| _id | d1b3c6e54 |
| title |  |
| text | 3.1 Financial risk factors (continued)
(a) Market risk (continued)
(i) Foreign exchange risk (continued)
As at 31 December 2019, the Group’s major monetary assets and liabilities exposed to foreign exchange risk are listed below:
During the year ended 31 December 2019, the Group reported exchange gains of approximately RMB77 million (2018: RMB229 million) within “Finance costs, net” in the consolidated income statement.

As at 31 December 2019, management considers that any reasonable changes in foreign exchange rates of the above currencies against the two major functional currencies would not result in a significant change in the Group’s results, as the net carrying amounts of financial assets and liabilities denominated in a currency other than the respective subsidiaries’ functional currency are considered to be not significant, given the exchange rate peg between HKD and USD. Accordingly, no sensitivity analysis is

and USD. Accordingly, no sensitivity analysis is presented for foreign exchange risk.

 |
| table | | USD denominated RMB’Million | Non-USD denominated RMB’Million
--------------------------------- | --------------------------- | -------------------------------
As at 31 December 2019            |                             |
Monetary assets, current          | 27,728                      | 2,899
Monetary assets, non-current      | 373                         | –
Monetary liabilities, current     | (4,273)                     | (14,732)
Monetary liabilities, non-current | (91)                        | (5,739)
                                  | 23,737                      | (17,572)
As at 31 December 2018            |                             |
Monetary assets, current          | 18,041                      | 1,994
Monetary assets, non-current      | 2,642                       | –
Monetary liabilities, current     | (3,434)                     | (4,587)
Monetary liabilities, non-current | (3,733)                     | (9,430)
                                  | 13,516                      | (12,023) |


| _id | d1b362116 |
| title |  |
| text | NOTE 3. PROPERTY AND EQUIPMENT
The classification of property and equipment, together with their estimated useful lives is as follows:
(1) Excludes assets held for sale
(2) Lesser of lease term or estimated useful life
The change in property and equipment in accrued liabilities was $14,315 and $15,674 for the fiscal years ended June 30, 2019 and 2018, respectively. These amounts were excluded from capital expenditures on the statements of cash flows.

No impairments of property and equipment were recorded in fiscal 2019 or 2018.

During the third quarter of fiscal 2019, the Company received an unsolicited offer to purchase its Houston, TX, facility. At June 30, 2019, the facility included assets with a carrying value of approximately $5,055. Although management has not committed to the sale, a sale of the facility during fiscal 2020 is likely and the Company expects to record a gain on the sale upon closing, since the offer represents full appraisal value for the facility. Therefore, the assets are considered held for sale at June

the assets are considered held for sale at June 30, 2019. Also held for sale at June 30, 2019, was the Company’s Elizabethtown, KY facility. During the third quarter of fiscal 2018, the Company reached a definitive agreement to sell the property for $1,300 pending an expected closing date during the second quarter of fiscal 2020. An impairment loss was recorded on this facility during fiscal 2017 as disclosed in Note 2 to the Company’s consolidated financial statements. Total assets held for sale by the

statements. Total assets held for sale by the Company at June 30, 2019 and 2018 were $6,355 and $1,300, respectively, and were included in assets held for sale on the Company’s consolidated balance sheet for each year. Those balances are not included on the above table.

 |
| table | | June 30, |          |
----------------------------- | -------- | -------- | ---------------------
                              | 2019     | 2018     | Estimated Useful Life
Land (1)                      | $23,243  | $24,845  |
Land improvements (1)         | 25,209   | 25,383   | 5 - 20 years
Buildings (1)                 | 147,220  | 143,918  | 20 - 30 years
Leasehold improvements        | 48,478   | 48,060   | 5 - 30 years(2)
Equipment and furniture       | 365,101  | 328,864  | 3 - 10 years
Aircraft and equipment        | 39,293   | 38,761   | 4 - 10 years
Construction in progress      | 12,411   | 39,872   |
                              | 660,955  | 649,703  |
Less accumulated depreciation | 388,481  | 364,153  |
Property and equipment, net   | $272,474 | $285,550 | |


| _id | d1a73ad20 |
| title |  |
| text | ADVANCED ENERGY INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (in thousands, except per share amounts)
NOTE 10. INVENTORIES
Our inventories are valued at the lower of cost or net realizable value and computed on a first-in, first-out (FIFO) basis. Components of inventories are as follows:

 |
| table | | December 31, |
----------------------- | ------------ | -------
                        | 2019         | 2018
Parts and raw materials | $134,816     | $76,647
Work in process         | 10,269       | 6,644
Finished goods          | 84,934       | 14,696
Total                   | $230,019     | $97,987 |


| _id | d1b3173d2 |
| title |  |
| text | Summarized 100% statement of financial position information for ASMPT equity method investment excluding basis adjustments (foreign currency exchange rate per December 31, 2019 was 1 HK$: €0.11432 for December 31, 2018: 1 HK$: €0.11151).
Equity of ASMPT per December 31, 2019 translated into euros at a rate of 0.11432 was €1,329 million (our 25.19% share: €335 million).

The ASMPT Board is responsible for ongoing monitoring of the performance of the Back-end activities. The actual results of the Back-end operating unit are discussed with the ASMPT Audit Committee, which includes the representative of ASMI. The ASMI representative reports to the ASMI Management Board and the Audit Committee of ASMI on a quarterly basis.

Our share of income taxes incurred directly by the associates is reported in result from investments in associates and as such is not included in income taxes in our consolidated financial statements.

 |
| table | | December 31, |
----------------------- | ------------ | ------
(HK$ million)           | 2018         | 2019
Current assets          | 15,168       | 13,381
Non-current assets      | 5,907        | 7,464
Current liabilities     | 7,792        | 4,432
Non-current liabilities | 1,122        | 4,781
Equity                  | 12,161       | 11,632 |


| _id | d1b39b4fc |
| title |  |
| text | The following is a roll forward of accrued restructuring charges for fiscal 2019 and fiscal 2018 (in millions):
The liability for restructuring and other exit costs of $47.8 million is included in accrued liabilities and other long-term liabilities, on the Company's consolidated balance sheets as of March 31, 2019.

 |
| table | | Restructuring             |            | Non-Restructuring |
-------------------------------------- | ------------------------- | ---------- | ----------------- | ------
                                       | Employee Separation Costs | Exit Costs | Exit Costs        | Total
Balance at March 31, 2017              | $5.4                      | $34.8      | $—                | $40.2
Charges                                | 1.2                       | 0.7        | 20.0              | 21.9
Payments                               | (5.9)                     | (9.2)      | (0.9)             | (16.0)
Non-cash - Other                       | (0.2)                     | 1.0        | —                 | 0.8
Changes in foreign exchange rates      | 0.3                       | —          | —                 | 0.3
Balance at March 31, 2018              | 0.8                       | 27.3       | 19.1              | 47.2
Additions due to Microsemi acquisition | 10.4                      | 9.0        | —                 | 19.4
Charges                                | 48.9                      | (4.7)      | —                 | 44.2
Payments                               | (47.1)                    | (13.1)     | (4.1)             | (64.3)
Non-cash - Other                       | —                         | 0.7        | 0.7               | 1.4
Changes in foreign exchange rates      | (0.1)                     | —          | —                 | (0.1)
Balance at March 31, 2019              | $12.9                     | $19.2      | $15.7             | $47.8
Current                                |                           |            |                   | $26.9
Non-current                            |                           |            |                   | 20.9
Total                                  |                           |            |                   | $47.8 |


| _id | d1b34acb4 |
| title |  |
| text | The following table summarizes the change in fair value of the Level 3 liabilities with significant unobservable inputs (in thousands):
The money market accounts are included in our cash and cash equivalents in our consolidated balance sheets. Our money market assets are valued using quoted prices in active markets.

The liability for the subsidiary unit awards relates to agreements established with employees of our subsidiaries for cash awards contingent upon the subsidiary companies meeting certain financial milestones such as revenue, working capital, EBITDA and EBITDA margin. We account for these subsidiary awards using fair value and establish liabilities for the future payment for the repurchase of subsidiary units under the terms of the agreements based on estimating revenue, working capital, EBITDA and EBITDA

revenue, working capital, EBITDA and EBITDA margin of the subsidiary units over the periods of the awards through the anticipated repurchase dates. We estimated the fair value of each liability by using a Monte Carlo simulation model for determining each of the projected measures by using an expected distribution of potential outcomes. The fair value of each liability is calculated with thousands of projected outcomes, the results of which are averaged and then discounted to estimate the present value. At

then discounted to estimate the present value. At each reporting date until the respective payment dates, we will remeasure these liabilities, using the same valuation approach based on the applicable subsidiary's revenue and future collection of financed customer receivables, the unobservable inputs, and we will record any changes in the employee's compensation expense. Some of the awards are subject to the employees' continued employment and therefore, recorded on a straight-line basis over the remaining

on a straight-line basis over the remaining service period. During the year ended December 31, 2019, we settled $0.2 million of the liability related to the subsidiary unit awards. The remaining liability balances are included in either accounts payable, accrued expenses and other current liabilities or other liabilities in our consolidated balance sheets (see Note 13).

The contingent consideration liability consists of the potential earn-out payment related to our acquisition of 85% of the issued and outstanding capital stock of OpenEye on October 21, 2019. The earn-out payment is contingent on the satisfaction of certain calendar 2020 revenue targets and has a maximum potential payment of up to $11.0 million. We account for the contingent consideration using fair value and establish a liability for the future earn-out payment based on an estimation of revenue

payment based on an estimation of revenue attributable to perpetual licenses and subscription licenses over the 2020 calendar year. We estimated the fair value of the liability by using a Monte Carlo simulation model for determining each of the projected measures by using an expected distribution of potential outcomes. The contingent consideration liability was valued with Level 3 unobservable inputs, including the revenue volatility and the discount rate. At October 21, 2019, the fair value of the

rate. At October 21, 2019, the fair value of the liability was $2.8 million. At each reporting date until the payment date in 2021, we will remeasure the liability, using the same valuation approach. Changes in the fair value resulting from information that existed subsequent to the acquisition date are recorded in the consolidated statements of operations. During the year ended December 31, 2019, the contingent consideration liability decreased $0.2 million to $2.6 million as compared to the initial

to $2.6 million as compared to the initial liability recorded at the acquisition date, primarily due to a change to OpenEye's 2020 projected revenue. The unobservable inputs used in the valuation as of December 31, 2019 included a revenue volatility of 45% and a discount rate of 3%. Selecting another revenue volatility or discount rate within an acceptable range would not result in a significant change to the fair value of the contingent consideration liability.

The contingent consideration liability is included in other liabilities in our consolidated balance sheet as of December 31, 2019 (see Note 13).

We monitor the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the beginning of the reporting period. There were no transfers between Levels 1, 2 or 3 during the years ended December 31, 2019, 2018 and 2017. We also

ended December 31, 2019, 2018 and 2017. We also monitor the value of the investments for other-than-temporary impairment on a quarterly basis. No other-than-temporary impairments occurred during the years ended December 31, 2019, 2018 and 2017.

 |
| table | | Fair Value Measurements Using Significant Unobservable Inputs |                                                      |
------------------------------------------ | ------------------------------------------------------------- | ---------------------------------------------------- | ----------------------------
                                           | Year Ended December 31, 2019                                  |                                                      | Year Ended December 31, 2018
                                           | Subsidiary Unit Awards                                        | Contingent Consideration Liability from Acquisitions | Subsidiary Unit Awards
Beginning of period balance                | 385                                                           | $ —                                                  | $3,160
Acquired liabilities                       | —                                                             | 2,793                                                | —
Changes in fair value included in earnings | (14)                                                          | (198)                                                | 27
Settlements                                | (200)                                                         | —                                                    | (2,802)
End of period balance                      | $171                                                          | $2,595                                               | $385 |


| _id | d1b32f36a |
| title |  |
| text | Market Information
Our common stock is traded under the symbol “OPRX” on the Nasdaq Capital Market. Only a limited market exists for our securities. There is no assurance that a regular trading market will develop, or if developed, that it will be sustained. Therefore, a shareholder may be unable to resell his securities in our company.

The following tables set forth the range of high and low bid information for our common stock for the each of the periods indicated. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
On March 24, 2020, the last sales price per share of our common stock was $7.93

 |
| table | | Fiscal Year Ending December 31, 2018 |
-------------------- | ------------------------------------ | -----
Quarter Ended        | High $                               | Low $
March 31, 2018       | 4.98                                 | 3.36
June 30, 2018        | 11.00                                | 4.29
September 30, 2018   | 18.39                                | 9.32
December 31, 2018    | 18.00                                | 8.92 |


| _id | d1b38f4d6 |
| title |  |
| text | 11 Employee Costs
Included in wages and salaries above are $4.2M (2018: $4.0M) relating to retention payments arising on business combinations.

 |
| table | | Year-ended 31 March 2019 | Year-ended 31 March 2018 Restated See note 2
---------------------------------- | ------------------------ | --------------------------------------------
                                   | $M                       | $M
Wages and salaries                 | 286.0                    | 271.8
Social security costs              | 25.6                     | 27.3
Pension costs                      | 8.9                      | 8.4
Other costs                        | 12.7                     | 12.1
                                   | 333.2                    | 319.6
Share-based payments (see note 29) | 36.9                     | 42.3
Total employee costs               | 370.1                    | 361.9 |


| _id | d1b2edb04 |
| title |  |
| text | Charters-in
As of December 31, 2019, the Company had commitments to charter-in 11 vessels, which are all bareboat charters. During the second quarter of 2019, the Company commenced a bareboat charter for the Overseas Key West for a lease term of 10 years. Based on the length of the lease term and the remaining economic life of the vessel, it is accounted for as a finance lease. The remaining 10 chartered-in vessels are accounted for as operating leases.

The right-of-use asset accounted for as a finance lease arrangement is reported in vessels and other property, less accumulated depreciation on our consolidated balance sheets. The Company holds options for 10 of the vessels chartered-in that can be exercised for one, three or five years with the one-year option only usable once, while the three- and five-year options are available indefinitely.

The lease payments for the charters-in are fixed throughout the option periods and the options are on a vessel-by-vessel basis that can be exercised individually. The Company exercised its option on one of its vessels to extend the term until June 2025. On December 10, 2018, the Company exercised its options to extend the terms of the other nine vessels.

Terms for five of the vessels were extended for an additional three years, with terms ending in December 2022, and terms for four of the vessels were extended for an additional year, with terms ending December 2020. On December 11, 2019, the terms for the four vessels ending December 2020 were extended for an additional three years, with terms ending in December 2023.

Five of the Company's chartered in vessels contain a deferred payment obligation (“DPO”) which relates to charter hire expense incurred by the Company in prior years and payable to the vessel owner in future periods. This DPO is due in quarterly installments with the final quarterly payment due upon lease termination.
The future minimum commitments under these leases are as follows:

The bareboat charters-in provide for variable lease payments in the form of profit share to the owners of the vessels calculated in accordance with the respective charter agreements or based on time charter sublease revenue. Because such amounts and the periods impacted are not reasonably estimable, they are not currently reflected in the table above. Due to reserve funding requirements and current rate forecasts, no profits are currently expected to be paid to the owners in respect of the charter term

paid to the owners in respect of the charter term within the next year.

For the year ended December 31, 2019, lease expense for the 10 chartered-in vessels accounted for as operating leases was $90,359, which is included in charter hire expense on the consolidated statements of operations and operating cash flows on the consolidated statements of cash flows. The Company recognized sublease income of $188,163 for the year ended December 31, 2019.

For the year ended December 31, 2019, the Company had non-cash operating activities of $93,407 for obtaining operating right-of-use assets and liabilities that resulted from exercising lease renewals not assumed in the initial lease term.

For the year ended December 31, 2019, lease expense related to the Company's finance lease was $2,052 related to amortization of the right-of-use asset and $1,462 related to interest on the lease liability. These are included in operating cash flows on the consolidated statements of cash flows. For the year ended December 31, 2019, the Company had non-cash financing activities of $28,993 for obtaining finance right-of-use assets.

For the year ended December 31, 2018, lease expense relating to charters-in was $91,350, which is included in charter hire expense on the consolidated statements of operations.

 |
| table | At December 31, 2019         | Operating Leases | Finance Lease
---------------------------- | ---------------- | -------------
2020                         | $92,404          | $4,172
2021                         | 91,164           | 4,161
2022                         | 107,654          | 4,161
2023                         | 43,015           | 4,161
2024                         | 9,168            | 4,172
Thereafter                   | 4,534            | 17,180
Net minimum lease payments   | 347,939          | 38,007
Less: present value discount | 40,891           | 10,448
Total lease liabilities      | $307,048         | $27,559 |


| _id | d1b3c1f6c |
| title |  |
| text | NOTE 10—GOODWILL AND PURCHASED INTANGIBLE ASSETS
Changes in goodwill for the two years ended September 30, 2019 are as follows (in thousands):
As described in Note 18, we concluded that CMS became a separate operating segment beginning on October 1, 2017. In conjunction with the changes to reporting units, we reassigned goodwill between CGD and CMS based on their relative fair values on October 1, 2017.

In July 2017, we acquired Deltenna, a wireless infrastructure company specializing in the design and delivery of radio and antenna communication solutions. Deltenna’s operations were included in our CGD reporting unit upon its acquisition. On April 1, 2019, we reorganized our reporting structure to include Deltenna in our CMS reporting unit and reassigned $3.4 million of goodwill from CGD to CMS based upon its relative fair value. Since its acquisition, Deltenna’s sales, operating results, and cash flows

sales, operating results, and cash flows have not been significant to our consolidated results. As such, reportable segment information has not been restated for this change in the composition of our reportable segments.

We complete our annual goodwill impairment test each year as of July 1 separately for our CTS, CGD and CMS reporting units.

The test for goodwill impairment is a two-step process. The first step of the test is performed by comparing the fair value of each reporting unit to its carrying amount, including recorded goodwill. If the carrying amount of a reporting unit exceeds its fair value, the second step is performed to measure the amount of the impairment, if any, by comparing the implied fair value of goodwill to its carrying amount. Any resulting impairment determined would be recorded in the current period.

For our 2019 impairment test, the estimated fair value of all three of our reporting units exceeded their respective carrying amounts. As such, there was no impairment of goodwill in 2019.

Significant management judgment is required in the forecast of future operating results that are used in our impairment analysis. The estimates we used are consistent with the plans and estimates that we use to manage our business. Although we believe our underlying assumptions supporting these assessments are reasonable, if our forecasted sales and margin growth rates, timing of growth, or the discount rate vary from our forecasts, we may be required to perform interim analyses in fiscal 2020 that could

interim analyses in fiscal 2020 that could expose us to material impairment charges in the future.

 |
| table | | Cubic Transportation Systems | Cubic Mission Solutions | Cubic Global Defense | Total
-------------------------------------- | ---------------------------- | ----------------------- | -------------------- | ----------
Net balances at September 30, 2017     | $  50,870                    | $  —                    | $  270,692           | $  321,562
Reassignment on October 1, 2017        | —                            | 125,321                 | (125,321)            | —
Acquisitions (see Note 2)              | —                            | 13,085                  | 665                  | 13,750
Foreign currency exchange rate changes | (1,084)                      | (279)                   | (323)                | (1,686)
Net balances at September 30, 2018     | 49,786                       | 138,127                 | 145,713              | 333,626
Reassignment on April 1, 2019          | —                            | 3,428                   | (3,428)              | —
Acquisitions                           | 206,988                      | 40,392                  | —                    | 247,380
Foreign currency exchange rate changes | (2,182)                      | (523)                   | (204)                | (2,909)
Net balances at September 30, 2019     | $ 254,592                    | $  181,424              | $  142,081           | $  578,097 |


| _id | d1b3654f6 |
| title |  |
| text | Note 20. Net Income Per Common Share From Continuing Operations
The following table sets forth the computation of basic and diluted net income per common share from continuing operations (in millions, except per share amounts):

The Company computed basic net income per common share from continuing operations based on the weighted average number of common shares outstanding during the period. The Company computed diluted net income per common share from continuing operations based on the weighted average number of common shares outstanding plus potentially dilutive common shares outstanding during the period.

Potentially dilutive common shares from employee equity incentive plans are determined by applying the treasury stock method to the assumed exercise of outstanding stock options and the assumed vesting of outstanding RSUs. Weighted average common shares exclude the effect of option shares which are not dilutive. There were no anti-dilutive option shares for the years ended March 31, 2019, 2018, and 2017.

 |
| table | |        | Year Ended March 31, |
-------------------------------------------------------------- | ------ | -------------------- | ------
                                                               | 2019   | 2018                 | 2017
Net income from continuing operations                          | $355.9 | $255.4               | $170.6
Basic weighted average common shares outstanding               | 236.2  | 232.9                | 217.2
Dilutive effect of stock options and RSUs                      | 3.8    | 4.4                  | 4.4
Dilutive effect of 2007 Junior Convertible Debt                | —      | 1.3                  | 12.7
Dilutive effect of 2015 Senior Convertible Debt                | 9.9    | 10.3                 | 0.5
Dilutive effect of 2017 Senior Convertible Debt                | —      | —                    | —
Dilutive effect of 2017 Junior Convertible Debt                | —      | —                    | —
Diluted weighted average common shares outstanding             | 249.9  | 248.9                | 234.8
Basic net income per common share from continuing operations   | $1.51  | $1.10                | $0.79
Diluted net income per common share from continuing operations | $1.42  | $1.03                | $0.73 |


| _id | d1b37066c |
| title |  |
| text | Stock-Based Compensation
The Company recognized total stock-based compensation cost related to equity incentive awards as follows (in thousands):
A small portion of stock-based compensation cost above is capitalized in accordance with the accounting guidance for internal-use software. The Company uses the straight-line attribution method for recognizing stock-based compensation expense.

 |
| table | |         | For the Year Ended December 31, |
----------------------------------- | ------- | ------------------------------- | -------
                                    | 2019    | 2018                            | 2017
Stock-based compensation cost:      |         |                                 |
Common stock warrants               | $—      | $512                            | $484
Stock options                       | 16,489  | 13,279                          | 11,295
Restricted stock units              | 14,585  | 90                              | —
Employee stock purchase plan        | 3,326   | 2,069                           | —
Total stock-based compensation cost | $34,400 | $15,950                         | $11,779 |


| _id | d1b3a83a0 |
| title |  |
| text | Financial and Operating Highlights
CONTINUING OPERATIONS
(1) See reconciliation of GAAP to non-GAAP financial measures tables in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Form 10-K.

 |
| table | (Amounts in thousands, except per share data and percentages)            | 2019       | 2018       | 2017
------------------------------------------------------------------------ | ---------- | ---------- | ----------
Bookings                                                                 | $1,002,320 | $2,779,782 | $1,234,013
Backlog                                                                  | $3,400,952 | $4,064,451 | $2,536,499
Sales                                                                    | $1,496,475 | $1,202,898 | $1,107,709
Sales growth %                                                           | 24%        | 9%         |
Research & development                                                   | $50,132    | $52,398    | $52,652
Operating income                                                         | $86,237    | $24,382    | $2,628
Net income (loss) per share, continuing operations attributable to Cubic | $1.67      | $0.29      | $(0.95)
Adjusted EBITDA (1)                                                      | $146,594   | $104,561   | $87,470
Adjusted EBITDA growth %                                                 | 40%        | 20%        |
Adjusted earnings per share (1)                                          | $3.13      | $2.19      | $1.62
Adjusted earnings per share growth %                                     | 43%        | 35%        |
Cash dividend per share                                                  | $0.27      | $0.27      | $0.27
Long-term debt, inclusive of current portion                             | $199,824   | $199,793   | $199,761 |


| _id | d1b369c7c |
| title |  |
| text | Overview of 2019
Total revenues for 2019 were $36.0 million, a decrease of $75.0 million, or 68%, versus 2018. The decrease was primarily driven by the $70.9 million decrease in fixed fee license revenue and the $4.0 million decrease in per-unit royalty revenue.

For 2019, we had a net loss of $20.0 million as compared to $54.3 million of net income for 2018. The $74.4 million decrease in net income was mainly related to the $75.0 million decrease in total revenue partially offset by a $0.5 million decrease in cost and operating expenses for 2019 compared to 2018.

We adopted ASC 606, effective January 1, 2018. Consistent with the modified retrospective transaction method, our results of operations for periods prior to the adoption of ASC 606 remain unchanged. As a result, the change in total revenues from 2018 to 2019 included a component of accounting policy change arising from the adoption of ASC 606.
The following table sets forth our consolidated statements of income data as a percentage of total revenues:

 |
| table | | Years Ended December 31, |         |
----------------------------------------------- | ------------------------ | ------- | --------
                                                | 2019                     | 2018    | 2017
Revenues:                                       |                          |         |
Fixed fee license revenue                       | 35.1 %                   | 75.3 %  | 36.0 %
Per-unit royalty revenue                        | 64.0                     | 24.3    | 61.4
Total royalty and license revenue               | 99.1                     | 99.6    | 97.4
Development, services, and other                | 0.9                      | 0.4     | 2.6
Total revenues                                  | 100.0                    | 100.0   | 100.0
Costs and expenses:                             |                          |         |
Cost of revenues                                | 0.5                      | 0.2     | 0.6
Sales and marketing                             | 17.9                     | 5.5     | 38.6
Research and development                        | 21.8                     | 8.8     | 33.6
General and administrative                      | 119.4                    | 37.7    | 152.4
Restructuring costs                             | —                        | —       | 4.6
Total costs and expenses                        | 159.6                    | 52.2    | 229.8
Operating income (loss)                         | (59.6)                   | 47.8    | (129.8)
Interest and other income                       | 5.0                      | 1.7     | 1.0
Other expense                                   | 0.2                      | (0.2)   | 0.9
Income (loss) before provision for income taxes | (54.4)                   | 49.3    | (127.9)
Provision for income taxes                      | (1.3)                    | (0.4)   | (1.4)
Net income (loss)                               | (55.7)%                  | 48.9 %  | (129.3)% |


| _id | d1b342d3e |
| title |  |
| text | At the balance sheet date, the combined principal accounting assumptions were as follows:
For the smaller overseas schemes the discount rate used was 1.50% (2017/18: 1.80%) and future pension increases were 1.30% (2017/18: 1.45%).
At 30 March 2019 and 31 March 2018, the discount rate was derived based on a bond yield curve expanded to also include bonds rated AA by one credit agency (and which might for example be rated A or AAA by other agencies).

 |
| table | | At 30 Mar 2019  |             | At 31 Mar 2018  |
------------------------- | --------------- | ----------- | --------------- | -----------
                          | Premier schemes | RHM schemes | Premier schemes | RHM schemes
Discount rate             | 2.45%           | 2.45%       | 2.70%           | 2.70%
Inflation – RPI           | 3.25%           | 3.25%       | 3.15%           | 3.15%
Inflation – CPI           | 2.15%           | 2.15%       | 2.05%           | 2.05%
Expected salary increases | n/a             | n/a         | n/a             | n/a
Future pension increases  | 2.10%           | 2.10%       | 2.10%           | 2.10% |


| _id | d1b2f1b46 |
| title |  |
| text | 8. Marketable Securities
The cost, gross unrealized gains, gross unrealized losses and fair market value of available-for-sale securities at April 30, 2019 and 2018, respectively, were as follows (in thousands):

 |
| table | |        |                        | April 30, 2019          |
----------------------- | ------ | ---------------------- | ----------------------- | -----------------
                        | Cost   | Gross Unrealized Gains | Gross Unrealized Losses | Fair Market Value
Fixed income securities | $8,152 | $71                    | $(24)                   | $8,199
                        |        |                        | April 30, 2018          |
                        | Cost   | Gross Unrealized Gains | Gross Unrealized Losses | Fair Market Value
Fixed income securities | $6,274 | $10                    | $(135)                  | $6,149 |


| _id | d1b3b3764 |
| title |  |
| text | Revenue

The Company adopted ASC 606 effective January 1, 2018 using the modified retrospective method. The Company recognized the cumulative effect of initially applying ASC 606, which was immaterial, as an adjustment to the opening balance of retained earnings. The comparative prior period information is accounted for in accordance with the previous revenue guidance, ASC 605, and has not been restated. In accordance with ASC 606, the Company recognizes revenue under the core principle to depict the transfer of

the core principle to depict the transfer of control to the Company’s customers in an amount reflecting the consideration the Company expects to be entitled. In order to achieve that core principle, the Company applies the following five step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when a

in the contract and (5) recognize revenue when a performance obligation is satisfied.

Revenue for product sales is recognized at the point in time when control transfers to the Company’s customers, which is generally when products are shipped from the Company’s manufacturing facilities or when delivered to the customer’s named location. When the Company performs shipping and handling activities after the transfer of control to the customer (e.g., when control transfers prior to delivery), they are considered to be fulfillment activities, and accordingly, the costs are accrued for when the

accordingly, the costs are accrued for when the related revenue is recognized. Taxes collected on behalf of customers relating to product sales and remitted to governmental authorities, principally sales taxes, are excluded from revenue.

The opening and closing balances of the Company’s accounts receivable and deferred revenue are as follows (in thousands):

The amount of revenue recognized in the period that was included in the opening deferred revenue balances was approximately$5.1 million for the year ended December 31, 2019. Generally, increases in current and non-current deferred revenue are related to billings to, or advance payments from, customers for which the Company has not yet fulfilled its performance obligations, and decreases are related to revenue recognized. Deferred revenue not expected to be recognized within the Company’s operating cycle of

within the Company’s operating cycle of one year is presented as a component of “Other long-term liabilities” on the consolidated balance sheet.

At times, the Company receives orders for products that may be delivered over multiple dates that may extend across reporting periods. The Company invoices for each delivery upon shipment and recognizes revenues for each distinct product delivered, assuming transfer of control has occurred. Generally, scheduled delivery dates are within one year, and the Company has elected to use the optional exemption whereby revenues allocated to partially completed contracts with an expected duration of one year or

with an expected duration of one year or less are not disclosed. As of December 31, 2019, the Company had no contracts with unsatisfied performance obligations with a duration of more than one year.

 |
| table | | Balance at Beginning of |                       |
------------------------------ | ----------------------- | --------------------- | ------------------------
                               | Period (1/1/19)         | Increase / (Decrease) | Balance at End of Period
Year Ended December 31, 2019   |                         |                       |
Accounts receivable            | $90,831                 | $7,117                | $97,948
Deferred revenue (current)     | $5,101                  | $(618)                | $4,483
Deferred revenue (non-current) | $3,707                  | $(263)                | $3,444 |


| _id | d1b3bbe96 |
| title |  |
| text | Stock-based Compensation Expense
The following table sets forth the total stock-based compensation expense resulting from stock options, RSUs, and ESPP included in the Company’s consolidated statements of operations (in thousands):

During the years ended December 31, 2019, 2018, and 2017 the Company capitalized stock-based compensation cost of $0.5 million, $0.1 million, and $0.3 million, respectively, in projects in process as part of property and equipment, net on the accompanying consolidated balance sheets.

As of December 31, 2019, there was $60.3 million unrecognized stock-based compensation expense of which $13.9 million is related to stock options and ESPP and $46.4 million is related to RSUs. The total unrecognized stock-based compensation expense related to stock options and ESPP as of December 31, 2019 will be amortized over a weighted-average period of 2.87 years. The total unrecognized stock-based compensation expense related to RSUs as of December 31, 2019 will be amortized over a weighted-average

2019 will be amortized over a weighted-average period of 2.69 years.

 |
| table | |        | Year Ended December 31, |
-------------------------------------- | ------ | ----------------------- | ------
                                       | 2019   | 2018                    | 2017
Cost of revenues                       | 2,193  | 2,315                   | 2,000
Sales and marketing                    | 6,812  | 6,596                   | 6,621
Research and development               | 4,804  | 6,137                   | 7,949
General and administrative             | 18,328 | 16,338                  | 15,682
Total stock-based compensation expense | 32,137 | 31,386                  | 32,252 |


| _id | d1b390908 |
| title |  |
| text | Interest Cost
The following table presents the amount of interest cost recognized relating to both the contractual interest coupon and amortization of the debt discount, issuance costs, and effective portion of interest rate contracts with respect to the Senior Notes, convertible notes, the term loan agreement, commercial paper, and the revolving credit facility during the fiscal years ended June 30, 2019, June 24, 2018, and June 25, 2017.

The increase in interest expense during the 12 months ended June 30, 2019, is primarily the result of the issuance of $2.5 billion of Senior Notes in March 2019.

 |
| table | |               | YearEnded      |
-------------------------------------- | ------------- | -------------- | -------------
                                       | June 30, 2019 | June 24, 2018  | June 25, 2017
                                       |               | (in thousands) |
Contractual interest coupon            | $100,712      | $77,091        | $95,195
Amortization of interest discount      | 3,937         | 12,225         | 22,873
Amortization of issuance costs         | 1,426         | 2,034          | 2,414
Effect of interest rate contracts, net | 4,086         | 3              | (4,756)
Total interest cost recognized         | $110,161      | $91,353        | $115,726 |


| _id | d1b31b40a |
| title |  |
| text | Employee Share Purchase Plan (ESPP)
The Company estimates the fair value of its ESPP share options on the date of grant using the Black-Scholes option-pricing model, which requires the use of highly subjective estimates and assumptions. The Company estimates the expected term of ESPP share options based on the length of each offering period, which is six months.

The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the ESPP share option. Expected volatility is based on the Company’s historical volatility. The Company uses an expected dividend rate of zero as it currently has no history or expectation of paying dividends on its ordinary shares.

The grant date fair value per ordinary share is based on the closing market value of its ordinary shares on the first day of each ESPP offering period. The first authorized offering period under the ESPP commenced on July 1, 2017.
The fair value of each ESPP option grant was estimated using the Black-Scholes option-pricing model that used the following weighted-average assumptions:

The weighted-average per share fair value of ESPP share options granted to employees during the years ended March 31, 2019 and 2018, was $9.58 and $6.41, respectively.

 |
| table | | Year ended March 31, |
---------------------------------------- | -------------------- | ------
                                         | 2019                 | 2018
Expected term (in years)                 | 0.5                  | 0.5
Risk-free interest rate                  | 2.3%                 | 1.4%
Expected volatility                      | 39.1%                | 29.9%
Expected dividend yield                  | —%                   | —%
Grant date fair value per ordinary share | $36.69               | $27.15 |


| _id | d1b3860b6 |
| title |  |
| text | Note 11. Income Taxes
The income tax provision consists of the following (amounts in millions):

On December 22, 2017, the Tax Cuts and Jobs Act (the "Act") was enacted into law. The Act provides for numerous significant tax law changes and modifications including the reduction of the U.S. federal corporate income tax rate from 35.0% to 21.0%, the requirement for companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and the creation of new taxes on certain foreign-sourced earnings.

Accounting Standards Codification ("ASC") 740, Income Taxes, requires companies to recognize the effect of the tax law changes in the period of enactment. However, the SEC staff issued Staff Accounting Bulletin ("SAB") 118, which allowed companies to record provisional amounts during a measurement period that is similar to the measurement period used when accounting for business combinations. The Company recorded a reasonable estimate when measurable and with the understanding that the provisional amount

the understanding that the provisional amount was subject to further adjustments under SAB 118. In addition, for significant items for which the Company could not make a reasonable estimate, no provisional amounts were recorded. As of December 31, 2018, the Company completed its review of the previously recorded provisional amounts related to the Act, recorded necessary adjustments, and the amounts are now final under SAB 118.

As of March 31, 2018, the Company remeasured certain deferred tax assets and liabilities based on the rates at which they were expected to reverse in the future (which was generally 21%), by recording a provisional income tax benefit of $136.7 million. Upon further analysis of certain aspects of the Act and refinement of its calculations during the period ended December 31, 2018, the Company did not make adjustments to the provisional amount

The one-time transition tax is based on the Company's total post-1986 earnings and profits (E&P), the tax on which the Company previously deferred from U.S. income taxes under U.S. law. The Company recorded a provisional amount for its one-time transition tax expense for each of its foreign subsidiaries, resulting in a transition tax expense of $644.7 million at March 31, 2018. Upon further analyses of the Act and notices and regulations issued and proposed by the U.S. Department of the Treasury and the

by the U.S. Department of the Treasury and the Internal Revenue Service, the Company finalized its calculations of the transition tax expense during the period ended December 31, 2018. The Company increased its March 31, 2018 provisional amount by $13.1 million to $657.8 million, which is included as a component of income tax expense from continuing operations. The measurement period adjustment of $13.1 million decreased basic and diluted net income per common share by $0.06 and $0.05, respectively, for

share by $0.06 and $0.05, respectively, for the year ended March 31, 2019.

The Company intends to invest substantially all of its foreign subsidiary earnings, as well as its capital in its foreign subsidiaries, indefinitely outside of the U.S. in those jurisdictions in which the Company would incur significant, additional costs upon repatriation of such amounts. It is not practical to estimate the additional tax that would be incurred, if any, if the permanently reinvested earnings were repatriated.

 |
| table | |          | Year Ended March 31, |
------------------------------------ | -------- | -------------------- | --------
                                     | 2019     | 2018                 | 2017
Pretax (loss) income:                |          |                      |
U.S.                                 | $(593.4) | $(127.3)             | $(279.3)
Foreign                              | 797.9    | 864.6                | 369.1
                                     | $204.5   | $737.3               | $89.8
Current (benefit) expense:           |          |                      |
U.S. Federal                         | $(98.0)  | $369.4               | $21.3
State                                | (5.3)    | 0.5                  | 1.0
Foreign                              | 14.1     | 60.8                 | 23.8
Total current (benefit) expense      | $(89.2)  | $430.7               | $46.1
Deferred expense (benefit):          |          |                      |
U.S. Federal                         | $11.9    | $82.5                | $(114.7)
State                                | 0.6      | 0.1                  | (5.4)
Foreign                              | (74.7)   | (31.4)               | (6.8)
Total deferred (benefit) expense     | (62.2)   | 51.2                 | (126.9)
Total Income tax (benefit) provision | $(151.4) | $481.9               | $(80.8) |


| _id | d1b343144 |
| title |  |
| text | NOTE 11—FINANCING ARRANGEMENTS
Long-term debt consists of the following (in thousands):
Maturities of long-term debt for each of the five years in the period ending September 30, 2024, are as follows: 2020 — $10.7 million; 2021 — $35.7 million; 2022 — $35.7 million; 2023 — $35.7 million; 2024 — $35.7 million.

In March 2013, we entered into a note purchase and private shelf agreement pursuant to which we issued $100.0 million of senior unsecured notes, bearing interest at a rate of 3.35% and maturing on March 12, 2025. Pursuant to the agreement, on July 17, 2015, we issued an additional $25.0 million of senior unsecured notes, bearing interest at a rate of 3.70% and maturing on March 12, 2025. Interest payments on the notes issued in 2013 and 2015 are due semi-annually and principal payments are due from 2021

and principal payments are due from 2021 through 2025. On February 2, 2016 we revised the note purchase agreement and we issued an additional $75.0 million of senior unsecured notes bearing interest at 3.93% and maturing on March 12, 2026. Interest payments on these notes are due semi-annually and principal payments are due from 2020 through 2026.

The agreement pertaining to the aforementioned notes also contained a provision that the coupon rate would increase by a further 0.50% should the company’s leverage ratio exceed a certain level.

 |
| table | September 30,                                                                                | 2019      | 2018
-------------------------------------------------------------------------------------------------- | --------- | ---------
Series A senior unsecured notes payable to a group of insurance companies, interest fixed at 3.35% | $  50,000 | $  50,000
Series B senior unsecured notes payable to a group of insurance companies, interest fixed at 3.35% | 50,000    | 50,000
Series C senior unsecured notes payable to a group of insurance companies, interest fixed at 3.70% | 25,000    | 25,000
Series D senior unsecured notes payable to a group of insurance companies, interest fixed at 3.93% | 75,000    | 75,000
                                                                                | 200,000   | 200,000
Less unamortized debt issuance costs                                                               | (175)     | (207)
Less current portion                                                                               | (10,714)  | —
                                                                                | $189,111  | $199,793 |


| _id | d1b31f564 |
| title |  |
| text | (d) Share-Based Awards Available for Grant
A summary of share-based awards available for grant is as follows (in millions):

For each share awarded as restricted stock or a restricted stock unit award under the 2005 Plan, 1.5 shares was deducted from the available share-based award balance. For restricted stock units that were awarded with vesting contingent upon the achievement of future financial performance or market-based metrics, the maximum awards that can be achieved upon full vesting of such awards were reflected in the preceding table.

 |
| table | Years Ended                                                         | July 27, 2019 | July 28, 2018 | July 29, 2017
------------------------------------------------------------------- | ------------- | ------------- | -------------
Balance at beginning of fiscal year                                 | 245           | 272           | 242
Restricted stock, stock units, and other share-based awards granted | (67)          | (70)          | (76)
Share-based awards canceled/forfeited/expired                       | 18            | 18            | 78
Shares withheld for taxes and not issued                            | 23            | 25            | 28
Other                                                               | 1             | —             | —
Balance at end of fiscal year                                       | 220           | 245           | 272 |


| _id | d1b385576 |
| title |  |
| text | 2 Alternative performance measures continued
Return on capital employed (ROCE)
ROCE measures effective management of fixed assets and working capital relative to the profitability of the business. It is calculated as adjusted operating profit divided by average capital employed. More information on ROCE can be found in the Capital Employed and ROCE sections of the Financial Review on page 57.
An analysis of the components is as follows:

 |
| table | | 2019    | 2018
------------------------------------------------------- | ------- | -------
                                                        | £m      | £m
Property, plant and equipment                           | 251.2   | 230.8
Right-of-use assets (IFRS 16)                           | 40.8    | –
Prepayments                                             | 0.9     | 6.2
Inventories                                             | 185.9   | 160.6
Trade receivables                                       | 240.7   | 245.1
Other current assets                                    | 35.3    | 32.9
Tax recoverable                                         | 8.4     | 4.6
Trade, other payables and current provisions            | (178.3) | (172.0)
Current tax payable                                     | (26.7)  | (23.7)
Capital employed                                        | 558.2   | 484.5
Average capital employed                                | 521.4   | 482.2
Average capital employed (excluding IFRS 16)            | 501.0   | 482.2
Operating profit                                        | 245.0   | 299.1
Adjustments (see adjusted operating profit on page 160) | 37.7    | (34.2)
Adjusted operating profit                               | 282.7   | 264.9
Adjusted operating profit (excluding IFRS 16)           | 281.4   | 264.9
Return on capital employed                              | 54.2%   | 54.9%
Return on capital employed (excluding IFRS 16)          | 56.2%   | 54.9% |


| _id | d1b38d69a |
| title |  |
| text | (1) Represents accelerated vesting of 48,849 stock options. Pursuant to Mr. Dooley’s stock option agreements (dated January 17, 2019),
if Mr. Dooley’s employment is terminated without cause or for good reason within six months following a “change in control”, he will
become immediately vested in all outstanding unvested stock options, and all of Mr. Dooley’s outstanding options shall remain
exercisable in accordance with their terms, but in no event for less than 90 days after such termination.

(2) Represents accelerated vesting of 15,000 unvested restricted stock units. Pursuant to Mr. Dooley’s restricted stock unit agreement
(dated March 1, 2012), upon a “change in control” all non-vested units shall accelerate and be vested as of the date of the “change in
control” and if Mr. Dooley’s employment is terminated without cause or for good reason, all non-vested units shall accelerate and be
vested as of the date of termination

vested as of the date of termination
(3) Represents accelerated vesting of 7,500 unvested restricted stock units. Pursuant to Mr. Dooley’s restricted stock unit agreement
(dated March 1, 2012), on the event of Mr. Dooley’s death or total disability, 7,500 restricted stock units (50% of the unvested restricted
stock units granted under such agreement at December 31, 2018) would vest.

(4) Represents accelerated vesting of 10,630 unvested performance restricted stock units. Pursuant to Mr. Dooley's performance restricted
stock unit agreement (dated January 17, 2019), if Mr. Dooley’s employment is terminated without cause or for good reason within six
months following a “change in control” or if Mr. Dooley's employment is terminated due to death or total disability, all non-vested units
shall accelerate and be vested as of the date of termination.

 |
| table | Type of Payment                                                          | Termination by Systemax without “Cause” or Resignation by Employee for “good reason” ($) | Termination Due to Death or Total Disability ($) | Change In Control Only ($) | Termination by Systemax without “Cause” or Resignation by Employee for “good reason” within a certain period of time following a Change in Control ($)
------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------- | ------------------------------------------------ | -------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------
Cash Compensation (Salary & Non-Equity Incentive Compensation)           | -                                                                                | -                                                | -                          | -
Value of Accelerated Vesting of Stock Option Awards                      | -                                                                                | -                                                | -                          | 505,100 (1)
Value of Accelerated Vesting of Restricted Stock Unit Awards             | 377,400 (2)                                                                              | 188,700 (3)                                      | 377,400 (2)                | -
Value of Accelerated Vesting of Performance Restricted Stock Unit Awards | -                                                                                | 267,500 (4)                                      | -                          | 267,500 (4)
Medical and Other Benefits                                               | -                                                                                | -                                                | -                          | -
Total                                                                    | 377,400                                                                                | 456,200                                          | 377,400                    | 772,600 |


| _id | d1b37b1d4 |
| title |  |
| text | NOTE 14 – OTHER LIABILITIES
The carrying amount is a reasonable approximation of fair value due to the short-term nature of the receivables. Please refer to note 21 for further information on fair value hierarchies.

 |
| table | USDm                                | 2019 | 2018
----------------------------------- | ---- | ----
Partners and commercial managements | 0.5  | 1.2
Accrued operating expenses          | 14.1 | 9.1
Accrued interest                    | 4.0  | 4.6
Wages and social expenses           | 14.3 | 16.1
Derivative financial instruments    | 12.3 | 3.4
Payables to joint ventures          | 0.1  | 0.1
Other                               | 2.0  | 2.0
Balance as of 31 December           | 47.3 | 36.5 |


| _id | d1b3715f8 |
| title |  |
| text | Historical Cash Flows
The following table sets forth our cash flows for the periods indicated (in thousands):

 |
| table | |          | Year Ended December 31, |
------------------------------------------------ | -------- | ----------------------- | ---------
                                                 | 2019     | 2018                    | 2017
Cash flows from operating activities             | $47,112  | $60,710                 | $57,187
Cash flows used in investing activities          | (73,414) | (13,377)                | (168,795)
Cash flows (used in) / from financing activities | (130)    | 2,399                   | 67,303 |


| _id | d1b2e6264 |
| title |  |
| text | A reconciliation of income tax expense provided at the federal statutory rate (21% in fiscal year 2019, 28.27% in fiscal year 2018, and 35% in fiscal year 2017) to actual income tax expense is as follows:

In July 2015, the U.S. Tax Court issued an opinion favorable to Altera with respect to Altera’s litigation with the IRS. The litigation related to the treatment of stock-based compensation expense in an intercompany cost-sharing arrangement with Altera’s foreign subsidiary. In its opinion, the U.S. Tax Court accepted Altera’s position of excluding stock-based compensation from its intercompany cost-sharing arrangement. In June 2019, the Ninth Circuit, through a three-judge panel, reversed the 2015 decision

a three-judge panel, reversed the 2015 decision of the U.S. Tax Court. Altera has petitioned the Ninth Circuit for an en banc rehearing of a larger panel of eleven Ninth Circuit judges. The Company will continue to monitor and evaluate the potential impact of this litigation on its fiscal year 2020 Consolidated Financial Statements. The estimated potential impact is in the range of $75 million, which may result in a decrease in deferred tax assets and an increase in tax expense.

Effective from fiscal year 2014 through 2017, the Company had a tax ruling in Switzerland for one of its foreign subsidiaries. The impact of the tax ruling decreased taxes by approximately $6.3 million for fiscal year 2017. The benefit of the tax ruling on diluted earnings per share was approximately $0.03 in fiscal year 2017. Effective fiscal year 2018, the Company has withdrawn its reduced tax rate ruling in Switzerland for this subsidiary due to the ruling being no longer necessary as the subsidiary

being no longer necessary as the subsidiary meets the requirements to achieve the reduced tax rate under Swiss tax law.

Earnings of the Company’s foreign subsidiaries included in consolidated retained earnings that are indefinitely reinvested in foreign operations aggregated to approximately $458.4 million at June 30, 2019. If these earnings were remitted to the United States, they would be subject to foreign withholding taxes of approximately $73.1 million at current statutory rates.

 |
| table | |               | Year Ended     |
----------------------------------------------------- | ------------- | -------------- | -------------
                                                      | June 30, 2019 | June 24, 2018  | June 25, 2017
                                                      |               | (in thousands) |
Income tax expense computed at federal statutory rate | $513,780      | $891,011       | $634,086
State income taxes, net of federal tax benefit        | (17,565)      | (50,585)       | (11,973)
Foreign income taxed at different rates               | (260,344)     | (939,808)      | (352,860)
Settlements and reductions in uncertain tax positions | (31,291)      | (33,367)       | (144,519)
Tax credits                                           | (71,779)      | (69,301)       | (37,713)
State valuation allowance, net of federal tax benefit | 26,742        | 57,302         | 12,070
Equity-based compensation                             | (7,566)       | (35,875)       | 13,187
Other permanent differences and miscellaneous items   | 39,251        | 43,214         | 1,632
U.S. tax reform impacts                               | 63,913        | 908,517        | —
                                                      | $255,141      | $771,108       | $113,910 |


| _id | d1b2f9daa |
| title |  |
| text | 3 Segmental reporting continued
Capital additions, depreciation, amortisation and impairment

Capital additions include property, plant and equipment of £59.0m (2018: £33.5m), of which £8.1m (2018: £0.2m) was from acquisitions in the period, and other intangible assets of £72.0m (2018: £19.0m) of which £60.2m (2018: £9.1m) relates to acquired intangibles from acquisitions in the period. Right-of-use asset additions of £48.9m occurred during the 12 month period to 31st December 2019, of which £36.1m relates to additions on 1st January 2019 as a result of transition to IFRS 16, £11.7m relates to new

of transition to IFRS 16, £11.7m relates to new leases entered into in 2019 and £1.1m from acquisitions. Capital additions split between the UK and rest of the world are UK £36.8m (2018: £20.1m) and rest of the world £143.1m (2018: £32.4m).

 |
| table | | 2019              | 2019                                      | 2018              | 2018
-------------------------- | ----------------- | ----------------------------------------- | ----------------- | -----------------------------
                           | Capital additions | Depreciation, amortisation and impairment | Capital additions | Depreciation and amortisation
                           | £m                | £m                                        | £m                | £m
Steam Specialties          | 57.7              | 35.8                                      | 27.9              | 30.1
Electric Thermal Solutions | 81.6              | 18.4                                      | 6.0               | 13.6
Watson-Marlow              | 40.6              | 22.4                                      | 18.6              | 14.4
Group total                | 179.9             | 76.6                                      | 52.5              | 58.1 |


| _id | d1a738d04 |
| title |  |
| text | 16. Income Taxes
The provisions (benefits) for income taxes differed from the amount computed by applying the federal statutory income tax rate to income (loss) before income taxes due to the following items for the years ended December 31, 2019 and 2018 (in millions):

The income tax benefit as of December 31, 2019 is $20.6 million. The benefit was primarily driven by a net valuation allowance release of $37.4 million related to the Insurance segment partially offset by an impairment of goodwill which is not deductible for tax purposes. The Insurance segment is profitable in 2019 and in a three-year overall cumulative income position as of December 31, 2019.

The profitability is driven by current year income associated with favorable claims and reserve development relative to expected. Further, unrealized gains from the investment portfolio continued to grow in 2019.

The amount recorded as of December 31, 2018 primarily relates to separate state filings that do not have net operating losses available to offset income. In the third quarter of 2018, the Insurance segment acquired Humana’s long-term care business, Kanawha Insurance Company. The combined insurance entity generated a net operating loss for the year due to additional tax deductions related to increases in policy holder reserves. In addition, the bargain purchase gain is not taxable. This net operating loss

gain is not taxable. This net operating loss was carried forward but had a valuation allowance. Additionally, the income tax expense generated from the sale of BeneVir in the second quarter of 2018 is offset by tax attributes for which a valuation allowance had been recorded. Therefore, there is no net income tax expense recorded in the income statement for the sale.

 |
| table | | Years Ended December 31, |
---------------------------------------------------- | ------------------------ | ------
                                                     | 2019                     | 2018
Tax provision (benefit) at federal statutory rate    | $ (11.9)                 | $ 38.3
Permanent differences                                | 0.3                      | 1.5
State tax, net of federal benefit                    | (7.3)                    | 6.2
Foreign rate differential                            | 1.4                      | (0.9)
Minority interest                                    | 0.2                      | (4.6)
Executive and stock compensation                     | 2.5                      | 3.5
Increase (decrease) in valuation allowance           | (7.6)                    | (43.8)
Transaction costs                                    | 0.1                      | 1.5
Tax credits generated/utilized                       | (2.2)                    | —
Return to provision                                  | (6.0)                    | 15.6
ASU 2017-11 adoption                                 | (1.3)                    | —
Goodwill impairment                                  | 10.9                     | —
Gain/loss on sale or deconsolidation of a subsidiary | —                        | 5.7
Bargain purchase gain                                | —                        | (24.2)
Other                                                | (1.8)                    | 3.6
Warrant liability                                    | 2.1                      | —
Income tax (benefit) expense                         | $ (20.6)                 | $ 2.4 |


| _id | d1b3168b0 |
| title |  |
| text | 4. VESSELS
Vessels consists of the carrying value of 23 vessels for the year ended December 31, 2019 and December 31, 2018, respectively. Vessels includes capitalized drydocking costs.
Depreciation is calculated based on cost less estimated residual value of $8.0 million per vessel over the estimated useful life of the vessel using the straight-line method. The estimated useful life of a vessel is 25 years from the date the vessel is delivered from the shipyard.

*Depreciation charges of $497.0 million related to vessels disposed of in 2018 is excluded
** Impairment charges of $2.2 million and $110.5 million related to vessels disposed of in 2018 is excluded
The Company has taken three vessels through periodical maintenance surveys in 2019 and further two vessels were in drydock for periodical maintenance as at December 31, 2019.
Impairment Loss on Vessels

Impairment Loss on Vessels
The Company has not recorded any impairment loss on vessels for the year ended December 31, 2019. The Company recorded an impairment loss of $2.2 million and $110.5 million for the years ended December 31, 2018 and December 31, 2017, respectively.

The Company reviewed its assets for impairment on an asset by asset basis. In determining whether the assets are recoverable, the Company compared the estimate of the undiscounted cash flows expected to be generated by the assets to its carrying value. As of December 31, 2019, it was determined that the sum of the undiscounted cash flows for each vessel exceeded its carrying value and no impairment was recorded.

In developing estimates of future undiscounted cash flows, we made assumptions and estimates based on historical trends as well as future expectations. The most important assumption in determining undiscounted cash flows are the estimated freight rates. Freight rates are volatile and the analysis is based on market rates obtained from third parties, in combination with historical achieved rates by the Company.

 |
| table | | 2019      | 2018
------------------------------------------- | --------- | ----------
All figures in USD ‘000                     |           |
Vessels as of January 1                     | 1,307,087 | 1,769,967
Additions Vessels                           | 2,531     | 169,446
Disposals Vessels                           | -         | (632,326)
Drydocking as of January 1                  | 52,331    | 119,303
Additions Drydocking                        | 7,618     | 8,210
Disposals Drydocking                        | -         | (75,182)
Total Vessels and Drydocking                | 1,369,567 | 1,359,418
Less Accumulated Depreciation               | (469,570) | (405,660)*
Less Accumulated Impairment Loss on Vessels | -         | -**
Vessels                                     | 899,997   | 953,758 |


| _id | d1b322b60 |
| title |  |
| text | 15. Revenue from Contracts with Customers
Impact of Adopting Topic 606
The effects of the adoption on the Company's Consolidated Financial Statements for the fiscal year ended September 28, 2019 was as follows (in thousands):

 |
| table | |                                | Fiscal Year Ended            |
--------------------------------- | ------------------------------ | ---------------------------- | --------------------------------------------------------------
                                  | September 28, 2019
As Reported | Adjustments due to Topic 606 | September 28, 2019
As Adjusted - Without
Adoption of Topic 606
Net sales                         | $3,164,434                     | $14,880                      | $3,149,554
Cost of sales                     | 2,872,596                      | 12,934                       | 2,859,662
       Gross profit               | 291,838                        | 1,946                        | 289,892
       Operating income           | 142,055                        | 1,946                        | 140,109
       Income before income taxes | 125,955                        | 1,946                        | 124,009
Income tax expense                | 17,339                         | 440                          | 16,899
           Net income             | $108,616                       | $1,506                       | $107,110 |


| _id | d1b364006 |
| title |  |
| text | Base Salary

Base salary for our named executive officers is the fixed component of our executive compensation program. We use base salary to compensate our named executive officers for services rendered during the year and to recognize the experience, skills, knowledge and responsibilities required of each named executive officer. We apply no specific formula to determine adjustments to base salary. Adjustments to base salary have been made to reflect our economic condition and future expected performance. We continue

and future expected performance. We continue to provide base salaries that are conservative relative to competitive market pay levels.

In April 2018, our compensation committee reviewed the base salaries of Mses. Friar, Henry, Reses and Whiteley, taking into consideration a competitive market analysis performed by Compensia, the recommendations of our CEO and our then-current People Lead, the desire to retain our highly qualified executive team and the other factors described above. Following this review, our compensation committee approved an increase in the annual base salary levels for Mses. Friar, Henry, Reses and Whiteley to

for Mses. Friar, Henry, Reses and Whiteley to $400,000, in each case effective as of April 1, 2018, in order to improve competitive alignment with our peers. In addition, our compensation committee determined that it was appropriate to leave our CEO’s 2018 base salary level at $2.75 per year, at the request of our CEO and with compensation committee approval.

The annualized base salaries of our named executive officers as of December 31, 2018 compared to December 31, 2017 were:
(1) Ms. Friar resigned from her position as Chief Financial Officer, effective as of November 16, 2018, at which time her annual base salary was $400,000.
(2) Ms. Whiteley was appointed to General Counsel and Corporate Secretary effective March 18, 2018, and her salary was adjusted to reflect her promotion to this role.

(3) The base salaries of Messrs. Daswani and Murphy were not adjusted in conjunction with their service as interim co-CFOs. Salary adjustments for Messrs. Daswani and Murphy made in April 2018, prior to their becoming named executive officers, were made as part of the company-wide compensation review program. Their salary adjustments were recommended by their direct manager and approved by the then-current People Lead. Messrs. Daswani and Murphy’s annualized base salaries at the time of their appointment

base salaries at the time of their appointment as interim co-CFOs were $300,000 and $295,000, respectively.

 |
| table | Named Executive Officer | Annual Base Salary as of December 31, 2017 | Annual Base Salary as of December 31, 2018 | Percentage Increase
----------------------- | ------------------------------------------ | ------------------------------------------ | -------------------
Mr. Dorsey              | $2.75                                      | $2.75                                      | 0%
Ms. Friar (1)           | $350,000                                   | $N/A                                       | N/A
Ms. Henry               | $350,000                                   | $400,000                                   | 14%
Ms. Reses               | $350,000                                   | $400,000                                   | 14%
Ms. Whiteley (2)        | $325,000                                   | $400,000                                   | 23%
Mr. Daswani (3)         | $280,000                                   | $300,000                                   | 7%
Mr. Murphy (3)          | $270,000                                   | $295,000                                   | 9% |


| _id | d1b385396 |
| title |  |
| text | BOOKINGS
The following table shows new orders levels for 2019 and the backlog for 2018:

The backlog includes orders for which purchase orders or letters of intent have been accepted, typically for up to one year. Historically, orders have been subject to cancellation or rescheduling by customers. In addition, orders have been subject to price negotiations and changes in specifications as a result of changes in customers’ requirements. Due to possible customer changes in delivery schedules and requirements, and to cancellations of orders, our backlog at any particular date is not necessarily

backlog at any particular date is not necessarily indicative of actual sales for any subsequent period.

For the year in total, our new bookings increased by 24% in 2019 to €1,170 million, excluding the proceeds from the settlements. The book-to-bill, as measured by orders divided by revenue, was 1.0 in 2019. Equipment bookings were led by the foundry segment, followed by logic and memory. Bookings strengthened in the course of the year, excluding the settlement gains, from €235 million in the first quarter to €270 million in the second quarter, €292 million in the third quarter and finished at a new record

in the third quarter and finished at a new record high of €373 million in the fourth quarter. We also finished the year with a record high order backlog of €351 million, an increase of 16% compared to the end of 2018.

 |
| table | |         | Year ended December 31, |
---------------------------------------------------- | ------- | ----------------------- | --------
(EUR million)                                        | 2018    | 2019                    | % Change
Backlog at the beginning of the year                 | 176.3   | 301.5                   | 71%
New orders                                           | 942.1   | 1,328.9                 | 41%
Revenue                                              | (818.1) | (1,283.9)               | 57%
FX-effect                                            | 6.3     | 4.7                     |
Adjustment IFRS 15                                   | (5.1)   | –                       |
Backlog as per reporting date                        | 301.5   | 351.2                   | 16%
Book-to-bill ratio (new orders divided by net sales) | 1.2     | 1.0                     | |


| _id | d1b3b0334 |
| title |  |
| text | Relative importance of the spend on pay
The following table shows the Group’s actual spend on pay for all employees compared to distributions to shareholders. The average number of employees has also been included for context. Revenue and Operating profit have also been disclosed as these are two key measures of Group performance.
1 2018 comparatives have been restated to reflect the adoption of IFRS 9, IFRS 15 and IFRS 16, and to include share buybacks.

 |
| table | | 2019  | Restated 2018 |
------------------------------------------------------------------------------------------------------------- | ----- | ------------- | --------
                                                                                | £m    | £m            | % change
Employee costs (see note 7 to the consolidated financial statements)                                          | 56.0  | 54.5          | 3%
Average number of employees (see note 6 to the consolidated financial statements)                             | 802   | 822           | 3%
Revenue (see Consolidated income statement)                                                                   | 355.1 | 330.1         | 8%
Operating profit                                                                                | 243.7 | 221.3         | 10%
Dividends paid and proposed and share buybacks (see notes 26 and 27 to the consolidated financial statements) | 156.4 | 152.8¹        | 2% |


| _id | d1b39fa5c |
| title |  |
| text | Revenue and costs are generally directly attributed to our segments. However, due to the integrated structure of our business, certain revenue recognized and costs incurred by one segment may benefit other segments. Revenue from certain contracts is allocated among the segments based on the relative value of the underlying products and services, which can include allocation based on actual prices charged, prices when sold separately, or estimated costs plus a profit margin. Cost of revenue is allocated in

a profit margin. Cost of revenue is allocated in certain cases based on a relative revenue methodology. Operating expenses that are allocated primarily include those relating to marketing of products and services from which multiple segments benefit and are generally allocated based on relative gross margin.

In addition, certain costs incurred at a corporate level that are identifiable and that benefit our segments are allocated to them. These allocated costs include costs of: legal, including settlements and fines; information technology; human resources; finance; excise taxes; field selling; shared facilities services; and customer service and support. Each allocation is measured differently based on the specific facts and circumstances of the costs being allocated. Certain corporate-level activity is not

Certain corporate-level activity is not allocated to our segments, including restructuring expenses.

Segment revenue and operating income were as follows during the periods presented:
Corporate and Other operating loss comprised restructuring expenses.

 |
| table | (In millions)                       |            |             |
----------------------------------- | ---------- | ----------- | ----------
Year Ended June 30,                 | 2019       | 2018        | 2017
Revenue                             |            |             |
Productivity and Business Processes | $ 41,160   | $ 35,865    | $ 29,870
Intelligent Cloud                   | 38,985     | 32,219      | 27,407
More Personal Computing             | 45,698     | 42,276      | 39,294
Total                               | $  125,843 | $   110,360 | $   96,571
Operating Income (Loss)             |            |             |
Productivity and Business Processes | $ 16,219   | $ 12,924    | $ 11,389
Intelligent Cloud                   | 13,920     | 11,524      | 9,127
More Personal Computing             | 12,820     | 10,610      | 8,815
Corporate and Other                 | 0          | 0           | (306)
Total                               | $ 42,959   | $ 35,058    | $ 29,025 |


| _id | d1b397758 |
| title |  |
| text | Liquidity and Capital Resources
We fund our operations primarily through cash generated from operations. As of December 31, 2019, we had cash and cash equivalents totalling $36.6 million, marketable securities of $434.8 million and accounts receivable of $97.9 million.

We believe our existing cash balances and anticipated cash flow from future operations will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months and the foreseeable future. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending on research and development efforts and other business initiatives, purchases of capital equipment to

initiatives, purchases of capital equipment to support our growth, the expansion of sales and marketing activities, any expansion of our business through acquisitions of or investments in complementary products, technologies or businesses, the use of working capital to purchase additional inventory, the timing of new product introductions, market acceptance of our products and overall economic conditions. To the extent that current and anticipated future sources of liquidity are insufficient to fund our

sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. In the event additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. We believe our existing cash balances and anticipated cash flow from future operations will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months and the foreseeable

at least the next 12 months and the foreseeable future. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending on research and development efforts and other business initiatives, purchases of capital equipment to support our growth, the expansion of sales and marketing activities, any expansion of our business through acquisitions of or investments in complementary products,

of or investments in complementary products, technologies or businesses, the use of working capital to purchase additional inventory, the timing of new product introductions, market acceptance of our products and overall economic conditions. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. In the event additional financing is required from outside

additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. We believe our existing cash balances and anticipated cash flow from future operations will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months and the foreseeable future. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing

including our rate of revenue growth, the timing and extent of spending on research and development efforts and other business initiatives, purchases of capital equipment to support our growth, the expansion of sales and marketing activities, any expansion of our business through acquisitions of or investments in complementary products, technologies or businesses, the use of working capital to purchase additional inventory, the timing of new product introductions, market acceptance of our products and

market acceptance of our products and overall economic conditions. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. In the event additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.

On April 30, 2018, our Board of Directors authorized a stock repurchase program for the repurchase of up to $60.0 million of our common stock, of which $39.7 million was used to repurchase shares in 2018 prior to the program’s expiration on December 31, 2018.

 |
| table | |           | Year Ended December 31, |
--------------------------------------------------- | --------- | ----------------------- | ---------
                                                    | 2019      | 2018                    | 2017
                                                    |           | (in thousands)          |
Cash and cash equivalents                           | $36,617   | $60,444                 | $67,495
Marketable securities                               | 434,761   | 339,424                 | 297,115
Working capital                                     | 368,912   | 370,445                 | 361,621
Net cash provided by operating activities           | 72,819    | 83,085                  | 61,893
Net cash used in investing activities               | (103,579) | (56,237)                | (207,907)
Net cash provided by (used in) financing activities | 6,933     | (33,899)                | 5,477 |


| _id | d1a72c19e |
| title |  |
| text | Cash Flow
Our cash flows from operating, investing and financing activities, as reflected in the Consolidated Statement of Cash Flows on page 71 are summarized in the table below. These amounts include the cash flows associated with the Global Financing business.

Net cash provided by operating activities decreased $477 million in 2019 driven by the following key factors: • An increase in cash income tax payments of $346 million; • An increase in interest payments on debt of approximately $300 million, driven by incremental debt used to fund the acquisition of Red Hat; and • Performance-related declines within net income, including lower operating cash flows due to businesses divested in 2019; partially offset by • An increase of $836 million in cash provided by

• An increase of $836 million in cash provided by financing receivables.

Net cash used in investing activities increased $22,023 million driven by: • An increase in net cash used for acquisitions of $32,491 million, primarily driven by the acquisition of Red Hat; offset by • An increase of $7,223 million in cash provided by net non-operating finance receivables primarily driven by the wind down of OEM IT commercial financing operations; • A decrease in cash used for net capital expenditures of $1,346 million; and • An increase in cash provided by divestitures of $1,076 million.

Financing activities were a net source of cash of $9,042 million in 2019 compared to a net use of cash of $10,469 million in 2018. The year-to-year increase in cash flow of $19,512 million was driven by: • An increase in net cash sourced from debt transactions of $16,584 million primarily driven by net issuances to fund the Red Hat acquisition; and • A decrease in cash used for gross common share repurchases of $3,082 million.

 |
| table | ($ in millions)                                                               |          |
----------------------------------------------------------------------------- | -------- | --------
For the year ended December 31:                                               | 2019     | 2018
Net cash provided by/(used in) continuing operations                          |          |
Operating activities                                                          | $14,770  | $15,247
Investing activities                                                          | (26,936) | (4,913)
Financing activities                                                          | 9,042    | (10,469)
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (167)    | (495)
Net change in cash, cash equivalents and restricted cash                      | $(3,290) | $(630) |


| _id | d1b30240a |
| title |  |
| text | The defined benefit pension plan utilizes various investment securities. Generally, investment securities are exposed to various risks, such as interest rate risks, credit risk, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur and that such changes could materially affect the amounts reported.

The following table presents the Company’s target for the allocation of invested defined benefit pension plan assets at June 30, 2019 and June 30, 2018:

 |
| table | | As of June 30 |
------------ | ------------- | ----
             | 2019          | 2018
Fixed income | 40%           | 40%
Equities     | 55%           | 55%
Other        | 5%            | 5%
Total        | 100%          | 100% |


| _id | d1a738034 |
| title |  |
| text | NOTE 15. ACCRUED EXPENSES AND OTHER PAYABLES
Accrued expenses and other payables consist of the following:

Personnel-related items comprise accrued management bonuses, accrued vacation days, accrued wage tax, social securities and pension premiums. Deferred revenue consists of the revenue relating to the undelivered elements of the arrangements, see Note 21 for more information. This part of revenue is deferred at their relative selling prices until delivery of these elements. Other includes accruals for VAT, other taxes and invoices to be received for goods and services.

 |
| table | | December 31, |
----------------------------------------- | ------------ | -------
                                          | 2018         | 2019
Personnel-related items                   | 32,636       | 45,318
Deferred revenue                          | 28,255       | 32,146
Financing related items                   | –            | 3,912
Current portion of lease liabilities      | –            | 7,002
Advanced payments from customers          | 25,382       | 47,601
Supplier related items                    | 1,828        | 2,175
Marketing related items                   | 1,049        | 1,365
R&D projects                              | 1,209        | 1,109
Other                                     | 8,634        | 9,215
Total accrued expenses and other payables | 98,993       | 149,843 |


| _id | d1b35d1ac |
| title |  |
| text | Note 3: Debt
A summary of debt is as follows (amounts in thousands):
(1) Amount shown is net of discount, bank issuance costs and other indirect issuance costs of $13.3 million as of March 31, 2018.
(2) Amount shown is net of discount, bank issuance costs and other indirect issuance costs of $8.7 million as of March 31, 2019.
(3) Amount shown is net of discount of $2.1 million as of March 31, 2019.

(4) Amounts shown are net of discounts of $0.6 million and $0.5 million as of March 31, 2019 and 2018, respectively.

 |
| table | | March 31, |
------------------------------ | --------- | --------
                               | 2019      | 2018
Term Loan Credit Agreement (1) | $—        | $318,782
TOKIN Term Loan Facility (2)   | 276,808   | —
Customer Advances (3)          | 11,270    | —
Other, net (4)                 | 6,393     | 5,841
Total debt                     | 294,471   | 324,623
Current maturities             | (28,430)  | (20,540)
Total long-term debt           | $266,041  | $304,083 |