| _id | d1a73ab0e |
| title |  |
| text | 13. SHARE-BASED EMPLOYEE COMPENSATION
Stock incentive plans — We offer share-based compensation plans to attract, retain, and motivate key officers, employees, and non-employee directors to work toward the financial success of the Company.

Our stock incentive plans are administered by the Compensation Committee of the Board of Directors and have been approved by the stockholders of the Company. The terms and conditions of our share-based awards are determined by the Compensation Committee for each award date and may include provisions for the exercise price, expirations, vesting, restriction on sales, and forfeitures, as applicable. We issue new shares to satisfy stock issuances under our stock incentive plans.

Our Amended and Restated 2004 Stock Incentive Plan authorizes the issuance of up to11,600,000 common shares in connection with the granting of stock options, stock appreciation rights, restricted stock purchase rights, restricted stock bonuses, restricted stock units, or performance units to key employees, directors, and other designated employees. There were 1,677,983 shares of common stock available for future issuance under this plan as of September 29, 2019.

We also maintain a deferred compensation plan for non-management directors under which those who are eligible to receive fees or retainers may choose to defer receipt of their compensation. The deferred amounts are converted to stock equivalents. The plan requires settlement in shares of our common stock based on the number of stock equivalents and dividend equivalents at the time of a participant’s separation from the Board of Directors. This plan provides for the issuance of up to 350,000 shares of

for the issuance of up to 350,000 shares of common stock in connection with the crediting of stock equivalents. There were143,122 shares of common stock available for future issuance under this plan as of September 29, 2019.

Compensation expense — The components of share-based compensation expense, included within “Selling, general, and administrative expenses” in our consolidated statement of earnings, in each fiscal year are as follows (in thousands):

Nonvested restricted stock units — Nonvested restricted stock units (“RSUs”) are generally issued to executives, non-management directors and certain other members of management and employees. Prior to fiscal 2011, RSUs were granted to certain Executive and Senior Vice Presidents pursuant to our share ownership guidelines. These awards vest upon retirement or termination based on years of service. There were 60,272 of such RSUs outstanding as of September 29, 2019.

 |
| table | | 2019   | 2018   | 2017
----------------------------------------------- | ------ | ------ | -------
Nonvested stock units                           | $5,458 | $5,737 | $5,873
Stock options                                   | 936    | 1,790  | 1,826
Performance share awards                        | 1,417  | 1,236  | 2,580
Nonvested restricted stock awards               | —      | 33     | 88
Non-management directors’ deferred compensation | 263    | 350    | 270
Total share-based compensation expense          | $8,074 | $9,146 | $10,637 |


| _id | d1a72ff9c |
| title |  |
| text | Significant components of Teradyne’s deferred tax assets (liabilities) as of December 31, 2019 and 2018 were as follows:

As of December 31, 2019 and 2018, Teradyne evaluated the likelihood that it would realize deferred income taxes to offset future taxable income and concluded that it is more likely than not that a substantial majority of its deferred tax assets will be realized through consideration of both the positive and negative evidence. At December 31, 2019 and 2018, Teradyne maintained a valuation allowance for certain deferred tax assets of $77.2 million and $69.9 million, respectively, primarily related to state

million, respectively, primarily related to state net operating losses and state tax credit carryforwards, due to the uncertainty regarding their realization. Adjustments could be required in the future if Teradyne estimates that the amount of deferred tax assets to be realized is more or less than the net amount recorded.

 |
| table | | 2019           | 2018
-------------------------------- | -------------- | ---------
                                 | (in thousands) |
Deferred tax assets              |                |
Tax credits                      | $79,480        | $69,091
Accruals                         | 25,424         | 23,449
Pension liabilities              | 24,459         | 20,826
Inventory valuations             | 18,572         | 18,514
Deferred revenue                 | 7,622          | 9,130
Equity compensation              | 7,042          | 7,190
Vacation accrual                 | 4,768          | 4,772
Investment impairment            | 3,292          | —
Net operating loss carryforwards | 2,705          | 3,658
Marketable securities            | —              | 962
Other                            | 1,472          | 685
Gross deferred tax assets        | 174,836        | 158,277
Less: valuation allowance        | (77,177)       | (69,852)
Total deferred tax assets        | $97,659        | $88,425
Deferred tax liabilities:        |                |
Depreciation                     | $(18,238)      | $(14,028)
Intangible assets                | (16,705)       | (24,211)
Marketable securities            | (1,601)        | —
Total deferred tax liabilities   | $(36,544)      | $(38,239)
Net deferred assets              | $61,115        | $50,186 |


| _id | d1b374866 |
| title |  |
| text | Contract Liabilities
Contract liabilities include payments received in advance of performance under the contract, and are realized with the associated revenue recognized under the contract. The changes in our contract liabilities are as follows (in thousands):
The revenue recognized from amounts included in contract liabilities primarily relates to prepayment contracts with customers as well as payments of activation fees.

 |
| table | Year Ended December 31,                                          |         |
---------------------------------------------------------------- | ------- | -------
                                                                 | 2019    | 2018
Beginning of period balance                                      | $11,176 | $12,678
Revenue deferred and acquired in current period                  | 6,127   | 3,954
Revenue recognized from amounts included in contract liabilities | (6,805) | (5,456)
End of period balance                                            | $10,498 | $11,176 |


| _id | d1b31baa4 |
| title |  |
| text | Stock-Based Compensation
The following table summarizes the components of total stock-based compensation included in VMware’s consolidated statements of income during the periods presented (table in millions):

As of January 31, 2020, the total unrecognized compensation cost for stock options and restricted stock was $1.8 billion and will be recognized through fiscal 2024 with a weighted-average remaining period of 1.5 years. Stock-based compensation related to VMware equity awards held by VMware employees is recognized on VMware’s consolidated statements of income over the awards’ requisite service periods.

 |
| table | |                  | For the Year Ended |
------------------------------------------ | ---------------- | ------------------ | ----------------
                                           | January 31, 2020 | February 1, 2019   | February 2, 2018
Cost of license revenue                    | $1               | $1                 | $2
Cost of subscription and SaaS revenue      | 13               | 7                  | 5
Cost of services revenue                   | 83               | 58                 | 53
Research and development                   | 459              | 391                | 363
Sales and marketing                        | 293              | 226                | 205
General and administrative                 | 168              | 117                | 84
Stock-based compensation                   | 1,017            | 800                | 712
Income tax benefit                         | (347)            | (253)              | (232)
Total stock-based compensation, net of tax | $670             | $547               | $480 |


| _id | d1b38bf5c |
| title |  |
| text | Results of Operations
The following describes the line items set forth in our consolidated statements of operations. A discussion of changes in our results of operations during the year ended December 31, 2018 compared to the year ended December 31, 2017 has been omitted from this Annual Report on Form 10-K, but may be found in “Item 7.

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

Net Revenue. Net revenue is generated from sales of radio-frequency, analog and mixed-signal integrated circuits for the connected home, wired and wireless infrastructure, and industrial and multi-market applications. A significant portion of our sales are to distributors, which then resell our products.

Cost of Net Revenue. Cost of net revenue includes the cost of finished silicon wafers processed by third-party foundries; costs associated with our outsourced packaging and assembly, test and shipping; costs of personnel, including stock-based compensation, and equipment associated with manufacturing support, logistics and quality assurance; amortization of acquired developed technology intangible assets and inventory step-ups to fair value; amortization of certain production mask costs; cost of production

certain production mask costs; cost of production load boards and sockets; and an allocated portion of our occupancy costs.

Research and Development. Research and development expense includes personnel-related expenses, including stock-based compensation, new product engineering mask costs, prototype integrated circuit packaging and test costs, computer-aided design software license costs, intellectual property license costs, reference design development costs, development testing and evaluation costs, depreciation expense and allocated occupancy costs.

Research and development activities include the design of new products, refinement of existing products and design of test methodologies to ensure compliance with required specifications. All research and development costs are expensed as incurred.

Selling, General and Administrative. Selling, general and administrative expense includes personnel-related expenses, including stock-based compensation, amortization of certain acquired intangible assets, third-party sales commissions, field application engineering support, travel costs, professional and consulting fees, legal fees, depreciation expense and allocated occupancy costs. Impairment Losses. Impairment losses consist of charges resulting from the impairment of acquired intangible assets.

Restructuring Charges. Restructuring charges consist of severance, lease and leasehold impairment charges, and other charges related to restructuring plans. Interest and Other Income (Expense), Net. Interest and other income (expense), net includes interest income, interest expense and other income (expense). Interest income consists of interest earned on our cash, cash equivalents and restricted cash balances. Interest expense consists of interest accrued on debt. Other income (expense) generally consists

debt. Other income (expense) generally consists of income (expense) generated from non-operating transactions.

Income Tax Provision (Benefit). We make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expenses for tax and financial statement purposes and the realizability of assets in future years.

The following table sets forth our consolidated statement of operations data as a percentage of net revenue for the periods indicated:

 |
| table | |      | Years Ended December 31,
---------------------------------------------- | ---- | ------------------------
                                               | 2019 | 2018
Net revenue                                    | 100% | 100%
Cost of net revenue                            | 47   | 46
Gross profit                                   | 53   | 54
Operating expenses:                            |      |
Research and development                       | 31   | 31
Selling, general and administrative            | 28   | 26
Impairment losses                              | -    | 1
Restructuring charges                          | 1    | 1
Total operating expenses                       | 60   | 59
Loss from operations                           | (7)  | (5)
Total interest and other income (expense), net | (3)  | (4)
Loss before income taxes                       | (10) | (9)
Income tax benefit                             | (4)  | (2)
Net loss                                       | (6)% | (7)% |


| _id | d1b31ee98 |
| title |  |
| text | Outstanding Equity Awards at Fiscal Year End
The following table summarizes the equity awards made to our named executive officers that were outstanding at December 31, 2019

 |
| table | Name                   | No. of Securities Underlying Unexercised Options (#) Exercisable No. of Securities Underlying Unexercised | No. of Securities Underlying Unexercised Options (#) Unexercisable No. of Securities Underlying Unexercised | Option Exercise Price | Option Expiration Date
---------------------- | --------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------- | --------------------- | ----------------------
Garo H. Armen (1)      | 500,000                                                                                | -                                                                                | $1.25                 | April 16, 2026
Garo H. Armen (2)      | 184,028                                                                                | 65,972                                                                                | $1.75                 | October 16, 2027
Alexander K. Arrow (3) | 100,000                                                                                | -                                                                                | $1.25                 | February 12, 2026
Alexander K. Arrow (3) | 140,000                                                                                | -                                                                                | $1.25                 | April 15, 2026
Alexander K. Arrow (4) | 55,208                                                                                | 19,792                                                                                | $1.75                 | October 16, 2027
Alexander K. Arrow (5) | 41,667                                                                                | -                                                                                | $1.00                 | February 1, 2029 |


| _id | d1b3958ea |
| title |  |
| text | 12. Information about Segments of Geographic Areas

The Company operates in one segment, the development and marketing of network infrastructure equipment. Revenue is attributed to a geographical area based on the location of the customers. The Company operates in three geographic theaters: Americas, which includes the United States, Canada, Mexico, Central America and South America; EMEA, which includes Europe, Russia, Middle East and Africa; and APAC which includes Asia Pacific, China, South Asia and Japan. The Company’s chief operating decision maker

The Company’s chief operating decision maker (“CODM”), who is its CEO, reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance.

See Note 3. Revenues for the Company’s revenues by geographic regions and channel based on the customers’ ship-to location.
The Company’s long-lived assets are attributed to the geographic regions as follows (in thousands):

 |
| table | Long-lived Assets       | June 30,
2019 | June 30,
2018
----------------------- | ------------- | -------------
Americas                | $136,035      | $178,251
EMEA                    | 28,744        | 15,106
APAC                    | 11,529        | 9,896
Total long-lived assets | $176,308      | $203,253 |


| _id | d1b33a1de |
| title |  |
| text | 19 Trade and other payables
Contract liabilities relate to advance payments received from customers which have not yet been recognised as revenue. £8.3m of the contract liabilities at 31st December 2018 was recognised as revenue during 2019 (2018: £3.0m).

 |
| table | | 2019  | 2018
------------------------------ | ----- | -----
                               | £m    | £m
Trade payables                 | 57.9  | 57.4
Contract liabilities           | 8.7   | 8.9
Social security                | 5.6   | 5.1
Other payables                 | 37.8  | 37.6
Accruals                       | 64.8  | 58.0
Total trade and other payables | 174.8 | 167.0 |


| _id | d1b319ea2 |
| title |  |
| text | 9. Audit, audit related and other non-audit services  The following fees were paid or are payable to the company’s auditors, KPMG LLP and other firms in the KPMG network, for the year ended 31 March 2019. Figures in the table below for the years ended 31 March 2017 and 2018 are in respect of fees paid to the company’s previous auditors, PricewaterhouseCoopers LLP.

a Services in relation to the audit of the parent company and the consolidated financial statements, including fees for reports under section 404 of the Sarbanes-Oxley Act. This also includes fees payable for the statutory audits of the financial statements of subsidiary companies. This excludes amounts for the audit of BT Group Employee Share Ownership Trust and Ilford Trustees (Jersey) Limited amounting to £32,000.

b During the year a further £446,000 of fees were payable to PricewaterhouseCoopers LLP in relation to the audit of 2017/18 subsidiary accounts and the audit of our restated IAS 19 accounting valuation of retirement benefit obligations, which have not been included in the 2019 balances in the above table.

c Services in relation to other statutory filings or engagements that are required by law or regulation to be carried out by an appointed auditor. This includes fees for the review of interim results, the accrued fee for the audit of the group’s regulatory financial statements and reporting associated with the group’s US debt shelf registration. d Services relating to tax returns, tax audits, monitoring and enquiries.

e Fees payable for all taxation advisory services not falling within taxation compliance. All other assurance services include fees payable to KPMG LLP for agreed upon procedures performed on the estimated impact of the new IFRS 15 revenue accounting standard, which took effect from 1 April 2018 for the 2017/18 audit. g Fees payable for all non-audit services not covered above, principally comprising other advisory services.

f All other assurance services include fees payable to KPMG LLP for agreed upon procedures performed on the estimated impact of the new IFRS 15 revenue accounting standard, which took effect from 1 April 2018 for the 2017/18 audit.
g Fees payable for all non-audit services not covered above, principally comprising other advisory services.

 |
| table | | 2019   | 2018   | 2017
------------------------------------------------------------------------- | ------ | ------ | ------
Year ended 31 March                                                       | £000   | £000   | £000
Fees payable to the company’s auditors and its associates for:            |        |        |
Audit services a,b                                                        |        |        |
The audit of the parent company and the consolidated financial statements | 8,165  | 5,418  | 4,316
The audit of the company’s subsidiaries                                   | 6,061  | 5,877  | 5,675
                                                                          | 14,226 | 11,295 | 9,991
Audit related assurance services c                                        | 2,236  | 1,771  | 1,865
Other non-audit services                                                  |        |        |
Taxation compliance services d                                            | –      | –      | 366
Taxation advisory services e                                              | –      | –      | 111
All other assurance services f                                            | 748    | 211    | 200
All other services g                                                      | 210    | 592    | 2,332
                                                                          | 958    | 803    | 3,009
Total services                                                            | 17,420 | 13,869 | 14,865 |


| _id | d1b363336 |
| title |  |
| text | 30. Financial instruments and financial risk management
The main purpose of the Group’s financial instruments, other than trade and other receivables, trade and other payables, contractual provisions and lease liabilities, is to fund the Group’s liquidity requirements.

All of the Group’s financial assets and liabilities are categorised as financial assets/liabilities stated at amortised cost, except for forward foreign currency exchange contracts, included within current other financial assets, that are designated as financial assets at fair value through profit or loss and corporate owned life insurance, amounting to $3.0 million (2018 $2.4 million), included within non-current trade and other receivables, that is designated as financial assets at fair value through

as financial assets at fair value through profit or loss. These are shown in the below table:

The Group enters into derivative transactions, forward foreign currency exchange contracts, for the management of the Group’s foreign currency exposures when deemed appropriate.

The key objective of the Group’s treasury department is to manage the financial risks of the business and to ensure that sufficient liquidity is available to the Group. All treasury activity operates within a formal control framework. The Board has approved treasury policies and guidelines and periodically reviews treasury activities. Additionally, it is the Group’s policy that speculative treasury transactions are expressly forbidden.

 |
| table | |       | 2019      | 2018
------------------------------------------------------- | ----- | --------- | ---------
                                                        | Notes | $ million | $ million
Non-current trade and other receivables                 | 20    | 5.7       | 3.5
Cash and cash equivalents                               | 22    | 183.2     | 121.6
Current trade and other receivables                     | 20    | 133.2     | 126.9
Current other financial assets                          | 20    | 0.1       | –
Financial assets                                        |       | 322.2     | 252.0
Non-current other payables, excluding government grants | 23    | 0.8       | 4.4
Current trade payables, other payables and accruals     | 23    | 75.4      | 57.1
Lease liabilities, current and non-current              | 26    | 33.0      | –
Contractual provisions                                  | 28    | 3.6       | 3.6
Financial liabilities                                   |       | 112.8     | 65.1 |


| _id | d1b2e2826 |
| title |  |
| text | The following are the significant assumptions adopted in measuring the Company’s pension and other benefit obligations:
For certain Canadian post-retirement plans the above trend rates are applicable for 2019 to 2024 which will increase linearly to 4.75% in 2029 and grading down to an ultimate rate of 3.57% per annum in 2040 and thereafter.

 |
| table | As at December 31,               | Pension 2019 | Other 2019     | Pension 2018 | Other 2018
-------------------------------- | ------------ | -------------- | ------------ | --------------
Actuarial benefit obligation     |              |                |              |
Discount rate                    | 3.20%        | 2.95% to 3.20% | 3.80%        | 3.80% to 4.00%
Benefit costs for the year ended |              |                |              |
Discount rate                    | 3.90%        | 3.90% to 4.00% | 3.60%        | 3.25% to 3.60%
Future salary growth             | 2.50%        | N/A            | 2.50%        | N/A
Health care cost trend rate      | N/A          | 3.49% to 5.49% | N/A          | 4.50%
Other medical trend rates        | N/A          | 4.00% to 4.56% | N/A          | 4.50% |


| _id | d1b31fb54 |
| title |  |
| text | The following table summarizes stock-based compensation expense in the Company’s consolidated statements of operations:
For the year ended September 30, 2019, the Company granted 33,000 nonvested shares to certain key employees, 55,000 nonvested shares to certain officers including 35,000 shares granted to the Chief Executive Officer, and 20,000 nonvested shares

to its non-employee directors. For the year ended September 30, 2018, the Company granted 12,000 nonvested shares to certain key employees, 40,000 nonvested shares to certain officers including 30,000 to its Chief Executive Officer and 20,000 nonvested
shares to its non-employee directors.

The Company measures the fair value of nonvested stock awards based upon the market price of its common stock as of the date of grant. The Company used the Black-Scholes option-pricing model to value stock options. The Black-Scholes model requires the use of a number of assumptions including volatility of the Company’s stock price, the weighted average risk-free interest rate and the weighted average expected life of the options, at the time of grant. The expected dividend yield is equal to the divided per

dividend yield is equal to the divided per share declared, divided by the closing share price on the date the options were granted. All equity compensation awards granted for the years ended September 30, 2019 and September 30, 2018 were nonvested stock awards.

 |
| table | | Years Ended            |
----------------------------------- | ---------------------- | ------------------
                                    | September 30, 2019     | September 30, 2018
                                    | (Amounts in thousands) |
Cost of sales                       | $7                     | $5
Engineering and development         | 49                     | 32
Selling, general and administrative | 736                    | 654
Total                               | $792                   | $691 |


| _id | d1a714224 |
| title |  |
| text | Equity in net earnings of affiliates:

The decrease in the share of net earnings in Golar Partners is as a result of a decrease in the underlying performance of Golar Partners in 2018. As a result, during the year ended December 31, 2018, we recognized an impairment charge of $149.4 million. The year ended December 31, 2017 included a deemed loss on disposal of $17.0 million as a result of a dilution in our holding in Golar Partners due to further issuances of common units by Golar Partners in February 2017. As of December 31, 2018, we held a

February 2017. As of December 31, 2018, we held a 32.0% (2017: 31.8%) ownership interest in Golar Partners (including our 2% general partner interest) and 100% of IDRs.

The share of net earnings in other affiliates represents our share of equity in Egyptian Company for Gas Services S.A.E ("ECGS") and Avenir LNG Limited ("Avenir"). During the year ended December 31, 2018 we recognized negative goodwill of $3.8 million in equity in net earnings of affiliates to reflect our bargain purchase of Avenir. Refer to note 14 "Investment in Affiliates" of our consolidated financial statements included herein for further details.

 |
| table | |           | December 31, |           |
------------------------------------------------------------ | --------- | ------------ | --------- | --------
(in thousands of $)                                          | 2018      | 2017         | Change    | % Change
Share of net earnings in Golar Partners                      | 7,001     | 17,702       | (10,701)  | (60)%
Impairment of investment in Golar Partners                   | (149,389) | —            | (149,389) | 100%
Net loss on deemed disposal of investments in Golar Partners | —         | (16,992)     | 16,992    | 100%
Share of net earnings in other affiliates                    | 3,711     | 793          | 2,918     | 368%
                                                             | (138,677) | 1,503        | (140,180) | (9,327)% |


| _id | d1b3a9dd6 |
| title |  |
| text | Selected financial information from our consolidated balance sheets is as follows:

(1) During 2016, as a result of our then pending sale of a portion of our colocation business and data centers, we reclassified $1.1 billion in net property, plant and equipment and $1.1 billion of goodwill to assets held for sale which is included in other current assets on our consolidated balance sheet. See Note 3—Sale of Data Centers and Colocation Business to our consolidated financial statements in Item 8 of Part II of this report, for additional information.

(2) During 2019 and 2018, we recorded non-cash, non-tax-deductible goodwill impairment charges of $6.5 billion and $2.7 billion, respectively.
(3) In 2015, we adopted both ASU 2015-03 “Simplifying the Presentation of Debt Issuance Costs” and ASU 2015-17 “Balance Sheet Classification of Deferred Taxes” by retrospectively applying the requirements of the ASUs to our previously issued consolidated financial statements.

(4) In 2019, we adopted ASU 2016-02 “Leases (ASC 842)” by using the non-comparative transition option pursuant to ASU 2018-11. Therefore, we have not restated comparative period financial information for the effects of ASC 842.

(5) Total long-term debt includes current maturities of long-term debt and finance lease obligations of $305 million for the year ended December 31, 2016 associated with assets held for sale. For additional information on our total long-term debt, see Note 7— Long-Term Debt and Credit Facilities to our consolidated financial statements in Item 8 of Part II of this report. For total contractual obligations, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Future

Condition and Results of Operations—Future Contractual Obligations” in Item 7 of Part II of this report.

 |
| table | |         |        | As of December 31,    |        |
------------------------------------ | ------- | ------ | --------------------- | ------ | ------
                                     | 2019    | 2018   | 2017                  | 2016   | 2015
                                     |         |        | (Dollars in millions) |        |
Net property, plant and equipment(1) | $26,079 | 26,408 | 26,852                | 17,039 | 18,069
Goodwill(1)(2)                       | 21,534  | 28,031 | 30,475                | 19,650 | 20,742
Total assets(3)(4)                   | 64,742  | 70,256 | 75,611                | 47,017 | 47,604
Total long-term debt(3)(5)           | 34,694  | 36,061 | 37,726                | 19,993 | 20,225
Total stockholders’ equity           | 13,470  | 19,828 | 23,491                | 13,399 | 14,060 |


| _id | d1b3a1f8c |
| title |  |
| text | Disaggregation of revenue

To provide visibility into our transition from older products to our newer, higher growth products and clarity into the dynamics of our product revenue, we have historically grouped our products by “Strategic” and “Mature” solutions. Strategic solutions include Clustered ONTAP, branded E-Series, SolidFire, converged and hyper-converged infrastructure, ELAs and other optional add-on software products. Mature solutions include 7-mode ONTAP, add-on hardware and related operating system (OS) software and

and related operating system (OS) software and original equipment manufacturers (OEM) products. Both our Mature and Strategic product lines include a mix of disk, hybrid and all flash storage media. Additionally, we provide a variety of services including software maintenance, hardware maintenance and other services including professional services, global support solutions, and customer education and training.

The following table depicts the disaggregation of revenue by our products and services (in millions):
Revenues by geographic region are presented in Note 16 – Segment, Geographic, and Significant Customer Information

 |
| table | |                | Year Ended     |
------------------------------------------------ | -------------- | -------------- | --------------
                                                 | April 26, 2019 | April 27, 2018 | April 28, 2017
Product revenues                                 | $ 3,755        | $  3,525       | $  3,060
Strategic                                        | 2,709          | 2,468          | 2,000
Mature                                           | 1,046          | 1,057          | 1,060
Software maintenance revenues                    | 946            | 902            | 905
Hardware maintenance and other services revenues | 1,445          | 1,492          | 1,526
Hardware maintenance support contracts           | 1,182          | 1,214          | 1,258
Professional and other services                  | 263            | 278            | 268
Net revenues                                     | $ 6,146        | $  5,919       | $  5,491 |


| _id | d1b3a0c72 |
| title |  |
| text | Restricted Stock Units
RSU activity is summarized as follows (shares in thousands):
The weighted-average grant date fair value of RSUs granted during the years ended December 31, 2019, 2018, and 2017 was $55.69, $46.17, and $37.99, respectively. The total fair value of RSUs vested as of the vesting dates during the years ended December 31, 2019, 2018, and 2017 was $58.4 million, $49.9 million, and $37.2 million, respectively.

Unrecognized compensation expense related to unvested RSUs was $127.2 million at December 31, 2019, which is expected to be recognized over a weighted-average period of 2.6 years.

 |
| table | | Number of Shares | Weighted- Average Grant Date Fair Value
------------------------------------ | ---------------- | ---------------------------------------
Unvested shares at December 31, 2018 | 4,117            | $41.94
Granted                              | 1,589            | 55.69
Forfeited                            | (510)            | 45.72
Vested                               | (1,440)          | 40.61
Unvested shares at December 31, 2019 | 3,756            | $47.76 |


| _id | d1b2f0318 |
| title |  |
| text | Contractual Obligations
Our contractual obligations as of December 31, 2019, were:
We have no off-balance sheet arrangements that have a material current effect or are reasonably likely to have a material future effect on our financial condition or changes in our financial condition.
Management believes that existing capital resources and funds generated from operations are sufficient to finance anticipated capital requirements.

 |
| table | |          |        | Payments due by period |           |
---------------------------------- | -------- | ------ | ---------------------- | --------- | -----------
                                   | Total    | 2020   | 2021-2022              | 2023-2024 | 2025-beyond
Long-term debt, including interest | $111,586 | $2,807 | $5,876                 | $102,903  | $—
Operating lease payments           | 37,610   | 4,467  | 8,764                  | 7,813     | 16,566
Retirement obligations             | 6,447    | 757    | 1,429                  | 1,328     | 2,933
Total                              | $155,643 | $8,031 | $16,069                | $112,044  | $19,499 |


| _id | d1b36d9f8 |
| title |  |
| text | Note 9. Non-current assets - property, plant and equipment
Property, plant and equipment secured under finance leases
Refer to note 24 for further information on property, plant and equipment secured under finance leases.
Accounting policy for property, plant and equipment

Plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably.

Plant and equipment are depreciated and leasehold improvements are amortised over their estimated useful lives using the straightline method. Assets held under finance lease are depreciated over their expected useful lives as owned assets or, where shorter, the term of the relevant lease.

 |
| table | Consolidated                     |         |
-------------------------------- | ------- | -------
                                 | 2019    | 2018
                                 | US$000  | US$000
Leasehold improvements - at cost | 7,754   | 5,181
Less: Accumulated depreciation   | (3,648) | (2,501)
                                 | 4,106   | 2,680
Plant and equipment - at cost    | 6,472   | 5,298
Less: Accumulated depreciation   | (2,827) | (2,278)
                                 | 3,645   | 3,020
Plant and equipment under lease  | 15      | 27
Less: Accumulated depreciation   | (4)     | (15)
                                 | 11      | 12
                                 | 7,762   | 5,712 |


| _id | d1b31d5de |
| title |  |
| text | Streamlined Energy and Carbon Reporting

We have decided to voluntarily comply with the UK government’s Streamlined Energy and Carbon Reporting (SECR) policy a year early. The table below represents Unilever’s energy use and associated GHG emissions from electricity and fuel in the UK for the 2018 and 2019 reporting years (1 October to 30 September), with scope calculations aligned to the Greenhouse Gas Protocol. The scope of this data includes 8 manufacturing sites and 11 non-manufacturing sites based in the UK. The UK accounts for 5% of our

based in the UK. The UK accounts for 5% of our global total Scope 1 and 2 emissions, outlined in our mandatory GHG reporting also on this page.

(a) Fleet and associated diesel use excluded. Transportation is operated by a
third party and accounted for under Scope 3.
(b) Carbon emission factors for grid electricity calculated according to the marketbased method'
For further information on energy efficiency measures taken to reduce our carbon
emissions, please see page 19.

 |
| table | K operations                             | 2019    | 2018
---------------------------------------- | ------- | -------
Biogas (MWh)                             | 17,045  | 15,958
Natural gas (MWh)                        | 238,081 | 278,849
PG (MWh)                                 | 866     | 1,513
Fuel oils (MWh)                          | 580     | 648
Coal (MWh)                               | 0       | 0
Electricity (MWh)                        | 195,796 | 196,965
Heat and steam (MWh)                     | 212,482 | 272,985
Total energy (MWh)(a)                    | 408,280 | 469,950
Total Scope 1 emissions (tonnes CO2e)    | 48,178  | 56,533
Total Scope 2 emissions (tonnes COe)(b)2 | 702     | 3,067 |


| _id | d1b321a58 |
| title |  |
| text | iv) Shareholding Pattern of top ten shareholders (other than Directors, Promoters and holder of GDRs and ADRs):
* The shares of the Company are traded on daily basis and hence the datewise increase/decrease in shareholding is not indicated. Shareholding is consolidated based on permanent account number (PAN) of the shareholder.

 |
| table | Top Ten Shareholders*                                                                                | Shareholding at the beginning of the year April 1, 2018 |                                  | Cumulative shareholding at end of the year March 31, 2019 |
---------------------------------------------------------------------------------------------------- | ------------------------------------------------------- | -------------------------------- | --------------------------------------------------------- | --------------------------------
                                                                                | No. of shares                                           | % of total shares of the Company | No. of shares                                             | % of total shares of the Company
1. Life Insurance Corporation of India                                                               | 75,384,947                                              | 3.9                              | 152,493,927                                               | 4.1
2. SBI Mutual Fund                                                                                | 7,056,720                                               | 0.4                              | 21,680,561                                                | 0.6
3. First State Investments Icvc- Stewart Investors Asia Pacific Leaders Fund                         | 15,054,489                                              | 0.8                              | 19,248,438                                                | 0.5
4. Government of Singapore                                                                           | 6,497,754                                               | 0.3                              | 18,028,475                                                | 0.5
5.Oppenheimer Developing Markets Fund                                                                | 7,996,009                                               | 0.4                              | 16,731,906                                                | 0.5
6.ICICI Prudential Life Insurance Company Ltd                                                        | 3,886,141                                               | 0.2                              | 16,139,316                                                | 0.4
7.Axis Mutual Fund Trustee Limited                                                                   | 4,055,256                                               | 0.2                              | 15,244,614                                                | 0.4
8.Abu Dhabi Investment Authority                                                                     | 6,296,384                                               | 0.3                              | 15,036,984                                                | 0.4
9. Vanguard Emerging Markets Stock Index Fund, A Series of Vanguard International Equity Index Funds | 7,595,080                                               | 0.4                              | 14,112,213                                                | 0.4
10. Vanguard Total International Stock Index Fund                                                    | 6,179,273                                               | 0.3                              | 13,978,944                                                | 0.4 |


| _id | d1b3675c6 |
| title |  |
| text | (a) GitHub has been included in our consolidated results of operations starting on the October 25, 2018 acquisition date.

(b) Includes a $2.6 billion net income tax benefit related to intangible property transfers and a $157 million net charge related to the enactment of the Tax Cuts and Jobs Act (“TCJA”), which together increased net income and diluted earnings per share (“EPS”) by $2.4 billion and $0.31, respectively. Refer to Note 12 – Income Taxes of the Notes to Financial Statements for further discussion.

(c) Includes a $13.7 billion net charge related to the enactment of the TCJA, which decreased net income and diluted EPS by $13.7 billion and $1.75, respectively. Refer to Note 12 – Income Taxes of the Notes to Financial Statements for further discussion.
(d) Reflects the impact of the adoption of new accounting standards in fiscal year 2018 related to revenue recognition and leases.
(e) LinkedIn has been included in our consolidated results of operations starting on the December 8, 2016 acquisition date.

(f) Includes $306 million of employee severance expenses primarily related to our sales and marketing restructuring plan, which decreased operating income, net income, and diluted EPS by $306 million, $243 million, and $0.04, respectively.

(g) Includes $630 million of asset impairment charges related to our Phone business and $480 million of restructuring charges associated with our Phone business restructuring plans, which together decreased operating income, net income, and diluted EPS by $1.1 billion, $895 million, and $0.11, respectively.

(h) Includes $7.5 billion of goodwill and asset impairment charges related to our Phone business and $2.5 billion of integration and restructuring expenses, primarily associated with our Phone business restructuring plans, which together decreased operating income, net income, and diluted EPS by $10.0 billion, $9.5 billion, and $1.15, respectively.

 |
| table | (In millions, except per share amounts) |           |           |             |            |
--------------------------------------- | --------- | --------- | ----------- | ---------- | ---------
Year Ended June 30,                     | 2019 (a)  | 2018      | 2017 (d)(e) | 2016 (d)   | 2015
Revenue                                 | $ 125,843 | $ 110,360 | $ 96,571    | $ 91,154   | $ 93,580
Gross margin                            | 82,933    | 72,007    | 62,310      | 58,374     | 60,542
Operating income                        | 42,959    | 35,058    | 29,025 (f)  | 26,078 (g) | 18,161(h)
Net income                              | 39,240(b) | 16,571(c) | 25,489 (f)  | 20,539 (g) | 12,193(h)
Diluted earnings per share              | 5.06 (b)  | 2.13(c)   | 3.25 (f)    | 2.56 (g)   | 1.48(h)
Cash dividends declared per share       | 1.84      | 1.68      | 1.56        | 1.44       | 1.24
Cash, cash equivalents, and short-term  |           |           |             |            |
investments                             | 133,819   | 133,768   | 132,981     | 113,240    | 96,526
Total assets                            | 286,556   | 258,848   | 250,312     | 202,897    | 174,303
Long-term obligations                   | 114,806   | 117,642   | 106,856     | 66,705     | 44,574
Stockholders’ equity                    | 102,330   | 82,718    | 87,711      | 83,090     | 80,083 |


| _id | d1a73fcc6 |
| title |  |
| text | The following table presents each NEO’s base salary for FY19.
(1) Mr. Kapuria was named an executive officer during FY19 and received a salary increase in connection with his promotion. His salary increased from $390,000 to $440,000 effective May 8, 2018.

As presented in the table above, our named executive officers did not receive an increase in annual base salary other than in connection with a promotion for Mr. Kapuria. Our former CEO determined that none of our other NEOs would receive a base salary increase for FY19. In addition, our Board also determined that Mr. Clark would not receive a salary increase in FY19.

 |
| table | | FY18              | Change in  | FY19
----------------------- | ----------------- | ---------- | -------------
NEO                     | Annual Salary ($) | Salary (%) | Annual Salary
Gregory S. Clark        | 1,000,000         | —          | 1,000,000
Nicholas R. Noviello    | 650,000           | —          | 650,000
Amy L. Cappellanti-Wolf | 440,000           | —          | 440,000
Samir Kapuria(1)        | 390,000(1)        | 60,000(1)  | 450,000
Scott C. Taylor         | 600,000           | —          | 600,000 |


| _id | d1b388d20 |
| title |  |
| text | Vesting of Equity Awards During 2019
The following table provides details regarding the equity awards held by our named executives that vested during 2019. Restricted stock and restricted stock units were the only equity awards held by our named executives during 2019.

(1) Represents both time-vested and performance-based equity awards that vested during 2019. For details on the payout of our performance-based equity awards, please see “Compensation Discussion and Analysis—Our 2019 Compensation Program and Components of Pay—Grants of Long Term Incentive Compensation—Long Term Incentive Performance Updates” and “—Our Compensation Philosophy Objectives and Linkage to Corporate Strategy—Overview of Pay Elements and Linkage to Compensation Philosophy and Corporate Strategy.”

(2) Based on the closing trading price of the Common Shares on the applicable vesting date.

 |
| table | | Stock Vested During 2019                |
----------- | --------------------------------------- | ----------------------------
Name        | Number of Shares Acquired on Vesting(1) | Value Realized on Vesting(2)
Mr. Storey  | 1,063,929                               | $13,479,617
Mr. Dev     | 55,490                                  | 749,737
Mr. Goff    | 114,167                                 | 1,338,934
Mr. Trezise | 71,576                                  | 812,600
Mr. Andrews | 16,678                                  | 221,859 |


| _id | d1b38257e |
| title |  |
| text | FAIR VALUE
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Certain fair value estimates are affected by assumptions we make about the amount and timing of future cash flows and discount rates, all of which reflect varying degrees of risk. Income taxes and other expenses that would be incurred on disposition of financial instruments are not reflected in the fair values. As a result, the fair values are not the net amounts that would be realized if these instruments were settled.

The carrying values of our cash and cash equivalents, trade and other receivables, dividends payable, trade payables and accruals, compensation payable, severance and other costs payable, interest payable, notes payable and loans secured by trade receivables approximate fair value as they are short-term.
The following table provides the fair value details of financial instruments measured at amortized cost in the statements of financial position.

(1) Upon adoption of IFRS 16 on January 1, 2019, fair value disclosures are no longer required for leases

 |
| table | |                                                                        |                                                                                | DECEMBER 31, 2019 |            | DECEMBER 31, 2018 |
--------------------------------- | ---------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------- | ----------------- | ---------- | ----------------- | ----------
                                  | CLASSIFICATION                                                         | FAIR VALUE METHODOLOGY                                                                         | CARRYING VALUE    | FAIR VALUE | CARRYING VALUE    | FAIR VALUE
CRTC tangible benefits obligation | Trade payables and other liabilities and other non-current liabilities | Present value of estimated future cash flows discounted using observable market interest rates | 29                | 29         | 61                | 61
CRTC deferral account obligation  | Trade payables and other liabilities and other non-current liabilities | Present value of estimated future cash flows discounted using observable market interest rates | 82                | 85         | 108               | 112
Debt securities and other debt    | Debt due within one year and long-term debt                            | Quoted market price of debt                                                                    | 18,653            | 20,905     | 18,188            | 19,178
Finance leases (1)                | Debt due within one year and long-term debt                            | Present value of future cash flows discounted using observable market interest rates           | -                 | -          | 2,097             | 2,304 |


| _id | d1b36e1dc |
| title |  |
| text | 10. Creditors: amounts falling due within one year
Trade creditors are non-interest bearing and are normally settled on 30 to 60-day terms. Other creditors are non-interest bearing.
The Directors consider that the carrying amount of trade creditors approximates their fair value.

 |
| table | |       | 2019      | 2018
------------------------------------- | ----- | --------- | ---------
                                      | Notes | £ million | £ million
Trade creditors                       |       | 2.3       | 1.4
Owed to subsidiaries                  |       | 90.4      | 84.8
Accruals                              |       | 5.1       | 4.5
Deferred income                       |       | 3.2       | 4.4
Lease liabilities                     | 14    | 0.1       | –
Other taxes and social security costs |       | 0.4       | 0.5
Government grants                     | 12    | 0.7       | 0.3
                                      |       | 102.2     | 95.9 |


| _id | d1b33931a |
| title |  |
| text | Reconciliation of segment EBITDA to total adjusted EBITDA is below:
For additional information on our reportable segments and product and services categories, see Note 17— Segment Information to our consolidated financial statements in Item 8 of Part II of this report.

 |
| table | |         | Year Ended December 31, |
--------------------------------- | ------- | ----------------------- | -------
                                  | 2019    | 2018                    | 2017
                                  |         | (Dollars in millions)   |
Adjusted EBITDA                   |         |                         |
International and Global Accounts | $2,286  | 2,341                   | 821
Enterprise                        | 3,490   | 3,522                   | 2,456
Small and Medium Business         | 1,870   | 2,013                   | 1,581
Wholesale                         | 3,427   | 3,666                   | 2,566
Consumer                          | 4,914   | 5,105                   | 5,136
Total segment EBITDA              | $15,987 | 16,647                  | 12,560
Operations and Other EBITDA       | (7,216) | (8,045)                 | (6,504)
Total adjusted EBITDA             | $8,771  | 8,602                   | 6,056 |


| _id | d1b3ba9b0 |
| title |  |
| text | In Endeavour Drinks, BWS and Dan Murphy’s key VOC metrics ended F19 at record highs, with improvements both in‐store and Online. Sales increased by 5.0% (3.2% normalised) to $8.7 billion with comparable sales increasing 2.3%. The market remained subdued throughout the year with declining volumes offset by price and mix improvements. Sales growth in H2 improved on H1 in both Dan Murphy’s and BWS, with Endeavour Drinks’ sales increasing by 4.8% (normalised) with comparable sales increasing 4.0%, compared to

comparable sales increasing 4.0%, compared to 0.7% growth in H1. The timing of New Year’s Day boosted sales in H2 by 84 bps and Q3, in particular, also benefitted from more stable weather compared to Q2. Dan Murphy’s focus on ‘discovery’ driven range, service and convenience is also beginning to resonate with customers.

BWS maintained its strong trading momentum, with enhancements to localised ranging and tailored Woolworths Rewards offerings. The BWS store network grew to 1,346 stores with 30 net new stores and the new BWS Renewal format successfully extended to key urban standalone stores. BWS’ convenience offering continued to expand, with On Demand delivery now available in 605 stores, supporting double‐digit online sales growth. Jimmy Brings expanded its geographical reach to Brisbane, Gold Coast, Canberra and new

reach to Brisbane, Gold Coast, Canberra and new suburbs in Sydney and Melbourne.

Dan Murphy’s delivered double‐digit Online sales growth with new customer offerings, including the roll out of On Demand delivery to 91 stores and 30‐minute Pick up from all stores. In‐store customer experience was enhanced with the introduction of wine merchants in key stores, to improve team product knowledge and customer discovery, while memberships in My Dan’s loyalty program increased 15% on the prior year. Dan Murphy’s store network grew to 230 with three new store openings in Q4 including the first

new store openings in Q4 including the first store to be powered by solar energy.

Endeavour Drinks sales per square metre increased by 3.2% (1.4% normalised) with sales growth above net average space growth of 1.7%.
Gross margin was 22.9%, 14 bps down on a normalised basis, with trading margin improvements offset by higher freight costs attributable to petrol prices, growth in online delivery and category mix.

Normalised CODB as a percentage of sales grew 64 bps, driven by a $21 million impairment charge related to goodwill and other intangible assets associated with the Summergate business in China. Summergate has now transitioned to ExportCo. Excluding Summergate, normalised CODB as a percentage of sales increased by 40 bps due to above‐inflationary cost pressures, as well as targeted investment in key focus areas including customer experience, ranging, data and analytics.

Endeavour Drinks EBIT for F19 decreased 8.2% to $474 million. EBIT normalised for the 53rd week and Summergate impairment of $21 million decreased 5.6%. Normalised ROFE (excluding the Summergate impairment) declined 148 bps driven by the decline in EBIT.
(3) During the period, the management of the New Zealand Wine Cellars business transferred from Endeavour Drinks to New Zealand Food. The prior period has been re‑presented toconform with the current period presentation.

 |
| table | | F19      | F18 (3)  |           | CHANGE
----------------------------- | -------- | -------- | --------- | ----------
$ MILLION                     | 53 WEEKS | 52 WEEKS | CHANGE    | NORMALISED
Sales                         | 8,657    | 8,244    | 5.0%      | 3.2%
EBITDA                        | 579      | 603      | (4.1)%    | (5.4)%
Depreciation and amortisation | (105)    | (87)     | 20.1%     | 20.1%
EBIT                          | 474      | 516      | (8.2)%    | (9.7)%
Gross margin (%)              | 22.9     | 23.1     | (16) bps  | (14) bps
Cost of doing business (%)    | 17.4     | 16.8     | 63 bps    | 64 bps
EBIT to sales (%)             | 5.5      | 6.3      | (78) bps  | (78) bps
Sales per square metre ($)$)  | 18,675   | 18,094   | 3.2%      | 1.4%
Funds employed                | 3,185    | 3,214    | (0.9)%    |
ROFE (%)                      | 15.2     | 17.1     | (190) bps | (215) bps |


| _id | d1b381124 |
| title |  |
| text | Amounts in the financial statements Group income statement
The expense or income arising from all group retirement benefit arrangements recognised in the group income statement is shown below.

a Relates to the removal of future indexation obligations following changes to the benefits provided under certain pension plans operating outside the UK in 2017/18. b All employees impacted by the closure of the BTPS receive transition payments into their BTRSS pot for a period linked to the employee’s age. There was no past service cost or credit on closure due to the assumed past service benefit link as an active member being the same as that assumed for a deferred member.

c In October, a High Court judgment involving the Lloyds Banking Group’s defined benefit pension schemes was handed down, resulting in the group needing to recognise additional liability to equalise benefits between men and women due to GMPs, in common with most UK defined benefit schemes.

 |
| table | | 2019 | 2018 | 2017
----------------------------------------------------------------------------------------- | ---- | ---- | ----
Year ended 31 March                                                                       | £m   | £m   | £m
Recognised in the income statement before specific items                                  |      |      |
Service cost (including administration expenses & PPF levy:                               |      |      |
defined benefit plans                                                                     | 135  | 376  | 281
defined contribution plans                                                                | 476  | 265  | 240
Past service credit a                                                                     | –    | (17) | –
Subtotal                                                                                | 611  | 624  | 521
Recognised in the income statement as specific items (note 10)                            |      |      |
Costs to close BT Pension Scheme and provide transition paymentsb for affected employees  | 23   | –    | –
Cost to equalise benefits between men and women due to guaranteed minimum pension (GMP) c | 26   | –    | –
Net interest expense on pensions deficit included in specific items                       | 139  | 218  | 209
Subtotal                                                                                | 188  | 218  | 209
Total recognised in the income statement                                                  | 799  | 842  | 730 |


| _id | d1b3121fc |
| title |  |
| text | NOTE 6- continued
¹⁾ For additional information regarding impairment considerations, please refer to note 8.
Included in the carrying amount for "Vessels and capitalized dry-docking" are capitalized drydocking costs in the amount of USD 60.7m (2018: USD 67.5m, 2017: USD 68.1m).
The sale and leaseback transactions in 2019 were all classified as financing arrangements and did not result in derecognition of the underlying assets as control was retained by the Group.

 |
| table | USDm                                       | 2019    | 2018    | 2017
------------------------------------------ | ------- | ------- | -------
Vessels and capitalized dry-docking        |         |         |
Cost:                                      |         |         |
Balance as of 1 January                    | 1,886.3 | 1,726.6 | 1,697.4
Additions                                  | 81.3    | 162.7   | 103.1
Disposals                                  | -25.6   | -30.2   | -14.3
Transferred from prepayments               | 252.3   | 81.8    | -
Transferred to assets held for sale        | -130.1  | -54.6   | -59.6
Balance as of 31 December                  | 2,064.2 | 1,886.3 | 1,726.6
Depreciation:                              |         |         |
Balance as of 1 January                    | 327.6   | 264.8   | 180.0
Disposals                                  | -25.6   | -30.2   | -14.3
Depreciation for the year                  | 106.5   | 113.4   | 113.6
Transferred to assets held for sale        | -47.9   | -20.4   | -14.5
Balance as of 31 December                  | 360.6   | 327.6   | 264.8
Impairment:                                |         |         |
Balance as of 1 January                    | 162.1   | 167.3   | 173.6
Impairment losses on tangible fixed assets | 6.0     | 3.2     | 3.6
Reversal of impairment ¹⁾                  | -120.0  | -       | -
Transferred to assets held for sale        | -19.3   | -8.4    | -9.9
Balance as of 31 December                  | 28.8    | 162.1   | 167.3
Carrying amount as of 31 December          | 1,674.8 | 1,396.6 | 1,294.5 |


| _id | d1b377e58 |
| title |  |
| text | The provision for income taxes differed from the provision computed by applying the Federal statutory rate to income (loss) from continuing operations before taxes due to the following:

The effective income tax rate was 18.9% and (141.8)% during the years ended December 31, 2019 and December 31, 2018, respectively. The decrease in 2019 compared to statutory tax rate of 21% was primarily due to deferred tax adjustments related to foreign tax credit carryforwards and state taxes, offset by changes in the valuation allowance and excess tax benefits resulting from the exercise of non-qualified stock options.

The effective tax rate for the year ended December 31,2018 was significantly impacted by recording a substantial increase in a valuation allowance on the entire deferred tax assets.

 |
| table | | Year ended December 31, |
------------------------------- | ----------------------- | --------
                                | 2019                    | 2018
Federal statutory tax rate      | 21.0%                   | 21.0%
State taxes                     | (4.5)                   | 4.4
Non deductible expenses         | (0.3)                   | (0.6)
Tax credits                     | 4.0                     | 4.6
Expired tax credit              | (1.3)                   | (3.9)
Deferred tax adjustment         | (4.8)                   | —
Stock based compensation        | 1.9                     | 0.8
Valuation allowance             | 3.2                     | (167.0)
Contingent purchase revaluation | —                       | (1.0)
Other                           | (0.3)                   | (0.1)
                                | 18.9%                   | (141.8)% |


| _id | d1b32b31e |
| title |  |
| text | 7. Property, Plant and Equipment
Property, plant and equipment consisted of the following components at June 30, 2019 and 2018:

 |
| table | | June 30, |
----------------------------------------------- | -------- | --------
($ in millions)                                 | 2019     | 2018
Land                                            | $35.6    | $34.8
Buildings and building equipment                | 512.9    | 500.0
Machinery and equipment                         | 2,183.6  | 2,129.0
Construction in progress                        | 150.7    | 83.6
Total at cost                                   | 2,882.8  | 2,747.4
Less: accumulated depreciation and amortization | 1,516.6  | 1,434.0
Total property, plant, and equipment            | $1,366.2 | $1,313.4 |


| _id | d1b398a04 |
| title |  |
| text | 5. Earnings Per Common Share
Basic earnings per common share ("EPS") is based upon the weighted-average number of common shares outstanding during the period.  Diluted EPS reflects the potential dilution that would occur upon issuance of common shares for awards under stock-based compensation plans, or conversion of preferred stock, but only to the extent that they are considered dilutive.
The following table shows the computation of basic and diluted EPS:

In conjunction with the acquisition of Hawaiian Telcom in the third quarter of 2018, the Company issued 7.7 million Common Shares as a part of the acquisition consideration. In addition, the Company granted 0.1 million time-based restricted stock units to certain Hawaiian Telcom employees under the Hawaiian Telcom 2010 Equity Incentive Plan

For the years ended December 31, 2019 and December 31, 2018, the Company had a net loss available to common shareholders and, as a result, all common stock equivalents were excluded from the computation of diluted EPS as their inclusion would have been anti-dilutive.  For the year ended December 31, 2017, awards under the Company’s stock-based compensation plans for common shares of 0.2 million, were excluded from the computation of diluted EPS as their inclusion

would have been anti-dilutive.  For all periods presented, preferred stock convertible into 0.9 million common shares was excluded as it was anti-dilutive.

 |
| table | Year Ended December 31,                                                |         |         |
---------------------------------------------------------------------- | ------- | ------- | -----
(in millions, except per share amounts)                                | 2019    | 2018    | 2017
Numerator:                                                             |         |         |
Net (loss) income                                                      | $(66.6) | $(69.8) | $40.0
Preferred stock dividends                                              | 10.4    | 10.4    | 10.4
Net (loss) income applicable to common shareowners - basic and diluted | $(77.0) | $(80.2) | $29.6
Denominator:                                                           |         |         |
Weighted-average common shares outstanding - basic                     | 50.4    | 46.3    | 42.2
Stock-based compensation arrangements                                  | —       | —       | 0.2
Weighted-average common shares outstanding - diluted                   | 50.4    | 46.3    | 42.4
Basic and diluted net (loss) earnings per common share                 | ($1.53) | ($1.73) | $0.70 |


| _id | d1b39d270 |
| title |  |
| text | 16. Segment, Geographic, and Significant Customer Information

We operate in one industry segment: the design, manufacturing, marketing, and technical support of high-performance storage and data management solutions. We conduct business globally, and our sales and support activities are managed on a geographic basis. Our management reviews financial information presented on a consolidated basis, accompanied by disaggregated information it receives from our internal management system about revenues by geographic region, based on the location from which the customer

based on the location from which the customer relationship is managed, for purposes of allocating resources and evaluating financial performance. We do not allocate costs of revenues, research and development, sales and marketing, or general and administrative expenses to our geographic regions in this internal management reporting because management does not review operations or operating results, or make planning decisions, below the consolidated entity level.

Summarized revenues by geographic region based on information from our internal management system and utilized by our Chief Executive Officer, who is considered our Chief Operating Decision Maker, is as follows (in millions):
Americas revenues consist of sales to Americas commercial and U.S. public sector markets. Sales to customers inside the U.S. were $3,116 million, $2,878 million and $2,721 million during fiscal 2019, 2018 and 2017, respectively.

 |
| table | |                | Year Ended     |
-------------------------------------------------- | -------------- | -------------- | --------------
                                                   | April 26, 2019 | April 27, 2018 | April 28, 2017
United States, Canada and Latin America (Americas) | $ 3,425        | $ 3,207        | $ 3,021
Europe, Middle East and Africa (EMEA)              | 1,847          | 1,873          | 1,741
Asia Pacific (APAC)                                | 874            | 839            | 729
Net revenues                                       | $ 6,146        | $ 5,919        | $ 5,491 |


| _id | d1b34c4ba |
| title |  |
| text | Note 18: Comprehensive Income (Loss)
The components of accumulated other comprehensive loss, net of tax at the end of June 30, 2019, as well as the activity during the fiscal year ended June 30, 2019, were as follows:
(1) Amount of after-tax gain reclassified from accumulated other comprehensive income into net income located in other expense, net.

(2) Amount of after-tax gain reclassified from accumulated other comprehensive income into net income located in revenue: $9.6 million gain; cost of goods sold: $5.0 million loss; selling, general, and administrative expenses: $1.7 million loss; and other income and expense: $0.1 million loss.
Tax related to other comprehensive income, and the components thereto, for the years ended June 30, 2019, June 24, 2018 and June 25, 2017 was not material.

 |
| table | | Accumulated Foreign Currency Translation Adjustment | Accumulated Unrealised Gains or Losses on Cash Flow Hedges | Accumulated Unrealized Holding Gain or Loss on Available-For- Sale Investments | Accumulated Unrealized Components of Defined Benefit Plans | Total
----------------------------------------------------------------------------------------------- | --------------------------------------------------- | ---------------------------------------------------------- | ------------------------------------------------------------------------------ | ---------------------------------------------------------- | ---------
                                                                                |                                                     |                                                            | (inthousands)                                                                  |                                                            |
Balance as of June 24, 2018                                                                     | $(32,722)                                           | $(4,042)                                                   | $(1,190)                                                                       | $(19,495)                                                  | $(57,449)
Other comprehensive (loss) income before reclassifications                                      | (9,470)                                             | 2,860                                                      | 3,535                                                                          | (1,153)                                                    | (4,228)
Losses (gains) reclassified from  accumulated other  comprehensive income (loss) to  net income | 2,822                                               | (2,749)                                                    | (199)                                                                          | —                                                          | (126)
Effects of ASU 2018-02 adoption                                                                 | —                                                   | (399)                                                      | —                                                                              | (1,828)                                                    | (2,227)
Net current-period other  comprehensive income (loss)                                           | (6,648)                                             | (288)                                                      | 3,336                                                                          | (2,981)                                                    | (6,581)
Balance as of June 30, 2019                                                                     | $(39,370)                                           | $(4,330)                                                   | $2,146                                                                         | $(22,476)                                                  | $(64,030) |


| _id | d1b334e28 |
| title |  |
| text | Restricted Shares
We granted shares to certain of our Directors, executives and key employees under the 2016 and 2011 Plans, the vesting of which is service-based. The following table summarizes the activity during the twelve months ended March 31, 2019 for restricted shares awarded under the 2016 and 2011 Plans:

The weighted-average grant date fair value of the restricted shares is determined based upon the closing price of our common shares on the grant date. During fiscal 2019, a total of 197,917 shares, net of 47,146 shares withheld from the vested restricted shares to cover the employee's minimum applicable income taxes, were issued from treasury. The shares withheld were returned to treasury shares.

 |
| table | | Number of Shares | Weighted-Average Grant-Date Fair Value
----------------------------- | ---------------- | --------------------------------------
                              |                  | (per share)
Outstanding at April 1, 2018  | 243,354          | $10.78
Granted                       | 265,452          | 14.66
Vested                        | (197,917)        | 12.74
Forfeited                     | (73,743)         | 11.3
Outstanding at March 31, 2019 | 237,146          | $13.46 |


| _id | d1b36ee3e |
| title |  |
| text | Share-based Compensation Expense
We have several share-based compensation plans covering stock options and RSUs for our employees and directors, which are described more fully in Note 11.

We measure our compensation cost related to share-based payment transactions based on fair value of the equity or liability classified instrument. For purposes of estimating the fair value of each stock option unit on the date of grant, we utilize the Black-Scholes option-pricing model. Option valuation models require the input of highly subjective assumptions including the expected volatility factor of the market price of our common stock (as determined by reviewing our historical public market closing

by reviewing our historical public market closing prices). Our accounting for share-based compensation for RSUs is based on the closing market price of our common stock on the date of grant.

Our total share-based compensation expense recognized in the Company’s results of operations from non-cash and cash-portioned instruments issued to our employees and directors comprised the following (in thousands):

 |
| table | |      | Year Ended December 31,
-------------------------------------- | ---- | -----------------------
                                       | 2019 | 2018
Research and development expense:      |      |
Stock option awards                    | $8   | $38
RSU awards                             | 13   | 27
                                       | 21   | $65
General and administrative expense:    |      |
Stock option awards                    | 12   | 61
RSU awards                             | 105  | 104
                                       | 117  | $165
Total share-based compensation expense | 138  | $230 |


| _id | d1b3a6596 |
| title |  |
| text | 2019 vs 2018
SMB segment net revenue was flat for the year ended December 31, 2019 compared to the prior year, primarily due to a decline in net revenue of our
network storage products, substantially offset by growth in net revenue of our switch products. Geographically, net revenue grew in APAC, but declined in Americas and EMEA.

Contribution income decreased for the year ended December 31, 2019 compared to the prior year, primarily as a result of lower gross margin attainment, partially offset by lower operating expenses as a proportion of net revenue. Contribution margin decreased for the year ended December 31, 2019 compared to the prior year, primarily lower gross margin attainment mainly resulting from foreign exchange headwinds due to the strengthening of the U.S. dollar as well as higher provisions for sales returns.

2018 vs 2017
SMB segment net revenue increased for the year ended December 31, 2018 compared to the prior year, primarily due to growth in switches, partially offset by the decrease in network storage. SMB experienced growth in net revenue across all regions. SMB net revenue was further benefited by lower provisions for sales returns deemed to be a reduction of net revenue.

Contribution income increased for the year ended December 31, 2018 compared to the prior year, primarily due to increasing net revenue and improved gross margin performance not being met with proportionate increases in operating expense compared to the prior period.

 |
| table | |          |          | Year Ended December 31,                |          |
------------------------- | -------- | -------- | -------------------------------------- | -------- | --------
                          | 2019     | % Change | 2018                                   | % Change | 2017
                          |          |          | (in thousands, except percentage data) |          |
Net revenue               | $287,372 | (0.1)%   | $287,756                               | 6.2%     | $270,908
Percentage of net revenue | 28.8%    |          | 27.2%                                  |          | 26.1%
Contribution income       | $67,282  | (4.1)%   | $70,142                                | 9.8%     | $63,865
Contribution margin       | 23.4%    |          | 24.4%                                  |          | 23.6% |


| _id | d1b343752 |
| title |  |
| text | Accrued expenses consisted of the following (in thousands):
Contract liabilities represent amounts that are collected in advance of the satisfaction of performance obligations under the new revenue recognition standard. See Recently Adopted Accounting Standards in Note 2 and Contract Liabilities in Note 6.

 |
| table | | December 31, | December 31,
---------------------------------------------- | ------------ | ------------
                                               | 2019         | 2018
Accrued payroll and related taxes              | $3,985       | $3,800
Accrued federal, state, and local taxes        | 2,635        | 1,827
Accrued bonus                                  | 20,206       | 10,766
Self-insurance reserves                        | 2,238        | —
Employee stock purchase plan contributions     | 4,716        | 6,473
Accrued sales commissions                      | 5,397        | 6,889
Accrued partner commissions                    | 7,043        | 5,535
Contract liabilities                           | 5,197        | —
Accrued purchase price related to acquisitions | 2,763        | —
Other                                          | 7,924        | 6,811
Total                                          | $62,104      | $42,101 |


| _id | d1b3ab596 |
| title |  |
| text | A.9.1 Results of operations
Statement of Income of Siemens AG in accordance with German Commercial Code (condensed)
Beginning of August 2018, Siemens AG carved out its mobility business to Siemens Mobility GmbH by way of singular succession. The decreases in revenue, cost of sales, gross profit and research and development (R & D) expenses were mainly driven by this carve-out.

On a geographical basis, 75 % of revenue was generated in the Europe, C. I. S., Africa, Middle East region, 18 % in the Asia, Australia region and 7 % in the Americas region. Exports from Germany accounted for 62 % of overall revenue. In fiscal 2019, orders for Siemens AG amounted to € 21.6 billion. Within Siemens AG, the development of revenue depends strongly on the completion of contracts, primarily in connection with large orders.

The R & D intensity (R & D as a percentage of revenue) increased by 0.8 percentage points year-over-year. The research and development activities of Siemens AG are fundamentally the same as for its fields of business activities within the Siemens Group, respectively. On an average basis, we employed 9,000 people in R & D in fiscal 2019.

The decrease in Financial income, net was primarily attributable to lower income from investments, net. The main factor for this decrease was a significant income from the profit transfer agreement with Siemens Beteiligungen Inland GmbH, Germany, in
fiscal 2018.

 |
| table | |          | Fiscal year |
----------------------------------------------------------------------------------- | -------- | ----------- | ---------
(in millions of €)                                                                  | 2019     | 2018        | % Change
Revenue                                                                             | 22,104   | 28,185      | (22) %
Cost of Sales                                                                       | (15,825) | (21,074)    | 25 %
Gross profit                                                                        | 6,279    | 7,111       | (12) %
as percentage of revenue                                                            | 28 %     | 25 %        |
Research and development expenses                                                   | (2,362)  | (2,788)     | 15 %
Selling and general administrative expenses                                         | (3,979)  | (3,767)     | (6) %
Other operating income (expenses), net                                              | 9,469    | 1           | n / a
Financial income, net thereof Income from investments, net 3,754 (prior year 5,381) | 3,188    | 4,643       | (31) %
Income from business activity                                                       | 12,596   | 5,199       | 142 %
Income taxes                                                                        | (1,377)  | (653)       | (111) %
Net income                                                                          | 11,219   | 4,547       | 147 %
Profit carried forward                                                              | 170      | 134         | 27 %
Allocation to other retained earnings                                               | (6,005)  | (1,451)     | > (200) %
Unappropriated net income                                                           | 5,384    | 3,230       | 67 % |


| _id | d1b2eb41c |
| title |  |
| text | Changes in Accumulated Other Comprehensive Income (Loss)
The following table summarizes the changes in accumulated other comprehensive income (loss), which is reported as a component of shareholders’ equity, for the years ended December 31, 2019 and 2018:
Expressed in US $000's except share and per share amounts

 |
| table | | Accumulated Other Comprehensive Income (Loss) |
--------------------------------------------------------------------------------------------------------------------- | --------------------------------------------- | -----------------
                                                                                | Years ended                                   |
                                                                                | December 31, 2019                             | December 31, 2018
                                                                                | $                                             | $
Balance, beginning of the year                                                                                | (12,216)                                      | 3,435
                                                                                |                                               |
Other comprehensive income (loss) before reclassifications                                                            | 12,865                                        | (19,821)
Loss on cash flow hedges reclassified from accumulated other comprehensive income (loss) to earnings were as follows: |                                               |
Cost of revenues                                                                                | 279                                           | 255
Sales and marketing                                                                                | 1,538                                         | 1,224
Research and development                                                                                | 2,620                                         | 2,063
General and administrative                                                                                | 744                                           | 628
Tax effect on unrealized gain (loss) on cash flow hedges                                                              | (4,784)                                       | —
Other comprehensive income (loss), net of tax                                                                         | 13,262                                        | (15,651)
Balance, end of the year                                                                                | 1,046                                         | (12,216) |


| _id | d1b3b3ffc |
| title |  |
| text | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except for share and per share data)
NOTE 18 — Income Taxes
The long-term deferred tax assets and long-term deferred tax liabilities are as follows below:

At each reporting date, we weigh all available positive and negative evidence to assess whether it is more-likely-than-not that the Company's deferred tax assets, including deferred tax assets associated with accumulated loss carryforwards and tax credits in the various jurisdictions in which it operates, will be realized. As of December 31, 2019, and 2018, we recorded deferred tax assets related to certain U.S. state and non-U.S. income tax loss carryforwards of $4,724 and $4,647, respectively, and U.S.

of $4,724 and $4,647, respectively, and U.S. and non- U.S. tax credits of $15,964 and $16,909, respectively. The deferred tax assets expire in various years primarily between 2021 and 2039.

Generally, we assess if it is more-likely-than-not that our net deferred tax assets will be realized during the available carry-forward periods. As a result, we have determined that valuation allowances of $8,011 and $8,274 should be provided for certain deferred tax assets at December 31, 2019, and 2018, respectively. As of December 31, 2019, the valuation allowances relate to certain U.S. state and non-U.S. loss carry-forwards and certain U.S. state tax credits that management does not anticipate will be

that management does not anticipate will be utilized.

No valuation allowance was recorded in 2019 against the U.S. federal foreign tax credit carryforwards of $5,785, which expire in varying amounts between 2023 and 2029 as well as the research and development tax credits of $7,495, which expire in varying amounts between 2021 and 2039. We assessed the anticipated realization of those tax credits utilizing future taxable income projections. Based on those projections, management believes it is more-likely-than-not that we will realize the benefits of these

that we will realize the benefits of these credit carryforwards.

 |
| table | | As of December 31, |
------------------------------------ | ------------------ | --------
                                     | 2019               | 2018
Non-current deferred tax assets      | $19,795            | $22,201
Non-current deferred tax liabilities | $(5,637)           | $(3,990)
Total net deferred tax assets        | $14,158            | $18,211 |


| _id | d1b37640e |
| title |  |
| text | Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. A summary of the tax effect of the significant components of deferred income taxes is as follows (in thousands):

At December 31, 2019, we had state and foreign net operating losses of approximately $12.2 million and $7.9 million, respectively. The state net operating losses expire beginning 2027 through 2038. We recorded a full valuation allowance against the foreign net operating losses and a partial valuation allowance against the state net operating losses, as we do not believe those losses will be fully utilized in the future.

 |
| table | December 31,                                                        |          |
------------------------------------------------------------------- | -------- | --------
                                                                    | 2019     | 2018
Goodwill and other intangibles                                      | $136,882 | $114,532
Lease arrangements                                                  | 31,128   | —
Property and equipment                                              | 13,270   | 8,168
Unbilled receivables - IRC Section 481(a)                           | 5,878    | 8,816
Gross deferred tax liabilities                                      | 187,158  | 131,516
Lease obligations                                                   | (34,146) | —
Retirement and other liabilities                                    | (18,614) | (20,707)
Allowance for potential contract losses and other contract reserves | (2,205)  | (1,681)
Foreign and state operating loss carryforwards                      | (2,239)  | (1,709)
Less: Valuation allowance                                           | 1,828    | 1,537
Gross deferred tax assets                                           | (55,376) | (22,560)
Net deferred tax liabilities                                        | $131,782 | $108,956 |


| _id | d1b327fa2 |
| title |  |
| text | The weighted-average grant date fair value of stock options granted during 2017 was $2.00 per share. There were no stock options granted in 2019 or 2018. The total grant date fair value of stock options that vested during 2019, 2018, and 2017 was $2.8 million, $10.1 million and $20.2 million, respectively. As of December 31, 2019, the total unrecognized compensation expense related to unvested stock options was $0.3 million, which the Company expects to recognize over an estimated weighted average period of

over an estimated weighted average period of 0.2 years. As of December 31, 2019, the total unrecognized compensation expense related to unvested RSUs was $94.2 million, which the Company expects to recognize over an estimated weighted average period of 1.9 years. As of December 31, 2019, there was zero unrecognized compensation expense related to unvested warrants.

Stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is generally the vesting period of the respective award. The Company accounts for forfeitures as they occur. The fair value of RSUs without market conditions is the fair value of the Company’s Class A common stock on the grant date. The fair value of RSUs with market conditions is estimated using a Monte Carlo simulation model. In determining the

Monte Carlo simulation model. In determining the fair value of the stock options, warrants and the equity awards issued under the 2015 ESPP, the Company used the Black-Scholes option-pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment.

Fair Value of Common Stock—The fair value of the shares of common stock underlying stock options had historically been established by the Company’s board of directors. Following the completion of the IPO, the Company began using the market closing price for the Company’s Class A common stock as reported on the New York Stock Exchange.

Expected Term—The Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time stock-based awards have been exercisable. As a result, for stock options, the Company used the simplified method to calculate the expected term, which is equal to the average of the stock-based award’s weighted average vesting period and its contractual term. The expected term of the 2015 ESPP was based on the contractual term.

Volatility—The Company estimates the expected volatility of the common stock underlying its stock options at the grant date. Prior to 2018, the Company estimated the expected volatility of the common stock underlying stock options, warrants and equity awards issued under its 2015 ESPP at the grant date by taking the average historical volatility of the common stock of a group of comparable publicly traded companies over a period equal to the expected life. The Company used this method because it had

life. The Company used this method because it had limited information on the volatility of its Class A common stock because of its short trading history. Beginning in 2018, the Company used a combination of historical volatility from its Class A common stock along with historical volatility from the group of comparable publicly traded companies.

Risk-Free Rate—The risk-free interest rate is estimated average interest rate based on U.S. Treasury zero-coupon notes with terms consistent with the expected term of the awards.
Dividend Yield—The Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends in the foreseeable future. Consequently, it used an expected dividend yield of zero.

The assumptions used in calculating the fair value of the stock-based awards represent management judgment. As a result, if factors change and different assumptions are used, the stock-based compensation expense could be materially different in the future. The fair value of the stock option awards, warrants, awards issued under the 2015 ESPP, and awards granted to employees was estimated at the date of grant using a Black-Scholes option-pricing model. The fair value of the RSUs with market conditions were

value of the RSUs with market conditions were estimated using a Black-Scholes option-pricing model combined with a Monte Carlo simulation model. The fair value of these awards were estimated using the following Black-Scholes assumptions:

 |
| table | |         | Year Ended December 31, |
-------------------------------------- | ------- | ----------------------- | -------
                                       | 2019    | 2018                    | 2017
Cost of revenue                        | $6,403  | $7,312                  | $5,312
Research and development               | 44,855  | 57,188                  | 54,123
Sales and marketing                    | 11,585  | 14,726                  | 14,959
General and administrative             | 14,896  | 17,783                  | 17,187
Total stock-based compensation expense | $77,739 | $97,009                 | $91,581 |