| _id | d1b39abf6 |
| title |  |
| text | NantHealth, Inc
Consolidated Statements of Cash Flows (Continued)
(Dollars in thousands)

(Dollars in thousands)
(1) Cash and cash equivalents included restricted cash of $1,136, $1,136, and $350 at December 31, 2019, 2018, and 2017 included in other assets, respectively. Restricted cash consists of funds that are contractually restricted as to usage or withdrawal related to the Company's security deposits in the form of standby letters of credit for leased facilities. No amounts have been drawn upon the letters of credit as of December 31, 2019.

The accompanying notes are an integral part of these Consolidated Financial Statements.

 |
| table | Year Ended December 31,                                               |        |
--------------------------------------------------------------------- | ------ | ------
                                                                      | 2019   | 2018
Supplemental disclosure of cash flow information                      |        |
Income taxes paid                                                     | $318   | $15
Interest paid                                                         | $5,909 | $5,885
Interest received                                                     | —      | 13
Noncash investing and financing activities                            |        |
Purchases of property and equipment (including internal use software) | 1,068  | 529
Assignment of NantHealth Labs (see Note 20)                           | —      | 8,956 |


| _id | d1b357bda |
| title |  |
| text | The following table presents the percentage relationship of our Consolidated Statement of Operations line items to our consolidated net revenues for the periods presented:

Net revenue. Total revenue decreased $0.3 million, or 0.2% in fiscal 2018 compared to fiscal 2017. Products revenue decreased $4.6 million or 12.1% while support, maintenance and subscription services revenue increased 5.8 million, or 9.1%, as a result of continued focus on selling hosted perpetual and subscription services which increased 35% year over year. Hosted perpetual and subscription services revenue comprised 16% of total consolidated revenues in 2018 compared to 12% in 2017. Professional

in 2018 compared to 12% in 2017. Professional services revenue decreased $1.4 million, or 5.5%, primarily as a result of a decrease in proprietary services of $1.5 million offset by an increase in remarketed services of $0.1 million.

Gross profit and gross profit margin. Our total gross profit increased $0.6 million, or 1.0%, in fiscal 2018 and total gross profit margin increased 0.6% to 50.6%. Products gross profit decreased $2.8 million and gross profit margin decreased 4.6% to 21.7% primarily as a result of lower product revenue coupled with higher amortization of developed technology by $2.0 million related to the previously announced general availability of the latest version of our rGuest Buy and rGuest Stay software that were

our rGuest Buy and rGuest Stay software that were placed into service in the first and second quarters of fiscal 2017, and the second quarter of fiscal 2018.

Support, maintenance and subscription services gross profit increased $6.0 million and gross profit margin increased 260 basis points to 75.8% due to the scalable nature of our infrastructure supporting and hosting customers. Professional services gross profit decreased $2.6 million and gross profit margin decreased 9.0% to 19.2% due to lower professional services revenues on higher cost structure following a recent alignment toward enabling the Company to provide more customer-centric services going

to provide more customer-centric services going forward.

Operating expenses Operating expenses, excluding legal settlements and restructuring, severance and other charges, increased $1.0 million, or 1.4%, in fiscal 2018 compared with fiscal 2017. As a percent of total revenue, operating expenses have increased 0.9% in fiscal 2018 compared with fiscal 2017

Product development. Product development includes all expenses associated with research and development. Product development decreased $1.1 million, or 3.8%, during fiscal 2018 as compared to fiscal 2017. This decrease is primarily driven by our shift from contract labor to internal resources resulting in a decrease in contract labor of $5.9 million and an increase in payroll related expenses of $4.7 million.

Sales and marketing. Sales and marketing decreased $2.7 million, or 13.2%, in fiscal 2018 compared with fiscal 2017. The change is due primarily to a decrease of $2.2 million in incentive commissions related to revision of our commission plan from total contract value to annual contract value coupled with lower sales in fiscal 2018.
Depreciation of fixed assets. Depreciation of fixed assets increased $0.2 million or 9.2% in fiscal 2018 as compared to fiscal 2017.

Amortization of intangibles. Amortization of intangibles increased $0.5 million, or 35.0%, in fiscal 2018 as compared to fiscal 2017 due to our latest version of rGuest Pay being placed into service on March 31, 2017.

Restructuring, severance and other charges. Restructuring, severance, and other charges increased $0.2 million during fiscal 2018 compared to fiscal 2017 related to our ongoing efforts to create more efficient teams across the business, which included certain executive changes during the year.
Our restructuring actions are discussed further in Note 4, Restructuring Charges.

Legal settlements. During fiscal 2018 and 2017, we recorded $0.2 million and $0.1 million, respectively, in legal settlements for employment and other business-related matters.

 |
| table | | Year ended March 31, |
--------------------------------------------------------- | -------------------- | ------
                                                          | 2018                 | 2017
Net revenue:                                              |                      |
Products                                                  | 26.5%                | 30.0%
Support, maintenance and subscription services            | 54.2                 | 49.6
Professional services                                     | 19.3                 | 20.4
Total net revenue                                         | 100.0                | 100.0
Cost of goods sold:                                       |                      |
Products (inclusive of developed technology amortization) | 20.7                 | 22.1
Support, maintenance and subscription services            | 13.1                 | 13.3
Professional services                                     | 15.6                 | 14.6
Total cost of goods sold                                  | 49.4                 | 50.0
Gross profit                                              | 50.6                 | 50.0
Operating expenses:                                       |                      |
Product development                                       | 21.9                 | 22.8
Sales and marketing                                       | 14.2                 | 16.3
General and administrative                                | 18.9                 | 15.6
Depreciation of fixed assets                              | 2.1                  | 1.9
Amortization of intangibles                               | 1.5                  | 1.1
Restructuring, severance and other charges                | 1.4                  | 1.2
Legal settlements                                         | 0.1                  | 0.1
Operating loss                                            | (9.5)%               | (8.9)% |


| _id | d1b3affd8 |
| title |  |
| text | Operating expenses
nm—not meaningful
Research and development expenses

Research and development expenses
Research and development expenses increased $15.8 million in the year ended March 31, 2018 compared to the year ended March 31, 2017, which was primarily attributable to increases in personnel-related costs of $10.1 million, information technology and facility costs of $2.3 million, professional services costs of $0.9 million, share-based compensation expense of $0.7 million, travel and other costs of $0.5 million and data center costs of $0.5 million.

Research and development expenses for the year ended March 31, 2018 as compared to the year ended March 31, 2017 were negatively impacted by approximately $0.5 million primarily as a result of the weakening of the U.S. dollar relative to the British pound.

Personnel-related cost increased primarily as a result of salaries and benefits associated with increased headcount throughout the year, information technology and facility costs increased primarily as a result of increased headcount, professional services costs increased primarily as a result of the use of research and development contractors and share-based compensation expense increased primarily as a result of share option grants since the prior year.
Sales and marketing expenses

Sales and marketing expenses
Sales and marketing expenses increased $25.1 million in the year ended March 31, 2018 compared to the year ended March 31, 2017, which was primarily attributable to increases in personnel-related costs of $13.5 million, marketing costs of $4.7 million, information technology and facilities costs of $3.6 million, travel and other costs of $2.3 million and professional services of $0.8 million.

Sales and marketing expenses for the year ended March 31, 2018 as compared to the year ended March 31, 2017 were negatively impacted by approximately $1.4 million primarily as a result of the weakening of the U.S. dollar relative to the South African rand and British pound. Personnel-related costs increased primarily as a result of salaries and benefits associated with increased headcount. Information technology and facility costs and travel and other costs increased primarily as a result of increased

increased primarily as a result of increased headcount.

General and administrative expenses
General and administrative expenses increased $9.1 million in the year ended March 31, 2018 compared to the year ended March 31, 2017, which was primarily attributable to increases in personnel-related costs of $5.0 million, share-based compensation expense of $1.2 million, information technology and facilities costs of $1.0 million and professional services costs and material supplies of $0.6 million each.

General and administrative expenses for the year ended March 31, 2018 as compared to the year ended March 31, 2017 were negatively impacted by approximately $0.3 million primarily as a result of the weakening of the U.S. dollar against the British pound and South African rand. Personnel-related costs increased primarily as a result of salaries and benefits associated with increased headcount.

Share-based compensation expense increased primarily as a result of share option grants since the prior year. Information technology and facility and material supplies costs increased primarily as a result of increased headcount.
Restructuring and Impairment of long-lived assets

Restructuring and Impairment of long-lived assets
In the fourth quarter of fiscal 2018, upon the exit of our Watertown, Massachusetts corporate office space, we recorded a restructuring charge of $0.8 million for remaining non-cancelable rent and estimated operating expenses for the vacated premises, net of sublease rentals, and a non-cash impairment charge of $1.7 million primarily related to leasehold improvements.

 |
| table | | Year ended March 31, |                        | Period-to-period change |
----------------------------------- | -------------------- | ---------------------- | ----------------------- | --------
% Change                            | 2018                 | 2017                   | Amount                  | % Change
                                    |                      | (dollars in thousands) |                         |
Operating expenses:                 |                      |                        |                         |
Research and development            | $38,373              | $22,593                | $15,780                 | 70%
Sales and marketing                 | 121,246              | 96,154                 | 25,092                  | 26%
General and administrative          | 36,989               | 27,875                 | 9,114                   | 33%
Impairment of long-lived assets     | 1,712                | —                      | 1,712                   | nm
Restructuring                       | 832                  | —                      | 832                     | nm
Total operating expenses            | $199,152             | $146,622               | $52,530                 | 36% |


| _id | d1b343608 |
| title |  |
| text | The following table provides reconciliation from U.S. GAAP Net income to non-GAAP Adjusted EBITDA (amounts in thousands):
(1) Fiscal years ending March 31, 2018 and 2017 adjusted due to the adoption of ASC 606.
(2) $0.9 million in costs incurred during fiscal year 2018 related to the relocation of the Company's tantalum powder facility equipment from Carson City, Nevada to its existing Matamoros, Mexico plant were reclassified from “Plant start-up costs” to “Restructuring charges” during fiscal year 2019.

 |
| table | |          | Fiscal Years Ended March 31, |
----------------------------------------------------------- | -------- | ---------------------------- | --------
                                                            | 2019     | 2018                         | 2017
Net income (U.S. GAAP) (1)                                  | $206,587 | $254,127                     | $47,157
Non-GAAP adjustments:                                       |          |                              |
Income tax expense (benefit)                                | (39,460) | 9,132                        | 4,294
Interest expense, net                                       | 19,204   | 32,073                       | 39,731
Depreciation and amortization                               | 52,628   | 50,661                       | 38,151
EBITDA (non-GAAP) (1)                                       | 238,959  | 345,993                      | 129,333
Excluding the following items:                              |          |                              |
Equity (income) loss from equity method investments         | 3,304    | (76,192)                     | (41,643)
Acquisition (gain) loss                                     | —        | (130,880)                    | —
Change in value of TOKIN options                            | —        | —                            | (10,700)
(Gain) loss on write down and disposal of long-lived assets | 1,660    | (992)                        | 10,671
ERP integration costs/IT transition costs                   | 8,813    | 80                           | 7,045
Stock-based compensation                                    | 12,866   | 7,657                        | 4,720
Restructuring charges (2)                                   | 8,779    | 14,843                       | 5,404
R&D grant reimbursements and grant income                   | (4,559)  | —                            | —
Legal expenses/fines related to antitrust class actions     | 11,896   | 16,636                       | 2,640
Net foreign exchange (gain) loss                            | (7,230)  | 13,145                       | (3,758)
TOKIN investment-related expenses                           | —        | —                            | 1,101
Plant start-up costs (2)                                    | (927)    | 929                          | 427
Loss on early extinguishment of debt                        | 15,946   | 486                          | —
Adjusted EBITDA (non-GAAP) (1)                              | $289,507 | $191,705                     | $105,240 |


| _id | d1a728e36 |
| title |  |
| text | We use a wide variety of raw materials in the manufacture of our products. Cost of sales and gross margin are subject to variability in raw material prices which continue to fluctuate for many of the raw materials we use, including copper, gold, and silver. In fiscal 2019, we purchased approximately 172 million pounds of copper, 122,000 troy ounces of gold, and 2.6 million troy ounces of silver. The following table presents the average prices incurred related to copper, gold, and silver:

In fiscal 2020, we expect to purchase approximately 170 million pounds of copper, 120,000 troy ounces of gold, and 2.4 million troy ounces of silver.

 |
| table | |          |        | Fiscal
------ | -------- | ------ | -------
       | Measure  | 2019   | 2018
Copper | Lb.      | $ 2.93 | $  2.86
Gold   | Troy oz. | 1,309  | 1,281
Silver | Troy oz. | 16.42  | 17.15 |


| _id | d1b3a09c0 |
| title |  |
| text | Deferred taxes are recorded for temporary differences between the carrying amounts of assets and liabilities and their tax bases. The significant components of deferred tax assets and liabilities that are recorded in the consolidated balance sheets are summarized in the table below. A valuation allowance is required when it is more likely than not that all or a portion of a deferred tax asset will not be realized. As of June 30, 2019, the Company had state net operating loss carryforwards of $337.6 million

operating loss carryforwards of $337.6 million expiring between 2020 and 2039. A significant portion of the state net operating loss carryforwards are subject to an annual limitation that, under current law, is likely to limit future tax benefits to approximately $3.3 million. Valuation allowances increased by $0.7 million during fiscal year 2019 primarily due to increases in net operating losses incurred in certain tax jurisdictions for which no tax benefit was recognized.

The Company does not have unrecognized tax benefits as of June 30, 2019, 2018 and 2017. The Company
recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.
All years prior to fiscal year 2013 have been settled with the Internal Revenue Service and with most significant state, local and foreign tax jurisdictions.

In December 2017, an Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 (the “Act”) was enacted. The Act included provisions that reduced the federal statutory income tax rate from 35 percent to 21 percent, created a territorial tax system with a one-time mandatory tax on previously deferred foreign earnings (i.e. transition tax), and changed certain business deductions including allowing for immediate expensing of certain qualified

for immediate expensing of certain qualified capital expenditures and limitations on deductions of interest expense. The SEC staff issued guidance on income tax accounting for the Act which allowed companies to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. In accordance with this guidance, during fiscal year 2018, we recorded a provisional tax charge of $5.0 million for the transition tax and a provisional tax benefit of $74.6 million for the

provisional tax benefit of $74.6 million for the remeasurement of deferred tax assets and liabilities. During fiscal year 2019, we recorded a discrete tax benefit of $0.2 million in measurement period adjustments for the transition tax offset by a discrete tax charge of $0.2 million for the remeasurement of deferred tax assets and liabilities. Our accounting for the impact of the Act was completed as of the period ending December 31, 2018. Under the Act, the transition tax is being paid over an eight year

transition tax is being paid over an eight year period beginning in fiscal year 2019.

The Act also established new tax provisions that became effective in fiscal year 2019, including but not limited to eliminating the corporate alternative minimum tax, creating the base erosion anti-abuse tax (“BEAT”), establishing new limitations on deductible interest expense and certain executive compensation, creating a new provision designed to tax global intangible low-tax income (“GILTI”) and generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries. The Company has made

from foreign subsidiaries. The Company has made an accounting policy election to treat the tax effect of GILTI as a current period expense when incurred.

Undistributed earnings of our foreign subsidiaries, totaling $77.8 million were considered permanently reinvested. Following enactment of the Act, the repatriation of cash to the U.S. is generally no longer taxable for federal income tax purposes. If these earnings were to be repatriated, approximately $0.3 million of tax expense would be incurred.

 |
| table | | June 30, |
---------------------------------- | -------- | --------
($ in millions)                    | 2019     | 2018
Deferred tax assets:               |          |
Pensions                           | $86.9    | $66.8
Postretirement provisions          | 35.7     | 33.7
Net operating loss carryforwards   | 28.8     | 26.5
Derivatives and hedging activities | 4.1      | —
Other                              | 32.1     | 29.4
Gross deferred tax assets          | 187.6    | 156.4
Valuation allowances               | (24.6)   | (23.9)
Total deferred tax assets          | 163.0    | 132.5
Deferred tax liabilities:          |          |
Depreciation                       | (249.5)  | (235.2)
Intangible assets                  | (11.3)   | (11.9)
Inventories                        | (36.1)   | (30.5)
Derivatives and hedging activities | (0.3)    | (8.7)
Other                              | (4.3)    | (3.5)
Total deferred tax liabilities     | (301.5)  | (289.8)
Deferred tax liabilities, net      | $(138.5) | $(157.3) |


| _id | d1b3a1e2e |
| title |  |
| text | Revenues. Revenues increased by 25% to RMB105.8 billion for the fourth quarter of 2019 on a year-on-year basis. The following table sets forth our revenues by line of business for the fourth quarter of 2019 and the fourth quarter of 2018:

Revenues from VAS increased by 20% to RMB52,308 million for the fourth quarter of 2019 on a year-on-year basis. Online games revenues grew by 25% to RMB30,286 million. The increase was primarily driven by revenue growth from smart phone games in both domestic and overseas markets, including titles such as Peacekeeper Elite and PUBG Mobile, as well as revenue contributions from Supercell titles, partly offset by lower revenues from PC client games such as DnF. Social networks revenues increased by 13% to

DnF. Social networks revenues increased by 13% to RMB22,022 million. The increase mainly reflected greater contributions from digital content services such as live broadcast and music streaming services. Total smart phone games revenues (including smart phone games revenues attributable to our social networks business) were RMB26,035 million and PC client games revenues were RMB10,359 million for the fourth quarter of 2019.

Revenues from FinTech and Business Services increased by 39% to RMB29,920 million for the fourth quarter of 2019 on a year-on-year basis. The increase was primarily due to greater revenue contributions from commercial payment, as well as revenue growth from cloud services as a result of deeper penetration in key verticals.

Revenues from Online Advertising increased by 19% to RMB20,225 million for the fourth quarter of 2019 on a year-onyear basis. Social and others advertising revenues increased by 37% to RMB16,274 million. The increase was mainly driven by advertising revenue growth from Weixin Moments and our mobile advertising network. Media advertising revenues decreased by 24% to RMB3,951 million. The decrease primarily reflected lower advertising revenues from our media platforms including Tencent Video and Tencent News

including Tencent Video and Tencent News due to uncertain broadcasting schedules and fewer telecasts of sports events.

 |
| table | | Unaudited                           |            |                  |
----------------------------- | ----------------------------------- | ---------- | ---------------- | ----------
                              | Three months ended                  |            |                  |
                              | 31 December 2019                    |            | 31 December 2018 |
                              |                                     | % of total |                  | % of total
                              | Amount                              | revenues   | Amount           | revenues
                              |                                     |            | (Restated)       | (Restated)
                              | (RMB in millions, unless specified) |            |                  |
VAS                           | 52,308                              | 50%        | 43,651           | 51%
FinTech and Business Services | 29,920                              | 28%        | 21,597           | 26%
Online Advertising            | 20,225                              | 19%        | 17,033           | 20%
Others                        | 3,314                               | 3%         | 2,615            | 3%
Total revenues                | 105,767                             | 100%       | 84,896           | 100% |


| _id | d1b39b8f8 |
| title |  |
| text | ADJUSTED NET EARNINGS AND ADJUSTED EPS
The terms adjusted net earnings and adjusted EPS do not have any standardized meaning under IFRS. Therefore, they are unlikely to be comparable to similar measures presented by other issuers.

We define adjusted net earnings as net earnings attributable to common shareholders before severance, acquisition and other costs, net mark-to-market losses (gains) on derivatives used to economically hedge equity settled share-based compensation plans, net losses (gains) on investments, early debt redemption costs and impairment charges, net of tax and NCI. We define adjusted EPS as adjusted net earnings per BCE common share.

We use adjusted net earnings and adjusted EPS, and we believe that certain investors and analysts use these measures, among other ones, to assess the performance of our businesses without the effects of severance, acquisition and other costs, net mark-to-market losses (gains) on derivatives used to economically hedge equity settled share-based compensation plans, net losses (gains) on investments, early debt redemption costs and impairment charges, net of tax and NCI. We exclude these items because they

tax and NCI. We exclude these items because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Excluding these items does not imply they are non-recurring

The most comparable IFRS financial measures are net earnings attributable to common shareholders and EPS.
The following table is a reconciliation of net earnings attributable to common shareholders and EPS to adjusted net earnings on a consolidated basis and per BCE common share (adjusted EPS), respectively.

 |
| table | | 2019  |           | 2018  |
------------------------------------------------------------------------------------------------------------------------- | ----- | --------- | ----- | ---------
                                                                                | TOTAL | PER SHARE | TOTAL | PER SHARE
Net earnings attributable to common shareholders                                                                          | 3,040 | 3.37      | 2,785 | 3.10
Severance, acquisition and other costs                                                                                | 83    | 0.10      | 100   | 0.11
Net mark-to-market losses (gains) on derivatives used to economically hedge equity settled share-based compensation plans | (101) | (0.11)    | 58    | 0.07
Net (gains) losses on investments                                                                                | 44    | 0.05      | 47    | 0.05
Early debt redemption costs                                                                                | 13    | 0.01      | 15    | 0.02
Impairment charges                                                                                | 74    | 0.08      | 146   | 0.16
Adjusted net earnings                                                                                | 3,153 | 3.50      | 3,151 | 3.51 |


| _id | d1b39b2d6 |
| title |  |
| text | Disaggregation of Revenue
We generate revenue from the sale of services and sale of software for end-user software products provided through direct customer downloads and through the sale of these end-user software products via partners. The following table depicts the disaggregation of revenue (in thousands) according to revenue type and is consistent with how we evaluate our financial performance:
Revenue from Contracts with Customers:

 |
| table | | Twelve months ended December 31, |
--------------------------- | -------------------------------- | -------
                            | 2019                             | 2018
Services                    | $59,545                          | $64,476
Software and other          | 3,788                            | 5,073
             Total revenue  | $63,333                          | $69,549 |


| _id | d1b2f8856 |
| title |  |
| text | Net periodic benefit expense for our post-retirement benefit plans includes the following components:

We report service costs for our Combined Pension Plan and post-retirement benefit plans in cost of services and products and selling, general and administrative expenses in our consolidated statements of operations for the years ended December 31, 2019, 2018 and 2017. Additionally, a portion of the service cost is also allocated to certain assets under construction, which are capitalized and reflected as part of property, plant and equipment in our consolidated balance sheets. The remaining components of

balance sheets. The remaining components of net periodic benefit expense (income) are reported in other income, net in our consolidated statements of operations. As a result of ongoing efforts to reduce our workforce, we recognized a one-time charge in 2019 of $6 million and in 2018 of $15 million for special termination benefit enhancements paid to certain eligible employees upon voluntary retirement.

 |
| table | | Post-Retirement Plans    |      |
-------------------------------------------- | ------------------------ | ---- | ----
                                             | Years Ended December 31, |      |
                                             | 2019                     | 2018 | 2017
                                             | (Dollars in milions)     |      |
Service cost                                 | $15                      | 18   | 18
Interest cost                                | 110                      | 97   | 100
Expected return on plan assets               | (1)                      | (1)  | (2)
Recognition of prior service cost            | 16                       | 20   | 20
Net periodic post-retirement benefit expense | $140                     | 134  | 136 |


| _id | d1b351262 |
| title |  |
| text | NOTE 8—OTHER ASSETS
Deposits and restricted cash primarily relate to security deposits provided to landlords in accordance with facility lease agreements and cash restricted per the terms of certain contractual-based agreements.

Deferred implementation costs relate to direct and relevant costs on implementation of long-term contracts, to the extent such costs can be recovered through guaranteed contract revenues. As a result of the adoption of Topic 606, deferred implementation costs are no longer capitalized, but rather expensed as incurred as these costs do not relate to future performance obligations. Accordingly, these costs were adjusted through opening retained earnings as of July 1, 2018 (see note 3 "Revenues").

Capitalized costs to obtain a contract relate to incremental costs of obtaining a contract, such as sales commissions, which are eligible for capitalization on contracts to the extent that such costs are expected to be recovered (see note 3 "Revenues").

Investments relate to certain non-marketable equity securities in which we are a limited partner. Our interests in each of these investees range from 4% to below 20%. These investments are accounted for using the equity method. Our share of net income or losses based on our interest in these investments is recorded as a component of other income (expense), net in our Consolidated Statements of Income. During the year ended June 30, 2019, our share of income (loss) from these investments was $13.7 million

(loss) from these investments was $13.7 million (year ended June 30, 2018 and 2017 — $6.0 million and $6.0 million, respectively).

Long-term prepaid expenses and other long-term assets includes advance payments on long-term licenses that are being amortized over the applicable terms of the licenses and other miscellaneous assets.

 |
| table | | As of June 30, 2019 | As of June 30, 2018
----------------------------------------------------- | ------------------- | -------------------
Deposits and restricted cash                          | $13,671             | $9,479
Deferred implementation costs                         | —                   | 13,740
Capitalized costs to obtain a contract                | 35,593              | 13,027
Investments                                           | 67,002              | 49,635
Long-term prepaid expenses and other long-term assets | 32,711              | 25,386
Total                                                 | $148,977            | $111,267 |


| _id | d1b39e936 |
| title |  |
| text | 3. Operating (loss)/profit
Detailed below are the key amounts recognised in arriving at our operating (loss)/profit
Notes: 1 The year ended 31 March 2019 included €nil (2018: €80 million credit, 2017: €127 million charge) reported in other income and expense in the consolidated income statement
2 Reported in other income and expense in the consolidated income statement.

 |
| table | | 2019  | 2018  | 2017
------------------------------------------------------------------------------------------------------ | ----- | ----- | -------
                                                                                | €m    | €m    | €m
Net foreign exchange losses/(gains)1                                                                   | 1     | (65)  | 133
Depreciation of property, plant and equipment (note 11):                                               |       |       |
Owned assets                                                                                | 5,795 | 5,963 | 6,253
Leased assets                                                                                | 59    | 47    | 12
Amortisation of intangible assets (note 10)                                                            | 3,941 | 4,399 | 4,821
Impairment of goodwill in subsidiaries, associates and joint arrangements (note 4)                     | 3,525 | –     | –
Staff costs (note 23)                                                                                | 5,267 | 5,295 | 5,519
Amounts related to inventory included in cost of sales                                                 | 5,886 | 6,045 | 6,464
Operating lease rentals payable                                                                        | 3,826 | 3,788 | 3,976
Loss on disposal of property, plant and equipment and intangible assets                                | 33    | 36    | 22
Own costs capitalised attributable to the construction or acquisition of property, plant and equipment | (844) | (829) | (800)
Net gain on formation of VodafoneZiggo (note 26)2                                                      | –     | –     | (1,275) |


| _id | d1b377714 |
| title |  |
| text | Note 6 – Accrued Expenses
Accrued expenses consisted of the following:

 |
| table | |         | December 31,
---------------------------------------------------- | ------- | ------------
                                                     | 2019    | 2018
Payroll and incentive compensation                   | $ 3,009 | $ 1,937
Current portion of operating lease liabilities     – | 285     | -
Real estate taxes                                    | 398     | 398
Other                                                | 395     | 442
Total accrued expenses                               | $ 4,087 | $ 2,777 |


| _id | d1b3bd4a8 |
| title |  |
| text | ADVANCED ENERGY INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (in thousands, except per share amounts)
We account for uncertain tax positions by applying a minimum recognition threshold to tax positions before recognizing these positions in the financial statements. The reconciliation of our total gross unrecognized tax benefits is as follows:

The unrecognized tax benefits of $13.0 million, if recognized, will impact the Company’s effective tax rate. In accordance with our accounting policy, we recognize accrued interest and penalties related to unrecognized tax benefits as a component of tax expense. We had $3.0 million and $1.2 million of accrued interest and penalties at December 31, 2019 and 2018, respectively. We expect the total amount of tax contingencies will decrease by approximately $3.5 million in 2020 based on statute of limitation

million in 2020 based on statute of limitation expiration.

With few exceptions, the Company is no longer subject to federal, state or foreign income tax examinations by tax authorities for years before 2016.

 |
| table | |         | Years Ended December 31, |
--------------------------------------------------------------------------- | ------- | ------------------------ | -------
                                                                            | 2019    | 2018                     | 2017
Balance at beginning of period                                              | $13,162 | $15,990                  | $11,401
Additions based on tax positions taken during a prior period                | 484     | 94                       | 1,258
Additions based on tax positions taken during a prior period - acquisitions | 4,479   | 757                      | —
Additions based on tax positions taken during the current period            | —       | —                        | 4,433
Reductions based on tax positions taken during a prior period               | (4,295) | (153)                    | —
Reductions related to a lapse of applicable statute of limitations          | (821)   | (3,144)                  | (1,102)
Reductions related to a settlement with taxing authorities                  | —       | (382)                    | —
Balance at end of period                                                    | $13,009 | $13,162                  | $15,990 |


| _id | d1b346f9c |
| title |  |
| text | On February 6, 2018, the Company announced that its Board of Directors had unanimously approved the pursuit of a separation of its smart camera business “Arlo” from NETGEAR (the “Separation”) to be effected by way of initial public offering (“IPO”) and spin-off. On August 2, 2018, Arlo Technologies, Inc. (“Arlo”) and NETGEAR announced the pricing of Arlo's initial public offering (“IPO”) at a price to the public of $16.00 per share, subsequently listing on the New York Stock Exchange on August 3, 2018 under

New York Stock Exchange on August 3, 2018 under the symbol "ARLO". On August 7, Arlo completed the IPO and generated proceeds of approximately $170.2 million, net of offering costs, which Arlo used for its general corporate purposes. Upon completion of the IPO, Arlo common stock outstanding amounted to 74,247,000 shares, of which NETGEAR held 62,500,000 shares, representing approximately 84.2% of the outstanding shares of Arlo common stock. On December 31, 2018, NETGEAR completed the distribution of these

2018, NETGEAR completed the distribution of these 62,500,000 shares of common stock of Arlo (the “Distribution”). After the completion of the Distribution, NETGEAR no longer owns any shares of Arlo common stock. The Distribution took place by way of a pro rata common stock dividend to each NETGEAR stockholder of record on the record date of the Distribution, December 17, 2018, and NETGEAR stockholders received 1.980295 shares of Arlo common stock for every share of NETGEAR common stock held as of the

share of NETGEAR common stock held as of the record date.

Upon completion of the Distribution, the Company ceased to own a controlling financial interest in Arlo and Arlo's assets, liabilities, operating results and cash flows for all periods presented have been classified as discontinued operations within the Consolidated Financial Statements.

In connection with Arlo's Separation, the Company incurred Separation expense of $34.2 million since commencing in December 2017. Separation expense primarily consists of third-party advisory, consulting, legal and professional services, IT costs and employee bonuses directly related to the separation, as well as other items that are incremental and one-time in nature that are related to the separation. The majority of these costs are reflected in the Company's consolidated statement of operations as

Company's consolidated statement of operations as discontinued operations for all periods presented. In addition, in the third fiscal quarter of 2018, the Company contributed $70.0 million in cash to Arlo and provided for, among other things, the transfer from NETGEAR to Arlo of assets and the assumption by Arlo of liabilities comprising its business effected through a master separation agreement between NETGEAR and Arlo. The master separation agreement governs the separation of Arlo's business from

governs the separation of Arlo's business from NETGEAR as well as various interim arrangements. In connection with these arrangements, during the third and fourth quarter of 2018, NETGEAR recorded a reduction to operating expenses of $6.3 million relating to the transition services, which are reflected in the Company's consolidated statement of operations as discontinued operations for the periods presented. In the third quarter of 2018, NETGEAR provided billing and collection services to Arlo in respect

and collection services to Arlo in respect of its trade receivables and trade payments. As of December 31, 2018, NETGEAR had a net liability to Arlo of $12.2 million relating to these transition service, billing and collection services, and the net liability was classified within accounts payable on the consolidated balance sheets. The Company does not expect the amounts relating to such services to be material after the Distribution. Additionally, the Company entered into certain other agreements that

entered into certain other agreements that provide a framework for the relationship between NETGEAR and Arlo after the separation, including a transition services agreement, a tax matters agreement, an employee matters agreement, an intellectual property rights cross-license agreement, and a registration rights agreement. In connection with Arlo's Separation, the Company incurred Separation expense of $34.2 million since commencing in December 2017. Separation expense primarily consists of third-party

expense primarily consists of third-party advisory, consulting, legal and professional services, IT costs and employee bonuses directly related to the separation, as well as other items that are incremental and one-time in nature that are related to the separation. The majority of these costs are reflected in the Company's consolidated statement of operations as discontinued operations for all periods presented. In addition, in the third fiscal quarter of 2018, the Company contributed $70.0 million in cash

the Company contributed $70.0 million in cash to Arlo and provided for, among other things, the transfer from NETGEAR to Arlo of assets and the assumption by Arlo of liabilities comprising its business effected through a master separation agreement between NETGEAR and Arlo. The master separation agreement governs the separation of Arlo's business from NETGEAR as well as various interim arrangements. In connection with these arrangements, during the third and fourth quarter of 2018, NETGEAR recorded a

and fourth quarter of 2018, NETGEAR recorded a reduction to operating expenses of $6.3 million relating to the transition services, which are reflected in the Company's consolidated statement of operations as discontinued operations for the periods presented. In the third quarter of 2018, NETGEAR provided billing and collection services to Arlo in respect of its trade receivables and trade payments. As of December 31, 2018, NETGEAR had a net liability to Arlo of $12.2 million relating to these transition

of $12.2 million relating to these transition service, billing and collection services, and the net liability was classified within accounts payable on the consolidated balance sheets. The Company does not expect the amounts relating to such services to be material after the Distribution. Additionally, the Company entered into certain other agreements that provide a framework for the relationship between NETGEAR and Arlo after the separation, including a transition services agreement, a tax matters

a transition services agreement, a tax matters agreement, an employee matters agreement, an intellectual property rights cross-license agreement, and a registration rights agreement.

The financial results of Arlo through the Distribution date are presented as income (loss) from discontinued operations, net of tax, in the consolidated
statements of operations. The following table presents financial results of Arlo:

 |
| table | |           | Year Ended December 31,
-------------------------------------------------------------- | --------- | -----------------------
                                                               | 2018      | 2017
                                                               |           | (In thousands)
Net revenue                                                    | $464,649  | $367,751
Cost of net revenue                                            | 372,843   | 279,425
Gross profit                                                   | 91,806    | 88,326
Operating expenses:                                            |           |
Research and development                                       | 48,696    | 22,710
Sales and marketing                                            | 39,713    | 19,490
General and administrative                                     | 17,762    | 691
Separation expense                                             | 31,583    | 1,384
Litigation reserves, net                                       | —         | 28
Total operating expenses                                       | 137,754   | 44,303
Income (loss) from operations of discontinued operations       | (45,948)  | 44,023
Interest income, net                                           | 1,239     | —
Other income (expense), net                                    | (41)      | 467
Income (loss) from discontinued operations before income taxes | (44,750)  | 44,490
Provision (benefit) for income taxes                           | (9,095)   | 13,921
Income (loss) from discontinued operations, net of tax         | $(35,655) | $30,569 |


| _id | d1b3143b2 |
| title |  |
| text | Lockheed Martin Transaction
On August 16, 2016, a wholly-owned subsidiary of Leidos Holdings, Inc. merged with the IS&GS Business in a Reverse Morris Trust transaction (the "IS&GS Transactions").

During fiscal 2017, the Company recorded adjustments to finalize the fair value of acquired assets and liabilities assumed which resulted in a $337 million increase in goodwill. Significant changes included intangible assets, property, plant and equipment, deferred tax assets, other assets, accounts payable and accrued liabilities and deferred tax liabilities.

On January 10, 2018, the final amount of the net working capital of the IS&GS Business was determined through a binding arbitration proceeding in accordance with the Separation Agreement with Lockheed Martin. As a result, $24 million was recorded as acquisition costs in the consolidated statements of income for fiscal 2017. On January 18, 2018, the final working capital amount of $105 million was paid to Lockheed Martin, of which $24 million and $81 million was presented as cash flows from operating and

was presented as cash flows from operating and investing activities, respectively, on the consolidated statements of cash flows.

During fiscal 2018, a tax indemnification liability of $23 million was paid to Lockheed Martin in accordance with the Tax Matters Agreement, which was presented as cash flows from financing activities on the consolidated statements of cash flows.
The Company incurred the following expenses related to the acquisition and integration of the IS&GS Business:

These acquisition and integration costs have been recorded within Corporate and presented in "Acquisition, integration and restructuring costs" on the consolidated statements of income.

 |
| table | |                 | Year Ended        |
--------------------------------------- | --------------- | ----------------- | -----------------
                                        | January 3, 2020 | December 28, 2018 | December 29, 2017
                                        |                 | (in millions)     |
Acquisition costs                       | $—              | $—                | $25
Integration costs                       | 3               | 29                | 77
Total acquisition and integration costs | $3              | $29               | $102 |


| _id | d1b34be20 |
| title |  |
| text | 8 Directors’ emoluments
Directors represent the key management personnel of the Group under the terms of IAS 24 (Related Party Disclosures). Total remuneration is shown below.

Further details of salaries and short-term benefits, post-retirement benefits, share plans and long-term share incentive plans are shown in the Annual Report on Remuneration 2019 on pages 102 to 132. The share-based payments charge comprises a charge in relation to the Performance Share Plan and the Employee Share Ownership Plan (as described in Note 23).

 |
| table | | 2019 | 2018
-------------------------------- | ---- | ----
                                 | £m   | £m
Salaries and short-term benefits | 4.1  | 3.7
Post-retirement benefits         | 0.5  | 0.4
Share-based payments             | 1.7  | 1.3
Total Directors' remuneration    | 6.3  | 5.4 |


| _id | d1b33f59e |
| title |  |
| text | The following is a summary of amounts reclassified from AOCI for the years ended June 30, 2019 and 2018:
(a) Amounts in parentheses indicate debits to income/loss.
(b) These AOCI components are included in the computation of net periodic benefit cost (see Note 11 for additional details).

 |
| table | |                         | Amount Reclassified from AOCI |
------------------------------------------------------------------- | ----------------------- | ----------------------------- | -------
                                                                    |                         | Years Ended June 30,          |
($ in millions) (a)                                                 | Location of gain (loss) | 2019                          | 2018
Details about AOCI Components                                       |                         |                               |
Cash flow hedging items                                             |                         |                               |
Commodity contracts                                                 | Cost of sales           | $5.1                          | $1.8
Foreign exchange contracts                                          | Net sales               | 1.0                           | (1.0)
Forward interest rate swaps                                         | Interest expense        | 0.4                           | 0.4
                                                                    | Total before tax        | 6.5                           | 1.2
                                                                    | Tax expense             | (1.6)                         | (0.4)
                                                                    | Net of tax              | $4.9                          | $0.8
Amortization of pension and other postretirement benefit plan items |                         |                               |
Net actuarial loss                                                  | (b)                     | $(12.0)                       | $(16.4)
Prior service cost                                                  | (b)                     | 3.1                           | 3.1
                                                                    | Total before tax        | (8.9)                         | (13.3)
                                                                    | Tax benefit             | 2.1                           | 4.4
                                                                    | Net of tax              | $(6.8)                        | $(8.9) |


| _id | d1b33ca56 |
| title |  |
| text | RESULTS OF OPERATIONS
Revenue
(1) Reflects client arrangements (term license, cloud, and maintenance) that are subject to renewal.

We expect our revenue mix to continue to shift in favor of our subscription offerings, particularly cloud arrangements, which could result in slower total revenue growth in the near term. Revenue from cloud arrangements is generally recognized over the service period, while revenue from term and perpetual license arrangements is generally recognized upfront when the license rights become effective.
Subscription revenue

Subscription revenue
The increase in cloud revenue in 2019 reflects the shift in client preferences to cloud arrangements from other types of arrangements. The increase in term license revenue in 2019 was due to several large, multi-year term license contracts executed in 2019. This increase was partially offset by term license contracts with multi-year committed maintenance periods, where a greater portion of the contract value is allocated to maintenance.

The increase in maintenance revenue in 2019 was primarily due to the continued growth in the aggregate value of the installed base of our software and strong renewal rates in excess of 90%
Perpetual license
The decrease in perpetual license revenue in 2019 reflects the shift in client preferences in favor of our subscription offerings, particularly cloud arrangements
Consulting

Consulting
Our consulting revenue fluctuates depending upon the mix of new implementation projects we perform as compared to those performed by our enabled clients or led by our partners. See "Our consulting revenue is significantly dependent upon our consulting personnel implementing new license and cloud arrangements" in Item 1A of this Annual Report for additional information.
The decrease in consulting revenue in 2019 was primarily due to a decrease in billable hours.

 |
| table | (Dollars in thousands) | 2019     |      | 2018     |      | Change   |
---------------------- | -------- | ---- | -------- | ---- | -------- | -----
Cloud                  | $133,746 | 15%  | 82,627   | 9%   | $51,119  | 62%
Term license           | 199,433  | 22%  | 178,256  | 20%  | 21,177   | 12%
Maintenance            | 280,580  | 30%  | 263,875  | 30%  | 16,705   | 6%
Subscription (1)       | 613,759  | 67%  | 524,758  | 59%  | 89,001   | 17%
Perpetual license      | 80,015   | 9%   | 109,863  | 12%  | (29,848) | (27)%
Consulting             | 217,609  | 24%  | 256,960  | 29%  | (39,351) | (15)%
                       | $911,383 | 100% | $891,581 | 100% | $19,802  | 2% |


| _id | d1b38c38a |
| title |  |
| text | VALUATION AND QUALIFYING ACCOUNTS
(in millions)
Foreign exchange and other includes the impact of foreign exchange and certain immaterial reclassifications.

 |
| table | | Allowances For        |
------------------------------------- | --------------------- | -------------------
                                      | Financing Receivables | Accounts Receivable
Year ended July 29, 2017              |                       |
Balance at beginning of fiscal year . | $375                  | $249
Provisions (benefits)                 | (35)                  | 27
Recoveries (write-offs), net .        | (49)                  | (61)
Foreign exchange and other .          | 4                     | (4)
Balance at end of fiscal year         | $295                  | $211
Year ended July 28, 2018              |                       |
Balance at beginning of fiscal year . | $295                  | $211
Provisions (benefits)                 | (89)                  | (45)
Recoveries (write-offs), net .        | (6)                   | (37)
Foreign exchange and other .          | 5                     | —
Balance at end of fiscal year         | $205                  | $129
Year ended July 27, 2019              |                       |
Balance at beginning of fiscal year   | $205                  | $129
Provisions (benefits)                 | (16)                  | 56
Recoveries (write-offs), net          | (42)                  | (50)
Foreign exchange and other  .         | (21)                  | 1
Balance at end of fiscal year         | $126                  | $136 |


| _id | d1b38db72 |
| title |  |
| text | The following table summarizes net revenues by significant product and services categories:

Endpoint and information protection products include endpoint security, advanced threat protection, and information protection solutions and their related support services. Network and web security products include network security, web security, and cloud security solutions and their related support services. WSS and PKI products consist of the solutions we divested on October 31, 2017. Other products and services primarily consist of email security products, managed security services, consulting, and

managed security services, consulting, and other professional services.

Consumer security products include Norton security, Norton Secure VPN, and other consumer security solutions. Identity and information protection products include LifeLock identity theft protection and other information protection solutions.
Products and service revenue information

 |
| table | |                | Year Ended     |
----------------------------------- | -------------- | -------------- | --------------
(in millions)                       | March 29, 2019 | March 30, 2018 | March 31, 2017
Enterprise Security:                |                |                |
Endpoint and information protection | $1,027         | $983           | $947
Network and web security            | 748            | 782            | 451
WSS and PKI                         | -              | 238            | 422
Other products and services         | 548            | 551            | 535
Total Enterprise Security           | $2,323         | $2,554         | $2,355
Consumer Cyber Safety:              |                |                |
Consumer security                   | $1,471         | $1,504         | $1,527
Identity and information protection | 937            | 776            | 137
Total Consumer Cyber Safety         | 2,408          | 2,280          | 1,664
Total net revenues                  | $4,731         | $4,834         | $4,019 |


| _id | d1b3274f8 |
| title |  |
| text | Note 15. NET INCOME (LOSS) PER SHARE
We calculate basic net income (loss) per share by dividing earnings allocated to common stockholders by the basic weighted-average number of common shares outstanding for the period.

Diluted weighted-average shares is computed using basic weighted-average number of common shares outstanding plus any potentially dilutive securities outstanding during the period using the treasury-stock-type method and the if-converted method, except when their effect is anti-dilutive. Potentially dilutive securities include stock options, restricted stock units, and the outstanding senior convertible debentures.

The following table presents the calculation of basic and diluted net income (loss) per share attributable to stockholders:

1 As a result of our net loss attributable to stockholders for fiscal 2019, 2018, and 2017, the inclusion of all potentially dilutive stock options, restricted stock units, and common shares under noted warrants and convertible debt would be anti-dilutive. Therefore, those stock options, restricted stock units and shares were excluded from the computation of the weighted-average shares for diluted net loss per share for such periods.

 |
| table | |                   | Fiscal Year Ended |
-------------------------------------------------- | ----------------- | ----------------- | -----------------
(In thousands, except per share amounts)           | December 29, 2019 | December 30, 2018 | December 31, 2017
Basic net income (loss) per share:                 |                   |                   |
Numerator:                                         |                   |                   |
Net income (loss) attributable to stockholders     | $22,159           | $(811,091)        | $(929,121)
Denominator:                                       |                   |                   |
Basic weighted-average common shares               | 144,796           | 140,825           | 139,370
Basic net income (loss) per share                  | $0.15             | $(5.76)           | $(6.67)
Diluted net income (loss) per share 1              |                   |                   |
Numerator:                                         |                   |                   |
Net income (loss) attributable to stockholders     | $22,159           | $(811,091)        | $(929,121)
Net income (loss) available to common stockholders | $22,159           | $(811,091)        | $(929,121)
Denominator:                                       |                   |                   |
Basic weighted-average common shares               | 144,796           | 140,825           | 139,370
Effect of dilutive securities:                     |                   |                   |
Restricted stock units                             | 2,729             | -                 | -
Dilutive weighted-average common shares:           | 147,525           | 140,825           | 139,370
Dilutive net income (loss) per share               | $ 0.15            | $ (5.76)          | $ (6.67) |


| _id | d1b34f8f4 |
| title |  |
| text | As a result of the adoption of ASC 606, our deferred product revenues and deferred product costs for the fleet management and auto vehicle finance verticals increased as balances are now amortized over the estimated average in-service lives of these devices. Deferred income tax assets and accumulated deficit increased as a result of the changes made to our deferred product revenues and deferred product costs. The cumulative effect of the changes made to our consolidated balance sheet for the adoption of ASC

balance sheet for the adoption of ASC 606 were as follows (in thousands):

(1) Deferred product costs included in Prepaid expenses and other current assets and Other assets amounted to $5.4 million and $6.0 million, respectively, as of March 1, 2018.

 |
| table | | Balance at                           | ASC 606     | Balance at
--------------------------------------------- | ------------------------------------ | ----------- | -------------
                                              | February 28, 2018                    | Adjustments | March 1, 2018
                                              | Assets                               |             |
Prepaid expenses and other current assets (1) | $12,000                              | 1,891       | $13,891
Deferred income tax assets                    | 31,581                               | 532         | 32,113
Other assets (1)                              | 18,829                               | 3,145       | 21,974
                                              |                                      |             |
                                              | Liabilities and Stockholders' Equity |             |
Deferred revenue                              | $17,757                              | 2,156       | 19,913
Other non-current liabilities                 | 24,249                               | 5,007       | 29,256
                                              |                                      |             |
                                              | Stockholders' equity                 |             | |


| _id | d1b39ff66 |
| title |  |
| text | Intangible Assets

Internal software development costs of $2,526 and $12,666 were capitalized during the years ended December 31, 2019 and 2018, respectively, and are classified within software development costs as an intangible asset. Amortization expense related to the capitalized internally developed software was $7,464 and $3,832 for the years ended December 31, 2019 and 2018, respectively, and is included in cost of revenues, sales and marketing and general and administrative expenses in the accompanying Consolidated

expenses in the accompanying Consolidated Statements of Operations and Comprehensive Loss.

Expressed in US $000's except share and per share amounts

 |
| table | | December 31, 2018 |                          |
------------------------------- | ----------------- | ------------------------ | --------------
                                | Cost              | Accumulated amortization | Net book value
                                | $                 | $                        | $
Acquired technology             | 15,556            | 7,875                    | 7,681
Software development costs      | 24,963            | 9,226                    | 15,737
Acquired customer relationships | 495               | 346                      | 149
Purchased software              | 6,973             | 4,503                    | 2,470
Other intangible assets         | 591               | 556                      | 35
                                | 48,578            | 22,506                   | 26,072 |


| _id | d1b38b32c |
| title |  |
| text | Note 6 — Accounts Receivable, net
The Company’s net accounts receivable consists of:

At December 31, 2019 and 2018, the Company had recorded allowances for doubtful accounts of $1.8 million and $1.3 million, respectively, against Restaurant/Retail segment accounts receivable. Write-offs of accounts receivable during fiscal years 2019 and 2018 were $0.3 million and $0.4 million, respectively. The bad debt expense which is recorded in the consolidated statements of operations was $0.8 million and $0.8 million in 2019 and 2018, respectively.

Receivables recorded as of December 31, 2019 and 2018 all represent unconditional rights to payments from customers.

 |
| table | | December 31,   |
-------------------------- | -------------- | -------
                           | (in thousands) |
                           | 2019           | 2018
Government segment:        |                |
Billed                     | $11,608        | $9,100
Advanced billings          | (608)          | (563)
                           | 11,000         | 8,537
Restaurant/Retail segment: |                |
Accounts receivable - net  | 30,774         | 17,682
                           | $41,774        | $26,219 |


| _id | d1b2e46e4 |
| title |  |
| text | ASSUMPTIONS USED IN STOCK OPTION PRICING MODEL
The fair value of options granted was determined using a variation of a binomial option pricing model that takes into account factors specific to the share incentive plans, such as the vesting period. The following table shows the principal assumptions used in the valuation.

Expected dividend growth is commensurate with BCE’s dividend growth strategy. Expected volatility is based on the historical volatility of BCE’s share price. The risk-free rate used is equal to the yield available on Government of Canada bonds at the date of grant with a term equal to the expected life of the options

 |
| table | | 2019  | 2018
---------------------------------------------- | ----- | -----
Weighted average fair value per option granted | $2.34 | $2.13
Weighted average share price                   | $58   | $57
Weighted average exercise price                | $58   | $56
Expected dividend growth                       | 5%    | 5%
Expected volatility                            | 14%   | 12%
Risk-free interest rate                        | 2%    | 2%
Expected life (years)                          | 4     | 4 |


| _id | d1b37762e |
| title |  |
| text | The reconciliation between U.S. federal income taxes at the statutory rate and income tax expense (benefit) was as follows:
(1) The U.S. federal statutory rate was 21% for fiscal 2019, 24.58% for fiscal 2018, and 35%
for fiscal 2017.
(2) Excludes items which are separately presented.

The income tax benefit for fiscal 2019 included a $216 million income tax benefit related to the tax impacts of certain measures of the Switzerland Federal Act on Tax Reform and AHV Financing (“Swiss Tax Reform”), a $90 million income tax benefit related to the effective settlement of a tax audit in a non-U.S. jurisdiction, and $15 million of income tax expense associated with the tax impacts of certain legal entity restructurings and intercompany transactions. See “Swiss Tax Reform” below for additional

See “Swiss Tax Reform” below for additional information regarding Swiss Tax Reform.

The income tax benefit for fiscal 2018 included a $1,222 million net income tax benefit associated with the tax impacts of certain legal entity restructurings and intercompany transactions that occurred in the quarter ended September 28, 2018. The net income tax benefit of $1,222 million related primarily to the recognition of certain non-U.S. loss carryforwards and basis differences in subsidiaries expected to be utilized against future taxable income, partially offset by a $46 million increase in the

partially offset by a $46 million increase in the valuation allowance for certain U.S. federal tax credit carryforwards. The income tax benefit for fiscal 2018 also included $567 million of income tax expense related to the tax impacts of the Tax Cuts and Jobs Act (the “Act”) and a $61 million net income tax benefit related to the tax impacts of certain legal entity restructurings that occurred in the quarter ended December 29, 2017. See “Tax Cuts and Jobs Act” below for additional information regarding

Act” below for additional information regarding the Act.

The income tax expense for fiscal 2017 included a $52 million income tax benefit associated with the tax impacts of certain intercompany transactions and the corresponding reduction in the valuation allowance for U.S. tax loss carryforwards, a $40 million income tax benefit related to share-based payments and the adoption of ASU No. 2016-09, and a $14 million income tax benefit associated with pre-separation tax matters.

 |
| table | |        | Fiscal        |
------------------------------------------------------------------ | ------ | ------------- | -----
                                                                   | 2019   | 2018          | 2017
                                                                   |        | (in millions) |
Notional U.S. federal income tax expense at the statutory rate (1) | $ 406  | $ 551         | $ 602
Adjustments to reconcile to the income tax expense (benefit):      |        |               |
U.S. state income tax benefit, net                                 | (5)    | (7)           | (4)
Tax law changes                                                    | 15     | 638           | 7
Tax credits                                                        | (22)   | (8)           | (8)
Non-U.S. net earnings(2)                                           | (166)  | (213)         | (355)
Change in accrued income tax liabilities                           | (61)   | 13            | 24
Valuation allowance                                                | (163)  | 33            | (1)
Legal entity restructuring and intercompany transactions           | 3      | (1,329)       | (40)
Excess tax benefits from share-based payments                      | (8)    | (24)          | (40)
Other                                                              | (14)   | 2             | (5)
Income tax expense (benefit)                                       | $ (15) | $ (344)       | $ 180 |


| _id | d1b2f4fc6 |
| title |  |
| text | Information about VMware’s payments for such arrangements during the periods presented consisted of the following (table in millions):
1) Amount includes indirect taxes that were remitted to Dell during the periods presented.
VMware also purchases Dell products through Dell’s channel partners. Purchases of Dell products through Dell’s channel partners were not significant during the periods presented.

From time to time, VMware and Dell also enter into joint marketing, sales, branding and product development arrangements, for which both parties may incur costs.

During the fourth quarter of fiscal 2020, VMware entered into an arrangement with Dell to transfer approximately 250 professional services employees from Dell to VMware. These employees are experienced in providing professional services delivering VMware technology and this transfer centralizes these resources within the Company in order to serve its customers more efficiently and effectively. The transfer was substantially completed during the fourth quarter of fiscal 2020 and did not have a material

of fiscal 2020 and did not have a material impact to the consolidated financial statements. VMware also expects that Dell will resell VMware consulting solutions.

During the third quarter of fiscal 2019, VMware acquired technology and employees related to the Dell EMC Service Assurance Suite, which provides root cause analysis management software for communications service providers, from Dell. The purchase of the Dell EMC Service Assurance Suite was accounted for as a transaction by entities under common control. The amount of the purchase price in excess of the historical cost of the acquired assets was recognized as a reduction to retained earnings on the

as a reduction to retained earnings on the consolidated balance sheets. Transition services were provided by Dell over a period of 18 months, starting from the date of the acquisition, which were not significant.

During the second quarter of fiscal 2018, VMware acquired Wavefront, Inc. (“Wavefront”). Upon closing of the acquisition, Dell was paid $20 million in cash for its non-controlling ownership interest in Wavefront.

 |
| table | |                  | For the Year Ended |
------------------------------------------------------------- | ---------------- | ------------------ | ----------------
                                                              | January 31, 2020 | February 1, 2019   | February 2, 2018
Purchases and leases of products and purchases of services(1) | $242             | $200               | $142
Dell subsidiary support and administrative costs              | 119              | 145                | 212 |


| _id | d1b3ba3c0 |
| title |  |
| text | Earnings per share presents the amount of profit generated for the reporting period attributable to shareholders divided by the weighted average number of shares on issue. The potential for any share rights issued by the Group to dilute existing shareholders’ ownership when the share rights are exercised are also presented.
(1) Weighted average number of shares has been adjusted to remove shares held in trust by Woolworths Custodian Pty Ltd (as trustee of various employee share trusts)

(2) Includes 8.0 million (2018: 3.4 million) shares deemed to be issued for no consideration in respect of employee performance rights.
In 2019, the weighted average number of ordinary shares used in the calculation of EPS included the effect of the off-market share buy-back that was completed on 27 May 2019, resulting in 58.7 million ordinary shares being cancelled. Refer to Note 4.3 for further details on the share buy-back.

 |
| table | | 2019     | 2018
----------------------------------------------------------------------------------- | -------- | --------
                                                                                | 53 WEEKS | 52 WEEKS
Profit for the period attributable to equity holders of the parent entity used in   |          |
earnings per share ($M)                                                             |          |
Continuing operations                                                               | 1,493    | 1,605
Discontinued operations                                                             | 1,200    | 119
                                                                                | 2,693    | 1,724
Weighted average number of shares used in earnings per share (shares, millions) (1) |          |
Basic earnings per share                                                            | 1,305.7  | 1,300.5
Diluted earnings per share (2)                                                      | 1,313.7  | 1,303.9
Basic earnings per share (cents per share) (1)                                      |          |
Continuing operations                                                               | 114.3    | 123.4
Discontinued operations                                                             | 91.9     | 9.2
                                                                                | 206.2    | 132.6
Diluted earnings per share (cents per share) (1,2)                                  |          |
Continuing operations                                                               | 113.6    | 123.1
Discontinued operations                                                             | 91.3     | 9.2
                                                                                | 204.9    | 132.3 |


| _id | d1b361266 |
| title |  |
| text | Goodwill
The following table summarizes the changes in the carrying amount of goodwill during the periods presented (table in millions):

 |
| table | | January 31, 2020 | February 1, 2019
----------------------------------------------------- | ---------------- | ----------------
Balance, beginning of the year                        | $7,418           | $6,660
Increase in goodwill related to business combinations | 1,911            | 784
Other adjustment                                      | —                | (26)
Balance, end of the year                              | $9,329           | $7,418 |


| _id | d1b32ae78 |
| title |  |
| text | 30. Financial instruments and financial risk management continued
b) Credit risk continued
The composition of trade receivables at 31 December is as follows:
The Group closely monitors amounts due from customers and performs activities such as credit checks and reviews of payment history and has put in place appropriate credit approval limits. Based on these procedures, management assessed the quality of those receivables that are past due but not impaired as low risk.

The receivables’ provision is based on expected credit losses. The movement on the provision during the year is given in note 20. The value of impaired trade receivables is $1.4 million (2018 $0.9 million). For all other financial assets, the maximum exposure to credit risk is represented by the carrying amount.

 |
| table | | 2019      | 2018
----------------------------- | --------- | ---------
                              | $ million | $ million
Neither impaired nor past due | 115.3     | 99.8
Past due but not impaired:    |           |
– Less than 30 days overdue   | 8.6       | 16.8
– 30 to 60 days               | 3.6       | 3.2
– Over 60 days                | 1.2       | 3.6
Trade receivables             | 128.7     | 123.4 |


| _id | d1b30fc4a |
| title |  |
| text | Research and Development Expenses: research and development expenses consist primarily of personnel related expenditures. We intend to continue to invest significantly in our research and development efforts because, in our judgment, they are essential to maintaining our competitive position.
(1) Excluding stock-based compensation

(1) Excluding stock-based compensation
On a constant currency basis, total research and development expenses were flat in fiscal 2019, as lower employee related expenses including lower variable compensation were offset by an increase in stock-based compensation expenses .

 |
| table | Year Ended May 31,           |        |        |                |
---------------------------- | ------ | ------ | -------------- | ------
                             |        |        | Percent Change |
(Dollars in millions)        | 2019   | Actual | Constant       | 2018
Research and development (1) | $5,063 | -2%    | 0%             | $5,163
Stock-based compensation     | 963    | 5%     | 5%             | 921
Total expenses               | $6,026 | -1%    | 0%             | $6,084
% of Total Revenues          | 15%    |        |                | 15% |


| _id | d1a71cfa0 |
| title |  |
| text | AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
20. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information and non-cash investing and financing activities are as follows for the years ended December 31,:
(1) Related to the note extinguishment with TV Azteca, S.A. de C.V. in 2018.

 |
| table | | 2019   | 2018   | 2017
-------------------------------------------------------------------------------------------------------------------------------- | ------ | ------ | ------
Supplemental cash flow information:                                                                                |        |        |
Cash paid for interest                                                                                | $750.2 | $789.7 | $712.1
Cash paid for income taxes (net of refunds of $11.2, $25.0 and $20.7, respectively)                                              | 147.5  | 163.9  | 136.5
Non-cash investing and financing activities:                                                                                |        |        |
(Decrease) increase in accounts payable and accrued expenses for purchases of property and equipment and construction activities | (21.0) | 8.3    | 34.0
Purchases of property and equipment under finance leases, perpetual easements and capital leases                                 | 81.3   | 57.8   | 54.8
Fair value of debt assumed through acquisitions                                                                                | 329.8  | —      | —
Acquisition of Commercialization Rights (1)                                                                                | —      | 24.8   | —
Conversion of third-party debt to equity                                                                                | —      | —      | 48.2
Debt financed acquisition of communication sites                                                                                | —      | 54.2   | — |


| _id | d1b2e5d50 |
| title |  |
| text | 5. Income taxes: (Continued)
In the normal course of business the Company takes positions on its tax returns that may be challenged by taxing
authorities. The Company evaluates all uncertain tax positions to assess whether the position will more likely than not
be sustained upon examination. If the Company determines that the tax position is not more likely than not to be
sustained, the Company records a liability for the amount of the benefit that is not more likely than not to be realized

when the tax position is settled. The Company does not have a liability for uncertain tax positions at December 31,
2019 and does not expect that its liability for uncertain tax positions will materially increase during the twelve months
ended December 31, 2020, however, actual changes in the liability for uncertain tax positions could be different than
currently expected. If recognized, changes in the Company's total unrecognized tax benefits would impact the
Company's effective income tax rate.

In the normal course of business the Company takes positions on its tax returns that may be challenged by taxing authorities. The Company evaluates all uncertain tax positions to assess whether the position will more likely than not be sustained upon examination. If the Company determines that the tax position is not more likely than not to be sustained, the Company records a liability for the amount of the benefit that is not more likely than not to be realized when the tax position is settled. The

be realized when the tax position is settled. The Company does not have a liability for uncertain tax positions at December 31, 2019 and does not expect that its liability for uncertain tax positions will materially increase during the twelve months ended December 31, 2020, however, actual changes in the liability for uncertain tax positions could be different than currently expected. If recognized, changes in the Company's total unrecognized tax benefits would impact the Company's effective income tax

would impact the Company's effective income tax rate. In the normal course of business the Company takes positions on its tax returns that may be challenged by taxing authorities. The Company evaluates all uncertain tax positions to assess whether the position will more likely than not be sustained upon examination. If the Company determines that the tax position is not more likely than not to be sustained, the Company records a liability for the amount of the benefit that is not more likely than not to be

benefit that is not more likely than not to be realized when the tax position is settled. The Company does not have a liability for uncertain tax positions at December 31, 2019 and does not expect that its liability for uncertain tax positions will materially increase during the twelve months ended December 31, 2020, however, actual changes in the liability for uncertain tax positions could be different than currently expected. If recognized, changes in the Company's total unrecognized tax benefits would

Company's total unrecognized tax benefits would impact the Company's effective income tax rate. In the normal course of business the Company takes positions on its tax returns that may be challenged by taxing authorities. The Company evaluates all uncertain tax positions to assess whether the position will more likely than not be sustained upon examination. If the Company determines that the tax position is not more likely than not to be sustained, the Company records a liability for the amount of the

Company records a liability for the amount of the benefit that is not more likely than not to be realized when the tax position is settled. The Company does not have a liability for uncertain tax positions at December 31, 2019 and does not expect that its liability for uncertain tax positions will materially increase during the twelve months ended December 31, 2020, however, actual changes in the liability for uncertain tax positions could be different than currently expected. If recognized, changes in the

currently expected. If recognized, changes in the Company's total unrecognized tax benefits would impact the Company's effective income tax rate.

The Company or one of its subsidiaries files income tax returns in the US federal jurisdiction and various state and foreign jurisdictions. The Company is subject to US federal tax and state tax examinations for years 2004 to 2019. The Company is subject to tax examinations in its foreign jurisdictions generally for years 2005 to 2019.
The following is a reconciliation of the Federal statutory income taxes to the amounts reported in the financial statements (in thousands).

 |
| table | |           | Years Ended December 31, |
--------------------------------------------- | --------- | ------------------------ | ---------
                                              | 2019      | 2018                     | 2017
Federal income tax expense at statutory rates | $(11,061) | $(8,690)                 | $(10,892)
Effect of:                                    |           |                          |
State income taxes, net of federal benefit    | (2,973)   | (2,665)                  | (2,244)
Impact of foreign operations                  | (11)      | (146)                    | 74
Non-deductible expenses                       | (592)     | (1,274)                  | (1,350)
Federal tax rate change                       | —         | —                        | (9,046)
Tax effect of TCJA from foreign earnings      | (28)      | (130)                    | (2,296)
Other                                         | (581)     | (645)                    | 239
Changes in valuation allowance                | 92        | 835                      | 273
Income tax expense                            | $(15,154) | $(12,715)                | $(25,242) |


| _id | d1b3a4dea |
| title |  |
| text | 8.1 CAPITAL STRUCTURE
The table below summarizes debt-related financial ratios over the last two fiscal years and the fiscal 2020 guidelines:

(1) Based on mid-range guidelines. (2) Excludes amortization of deferred transaction costs and commitment fees but includes the impact of interest rate swaps. Potential variations in the US LIBOR rates in fiscal 2020 have not been considered. (3) Taking into consideration the interest rate swaps in effect at the end of each fiscal year. (4) Net indebtedness is defined as the aggregate of bank indebtedness, balance due on business combinations and principal on long-term debt, less cash and cash equivalents.

long-term debt, less cash and cash equivalents. (5) Adjusted EBITDA and financial expense for fiscal year 2018 include only eight months of MetroCast operations. (6) Specific guidance on interest coverage cannot be provided given that financial expense guidance is not provided.

In fiscal 2019, the financial leverage ratio relating to net indebtedness over adjusted EBITDA has declined as a result of the sale of Cogeco Peer 1 on April 30, 2019 for a net cash consideration of $720 million and to a lesser extent growing adjusted EBITDA and a reduction in net indebtedness from generated free cash flow. In fiscal 2020, prior to the adoption of IFRS 16 Leases, the financial leverage ratio relating to net indebtedness over adjusted EBITDA should continue to decline as a result of growing

should continue to decline as a result of growing adjusted EBITDA and a projected reduction in net indebtedness from generated free cash flow.

 |
| table | Years ended August 31,                   | 2020 Guidelines(1) | 2019 | 2018
---------------------------------------- | ------------------ | ---- | ----
Average cost of indebtedness(2)          | 4.4%               | 4.4% | 4.4%
Fixed rate indebtedness(3)               | 78%                | 78%  | 72%
Average term: long-term debt (in years)  | 3.9                | 4.9  | 5.7
Net indebtedness(4) / adjusted EBITDA(5) | 2.3                | 2.6  | 3.8
Adjusted EBITDA / financial expense(5)   | N/A (6)            | 6.3  | 5.4 |


| _id | d1b3616a8 |
| title |  |
| text | The following table sets forth activity during the years ended December 31, 2019 and 2018 related to finite-lived intangible assets:

The Company regularly reviews the carrying amounts of its long-lived assets subject to depreciation and amortization, as well as the related useful lives, to determine whether indicators of impairment may exist which warrant adjustments to carrying values or estimated useful lives. An impairment loss is recognized when the sum of the expected future undiscounted net cash flows is less than the carrying amount of the asset.

Should impairment exist, the impairment loss is measured based on the excess of the carrying amount of the asset over the asset’s fair value. During the years ended December 31, 2019 and 2017, no impairment losses related to finite-lived intangible assets were recognized. Impairment loss related to finite-lived intangible assets for the year ended December 31, 2018 was $2.2 million and related to acquired developed technology.

 |
| table | | Years Ended December 31, |
-------------------------------------------- | ------------------------ | --------
                                             | 2019                     | 2018
                                             | (in thousands)           |
Beginning balance                            | $240,500                 | $310,645
Other additions                              | 86                       | —
Transfers to developed technology from IPR&D | 4,400                    | —
Amortization                                 | (57,015)                 | (67,947)
Impairment losses                            | —                        | (2,198)
Ending balance                               | $187,971                 | 240,500 |


| _id | d1b3bca94 |
| title |  |
| text | Horizon Clinicals and Series2000 Revenue Cycle Discontinued Operation
Two of the product offerings acquired with the EIS Business in 2017, Horizon Clinicals and Series2000 Revenue Cycle, were sunset after March 31, 2018. The decision to discontinue maintaining and supporting these solutions was made prior to our acquisition of the EIS Business and, therefore, they are presented below as discontinued operations.

Until the end of the first quarter of 2018, we were involved in ongoing maintenance and support for these solutions until customers transitioned to other platforms. No disposal gains or losses were recognized during the year ended December 31, 2018 related to these discontinued solutions. We had $0.9 million of accrued expenses associated with the Horizon Clinicals and Series2000 Revenue Cycle businesses on the consolidated balance sheets as of December 31, 2018

The following table summarizes the major income and expense line items of these discontinued solutions, as reported in the consolidated statements of operations for the years ended December 31, 2018 and 2017:

 |
| table | (In thousands)                                                                                | 2018    | 2017
-------------------------------------------------------------------------------------------------------------------------------------------- | ------- | -------
Major classes of line items constituting pretax profit (loss) of discontinued operations for Horizon Clinicals and Series2000 Revenue Cycle: |         |
Revenue:                                                                                |         |
Software delivery, support and maintenance                                                                                | $9,441  | $10,949
Client services                                                                                | 404     | 1,044
Total revenue                                                                                | 9,845   | 11,993
Cost of revenue:                                                                                |         |
Software delivery, support and maintenance                                                                                | 2,322   | 2,918
Client services                                                                                | 830     | 261
Total cost of revenue                                                                                | 3,152   | 3,179
Gross profit                                                                                | 6,693   | 8,814
Research and development                                                                                | 1,651   | 1,148
Income from discontinued operations for Horizon Clinicals and Series2000 Revenue Cycle before income taxes                                   | 5,042   | 7,666
Income tax provision                                                                                | (1,311) | (2,990)
Income from discontinued operations, net of tax for Horizon Clinicals and Series2000 Revenue Cycle                                           | $3,731  | $4,676 |


| _id | d1b338a6e |
| title |  |
| text | Opening Balance Sheet Adjustments
The following summarizes the effect of adopting the above new accounting standards:
(1) The balance as of March 30, 2018, includes income tax receivable and prepaid income taxes of $107 million and short-term deferred commissions of $94 million. The opening balance as of March 31, 2018, includes income tax receivable and prepaid income taxes of $99 million and short-term deferred commissions of $86 million.

(2) The balance as of March 30, 2018, includes long-term deferred commissions of $35 million, long-term income tax receivable and prepaid income taxes of $61 million and deferred income tax assets of $46 million. The opening balance as of March 31, 2018, includes long-term deferred commissions of $92 million, long-term income tax receivable and prepaid income taxes of $29 million, and deferred income tax assets of $828 million.

 |
| table | (in millions)                   | Balance as of March 30, 2018 | Revenue Recognition Guidance | Accounting for Income Taxes Guidance | Opening Balance as of March 31, 2018
------------------------------- | ---------------------------- | ---------------------------- | ------------------------------------ | ------------------------------------
Accounts receivable, net        | $809                         | $24                          | $—                                   | $833
Other current assets (1)        | $522                         | $(8)                         | $(8)                                 | $506
Other long-term assets (2)      | $526                         | $57                          | $750                                 | $1,333
Total assets                    | $15,759                      | $73                          | $742                                 | $16,574
Short-term contract liabilities | $2,368                       | $(107)                       | $—                                   | $2,261
Other current liabilities       | $372                         | $(2)                         | $—                                   | $370
Long-term contract liabilities  | $735                         | $(62)                        | $—                                   | $673
Deferred income tax liabilities | $592                         | $47                          | $—                                   | $639
Total liabilities               | $10,736                      | $(124)                       | $—                                   | $10,612
Retained earnings               | $328                         | $197                         | $742                                 | $1,267 |