018 primarily due to declines in average selling prices

due to declines in average selling prices in the mid-40% range resulting from supply and demand imbalances, which were partially offset by significant increases in sales volumes. In addition, demand for our NAND products was adversely affected by the transition from SATA SSDs to NVMe SSDs. The higher NAND sales volumes in 2019 were driven by increases in sales of high-value mobile managed NAND products as well as discrete NAND products enabled by our execution in ramping 64- and 96-layer TLC 3D NAND.

Total revenue for 2018 increased 50% as compared to 2017. Higher revenue in 2018 for both DRAM and NAND as compared to 2017 were driven by strong execution in delivering high-value products featuring our 1Xnm DRAM and 64-layer 3D NAND technologies combined with strong demand for products across our primary markets. Sales of DRAM products for 2018 increased 64% from 2017 primarily due to an increase in average selling prices of approximately 35% and an increase in sales volumes of approximately 20% as a

in sales volumes of approximately 20% as a result of strong market conditions, particularly for cloud, enterprise, mobile, and graphics markets, combined with increased sales into high-value markets. Sales of NAND products for 2018 increased 20% from 2017 despite declines in average selling prices primarily due to an increase in sales volumes of approximately 30% driven by increases in sales of high-value SSD and mobile managed NAND products enabled by strong demand and our execution in delivering 3D NAND

demand and our execution in delivering 3D NAND products.

Overall Gross Margin

Our overall gross margin percentage decreased to 46% for 2019 from 59% for 2018 primarily due to declines in average selling prices partially offset by cost reductions resulting from strong execution in delivering products featuring advanced technologies and from continuous improvement initiatives to reduce production costs. Underutilization of IMFT assets adversely impacted our gross margin by a per-quarter average of approximately $100 million in 2019 and $65 million in 2018, and we anticipate the

and $65 million in 2018, and we anticipate the adverse impact of underutilization at IMFT to increase to approximately $150 million per quarter beginning in the first quarter of 2020.

We continue to evaluate planned technology node transitions, capital spending and re-use rates for NAND equipment. Based on our preliminary assessment, we anticipate changing the depreciable life of our NAND equipment from five to seven years beginning in the first quarter of 2020. We anticipate this change will reduce our depreciation expense included in cost of goods sold for the first quarter of 2020 by approximately $80 million, increasing to approximately $100 to $150 million per quarter for the

$100 to $150 million per quarter for the remainder of 2020.

Our overall gross margin percentage increased to 59% for 2018 from 42% for 2017 primarily due to favorable market conditions across key markets combined with strong execution in delivering products featuring advanced technologies, including 1Xnm DRAM and 64-layer 3D NAND, enabling manufacturing cost reductions. For 2018 as compared to 2017, pricing for DRAM products increased while manufacturing costs declined and, for NAND products, manufacturing cost reductions outpaced declines in average selling

reductions outpaced declines in average selling prices.

 |
| table | For the year ended                                     | 2019    | 2019 | 2018    | 2018 | 2017    | 2017
------------------------------------------------------ | ------- | ---- | ------- | ---- | ------- | ----
Revenue                                                | $23,406 | 100% | $30,391 | 100% | $20,322 | 100%
Cost of goods sold                                     | 12,704  | 54%  | 12,500  | 41%  | 11,886  | 58%
Gross margin                                           | 10,702  | 46%  | 17,891  | 59%  | 8,436   | 42%
Selling, general, and administrative                   | 836     | 4%   | 813     | 3%   | 743     | 4%
Research and development                               | 2,441   | 10%  | 2,141   | 7%   | 1,824   | 9%
Other operating (income) expense, net                  | 49      | —%   | (57)    | —%   | 1       | —%
Operating income                                       | 7,376   | 32%  | 14,994  | 49%  | 5,868   | 29%
Interest income (expense), net                         | 77      | —%   | (222)   | (1)% | (560)   | (3)%
Other non-operating income (expense), net              | (405)   | (2)% | (465)   | (2)% | (112)   | (1)%
Income tax (provision) benefit                         | (693)   | (3)% | (168)   | (1)% | (114)   | (1)%
Equity in net income (loss) of equity method investees | 3       | —%   | (1)     | —%   | 8       | —%
Net income attributable to noncontrolling interests    | (45)    | —%   | (3)     | —%   | (1)     | —%
Net income attributable to Micron                      | $6,313  | 27%  | $14,135 | 47%  | $5,089  | 25% |


| _id | d1b339ea0 |
| title |  |
| text | A summary of option activity under all of the Company’s equity incentive plans at December 31, 2019 and changes during the period then ended is presented in the following table:
There were no options granted for the year ended December 31, 2019 and 2018. The total intrinsic value of options exercised during year ended December 31, 2019, 2018 and 2017 were $215.5 million, $74.6 million, and $41.2 million, respectively.

 |
| table | | Number of Options Outstanding (in thousands) | Weighted- Average Exercise Price Per Share | Weighted- Average Contractual Term (in Years) | Aggregate Intrinsic Value (in thousands)
--------------------------------------------------- | -------------------------------------------- | ------------------------------------------ | --------------------------------------------- | ----------------------------------------
Outstanding at December 31, 2016                    | 7,384                                        | $10.59                                     | 5.3                                           | $74,065
Granted                                             | 25                                           | 23.99                                      |                                               |
Exercised                                           | (1,722)                                      | 10.39                                      |                                               |
Canceled/Forfeited                                  | (401)                                        | 16.04                                      |                                               |
Outstanding at December 31, 2017                    | 5,286                                        | $10.30                                     | 4.2                                           | $201,480
Granted                                             | -                                            | -                                          |                                               |
Exercised                                           | (1,138)                                      | 8.17                                       |                                               |
Canceled/Forfeited                                  | (17)                                         | 18.79                                      |                                               |
Outstanding at December 31, 2018                    | 4,131                                        | $10.86                                     | 3.3                                           | $295,921
Granted                                             | -                                            | -                                          |                                               |
Exercised                                           | (1,742)                                      | 8.53                                       |                                               |
Canceled/Forfeited                                  | (132)                                        | 2.73                                       |                                               |
Outstanding at December 31, 2019                    | 2,257                                        | $13.13                                     | 2.5                                           | $351,428
Vested and expected to vest as of December 31, 2019 | 2,259                                        | $13.13                                     | 2.5                                           | $351,362
Excercisable as of December 31, 2019                | 2,243                                        | $13.10                                     | 2.5                                           | $349,002 |


| _id | d1b333032 |
| title |  |
| text | Reporting Channels and Whistleblower Protection
To ensure that our conduct meets relevant legal requirements and the highest ethical standards under the Ethics Code, TSMC provides multiple channels for reporting business conduct concerns.

First of all, our Audit Committee approved and we have implemented the “Complaint Policy and Procedures for Certain Accounting and Legal Matters” and “Procedures for Ombudsman System” that allow employees or any whistleblowers with relevant evidence to report any financial, legal, or ethical irregularities anonymously through either the Ombudsman or directly to the Audit Committee.

TSMC maintains additional internal reporting channels for our employees. To foster an open culture of ethics compliance, we encourage our employees and the third parties we do business with to report any suspected noncompliance with law or relevant TSMC policy.

TSMC treats any complaint and the investigation thereof in a confidential and sensitive manner, and strictly prohibits any form of retaliation against any individual who in good faith reports or helps with the investigation of any complaint. Due to the open reporting channels, TSMC receives reports on various issues from employees and external parties such as our customers and suppliers from time to time. Below is a summary of the Number of Reported Incidents.

Note 1: Among the 205 cases, 132 were related to employee relationship, 47 cases related to other matters (e.g. employee’s individual interest or private matters), and 26 cases related to ethical matters.

Note 2: One case involved an employee who requested a supplier to reserve a hotel and pay advance accommodation fees during his business trip, actions which violate TSMC policy, and the employee was disciplined. Another case involved an employee who abused his work relationship by requesting a supplier to make a personal loan to the employee, a severe violation of our Ethics Code, and the employee was terminated.

Note 3: After the investigation by TSMC’s Sexual Harassment Investigation Committee, four employees involved in confirmed cases of sexual harassment received severe discipline from the Company.

 |
| table | Year                                                 | FY 2016 | FY 2017 | FY 2018 | FY 2019
---------------------------------------------------- | ------- | ------- | ------- | ------------
Total reported cases                                 | 116     | 113     | 150     | 205 (Note 1)
Ethics-related cases                                 | 16      | 20      | 14      | 26
Cases investigated and verified as ethics violations | 2       | 4       | 1       | 2 (Note 2)
Sexual Harassment Investigation Committees Formed    | 5       | 7       | 3       | 4
Cases investigated and verified as violations        | 5       | 3       | 3       | 4 (Note 3) |


| _id | d1b2fb4a2 |
| title |  |
| text | Discontinued Operations
In December 2015, we completed the wind down of engineering, manufacturing and sales of our solar inverter product line (the "inverter business"). Accordingly, the results of our inverter business have been reflected as “Income (loss) from discontinued operations, net of income taxes” on our Consolidated Statements of Operations for all periods presented herein.

The effect of our sales of the remaining extended inverter warranties to our customers continues to be reflected in deferred revenue in our Consolidated Balance Sheets. Deferred revenue for extended inverter warranties and the associated costs of warranty service will be reflected in Sales and Cost of goods sold, respectively, from continuing operations in future periods in our Consolidated Statement of Operations, as the deferred revenue is earned and the associated services are rendered. Extended

the associated services are rendered. Extended warranties related to the inverter product line are no longer offered.

In May 2019, we divested our grid-tied central solar inverter repair and service operation. In conjunction with the divesture, the initial product warranty for the previously sold grid-tied central solar inverters was transferred to the buyer. Accordingly, a gain of $8.6 million net of tax expense of $2.4 million was recognized in Other income (expense) and Provision (benefit) for income taxes, respectively, in our discontinued operations for the year December 31, 2019. Operating income from discontinued

31, 2019. Operating income from discontinued operations for the year ended December 31, 2019 and 2018, also includes the impacts of changes in our estimated product warranty liability, the recovery of accounts receivable and foreign exchange gain or (losses).

Income (loss) from discontinued operations, net of income taxes (in thousands):

 |
| table | | Years Ended December 31, |
--------------------------------------------------------------- | ------------------------ | -------
                                                                | 2019                     | 2018
Sales                                                           | $  —                     | $  —
Cost of sales                                                   | (901)                    | (88)
Total operating expense                                         | 1,022                    | 96
Operating income (loss) from discontinued operations            | (121)                    | (8)
Other income (expense)                                          | 10,895                   | (24)
Income (loss) from discontinued operations before income taxes  | 10,774                   | (32)
Provision (benefit) for income taxes                            | 2,294                    | 6
Income (loss) from discontinued operations, net of income taxes | $ 8,480                  | $  (38) |


| _id | d1b3ab398 |
| title |  |
| text | AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular amounts in millions, unless otherwise disclosed)
17. OTHER OPERATING EXPENSE

Other operating expense consists primarily of impairment charges, net losses on sales or disposals of assets and other operating expense items. The Company records impairment charges to write down certain assets to their net realizable value after an indicator of impairment is identified and subsequent analysis determines that the asset is either partially recoverable or not recoverable. These assets consisted primarily of towers and related assets, which are typically assessed on an individual basis,

are typically assessed on an individual basis, network location intangibles, which relate directly to towers, and tenant-related intangibles, which are assessed on a tenant basis. Net losses on sales or disposals of assets primarily relate to certain non-core towers, other assets and miscellaneous items. Other operating expenses includes acquisition-related costs and integration costs.

Impairment charges included the following for the years ended December 31,:
(1) For the year ended December 31, 2018, impairment charges on tower and network location intangible assets included $258.3 million in India primarily related to carrier consolidation-driven churn events. In addition, the Company fully impaired the tenant relationship for Aircel Ltd., which resulted in an impairment charge of $107.3 million.

(2) During the year ended December 31, 2017, $81.0 million of impairment charges on tower and network location intangible assets and all impairment charges on tenant relationships were related to carrier consolidation-driven churn in India.
(3) For the year ended December 31, 2019, amount includes impairment charges related to right-of-use assets and land easements.

 |
| table | | 2019  | 2018 (1) | 2017 (2)
-------------------------------------------- | ----- | -------- | --------
Tower and network location intangible assets | $77.4 | $284.9   | $108.7
Tenant relationships                         | —     | 107.3    | 100.1
Other (3)                                    | 16.8  | 1.8      | 2.6
Total impairment charges                     | $94.2 | $394.0   | $211.4 |


| _id | d1a7289ae |
| title |  |
| text | 1 Effective January 1, 2019, we adopted IFRS 16, with the ongoing impacts of this standard included in our results prospectively from that date. Our 2018 and 2017 results have not been restated for the effects of IFRS 16. See “Accounting Policies”. 2 As defined. See “Key Performance Indicators”.

3 Adjusted EBITDA, adjusted EBITDA margin, and adjusted net income are non-GAAP measures and should not be considered substitutes or alternatives for GAAP measures. These are not defined terms under IFRS and do not have standard meanings, so may not be a reliable way to compare us to other companies. See “Non-GAAP Measures and Related Performance Measures” for information about these measures, including how we calculate them.

Revenue Consolidated revenue increased by 5% in 2018, reflecting revenue growth of 7% in Wireless and 1% in both Cable and Media. Wireless revenue increased as a result of the increased mix of subscribers on higher-rate plans from our various brands and an increase in sales of higher-value devices.

Cable revenue increased by 1% as the increase in Internet revenue from the general movement of customers to higher speed and usage tiers of our Internet offerings was partially offset by the decrease in legacy Television subscribers and the impact of Phone pricing packages. Media revenue increased by 1% as a result of higher revenue at the Toronto Blue Jays, including a distribution from Major League Baseball, and higher Sportsnet and other network subscription revenue, partially offset by lower

subscription revenue, partially offset by lower advertising revenue.

Adjusted EBITDA Consolidated adjusted EBITDA increased in 2018 to $5,983 million, reflecting increases in Wireless, Cable, and Media. Wireless adjusted EBITDA increased 10% as a result of the strong flow-through of service revenue growth, partially offset by higher expenditures associated with increased subscriber volumes and costs of devices.

Cable adjusted EBITDA increased by 3% in 2018 as a result of strong Internet revenue growth, the ongoing product mix shift to higher-margin Internet services, and various cost efficiency and productivity initiatives. Media adjusted EBITDA increased 54% primarily as a result of the increase in revenue as discussed above and lower operating expenses from improvements made to our cost structure across the divisions.

Net income and adjusted net income Net income and adjusted net income both increased in 2018 primarily as a result of higher adjusted EBITDA, partially offset by higher depreciation and amortization. Net income increased to $2,059 million in 2018 from $1,845 million in 2017 and adjusted net income increased to $2,241 million in 2018 from $1,902 million in 2017.
2018 FULL-YEAR RESULTS COMPARED TO 2017

 |
| table | 2018 FULL-YEAR RESULTS COMPARED TO 2017         |                         |                         |
----------------------------------------------- | ----------------------- | ----------------------- | -----------------------
                                                | Years ended December 31 | Years ended December 31 | Years ended December 31
(In millions of dollars, except margins)        | 2018 1                  | 2017 1                  | %Chg
Revenue                                         |                         |                         |
Wireless                                        | 9,200                   | 8,569                   | 7
Cable                                           | 3,932                   | 3,894                   | 1
Media                                           | 2,168                   | 2,153                   | 1
Corporate items and intercompany eliminations 2 | (204)                   | (247)                   | (17
Revenue                                         | 15,096                  | 14,369                  | 5
Total service revenue 2                         | 12,974                  | 12,550                  | 3
Adjusted EBITDA 3                               |                         |                         |
Wireless                                        | 4,090                   | 3,726                   | 10
Cable                                           | 1,874                   | 1,819                   | 3
Media                                           | 196                     | 127                     | 54
Corporate items and intercompany eliminations   | (177)                   | (170)                   | 4
Adjusted EBITDA 3                               | 5,983                   | 5,502                   | 9
Adjusted EBITDA margin 3                        | 39.6%                   | 38.3%                   |
Net income                                      | 2,059                   | 1,845                   | 12
Adjusted net income 3                           | 2,241                   | 1,902                   | 18 |


| _id | d1b2e387a |
| title |  |
| text | Lines of Credit
The following table summarizes our available lines of credit and committed and uncommitted lines of credit, including the revolving credit facility discussed above, and the amounts available under our accounts receivable securitization programs.
(1) Includes total borrowings under the accounts receivable securitization programs, the revolving credit facility and borrowings under lines of credit available to several subsidiaries.

(2) Of the total available lines of credit, $1,137.4 million were committed as of December 31, 2019.

 |
| table | | December 31, |
---------------------------------- | ------------ | ---------
(In millions)                      | 2019         | 2018
Used lines of credit (1)           | $ 98.9       | $ 232.8
Unused lines of credit             | 1,245.2      | 1,135.3
Total available lines of credit(2) | $ 1,344.1    | $ 1,368.1 |


| _id | d1b33ce20 |
| title |  |
| text | The Group’s revenue mainly comprises the sale of goods in-store and online, and hospitality and leisure services. Revenue is recognised when control of the goods has transferred to the customer or when the service is provided at an amount that reflects the consideration to which the Group expects to be entitled.

For sale of goods in-store, control of the goods transfers to the customer at the point the customer purchases the goods in-store. For sale of goods online, control of the goods transfers to the customer at the point the goods are delivered to, or collected by, the customer. Where payment for the goods is received prior to control transferring to the customer, revenue recognition is deferred in contract liabilities within trade and other payables in the Consolidated Statement of Financial Position until

Statement of Financial Position until the goods have been delivered to, or collected by, the customer.

Woolworths Rewards points granted by the Group provide customers with a material right to a discount on future purchases. The amounts allocated to Woolworths Rewards points are deferred in contract liabilities within trade and other payables in the Consolidated Statement of Financial Position until redeemed by the customer.

 |
| table | | 2019     | 2018
-------------------------------- | -------- | --------
                                 | 53 WEEKS | 52 WEEKS
                                 | $M       | $M
Sale of goods in-store           | 54,720   | 52,533
Sale of goods online             | 2,534    | 1,883
Leisure and hospitality services | 1,671    | 1,612
Other                            | 1,059    | 916
Total                            | 59,984   | 56,944 |


| _id | d1b37442e |
| title |  |
| text | KEY PERFORMANCE INDICATORS
Below is a summary of some of the quantitative performance indicators (as defined below) that are evaluated by management to assess our financial performance. Some of the indicators are non-GAAP measures and should not be considered as an alternative to any other measure for determining operating performance or liquidity that is calculated in accordance with generally accepted accounting principles.
Definitions and analysis of these performance indicators are as follows:

Net Sales Net sales include sales of lasers, laser systems, related accessories and service. Net sales for fiscal 2019 decreased 29.6% in our OLS segment and decreased 15.4% in our ILS segment from fiscal 2018. For a description of the reasons for changes in net sales refer to the ‘‘Results of Operations’’ section below.

Gross Profit as a Percentage of Net Sales Gross profit as a percentage of net sales (‘‘gross profit percentage’’) is calculated as gross profit for the period divided by net sales for the period. Gross profit percentage for OLS decreased to 47.3% in fiscal 2019 from 52.7% in fiscal 2018. Gross profit percentage for ILS decreased to 13.3% in fiscal 2019 from 26.7% in fiscal 2018. For a description of the reasons for changes in gross profit refer to the ‘‘Results of Operations’’ section below.

Research and Development as a Percentage of Net Sales Research and development as a percentage of net sales (‘‘R&D percentage’’) is calculated as research and development expense for the period divided by net sales for the period. Management considers R&D percentage to be an important indicator in managing our business as investing in new technologies is a key to future growth. R&D percentage increased to 8.2% in fiscal 2019 from 7.0% in fiscal 2018. For a description of the reasons for changes in R&D

a description of the reasons for changes in R&D spending refer to the ‘‘Results of Operations’’ section below.

Net Cash Provided by Operating Activities Net cash provided by operating activities shown on our Consolidated Statements of Cash Flows primarily represents the excess of cash collected from billings to our customers and other receipts over cash paid to our vendors for expenses and inventory purchases to run our business. We believe that cash flows from operations is an important performance indicator because cash generation over the long term is essential to maintaining a healthy business and providing

to maintaining a healthy business and providing funds to help fuel growth. For a description of the reasons for changes in Net Cash Provided by Operating Activities refer to the ‘‘Liquidity and Capital Resources’’ section below.

Days Sales Outstanding in Receivables We calculate days sales outstanding (‘‘DSO’’) in receivables as net receivables at the end of the period divided by net sales during the period and then multiplied by the number of days in the period, using 360 days for years. DSO in receivables indicates how well we are managing our collection of receivables, with lower DSO in receivables resulting in higher working capital availability. The more money we have tied up in receivables, the less money we have available

in receivables, the less money we have available for research and development, acquisitions, expansion, marketing and other activities to grow our business. Our DSO in receivables for fiscal 2019 remained unchanged at 67 days as compared to fiscal 2018.

Annualized Fourth Quarter Inventory Turns We calculate annualized fourth quarter inventory turns as cost of sales during the fourth quarter annualized and divided by net inventories at the end of the fourth quarter. This indicates how well we are managing our inventory levels, with higher inventory turns resulting in more working capital availability and a higher return on our investments in inventory. Our annualized fourth quarter inventory turns for fiscal 2019 decreased to 2.1 turns from 2.2 turns in

2019 decreased to 2.1 turns from 2.2 turns in fiscal 2018 primarily as a result of a decrease in demand for sales of our large ELA tools, partially offset by the impact of lower inventories due to restructuring charges.

Adjusted EBITDA as a Percentage of Net Sales We define adjusted EBITDA as operating income adjusted for depreciation, amortization, stock compensation expense, major restructuring costs and certain other non-operating income and expense items, such as costs related to our acquisitions. Key initiatives to reach our goals for EBITDA improvements include utilization of our Asian manufacturing locations, optimizing our supply chain and continued leveraging of our infrastructure.

We utilize a number of different financial measures, both GAAP and non-GAAP, such as adjusted EBITDA as a percentage of net sales, in analyzing and assessing our overall business performance, for making operating decisions and for forecasting and planning future periods. We consider the use of non-GAAP financial measures helpful in assessing our current financial performance and ongoing operations. While we use non-GAAP financial measures as a tool to enhance our understanding of certain aspects of our

our understanding of certain aspects of our financial performance, we do not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. We provide adjusted EBITDA in order to enhance investors’ understanding of our ongoing operations. This measure is used by some investors when assessing our performance.

 |
| table | | Fiscal   |
--------------------------------------------------------------------- | -------- | ----------
                                                                      | 2019     | 2018
Net Sales - OEM Laser Sources                                         | $886,676 | $1,259,477
Net Sales - Industrial Lasers & Systems                               | $543,964 | $643,096
Gross Profit as a Percentage of Net Sales—OEM Laser Sources           | 47.3%    | 52.7%
Gross Profit as a Percentage of Net Sales—Industrial Lasers & Systems | 13.3%    | 26.7%
Research and Development Expenses as a Percentage of Net Sales        | 8.2%     | 7.0%
Income From Continuing Operations Before Income Taxes                 | $60,048  | $361,555
Net Cash Provided by Operating Activities                             | $181,401 | $236,111
Days Sales Outstanding in Receivables                                 | 67       | 67
Annualized Fourth Quarter Inventory Turns                             | 2.1      | 2.2
Net Income From Continuing Operations as a Percentage of Net Sales    | 3.8%     | 13.0%
Adjusted EBITDA as a Percentage of Net Sales                          | 18.1%    | 28.9% |


| _id | d1b397320 |
| title |  |
| text | 5. Accrued expenses
Accrued expenses consisted of the following:

 |
| table | October 31,                  |         |
---------------------------- | ------- | -------
                             | 2019    | 2018
(In thousands)               |         |
Workers’ compensation claims | $9,687  | $9,020
Accrued wages                | 19,525  | 14,142
Accrued rebates              | 13,529  | 7,828
Accrued vacation             | 10,592  | 8,554
Accrued property taxes       | 11,331  | 9,453
Accrued payroll taxes        | 8,290   | 9,034
Other accrued expenses       | 9,986   | 11,922
Total accrued expenses       | $82,940 | $69,953 |


| _id | d1b32d380 |
| title |  |
| text | ALTERNATIVE PERFORMANCE MEASURES – continued
Liquidity: TORM defines liquidity as available cash, comprising cash and cash equivalents, including restricted cash, as well as undrawn credit facilities.
TORM finds the APM important as the liquidity expresses TORM’s financial position, ability to meet current liabilities and cash buffer. Furthermore, it expresses TORM’s ability to act and invest when possibilities occur.

 |
| table | USDm                                                 | 2019  | 2018  | 2017
---------------------------------------------------- | ----- | ----- | -----
Cash and cash equivalents, including restricted cash | 72.5  | 127.4 | 134.2
Undrawn credit facilities                            | 173.1 | 278.7 | 270.7
Liquidity                                            | 245.6 | 406.1 | 404.9 |


| _id | d1b345f84 |
| title |  |
| text | It rewards executives subject to performance against three equally weighted measures over a three year performance period:

Relative TSR is used as a measure in our LTI plan to align executive outcomes and long‐term shareholder value creation. The peer group is the ASX30 excluding metals and mining companies. Peer group ranking at the 75th percentile or higher 100% vesting is achieved and ranking at the median 50% vesting is achieved. Between the 75th  and median, pro-rata vesting is achieved from 50% to 100%. Peer group ranking below the median results in zero vesting.

Sales per square metre measures sales productivity improvements across the Food and Drinks businesses. Efficient use of our physical network for in‐store and online sales is core to our success.

ROFE is an important measures to drive behaviours consistent with the delivery of long‐term shareholder value. ROFE improvements can be delivered through earnings growth as well as the disciplined allocation of capital and management of assets, which is important for a business that is building capabilities for the future. Lease‐adjusted ROFE measures the balance between our earnings growth and the disciplined allocation and application of assets used to generate those earnings. We adjust for leases to

generate those earnings. We adjust for leases to recognise that a very significant portion of our sites are leased. This approach is also similar to the accounting standard definition of ROFE that will change to incorporate a lease-adjusted definition from F20.

The Sales/SQM and ROFE targets are published following the end of the performance period given the commercial sensitivity of this information.

 |
| table | | rTSR   | SALES/SQM | ROFE
------- | ------ | --------- | ------
Entry   | 16.66% | 6.66%     | 6.66%
Target  | n/a    | 20%       | 20%
Stretch | 33.33% | 33.33%    | 33.33% |


| _id | d1a73c530 |
| title |  |
| text | The following table compares our other consolidated operating results for 2019 and 2018:

Interest expense. Interest expense increased to $279.1 million in 2019, compared to $254.1 million in 2018, primarily due to: • an increase of $29.9 million primarily to the commencement of Teekay LNG's finance lease obligations upon the deliveries of the Myrina, Megara and Yamal Spirit LNG carriers and an increase in debt balance to pay for the final newbuilding installments on the Bahrain Spirit and Sean Spirit LNG carrier newbuilding deliveries;

• an increase of $6.7 million primarily due to the additional interest expense incurred by Teekay Tankers with respect to three sale-leaseback financing transactions completed in September 2018, November 2018 and May 2019; and • an increase of $6.3 million due to decreases in capitalized interest in Teekay LNG in 2019 as a result of vessels delivered during 2018 and 2019;

• an increase of $6.7 million primarily due to the additional interest expense incurred by Teekay Tankers with respect to three sale-leaseback financing transactions completed in September 2018, November 2018 and May 2019; and • an increase of $6.3 million due to decreases in capitalized interest in Teekay LNG in 2019 as a result of vessels delivered during 2018 and 2019;

• a decrease of $4.1 million relating to interest incurred by Teekay Parent in 2018 as a result of the prepayment of the outstanding amounts under one revolving credit facility and lower debt issuance cost amortization in 2019 on an amendment of another revolving credit facility.

Realized and unrealized (losses) gains on non-designated derivative instruments. Realized and unrealized (losses) gains related to derivative instruments that are not designated as hedges for accounting purposes are included as a separate line item in the consolidated statements of loss. Net realized and unrealized losses on non-designated derivatives were $13.7 million for 2019, compared to $14.9 million for 2018, as detailed in the table below:

The realized losses relate to amounts we actually realized for settlements related to these derivative instruments in normal course and amounts
paid to terminate interest rate swap agreement terminations.

During 2019 and 2018, we had interest rate swap agreements with aggregate average net outstanding notional amounts of approximately $1.1 billion and $1.3 billion, respectively, with average fixed rates of approximately 3.0% and 2.9%, respectively. Short-term variable benchmark interest rates during these periods were generally less than 3.0% and, as such, we incurred realized losses of $8.3 million and $13.9 million during 2019 and 2018, respectively, under the interest rate swap agreements.

We did not incur any realized losses related to the termination of interest rate swaps in 2019, compared to realized losses of $13.7 million during 2018. Primarily as a result of significant changes in long-term benchmark interest rates during 2019 and 2018, we recognized unrealized losses of $7.9 million in 2019 compared to unrealized gains of $33.7 million in 2018 under the interest rate swap agreements.

During the year ended December 31, 2019, we recognized a reversal of previously unrealized losses of $26.9 million on all the warrants held by Teekay to purchase common units of Altera (or the Warrants) as a result of the sale of the Warrants to Brookfield, and we concurrently recognized a realized loss of $25.6 million during the same period. During the year ended December 31, 2018, we recognized unrealized losses of $21.1 million on the Warrants. Please read “Item 18 – Financial Statements: Note 12 –

read “Item 18 – Financial Statements: Note 12 – Fair Value Measurements and Financial Instruments.”

Foreign Exchange Loss. Foreign currency exchange losses were $13.6 million in 2019 compared to gains of $6.1 million in 2018. Our foreign currency exchange gains and losses, substantially all of which are unrealized, are primarily due to the relevant period-end revaluation of our Norwegian-Krone (or NOK)-denominated debt and our Euro-denominated term loans, finance leases and restricted cash for financial reporting purposes and the realized and unrealized (losses) gains on our cross currency swaps.

Gains on NOK-denominated and Euro-denominated monetary liabilities reflect a stronger U.S. Dollar against the NOK and Euro on the date of revaluation or settlement compared to the rate in effect at the beginning of the period. Losses on NOK-denominated and Euro-denominated monetary liabilities reflect a weaker U.S. Dollar against the NOK and Euro on the date of revaluation or settlement compared to the rate in effect at the beginning of the period.

For 2019, foreign currency exchange loss included realized losses of $5.1 million (2018 – $6.5 million) and unrealized losses of $13.2 million (2018 – gains of $21.2 million) on our cross currency swaps, realized losses on maturity and termination of cross currency swaps of $nil (2018 – $42.3 million) and unrealized gains of $5.8 million (2018 – gains of $19.2 million) on the revaluation of our NOK-denominated debt.

Loss on deconsolidation of Altera. Loss on deconsolidation of Altera was $7.1 million in 2018. Please read "Item 18 – Financial Statements: Note 4 – Deconsolidation and Sale of Altera."

Other loss. Other loss was $14.5 million in 2019 compared to $2.0 million in 2018. Other loss in 2019 was primarily due to losses of $10.6 million on the repurchase of 2020 Notes, $2.0 million tax expense on Teekay LNG's income from U.S. sources and $1.4 million losses relating to Teekay LNG's sale lease-back refinancing of the Torben Spirit completed in 2019. Other loss in 2018 included $1.8 million related to repurchases of the 2020 Notes and $0.6 million related to the tax indemnification guarantee

related to the tax indemnification guarantee liability related to the Teekay Nakilat finance lease.

Income Tax Expense. Income tax expense was $25.5 million in 2019 compared to $19.7 million in 2018. This increase in income tax expense was primarily due to changes to freight tax accruals in 2019.

 |
| table | | Year Ended December 31, |
----------------------------------------------------------------------- | ----------------------- | ---------
(in thousands of U.S. dollars, except percentages)                      | 2019                    | 2018
Interest expense                                                        | (279,059)               | (254,126)
Interest income                                                         | 7,804                   | 8,525
Realized and unrealized losses on non-designated derivative instruments | (13,719)                | (14,852)
Foreign exchange (loss) gain                                            | (13,574)                | 6,140
Loss on deconsolidation of Altera                                       | —                       | (7,070)
Other loss                                                              | (14,475)                | (2,013)
Income tax expense                                                      | (25,482)                | (19,724) |


| _id | d1b31b91e |
| title |  |
| text | Operating Results – Teekay Tankers
The following table compares Teekay Tankers’ operating results, equity income and number of calendar-ship-days for its vessels for 2019 and 2018.
(1) Calendar-ship-days presented relate to owned and in-chartered consolidated vessels.

Teekay Tankers' income from vessel operations increased to $123.9 million in 2019 compared to $7.2 million in 2018, primarily as a result of: • an increase of $129.3 million due to higher overall average realized spot tanker rates earned by Teekay Tankers' Suezmax, Aframax and LR2 product tankers; • an increase of $3.5 million due to improved net results from Teekay Tankers' full service lightering (or FSL) activities from more voyage days and higher realized spot rates earned;

• an increase of $3.4 million resulting from lower general and administrative expenses primarily due to non-recurring project expenses incurred in 2018; • a net increase of $2.3 million primarily due to the delivery of three Aframax and two LR2 chartered-in tankers in late 2018 and throughout 2019, partially offset by the redeliveries of various in-chartered tankers to their owners in the second and third quarters of 2018; and • an increase of $1.2 million as a result of restructuring charge incurred in

as a result of restructuring charge incurred in the prior year;

partially offset by

• a decrease of $10.2 million due to a higher number of off-hire days in 2019 resulting from dry dockings and higher off-hire bunker expenses compared to the prior year; • a decrease of $6.9 million due to lower revenues and loss on the sale of one Suezmax tanker in 2019 and the write-down of two Suezmax tankers that were classified as held for sale at December 31, 2019; and • a decrease of $6.4 million due to the amortization of first dry dockings for various former Tanker Investments Ltd. (or TIL)

various former Tanker Investments Ltd. (or TIL) vessels subsequent to Teekay Tankers' acquisition of TIL in late 2017.

Equity income increased to $2.3 million in 2019 from $1.2 million in 2018 primarily due to higher earnings recognized in 2019 from the High-Q Investment Ltd. joint venture as a result of higher spot rates earned in 2019.

 |
| table | | Year Ended December 31, |
--------------------------------------------------------- | ----------------------- | ---------
(in thousands of U.S. dollars, except calendar-ship-days) | 2019                    | 2018
Revenues                                                  | 943,917                 | 776,493
Voyage expenses                                           | (402,294)               | (381,306)
Vessel operating expenses                                 | (208,601)               | (209,131)
Time-charter hire expense                                 | (43,189)                | (19,538)
Depreciation and amortization                             | (124,002)               | (118,514)
General and administrative expenses                       | (36,404)                | (39,775)
Write-down and loss on sale of vessels                    | (5,544)                 | 170
Restructuring charges                                     | —                       | (1,195)
Income from vessel operations                             | 123,883                 | 7,204
Equity income                                             | 2,345                   | 1,220
Calendar-Ship-Days (1)                                    |                         |
Conventional Tankers                                      | 22,350                  | 21,226 |


| _id | d1a7161fa |
| title |  |
| text | Item 6. Selected Financial Data
Various factors affecting the comparability of the information included in the table above are discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 |
| table | |            |            | Year Ended October 31,                 |            |
---------------------------------------- | ---------- | ---------- | -------------------------------------- | ---------- | ----------
                                         | 2019       | 2018       | 2017                                   | 2016       | 2015
                                         |            |            | (In thousands, except per share data)  |            |
Net sales                                | $3,440,258 | $3,236,004 | $3,342,226                             | $2,816,057 | $2,803,480
Operating income                         | 67,994     | 29,700     | 425,239                                | 294,111    | 335,998
Net income                               | 53,294     | 61,431     | 279,745                                | 188,961    | 216,001
Basic earnings per share                 | 2.41       | 2.70       | 12.30                                  | 8.37       | 9.52
Diluted earnings per share               | 2.41       | 2.70       | 12.30                                  | 8.37       | 9.52
Working capital                          | 365,430    | 367,600    | 650,817                                | 465,135    | 396,834
Total assets                             | 1,774,134  | 1,659,440  | 1,733,243                              | 1,422,700  | 1,246,752
Long-term debt, less current maturities  | 55,000     | —          | —                                      | —          | —
Stockholders’ equity                     | 1,417,675  | 1,387,893  | 1,432,862                              | 1,190,262  | 1,029,861
Cash dividends declared per share        | $1.28      | $1.28      | $2.04                                  | $1.90      | $1.38 |


| _id | d1b2e1e08 |
| title |  |
| text | Our product categories are:
Drinkable Kefir, sold in a variety of organic and non-organic sizes, flavors, and types, including low fat, non-fat, whole milk, protein, and BioKefir (a 3.5 oz. kefir with additional probiotic cultures).
European-style soft cheeses, including farmer cheese in resealable cups.
Cream and other, which consists primarily of cream, a byproduct of making our kefir.
ProBugs, a line of kefir products designed for children.

Other Dairy, which includes Cupped Kefir and Icelandic Skyr, a line of strained kefir and yogurt products in resealable cups.
Frozen Kefir, available in soft serve and pint-size containers.

Lifeway has determined that it has one reportable segment based on how our chief operating decision maker manages the business and in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing our performance, has been identified collectively as the Chief Financial Officer, the Chief Operating Officer, the Chief Executive Officer, and Chairperson of the board of directors.

and Chairperson of the board of directors. Substantially all of our consolidated revenues relate to the sale of cultured dairy products that we produce using the same processes and materials and are sold to consumers through a common network of distributors and retailers in the United States.

Net sales of products by category were as follows for the years ended December 31:
(a) Includes Lifeway Kefir Shop sales

Significant Customers – Sales are predominately to companies in the retail food industry located within the United States. Two major customers accounted for approximately 22% and 21% of net sales for the years ended December 31, 2019 and 2018, respectively. Two major customers accounted for approximately 17% of accounts receivable as of December 31, 2019 and 2018. Our ten largest customers as a group accounted for approximately 57% and 59% of net sales for the years ended December 31, 2019 and 2018,

for the years ended December 31, 2019 and 2018, respectively.

 |
| table | |          | 2019 |           | 2018
---------------------------------- | -------- | ---- | --------- | ----
In thousands                       | $        | %    | $         | %
Drinkable Kefir other than ProBugs | $ 71,822 | 77%  | $ 78,523  | 76%
Cheese                             | 11,459   | 12%  | 11,486    | 11%
Cream and other                    | 4,228    | 4%   | 5,276     | 5%
ProBugs Kefir                      | 2,780    | 3%   | 2,795     | 3%
Other dairy                        | 1,756    | 2%   | 3,836     | 4%
Frozen Kefir (a)                   | 1,617    | 2%   | 1,434     | 1%
Net Sales                          | $ 93,662 | 100% | $ 103,350 | 100% |


| _id | d1b393f5e |
| title |  |
| text | Deferred tax assets and liabilities reflect the net tax effects of net operating loss carryovers and the temporary differences between the assets and liabilities carrying value for financial reporting and the amounts used for income tax purposes. The Company’s significant deferred tax assets (liabilities) components are as follows:

In assessing the ability to realize the Company’s net deferred tax assets, management considers various factors including taxable income in carryback years, future reversals of existing taxable temporary differences, tax planning strategies, and future taxable income projections to determine whether it is more likely than not that some portion or all of the net deferred tax assets will not be realized.

Based on the negative evidence, including the worldwide cumulative losses that the Company has incurred, the Company has determined that the uncertainty regarding realizing its deferred tax assets is sufficient to warrant the need for a full valuation allowance against its worldwide net deferred tax assets.

The $4.3 million net increase in the valuation allowance from 2018 to 2019 is primarily due to operating losses incurred and windfall tax benefits on equity awards in the current year, partially offset by the reduction in valuation allowance as a result of recording a net deferred tax liability associated with the adoption of ASC 606. In addition, the Company recognized a tax benefit of $1.0 million for the release of a portion of the Company’s pre-existing U.S. and U.K. valuation allowances as a result of

U.S. and U.K. valuation allowances as a result of the Ataata and Simply Migrate business combinations.

During the third quarter of fiscal 2018, the Tax Cuts and Jobs Act (the Act) was enacted in the United States. In addition, the Securities and Exchange Commission issued guidance under Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118) that directed taxpayers to consider the impact of the U.S. legislation as “provisional” when it did not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to

(including computations) in reasonable detail to complete its accounting for the change in tax law.

During 2019, the Company has completed its accounting for the tax effects of the enactment of the Act. During the year ended March 31, 2019, the Company recognized an immaterial adjustment to the provisional estimate recorded related to the Act in the Company’s fiscal 2018 financial statements.

As of March 31, 2019, the Company had U.K. net operating loss carryforwards of approximately $57.4 million that do not expire. As of March 31, 2019, the Company had U.S. federal net operating loss carryforwards of approximately $78.6 million. U.S. federal net operating loss carryforwards generated through March 31, 2017 of approximately $32.5 million expire at various dates through 2037, and U.S. federal net operating loss carryforwards generated in the tax years beginning after March 31, 2017 of

the tax years beginning after March 31, 2017 of approximately $46.1 million do not expire.

As of March 31, 2019, the Company had U.S. state net operating loss carryforwards of approximately $54.6 million that expire at various dates through 2039. As of March 31, 2019, the Company had Australian net operating loss carryforwards of approximately $23.9 million that do not expire. As of March 31, 2019, the Company had German net operating loss carryforwards of approximately $9.9 million that do not expire.

As of March 31, 2019, the Company had Israeli net operating loss carryforwards of approximately $3.3 million that do not expire. As of March 31, 2019, the Company had a U.K. income tax credit carryforward of $1.1 million that does not expire. As of March 31, 2019, the Company had Israeli income tax credit carryforwards of $0.6 million that expires in 2023 and 2024.

Under Section 382 of the U.S. Internal Revenue Code, if a corporation undergoes an ownership change, the corporation’s ability to use its pre-change net operating loss carryforwards to offset its post-change income and taxes may be limited. In general, an ownership change occurs if there is a 50 percent cumulative change in ownership of the Company over a rolling three-year period. Similar rules may apply under U.S. state tax laws.

The Company believes that it has experienced an ownership change in the past and may experience ownership changes in the future resulting from future transactions in our share capital, some of which may be outside the Company’s control. The Company’s ability to utilize its net operating loss carryforwards or other tax attributes to offset U.S. federal and state taxable income in the future may be subject to future limitations.

As of March 31, 2019 and 2018, the Company had liabilities for uncertain tax positions of $6.0 million and $6.2 million, respectively, none of which, if recognized, would impact the Company’s effective tax rate.

 |
| table | | As of March 31, |
--------------------------------------- | --------------- | --------
                                        | 2019            | 2018
Deferred tax assets:                    |                 |
Net operating loss carryforwards        | $35,120         | $24,159
Share-based compensation                | 5,687           | 2,760
Deferred revenue                        | 1,761           | 2,237
Fixed assets                            | 4,187           | 3,593
Lease liability                         | 11,748          | 17,024
Accrued compensation                    | 1,211           | 742
Accrued costs                           | 401             | 1,362
Deferred rent                           | 320             | 473
Income tax credits                      | 1,833           | 1,151
Other                                   | 1,247           | 109
Gross deferred tax assets               | 63,515          | 53,610
Deferred tax liabilities:               |                 |
Prepaid expenses                        | (219)           | (315)
Fixed assets                            | (13,855)        | (19,280)
Unremitted earnings                     | (320)           | (115)
Intangible assets                       | (4,818)         | —
Capitalized commissions                 | (7,606)         | —
Other                                   | (387)           | —
Gross deferred tax liabilities          | (27,205)        | (19,710)
Valuation allowance                     | (38,318)        | (34,008)
Deferred tax (liabilities) assets, net  | $(2,008)        | $(108) |


| _id | d1b3a52c2 |
| title |  |
| text | Cash and Cash Equivalents

Highly liquid instruments purchased with original maturities of three months or less are considered cash equivalents. Cash equivalents are invested with high credit quality financial institutions and consist of short-term investments, such as demand deposit accounts, money market accounts, money market funds and time deposits. The carrying amounts of these instruments reported in the Consolidated Balance Sheets approximate their fair value because of their immediate or short-term maturities.

Cash and cash equivalents are unrestricted and include the following (in millions):

 |
| table | | December 31, |
------------------------- | ------------ | -----
                          | 2019         | 2018
Cash                      | $8.2         | $9.5
Cash equivalents          | 7.2          | 10.8
Cash and cash equivalents | $15.4        | $20.3 |