| _id | d1b32fb4e |
| title |  |
| text | The $252.5 million of valuation allowance as of September 27, 2019 relates primarily to federal and state NOLs, tax credit carryforwards and a partial valuation allowance on tax credits in Canada of $19.0 million whose recovery is not considered more likely than not. The$243.1 million of valuation allowance as of September 28, 2018 related primarily to federal and state NOLs, tax credit carryforwards and a partial valuation allowance on tax credits in Canada of$13.6 million whose recovery is not considered

of$13.6 million whose recovery is not considered more likely than not. The change during the fiscal year endedSeptember 27, 2019 of $9.4 million primarily relates to the reduction of our NOLs due to section 382 limitations, the changes in our temporary differences, and the lower U.S federal tax rate.

Our effective tax rates differ from the federal and statutory rate as follows:
For fiscal years 2019, 2018 and 2017, the effective tax rates on $423.2 million, $155.2 million and $49.5 million, respectively, of pre-tax loss from continuing operations were 9.3%, 13.8% and (203.8)%, respectively.

For fiscal year 2019, the effective tax rate was primarily impacted by a change in our NOL carryforward due to an adjustment in our Section 382 limitation from a prior period acquisition and the immediate recognition of the current and deferred income tax effects totaling $39.8 million from an intra-entity transfer of a license for intellectual property to a higher taxed jurisdiction that received a tax basis step-up.

For fiscal year 2018, the effective tax rate was primarily impacted by the Tax Cuts and Jobs Act (the "Tax Act"). The effective income tax rates for fiscal years 2019, 2018 and 2017 were also impacted by a lower income tax rate in many foreign jurisdictions in which our foreign subsidiaries operate, changes in valuation allowance, research and development tax credits, and a fair market value adjustment of warrant liabilities.

All earnings of foreign subsidiaries, other than our M/A-COM Technology Solutions International Limited Cayman Islands subsidiary ("Cayman Islands subsidiary"), are considered indefinitely reinvested for the periods presented. During fiscal year 2019 we changed our position for our Cayman Islands subsidiary to no longer have its earnings permanently reinvested.

Although a foreign subsidiary would typically have to accrue for foreign withholding tax liabilities associated with undistributed earnings, Cayman Islands has no withholding tax under domestic law, therefore, we did not accrue for foreign withholding tax.

During fiscal year 2019 we finalized our calculation of the one-time deemed repatriation of gross foreign earnings and profits, totaling $156.8 million, which resulted in approximately $86.7 million in U.S. taxable income for the year ended September 28, 2018 with Grand Cayman and Ireland accounting for$ 59.7 million and $25.6 million, respectively. Due to the fact that we are in a full U.S. valuation allowance, this one-time deemed repatriation had no impact on our tax expense for fiscal year 2018.

Our fiscal year 2019 tax provision incorporated changes required by the Tax Act. Some of these changes include a new limitation on the deductible interest expense, inclusion of Global Intangible Low Taxed Income earned by controlled foreign corporations, computation of the new base erosion anti-abuse minimum tax, repealing the performance-based compensation exception to section 162(m) and revising the definition of a covered employee.

 |
| table | |        | Fiscal Years |
---------------------------------- | ------ | ------------ | --------
                                   | 2019   | 2018         | 2017
Federal statutory rate             | 21.0%  | 24.5%        | 35.0%
Foreign rate differential          | 1.6    | 5.1          | 31.9
State taxes net of federal benefit | 0.9    | 0.8          | 0.2
Warrant liabilities                | —      | 4.4          | (1.8)
Change in valuation allowance      | (2.4)  | 34.0         | (270.0)
Research and development credits   | 1.4    | 9.0          | 12.8
Provision to return adjustments    | 0.3    | 8.3          | (4.0)
Section 382 adjustment             | (19.3) | —            | —
Nondeductible compensation expense | (0.6)  | 1.4          | (4.1)
Global Intangible Low Taxed Income | (2.9)  | —            | —
Nondeductible legal fees           | —      | 0.9          | (3.9)
2017 tax reform                    | —      | (73.7)       | —
Intra-entity license transfer      | 9.4    | —            | —
Other permanent differences        | (0.1)  | (0.9)        | 0.1
Effective income tax rate          | 9.3%   | 13.8%        | (203.8)% |


| _id | d1b3a7932 |
| title |  |
| text | Cash Flows
The following table summarizes our cash flows for the periods indicated:
Operating Activities

Our primary source of cash from operating activities has been cash collections from our customers. We expect cash inflows from operating activities to be primarily affected by increases in total bookings. Our primary uses of cash from operating activities have been for domain registration costs paid to registries, software licensing fees related to third-party email and productivity solutions, personnel costs, discretionary marketing and advertising costs, technology and development costs and interest

technology and development costs and interest payments. We expect cash outflows from operating activities to be affected by the timing of payments we make to registries and increases in personnel and other operating costs as we continue to grow our business and increase our international presence.

Net cash provided by operating activities increased $163.6 million from $559.8 million in 2018 to $723.4 million in 2019, primarily driven by our bookings growth as well as increased interest income.
Investing Activities

Investing Activities
Our investing activities primarily consist of strategic acquisitions and purchases of property and equipment to support the overall growth of our business and our increased international presence. We expect our investing cash flows to be affected by the timing of payments we make for capital expenditures and the strategic acquisition or other growth opportunities we decide to pursue.

Net cash used in investing activities decreased $119.5 million from $254.8 million in 2018 to $135.3 million in 2019, primarily due to a $106.9 million decrease in business acquisitions.
Financing Activities
Our financing activities primarily consist of long-term debt borrowings, the repayment of principal on long-term debt, stock option exercises and share repurchases.

Net cash from financing activities decreased $503.9 million from $47.0 million provided in 2018 to $456.9 million used in 2019, primarily resulting from $458.6 million of share repurchases in 2019, a $44.4 million increase in acquisition contingent consideration payments and $13.2 million of financing-related costs paid in 2019.

 |
| table | | Year Ended December 31, |         |
------------------------------------------------------------ | ----------------------- | ------- | ---------
                                                             | 2019                    | 2018    | 2017
Net cash provided by operating activities                    | $723.4                  | $559.8  | $475.6
Net cash used in investing activities                        | (135.3)                 | (254.8) | (1,570.1)
Net cash provided by (used in) financing activities          | (456.9)                 | 47.0    | 1,107.5
Effect of exchange rate changes on cash and cash equivalents | (0.8)                   | (2.3)   | 3.6
Net increase in cash and cash equivalents                    | $130.4                  | $349.7  | $16.6 |


| _id | d1b3907e6 |
| title |  |
| text | The following table provides a reconciliation from U.S. GAAP Net income to non-GAAP Adjusted net income (amounts in thousands):
(1) Fiscal years ending March 31, 2018 and 2017 adjusted due to the adoption of ASC 606.

(2) $0.9 million in costs incurred during fiscal year 2018 related to the relocation of the Company's tantalum powder facility equipment from Carson City, Nevada to its existing Matamoros, Mexico plant were reclassified from “Plant start-up costs” to “Restructuring charges” during fiscal year 2019.

 |
| table | |          | Fiscal Years Ended March 31, |
----------------------------------------------------------- | -------- | ---------------------------- | --------
                                                            | 2019     | 2018                         | 2017
Net income (GAAP) (1)                                       | $206,587 | $254,127                     | $47,157
Non-GAAP adjustments:                                       |          |                              |
Equity (income) loss from equity method investments         | 3,304    | (76,192)                     | (41,643)
Acquisition (gain) loss                                     | —        | (130,880)                    | —
Change in value of TOKIN options                            | —        | —                            | (10,700)
(Gain) loss on write down and disposal of long-lived assets | 1,660    | (992)                        | 10,671
Restructuring charges (2)                                   | 8,779    | 14,843                       | 5,404
R&D grant reimbursements and grant income                   | (4,559)  | —                            | —
ERP integration costs/IT transition costs                   | 8,813    | 80                           | 7,045
Stock-based compensation                                    | 12,866   | 7,657                        | 4,720
Legal expenses/fines related to antitrust class actions     | 11,896   | 16,636                       | 2,640
Net foreign exchange (gain) loss                            | (7,230)  | 13,145                       | (3,758)
TOKIN investment-related expenses                           | —        | —                            | 1,101
Plant start-up costs (2)                                    | (927)    | 929                          | 427
Amortization included in interest expense                   | 1,872    | 2,467                        | 761
Income tax effect of non-GAAP adjustments                   | (50,012) | (30)                         | (741)
Loss on early extinguishment of debt                        | 15,946   | 486                          | —
Adjusted net income (non-GAAP) (1)                          | $208,995 | $102,276                     | $23,084 |


| _id | d1a7290b6 |
| title |  |
| text | Note 8 Property and Equipment, net
The following table details our property and equipment, net.

(1) Upon adoption of ASU 2016-02, $28.3 million of assets that were included in property and equipment, net as of December 31, 2018 are now included in other non-current assets on our Consolidated Balance Sheets as of December 31, 2019. These assets were related to capital leases, primarily for warehouse, office and small manufacturing facilities, IT equipment and automobiles, which are now ROU assets. Refer to Note 4, “Leases,” of the Notes to Consolidated Financial Statements for additional information

Financial Statements for additional information on our ROU assets.

 |
| table | December 31,                              |           |
----------------------------------------- | --------- | ---------
(In millions)                             | 2019      | 2018(1)
Land and improvements                     | $ 50.7    | $ 41.2
Buildings                                 | 747.0     | 728.6
Machinery and equipment                   | 2,453.2   | 2,325.7
Other property and equipment              | 141.3     | 135.6
Construction-in-progress                  | 127.9     | 155.1
Property and equipment, gross             | 3,520.1   | 3,386.2
Accumulated depreciation and amortization | (2,378.2) | (2,350.0)
Property and equipment, net               | $ 1,141.9 | $ 1,036.2 |


| _id | d1b3a2270 |
| title |  |
| text | Note A: Beginning from June 2015, the Company accounts for its investment in FARADAY as an associate given the fact that the Company obtained the ability to exercise significant influence over FARADAY through representation on its Board of Directors.
Note B: WINAICO SOLAR PROJEKT 1 GMBH and WINAICO IMMOBILIEN GMBH are joint ventures to the Company.

Note C: The Company follows international accounting practices in equity accounting for limited partnerships and uses the equity method to account for these investees.

The carrying amount of investments accounted for using the equity method for which there are published price quotations amounted to NT$1,733 million and NT$1,750 million, as of December 31, 2018 and 2019, respectively. The fair value of these investments were NT$1,621 million and NT$2,244 million, as of December 31, 2018 and 2019, respectively.

 |
| table | As of December 31,                          |                    |                                          |                    |
------------------------------------------- | ------------------ | ---------------------------------------- | ------------------ | ----------------------------------------
                                            | 2018               |                                          | 2019               |
Investee companies                          | Amount             | Percentage of ownership or voting rights | Amount             | Percentage of ownership or voting rights
                                            | NT$ (In Thousands) |                                          | NT$ (In Thousands) |
Listed companies                            |                    |                                          |                    |
CLIENTRON CORP.                             | $249,663           | 22.39                                    | $276,515           | 21.90
FARADAY TECHNOLOGY CORP. (FARADAY) (Note A) | 1,483,111          | 13.78                                    | 1,473,028          | 13.78
Unlisted companies                          |                    |                                          |                    |
MTIC HOLDINGS PTE. LTD.                     | 3,026              | 45.44                                    | 18,157             | 45.44
WINAICO IMMOBILIEN GMBH (Note B)            | —                  | 44.78                                    | —                  | 44.78
PURIUMFIL INC.                              | —                  | —                                        | 7,164              | 44.45
UNITECH CAPITAL INC.                        | 568,005            | 42.00                                    | 642,660            | 42.00
TRIKNIGHT CAPITAL CORPORATION               | 1,520,575          | 40.00                                    | 2,281,631          | 40.00
HSUN CHIEH INVESTMENT CO., LTD.             | 1,608,551          | 36.49                                    | 1,686,502          | 36.49
YANN YUAN INVESTMENT CO., LTD.              | 2,032,013          | 30.87                                    | 2,761,821          | 30.87
HSUN CHIEH CAPITAL CORP.                    | 161,319            | 30.00                                    | 122,060            | 30.00
VSENSE CO., LTD.                            | 31,544             | 26.89                                    | 592                | 25.90
UNITED LED CORPORATION HONG KONG LIMITED    | 167,953            | 25.14                                    | 121,973            | 25.14
TRANSLINK CAPITAL PARTNERS I, L.P. (Note C) | 120,440            | 10.38                                    | 172,414            | 10.38
WINAICO SOLAR PROJEKT 1 GMBH (Note B)       | —                  | 50.00                                    | —                  | —
YUNG LI INVESTMENTS, INC.                   | 2,213              | 45.16                                    | —                  | —
Total                                       | $7,948,413         |                                          | $9,564,517         | |


| _id | d1b348478 |
| title |  |
| text | Item 6. SELECTED FINANCIAL DATA

You should read the following selected consolidated financial data for the five-year period ended March 31, 2019 in conjunction with our consolidated financial statements and notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in Items 7 and 8 of this Form 10-K. Our consolidated statements of income data for each of the years in the three-year period ended March 31, 2019, and the balance sheet data as of March 31, 2019 and 2018, are derived

data as of March 31, 2019 and 2018, are derived from our audited consolidated financial statements, included in Item 8 of this Form 10-K. The statement of income data for the years ended March 31, 2016 and 2015 and balance sheet data as of March 31, 2017, 2016 and 2015 have been derived from our audited consolidated financial statements not included herein (in the tables below all amounts are in millions, except per share data).

(1) Refer to Note 2 to our consolidated financial statements for an explanation of our material business combinations during fiscal 2019 and fiscal 2017.
(2) Refer to Note 4 to our consolidated financial statements for a discussion of the special charges and other, net.
(3) Refer to Note 12 Debt and Credit Facility for further discussion.

 |
| table | |           |           | Year ended March 31, |           |
----------------------------------------------------------------------------- | --------- | --------- | -------------------- | --------- | ---------
                                                                              | 2019 (1)  | 2018      | 2017 (1)             | 2016      | 2015
Consolidated Statements of Income data:                                       |           |           |                      |           |
Net sales                                                                     | $5,349.5  | $3,980.8  | $3,407.8             | $2,173.3  | $2,147.0
Special charges and other, net (2)                                            | $33.7     | $17.5     | $98.6                | $4.0      | $2.8
Loss on settlement of debt (3)                                                | $(12.6)   | $(16.0)   | $(43.9)              | $—        | $(50.6)
Net income from continuing operations                                         | $355.9    | $255.4    | $170.6               | $323.9    | $365.3
Basic net income per common share from continuing operations                  | $1.51     | $1.10     | $0.79                | $1.59     | $1.84
Diluted net income per common share from continuing operations                | $1.42     | $1.03     | $0.73                | $1.49     | $1.65
Dividends declared per common share                                           | $1.457    | $1.449    | $1.441               | $1.433    | $1.425
Consolidated Balance Sheets data:                                             |           |           |                      |           |
Total assets                                                                  | $18,350.0 | $8,257.2  | $7,686.9             | $5,537.9  | $4,780.7
Net long-term debt and capital lease obligations, less current maturities (3) | $8,956.0  | $1,769.1  | $2,912.1             | $2,465.8  | $1,840.0
Microchip Technology stockholders' equity                                     | $ 5,287.5 | $ 3,279.8 | $3,270.7             | $ 2,150.9 | $ 2,044.7 |


| _id | d1b3931c6 |
| title |  |
| text | Results of Continuing Operations
The following table sets forth certain operational data as a percentage of net sales for the fiscal years indicated:

 |
| table | |        | Year Ended March 31, |
------------------------------------------ | ------ | -------------------- | ------
                                           | 2019   | 2018                 | 2017
Net sales                                  | 100.0% | 100.0%               | 100.0%
Cost of sales                              | 45.2   | 39.2                 | 48.4
Gross profit                               | 54.8   | 60.8                 | 51.6
Research and development                   | 15.4   | 13.3                 | 16.0
Selling, general and administrative        | 12.8   | 11.4                 | 14.7
Amortization of acquired intangible assets | 12.6   | 12.2                 | 9.9
Special charges and other, net             | 0.6    | 0.4                  | 2.9
Operating income                           | 13.4%  | 23.5%                | 8.1% |


| _id | d1b318516 |
| title |  |
| text | Net Sales
The following table presents our net sales and the percentage of total net sales by segment:

 |
| table | |          | Fiscal          |          |
------------------------ | -------- | --------------- | -------- | -----
                         | 2019     |                 | 2018     |
                         |          | ($ in millions) |          |
Transportation Solutions | $  7,821 | 58 %            | $ 8,290  | 59 %
Industrial Solutions     | 3,954    | 30              | 3,856    | 28
Communications Solutions | 1,673    | 12              | 1,842    | 13
Total                    | $ 13,448 | 100 %           | $ 13,988 | 100 % |


| _id | d1a73ee34 |
| title |  |
| text | AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular amounts in millions, unless otherwise disclosed)
2018 Transactions
During the year ended December 31, 2019, the allocation of the final purchase price for the acquisition of Idea Cellular Infrastructure Services Limited was finalized with no material post-closing adjustments. During the year ended December 31, 2019, there were no material post-closing adjustments that impacted other 2018 acquisitions.

Pro Forma Consolidated Results (Unaudited)

The following table presents the unaudited pro forma financial results as if the 2019 acquisitions had occurred on January 1, 2018 and the 2018 acquisitions had occurred on January 1, 2017. The pro forma results do not include any anticipated cost synergies, costs or other integration impacts. Accordingly, such pro forma amounts are not necessarily indicative of the results that actually would have occurred had the transactions been completed on the dates indicated, nor are they indicative of the future

indicated, nor are they indicative of the future operating results of the Company.

 |
| table | | Year Ended December 31, |
----------------------------------------------------------------------------------- | ----------------------- | --------
                                                                                | 2019                    | 2018
Pro forma revenues                                                                  | $7,904.2                | $7,936.0
Pro forma net income attributable to American Tower Corporation common stockholders | $1,844.9                | $1,122.6
Pro forma net income per common share amounts:                                      |                         |
Basic net income attributable to American Tower Corporation common stockholders     | $4.17                   | $2.55
Diluted net income attributable to American Tower Corporation common stockholders   | $4.14                   | $2.53 |


| _id | d1b32f57c |
| title |  |
| text | GreenSky, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (United States Dollars in thousands, except per share data, unless otherwise stated)
The following table reflects the impact of consolidation of GS Holdings into the Consolidated Statements of Operations for the years indicated.

 |
| table | | Year Ended December 31, |
--------------------------------- | ----------------------- | --------
                                  | 2019                    | 2018
Total revenue                     | $529,646                | $414,673
Total costs and expenses          | 408,693                 | 261,883
Operating profit                  | 120,953                 | 152,790
Total other income (expense), net | (22,297)                | (19,276)
Net income                        | $98,656                 | $133,514 |


| _id | d1b31cc4c |
| title |  |
| text | ADVANCED ENERGY INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (in thousands, except per share amounts)
The following table summarizes the estimated preliminary fair values of the assets acquired and liabilities assumed from the acquisition in 2019:

 |
| table | | Preliminary: September 10, 2019 | Measurement Period Adjustments | Preliminary: December 31, 2019
--------------------------------------- | ------------------------------- | ------------------------------ | ------------------------------
Accounts and other receivable, net      | $  128,221                      | $  -                           | $  128,221
Inventories                             | 140,678                         | (900)                          | 139,778
Property and equipment                  | 65,016                          | (1,984)                        | 63,032
Operating lease right-of-use assets     | 60,217                          | (144)                          | 60,073
Goodwill                                | 143,262                         | (30,222)                       | 113,040
Intangible assets                       | 125,000                         | (1,000)                        | 124,000
Deferred income tax assets              | 14,767                          | (14,767)                       | —
Other assets                            | 61,511                          | 2,507                          | 64,018
Total assets acquired                   | 738,672                         | (46,510)                       | 692,162
Accounts payable                        | 144,652                         | 50                             | 144,702
Operating lease liability               | 59,634                          | 477                            | 60,111
Pension liability                       | 48,494                          | 192                            | 48,686
Deferred income tax liabilities         | 37,218                          | (31,372)                       | 5,846
Other liabilities                       | 80,876                          | (9,312)                        | 71,564
Total liabilities assumed               | 370,874                         | (39,965)                       | 330,909
Total fair value of net assets acquired | $367,798                        | $  (6,545)                     | $361,253 |


| _id | d1b3254a0 |
| title |  |
| text | Non-Operating Income, net: Non-operating income, net consists primarily of interest income, net foreign currency exchange losses, the noncontrolling interests in the net profits of our majority-owned subsidiaries (primarily Oracle Financial Services Software Limited and Oracle Corporation Japan) and net other income, including net recognized gains and losses related to all of our investments, net unrealized gains and losses related to the small portion of our investment portfolio related to our deferred

our investment portfolio related to our deferred compensation plan, net unrealized gains and losses related to certain equity securities and non-service net periodic pension income (losses).

On a constant currency basis, our non-operating income, net decreased in fiscal 2019 compared to fiscal 2018 primarily due to decreases in other income, net in fiscal 2019 , which was primarily attributable to realized gains on the sale of certa in marketable securities during fiscal 2018 , and lower interest income in fiscal 2019 primarily due to lower average cash, cash equivalent and marketable securities balances during fiscal 2019 .

 |
| table | |        |        | Year Ended May 31, |
---------------------------------- | ------ | ------ | ------------------ | ------
                                   |        |        | Percent Change     |
(Dollars in millions)              | 2019   | Actual | Constant           | 2018
Interest income                    | $1,092 | -9%    | -9%                | $1,203
Foreign currency losses, net       | (111)  | 50%    | 62%                | (74)
Noncontrolling interests in income | (152)  | 12%    | 12%                | (135)
Other income, net                  | (14)   | -107%  | -42%               | 191
Total non-operating income, net    | $815   | -31%   | -31%               | $1,185 |


| _id | d1b30928c |
| title |  |
| text | Unrecognized Tax Benefits

Current accounting guidance contains a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon

is more than 50% likely of being realized upon ultimate settlement.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits during fiscal 2019, 2018, and 2017 is as follows:

Included in the unrecognized tax benefits at fiscal 2019 and 2018 is $38.2 million and $36.7 million, respectively, that if recognized, would result in a reduction of our effective tax rate. The amounts differ from the long-term liability recorded of $20.1 million and $16.8 million as of fiscal 2019 and 2018, respectively, due to accrued interest and penalties, as well as unrecognized tax benefits of French and Italian entities that are recorded against deferred tax asset balances without valuation

deferred tax asset balances without valuation allowance.

We believe that events that could occur in the next 12 months and cause a change in unrecognized tax benefits include, but are not limited to, the following: • commencement, continuation or completion of examinations of our tax returns by the U.S. or foreign taxing authorities; and • expiration of statutes of limitation on our tax returns.

The calculation of unrecognized tax benefits involves dealing with uncertainties in the application of complex global tax regulations. Uncertainties include, but are not limited to, the impact of legislative, regulatory and judicial developments, transfer pricing and the application of withholding taxes. We regularly assess our tax positions in light of legislative, bilateral tax treaty, regulatory and judicial developments in the countries in which we do business. We determined that an estimate of the

business. We determined that an estimate of the range of reasonably possible change in the amounts of unrecognized tax benefits within the next 12 months cannot be made.

 |
| table | |                   | Fiscal Year       |
-------------------------------------------------------------------------------- | ----------------- | ----------------- | -----------------
(In thousands)                                                                   | December 29, 2019 | December 30, 2018 | December 31, 2017
Balance, beginning of year                                                       | $103,884          | $105,959          | $82,253
Additions for tax positions related to the current year                          | 2,517             | 2,404             | 2,478
Additions for tax positions from prior years                                     | 1,624             | 451               | 22,151
Reductions for tax positions from prior years/statute of limitations expirations | (416)             | (2,468)           | (1,460)
Foreign exchange (gain) loss                                                     | (668)             | (2,462)           | 537
Balance at the end of the period                                                 | $106,941          | $103,884          | $105,959 |


| _id | d1b365e2e |
| title |  |
| text | Comparison of 2019 and 2018
Revenue

We generate substantially all of our revenue from sales of subscriptions, including domain registrations and renewals, hosting and presence products and business applications. Our subscription terms average one year, but can range from monthly terms to multi-annual terms of up to ten years depending on the product. We generally collect the full amount of subscription fees at the time of sale, while revenue is recognized over the period in which the performance obligations are satisfied, which is generally

obligations are satisfied, which is generally over the contract term. Revenue is presented net of refunds, and we maintain a reserve to provide for refunds granted to customers

Domains revenue primarily consists of revenue from the sale of domain registration subscriptions, domain add-ons and aftermarket domain sales. Domain registrations provide a customer with the exclusive use of a domain during the applicable contract term. After the contract term expires, unless renewed, the customer can no longer access the domain.

Hosting and presence revenue primarily consists of revenue from the sale of subscriptions for our website hosting products, website building products, website security products and online visibility products.
Business applications revenue primarily consists of revenue from the sale of subscriptions for third-party productivity applications, email accounts, email marketing tools and telephony solutions.
The following table presents our revenue for the periods indicated:

The 12.3% increase in total revenue was driven by growth in total customers and ARPU as well as having a full year of revenue from MSH in 2019, partially offset by the impact of movements in foreign currency exchange rates. The increase in customers impacted each of our revenue lines, as the additional customers purchased subscriptions across our product portfolio.

Domains. The 10.8% increase in domains revenue was primarily driven by the increase in domains under management from 77.6 million as of December 31, 2018 to 79.6 million as of December 31, 2019, increased aftermarket domain sales and international growth
Hosting and presence. The 10.7% increase in hosting and presence revenue was primarily driven by increased revenue from our website building and website security products as well as our acquisition of MSH.

Business applications. The 20.8% increase in business applications was primarily driven by increased customer adoption of our email, productivity and telephony solutions.

 |
| table | | Year Ended December 31, |           |           | 2019 to 2018 |          | 2018 to 2017 |
--------------------- | ----------------------- | --------- | --------- | ------------ | -------- | ------------ | --------
                      | 2019                    | 2018      | 2017      | $ change     | % change | $ change     | % change
Domains               | $ 1,351.6               | $ 1,220.3 | $ 1,057.2 | $ 131.3      | 11 %     | $ 163.1      | 15 %
Hosting and presence  | 1,126.5                 | 1,017.6   | 847.9     | 108.9        | 11 %     | 169.7        | 20 %
Business applications | 510.0                   | 422.2     | 326.8     | 87.8         | 21 %     | 95.4         | 29 %
Total revenue         | $ 2,988.1               | $ 2,660.1 | $ 2,231.9 | $ 328.0      | 12 %     | $ 428.2      | 19 % |


| _id | d1b345520 |
| title |  |
| text | GreenSky, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (United States Dollars in thousands, except per share data, unless otherwise stated)
Details of the Company’s deferred tax assets and liabilities are as follows:

As of December 31, 2019, the Company had net operating loss carryforwards (“NOLs”) of $4.7 million, of which approximately $3.9 million have an indefinite life. NOLs of $0.8 million will begin to expire in 2030. As of December 31, 2019, the Company had federal and state tax credit carryforwards of $0.2 million and $0.5 million, respectively, which will begin to expire in 2028 and 2038. The Company believes as of December 31, 2019, it is more likely than not that the results of future operations will

not that the results of future operations will generate sufficient taxable income to realize the NOLs and tax credits and, as such, no valuation allowance was recorded.

 |
| table | | Year Ended December 31, |
------------------------------------------------ | ----------------------- | --------
                                                 | 2019                    | 2018
Deferred tax assets:                             |                         |
Investment in partnership                        | $358,024                | $299,466
Net operating loss carryforwards and tax credits | 5,160                   | 5,634
Other                                            | 1,657                   | 1,879
Total                                            | 364,841                 | 306,979
Valuation allowance                              | —                       | —
Total deferred tax assets                        | 364,841                 | 306,979
Total deferred tax liabilities                   | —                       | —
Deferred tax assets, net                         | $364,841                | $306,979 |


| _id | d1b3b9d80 |
| title |  |
| text | Contractual Obligations
The following table summarizes, as of December 31, 2019, our contractual obligations over the next five years for the property lease entered into during the year ended 2018, the VPN arrangement with Avira and the asset purchase from IBM:

 |
| table | |                  | Payments due by Period (In thousands) |
------------------------------- | ---------------- | ------------------------------------- | ------
Contractual Obligations         | Less Than 1 Year | 2-5 Years                             | Total
Operating Lease Obligations:    | $773             | $2,055                                | $2,828
Other Long-Term Liabilities:    |                  |                                       |
Finjan Mobile future commitment | 650              | —                                     | 650
Finjan Blue future commitment   | 2,000            | 2,000                                 | 4,000
Total                           | $3,423           | $4,055                                | $7,478 |


| _id | d1b3ae7be |
| title |  |
| text | Employee Share Ownership Plan

UK employees are eligible to participate in the Employee Share Ownership Plan (ESOP). The aim of the ESOP is to encourage increased shareholding in the Company by all UK employees and so there are no performance conditions. Employees are invited to join the ESOP when an offer is made each year. Individuals save for 12 months during the accumulation period and subscribe for shares at the lower of the price at the beginning and the end of the accumulation period under HMRC rules. The Company provides a

period under HMRC rules. The Company provides a matching share for each share purchased by the individual.

Shares issued under the ESOP have been measured using the Present Economic Value (PEV) valuation methodology. The relevant disclosures in respect of the Employee Share Ownership Plans are set out below.
The accumulation period for the 2019 ESOP ends in September 2020, therefore some figures are projections.

 |
| table | | 2015 Grant  | 2016 Grant  | 2017 Grant  | 2018 Grant  | 2019 Grant
----------------------- | ----------- | ----------- | ----------- | ----------- | -----------
Grant date              | 1st October | 1st October | 1st October | 1st October | 1st October
Exercise price          | 2,797.0p    | 4,477.3p    | 5,496.7p    | 7,240.0p    | 7,835.0p
Number of employees     | 1,038       | 1,040       | 1,229       | 1,294       | 1,318
Shares under scheme     | 34,449      | 22,173      | 22,411      | 16,687      | 16,820
Vesting period          | 3 years     | 3 years     | 3 years     | 3 years     | 3 years
Expected volatility     | 21%         | 21%         | 21%         | 19%         | 21%
Risk free interest rate | 0.4%        | 0.1%        | 0.4%        | 0.8%        | 0.5%
Expected dividend yield | 2.5%        | 2.5%        | 2.3%        | 2.0%        | 1.8%
Fair value              | 2,931.3p    | 4,696.7p    | 5,799.0p    | 7,623.7p    | 8,305.1p |


| _id | d1b2f9bf2 |
| title |  |
| text | NOTE 3 - SHORT TERM INVESTMENTS
The Company's short term investments are classified as below with maturities of twelve months or less, unrealized gains and losses were immaterial for the periods presented:

 |
| table | | December 31    |
------------ | -------------- | -------
             | 2019           | 2018
             | (in thousands) |
Government   | $1,012         | $—
Asset Backed | 4,854          | 1,786
Industrial   | 5,034          | 2,381
Financial    | 6,879          | 7,136
             | $17,779        | $11,303 |


| _id | d1b3172c4 |
| title |  |
| text | Selling, General and Administrative Expense
NM—Not meaningful
Total selling, general and administrative (SG&A) expense increased 6.4 percent in 2019 versus 2018, driven primarily by the following factors: • Higher spending (5 points) driven by Red Hat spending (5 points); and • Higher acquisition-related charges and amortization of acquired intangible assets associated with the Red Hat acquisition (3 points); partially offset by • The effects of currency (2 points).

Operating (non-GAAP) expense increased 3.4 percent year to year primarily driven by the same factors excluding the acquisition-related charges and amortization of acquired intangible assets associated with the Red Hat transaction.

 |
| table | ($ in millions)                                                  |         |         |
---------------------------------------------------------------- | ------- | ------- | -------------------------
For the year ended December 31:                                  | 2019    | 2018    | Yr.-to-Yr. Percent Change
Selling, general and administrative expense                      |         |         |
Selling, general and administrative—other                        | $17,099 | $16,438 | 4.0%
Advertising and promotional expense                              | 1,647   | 1,466   | 12.3
Workforce rebalancing charges                                    | 555     | 598     | (7.2)
Amortization of acquired intangible assets                       | 762     | 435     | 74.9
Stock-based compensation                                         | 453     | 361     | 25.2
Bad debt expense                                                 | 89      | 67      | 32.5
Total consolidated selling, general and administrative expense   | $20,604 | $19,366 | 6.4%
Non-operating adjustments                                        |         |         |
Amortization of acquired intangible assets                       | (762)   | (435)   | 74.9
Acquisition-related charges                                      | (282)   | (15)    | NM
Operating (non-GAAP) selling, general and administrative expense | $19,560 | $18,915 | 3.4% |


| _id | d1b2eb728 |
| title |  |
| text | Foreign Sales
Revenues in each of the Company’s segments include sales to foreign governments or to companies located in foreign countries. For the years ended April 30, 2019 and 2018, revenues, based on the location of the procurement entity and excluding intersegment sales, were derived from the following countries (in thousands):

 |
| table | | 2019   | 2018
----------- | ------ | -------
Belgium     | $49    | $64
France      | 40     | 154
China       | 359    | 512
Russia      | 2      | 302
Germany     | 36     | 143
Italy       | 159    | 110
South Korea | -      | 314
Singapore   | 215    | 376
Other       | 525    | 469
            | $1,361 | $ 2,444 |


| _id | d1b32e01e |
| title |  |
| text | Results of Operations
The following table sets forth, as a percentage of total revenues, the results from our operations for the periods indicated.

 |
| table | | 2019   | 2018
-------------------------- | ------ | ------
Revenues                   | 100.0% | 100.0%
Cost of revenues           | 10.6   | 11.0
Gross profit               | 89.4   | 89.0
Operating expenses:        |        |
Sales and marketing        | 54.2   | 52.6
Product development        | 6.2    | 8.1
General and administrative | 20.5   | 20.9
Total operating expenses   | 80.9   | 81.6
Income from operations     | 8.5    | 7.4
Other income (loss), net   | (0.5)  | —
Income before income taxes | 8.0    | 7.4
Income tax expense         | 4.3    | 3.2
Net income                 | 3.7%   | 4.2% |


| _id | d1b3bb180 |
| title |  |
| text | Cost of Revenue, Gross Profit and Gross Margin
Cost of revenue
Cost of products revenue is primarily comprised of cost of third-party manufacturing services and cost of inventory for the hardware component of our products. Cost of products revenue also includes warehouse personnel costs, shipping costs, inventory write-downs, certain allocated facilities and information technology infrastructure costs, and expenses associated with logistics and quality control.

Cost of services revenue is primarily comprised of personnel costs for our technical support, training and professional service teams. Cost of services revenue also includes the costs of inventory used to provide hardware replacements to end- customers under PCS contracts and certain allocated facilities and information technology infrastructure costs.
A summary of our cost of revenue is as follows (dollars in thousands):

 |
| table | | Years Ended December 31, |         | Increase (Decrease) |
--------------------- | ------------------------ | ------- | ------------------- | -------
                      | 2019                     | 2018    | Amount              | Percent
Cost of revenue:      |                          |         |                     |
Products              | $29,816                  | $34,066 | $(4,250)            | (12)%
Services              | 19,065                   | 17,830  | 1,235               | 7%
Total cost of revenue | $48,881                  | $51,896 | $(3,015)            | (6)% |


| _id | d1b3bfe6a |
| title |  |
| text | The number of options outstanding and exercisable as at 31 March was as follows:
The weighted average market value per ordinary share for PSP options exercised in 2019 was 445.0p (2018: n/a). The PSP awards outstanding at 31 March 2019 have a weighted average remaining vesting period of 0.8 years (2018: 1.2 years) and a weighted average contractual life of 7.6 years (2018: 8.2 years).

 |
| table | | 2019      | 2018
----------------------------- | --------- | ---------
                              | Number    | Number
Outstanding at 1 April        | 3,104,563 | 2,682,738
Options granted in the year   | 452,695   | 1,188,149
Dividend shares awarded       | 9,749     | –
Options forfeited in the year | (105,213) | (766,324)
Options exercised in the year | (483,316) | –
Outstanding at 31 March       | 2.978,478 | 3,104,563
Exercisable at 31 March       | 721,269   | – |


| _id | d1b33ba66 |
| title |  |
| text | Note 9 – Debt Obligations
Debt obligations as of December 27, 2019 and December 28, 2018 consisted of the following:
Senior Secured Term Loan Credit Facility

On June 22, 2016, the Company refinanced its debt structure by entering into a credit agreement (the “Term Loan Credit Agreement”) with a group of lenders for which Jefferies Finance LLC acts as administrative agent and collateral agent. The Term Loan Credit Agreement provides for a senior secured term loan B facility (the “Term Loan Facility”) in an aggregate amount of $305,000 (the loans outstanding under the Term Loan Facility, the “Term Loans”) maturing on June 22, 2022. Additionally, the Term Loan

on June 22, 2022. Additionally, the Term Loan Facility includes an accordion which permits the Company to request that the lenders extend additional Term Loans in an aggregate principal amount of up to $50,000 (less the aggregate amount of certain indebtedness incurred to finance acquisitions) plus an unlimited amount subject to the Company’s Total Leverage Ratio not exceeding 4.90:1.00 on a pro forma basis. Borrowings were used to repay the Company’s senior secured notes, as well as the prior term loan

secured notes, as well as the prior term loan and revolving credit facility. Remaining funds were used for capital expenditures, permitted acquisitions, working capital and general corporate purposes of the Company.

On December 13, 2017, the Company completed a repricing of the Term Loan Facility to reduce Applicable Rate (as defined in the Term Loan Credit Agreement) from 475 basis points to 400 basis points over the London Inter-bank Offered Rate (“LIBOR”). In connection with the repricing, the Company paid debt financing costs of $761 which were capitalized as deferred financing charges.

On July 6, 2018, the Company made a $47,100 prepayment and is no longer required to make quarterly amortization payments on the Term Loans. On November 16, 2018, the Company completed a repricing of the Term Loan Facility to reduce the Applicable Rate from 400 basis points to 350 basis points over LIBOR. In connection with the repricing, the Company paid debt financing costs of $626 which were capitalized as deferred financing charges. The Company wrote off unamortized deferred financing fees of $1,081 as

unamortized deferred financing fees of $1,081 as a result of this repricing.

The interest charged on the Term Loans, will be equal to a spread plus, at the Company’s option, either the Base Rate (as defined in the Term Loan Credit Agreement) or LIBOR for one, two, three, six or (if consented to by the lenders) twelve-month interest periods chosen by the Company. The interest rate on the Term Loans at December 27, 2019 was 5.2%.

The Term Loan Facility contains customary affirmative covenants, negative covenants (including restrictions, subject to customary exceptions, on incurring debt or liens, paying dividends, repaying payment subordinated and junior lien debt, disposing assets, and making investments and acquisitions), and events of default for a term loan B facility of this type, as more particularly described in the Term Loan Credit Agreement. As of December 27, 2019, the Company was in compliance with all debt covenants

Company was in compliance with all debt covenants under the Term Loan Credit Agreement.

Asset-Based Loan Facility

On June 29, 2018, the Company entered into a credit agreement (the “ABL Credit Agreement”) with a group of lenders for which BMO Harris Bank, N.A. acts as administrative agent. The ABL Credit Agreement provides for an asset-based loan facility (the “ABL”) in the aggregate amount of up to $150,000. Borrowings under the ABL will be used, and are expected to be used, for capital expenditures, permitted acquisitions, working capital and general corporate purposes of the Company. Availability under the ABL will

of the Company. Availability under the ABL will be limited to a borrowing base equal to the lesser of: (i) the aggregate amount of commitments or (ii) the sum of specified percentages of eligible receivables and eligible inventory, minus certain availability reserves. The co-borrowers under the ABL are entitled on one or more occasions, subject to the satisfaction of certain conditions, to request an increase in the commitments under the ABL in an aggregate principal amount of up to $25,000. The ABL

principal amount of up to $25,000. The ABL matures on the earlier of June 29, 2023 and 90 days prior to the maturity date of the Company’s Term Loan Facility.

The interest rate charged on borrowing under the ABL is equal to a spread plus, at the Company’s option, either the Base Rate (as defined in the ABL Credit Agreement) or LIBOR (except for swingline loans) for one, two, three, six or (if consented to by the lenders) twelve-month, interest periods chosen by the Company. The Company will pay certain recurring fees with respect to the ABL, including fees on unused lender commitments.

The ABL Credit Agreement contains customary affirmative covenants, negative covenants and events of default as more particularly described in the ABL Credit Agreement. The Company is required to comply with a minimum consolidated fixed charge coverage ratio of 1:1 if the amount of availability under the ABL falls below $10,000 or 10% of the borrowing base.

The Company incurred transaction costs of $877 which were capitalized as deferred financing fees to be amortized over the term of the ABL. On July 6, 2018, the Company borrowed $47,100 under the ABL and made an equivalent prepayment on its Term Loans. On November 22, 2019, the Company fully paid all borrowings outstanding under the ABL and there was no balance outstanding as of December 27, 2019. The weighted average interest rate on our ABL borrowings was approximately 3.7% during fiscal 2019.

As of December 27, 2019, the Company was in compliance with all debt covenants and the Company had reserved $16,641 of the ABL for the issuance of letters of credit. As of December 27, 2019, funds totaling $133,359 were available for borrowing under the ABL.
Convertible Senior Notes

On November 22, 2019, the Company issued $150,000 aggregate principal amount of 1.875% Convertible Senior Notes (the “Senior Notes”). The Senior Notes were issued pursuant to an indenture, dated as of November 22, 2019 (the “Indenture”), between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee. Approximately $43,225 of the net proceeds were used to repay all outstanding borrowings under the ABL and the Company intends to use the remainder for working capital and general corporate

for working capital and general corporate purposes, which may include future acquisitions.

The Senior Notes bear interest of 1.875% per annum payable semiannually in arrears on June 1 and December 1 of each year, beginning on June 1, 2020. At any time before the close of business on the scheduled trading day immediately before the maturity date, the Senior Notes will be convertible at the option of holders into shares of the Company’s common stock, together with cash in lieu of any fractional share, at an initial conversion price of approximately $44.20 per share. The conversion price is subject

$44.20 per share. The conversion price is subject to adjustments upon the occurrence of certain events. The Senior Notes will mature on December 1, 2024, unless earlier converted or repurchased in accordance with their terms.

The Company may not redeem the Senior Notes at its option prior to maturity. In addition, if the Company undergoes a fundamental change, as described in the Indenture, holders may require the Company to repurchase for cash all or part of their Senior Notes at a repurchase price equal to 100% of the principal amount of the Senior Notes to be repurchased, plus accrued and unpaid interest up to, but excluding, the required repurchase date.

The Company incurred transaction costs of approximately $5,082 which were capitalized as deferred financing fees to be amortized over the term of the Senior Notes.
Convertible Unsecured Note

On February 25, 2019, the Company issued a $4,000 convertible unsecured note (the “Unsecured Note”), maturing on June 29, 2023, to Bassian Farms, Inc. (the “Holder”) as partial consideration in the Bassian acquisition. The interest rate charged on the Unsecured Note is 4.5% per annum and increases to 5.0% after the two-year anniversary of the closing date. The Company may, in certain instances beginning eighteen months after issuance of the Unsecured Note, redeem the Unsecured Note in whole or in part for

redeem the Unsecured Note in whole or in part for cash or convert the Unsecured Note into shares of the Company’s common stock at the conversion price of $43.93 per share. After the two-year anniversary of the closing date, the Holder may convert the Unsecured Note into shares of the Company’s common stock at the conversion price. Upon a change of control event, the Holder may convert the Unsecured Note into shares of the Company’s common stock at the conversion price or redeem the Unsecured Note for cash.

 |
| table | | December 27, 2019  | December 28, 2018
----------------------------------------------------- | ------------------ | -----------------
Senior secured term loan                              | $238,129           | $239,745
Convertible senior notes                              | 150,000            | —
Convertible unsecured note                            | 4,000              | —
Finance lease and other financing obligations         | 3,905              | 193
Asset-based loan facility                             | —                  | 44,185
Deferred finance fees and original issue discount     | (9,207)            | (5,893)
Total debt obligations                                | 386,827            | 278,230
Less: current installments                            | (721)              | (61)
Total debt obligations excluding current installments | $386,106           | $278,169 |


| _id | d1b2f91d4 |
| title |  |
| text | Acquisition of AFP
On August 1, 2018, the Company acquired AFP, Inc., a privately held fabricator of foam, corrugated, molded pulp and wood packaging solutions, to join its Product Care division. This acquisition expands our protective packaging offerings in the electronic, transportation and industrial markets with custom engineered applications. We acquired 100% of AFP shares for an estimated consideration of $74.1 million, excluding $3.3 million of cash acquired.

The following table summarizes the consideration transferred to acquire AFP and the final allocation of the purchase price among the assets acquired and liabilities assumed.

 |
| table | | Preliminary          | Measurement |
----------------------------------------- | -------------------- | ----------- | ------------------------
                                          | Allocation           | Period      | Final Allocation
(In millions)                             | As of August 1, 2018 | Adjustments | As of September 30, 2019
Total consideration transferred           | $ 70.8               | $ 3.3       | $ 74.1
Assets:                                   |                      |             |
Cash and cash equivalents                 | 2.9                  | 0.4         | 3.3
Trade receivables, net                    | 30.8                 | —           | 30.8
Inventories, net                          | 7.1                  | —           | 7.1
Prepaid expenses and other current assets | 0.7                  | —           | 0.7
Property and equipment, net               | 3.5                  | (0.4)       | 3.1
Identifiable intangible assets, net       | 18.6                 | 0.7         | 19.3
Goodwill                                  | 21.6                 | 1.0         | 22.6
Other non-current assets                  | 0.7                  | (0.4)       | 0.3
Total assets                              | $ 85.9               | $ 1.3       | $ 87.2
Liabilities:                              |                      |             |
Current portion of long-term debt         | —                    | 0.1         | 0.1
Accounts payable                          | 13.8                 | (2.2)       | 11.6
Other current liabilities                 | 1.3                  | (0.1)       | 1.2
Long-term debt, less current portion      | —                    | 0.2         | 0.2
Total liabilities                         | $ 15.1               | $ (2.0)     | $ 13.1 |


| _id | d1b303f6c |
| title |  |
| text | Free Cash Flow. We define free cash flow ("FCF"), a non-GAAP financial measure, as cash flow provided by operations less capital expenditures. FCF was$ 24.7 million for fiscal 2019 compared to $4.0 million for fiscal 2018, an increase of $20.7 million.

Non-GAAP financial measures, including FCF, are used for internal management assessments because such measures provide additional insight to investors into ongoing financial performance. In particular, we provide FCF because we believe it offers insight into the metrics that are driving management decisions. We view FCF as an important financial metric as it demonstrates our ability to generate cash and can allow us to pursue opportunities that enhance shareholder value. FCF is a non-GAAP financial measure

value. FCF is a non-GAAP financial measure that should be considered in addition to, not as a substitute for, measures of our financial performance prepared in accordance with GAAP.

A reconciliation of FCF to our financial statements that were prepared using GAAP follows (in millions):

 |
| table | | 2019   | 2018
------------------------------------------- | ------ | ------
Cash flows provided by operating activities | $115.3 | $66.8
Payments for property, plant and equipment  | (90.6) | (62.8)
Free cash flow                              | 24.7   | 4.0 |


| _id | d1b360a78 |
| title |  |
| text | Note 9. Receivables, Net
Receivables, net consisted of the following (in thousands):

 |
| table | | December 31, |
---------------------------------------------------------------------------------- | ------------ | --------
                                                                                | 2019         | 2018
Trade accounts receivable, current                                                 | $378,616     | $338,473
Income taxes receivable                                                            | 1,571        | 916
Other                                                                              | 13,440       | 11,132
Receivables, gross                                                                 | 393,627      | 350,521
Less: Allowance for doubtful accounts                                              | 3,480        | 3,096
Receivables,net                                                                    | $390,147     | $347,425
Allowance for doubtful accounts as a percent of trade accounts receivable, current | 0.9%         | 0.9% |


| _id | d1b36fa96 |
| title |  |
| text | Cash Flows
The following table summarizes key cash flow activity for the years ended December 31, 2019, 2018, and 2017 (in thousands):
Operating Activities

The increase in net cash provided by operating activities during 2019 was primarily driven by higher cash proceeds from sales of systems projects, including the Sunshine Valley, Sun Streams, and California Flats projects, and advance payments received for sales of solar modules prior to the step down in the U.S. investment tax credit as discussed above. These increases were partially offset by operating expenditures associated with initial ramp of certain Series 6 manufacturing lines and expenditures for

Series 6 manufacturing lines and expenditures for the construction of certain projects.

Investing Activities
The decrease in net cash used in investing activities during 2019 was primarily due to higher net sales of marketable securities and restricted investments, partially offset by proceeds associated with the sale of our interests in 8point3 and its subsidiaries in 2018.
Financing Activities

Financing Activities
The decrease in net cash provided by financing activities during 2019 was primarily the result of lower net proceeds from borrowings under project specific debt financings associated with the construction of certain projects in Australia, Japan, and India.

 |
| table | | 2019       | 2018       | 2017
------------------------------------------------------------------------------ | ---------- | ---------- | ----------
Net cash provided by (used in) operating activities                            | $174,201   | $(326,809) | $1,340,677
Net cash used in investing activities                                          | (362,298)  | (682,714)  | (626,802)
Net cash provided by financing activities                                      | 74,943     | 255,228    | 192,045
Effect of exchange rate changes on cash, cash equivalents and restricted cash. | (2,959)    | (13,558)   | 8,866
Net (decrease) increase in cash, cash equivalents and restricted cash          | $(116,113) | $(767,853) | $914,786 |


| _id | d1b2fa7be |
| title |  |
| text | Fiscal 2019 compared to fiscal 2018
The following table sets forth our Consolidated Statements of Operations data as a percentage of net revenues for the periods indicated:
Note: The percentages may not add due to rounding.

 |
| table | | Fiscal Year |
-------------------------------------------------------- | ----------- | ----
                                                         | 2019        | 2018
Net revenues                                             | 100%        | 100%
Cost of revenues                                         | 22          | 21
Gross profit                                             | 78          | 79
Operating expenses:                                      |             |
Sales and marketing                                      | 32          | 33
Research and development                                 | 19          | 20
General and administrative                               | 9           | 12
Amortization of intangible assets                        | 4           | 5
Restructuring, transition and other costs                | 5           | 8
Total operating expenses                                 | 70          | 78
Operating income                                         | 8           | 1
Interest expense                                         | (4)         | (5)
Gain on divestiture                                      | —           | 14
Other expense, net                                       | (1)         | —
Income from continuing operations before income taxes    | 2           | 9
Income tax expense (benefit)                             | 2           | (14)
Income from continuing operations                        | —           | 23
Income from discontinued operations, net of income taxes | —           | —
Net income                                               | 1%          | 24% |


| _id | d1b3bacc6 |
| title |  |
| text | Interest Expense:
Interest expense increased in fiscal 2019 compared to fiscal 2018 primarily due to higher average borrowings resulting from our issuance of $10.0 billion of senior notes in November 2017, which was partially offset by a reduction in interest expense resulting primarily from the maturities and repayments of $2.0 billion of senior notes during fiscal 2019 and $6.0 billion of senior notes during fiscal 2018.

 |
| table | Year Ended May 31,    |        |        |                |
--------------------- | ------ | ------ | -------------- | ------
                      |        |        | Percent Change |
(Dollars in millions) | 2019   | Actual | Constant       | 2018
Interest expense      | $2,082 | 3%     | 3%             | $2,025 |


| _id | d1b2f5e76 |
| title |  |
| text | Notes to Consolidated Financial Statements (continued)
Reconciliations of total segment net revenues and total segment operating income to consolidated net revenues and consolidated income before income tax expense are presented in the table below (amounts in millions):
(1) Includes other income and expenses from operating segments managed outside the reportable segments, including our Distribution business. Also includes unallocated corporate income and expenses.

(2) Reflects the net effect from recognition (deferral) of deferred net revenues, along with related cost of revenues, on certain of our online-enabled products.
(3) Intersegment revenues reflect licensing and service fees charged between segments.
(4) Reflects fees and other expenses, such as legal, banking, and professional services fees, related to the acquisition of King and associated integration activities, including related debt financings.

(5) Reflects restructuring initiatives, which include severance and other restructuring-related costs.
(6) Reflects a non-cash accounting charge to reclassify certain cumulative translation gains (losses) into earnings due to the substantial liquidation of certain of our foreign entities.
(7) Reflects the impact of other unusual or unique tax-related items and activities.

 |
| table | |        | Years Ended December 31, |
------------------------------------------------------------------------------------------------ | ------ | ------------------------ | ------
                                                                                | 2019   | 2018                     | 2017
Reconciliation to consolidated net revenues:                                                     |        |                          |
Segment net revenues                                                                             | $5,969 | $6,835                   | $6,765
Revenues from non-reportable segments (1)                                                        | 462    | 480                      | 410
Net effect from recognition (deferral) of deferred net revenues (2)                              | 101    | 238                      | (139)
Elimination of intersegment revenues (3)                                                         | (43)   | (53)                     | (19)
Consolidated net revenues                                                                        | $6,489 | $7,500                   | $7,017
Reconciliation to consolidated income before income tax expense:                                 |        |                          |
Segment operating income                                                                         | $2,054 | $2,446                   | $2,417
Operating income (loss) from non-reportable segments (1)                                         | 24     | 31                       | (19)
Net effect from recognition (deferral) of deferred net revenues and related cost of revenues (2) | 52     | 100                      | (71)
Share-based compensation expense                                                                 | (166)  | (209)                    | (178)
Amortization of intangible assets                                                                | (203)  | (370)                    | (757)
Fees and other expenses related to the acquisition of King (4)                                   | —      | —                        | (15)
Restructuring costs (5)                                                                          | (137)  | (10)                     | (15)
Other non-cash charges (6)                                                                       | —      | —                        | (14)
Discrete tax-related items (7)                                                                   | (17)   | —                        | (39)
Consolidated operating income                                                                    | 1,607  | 1,988                    | 1,309
Interest and other expense (income), net                                                         | (26)   | 71                       | 146
Loss on extinguishment of debt                                                                   | —      | 40                       | 12
Consolidated income before income tax expense                                                    | $1,633 | $1,877                   | $1,151 |


| _id | d1b305948 |
| title |  |
| text | Allocation of Goodwill to Reporting Segment
The following table shows our goodwill balances by reportable segment:

As noted above, it was determined under a quantitative assessment that there was no impairment of goodwill. However, if we become aware of indicators of impairment in future periods, we may be required to perform an interim assessment for some or all of our reporting units before the next annual assessment. Examples of such indicators may include a decrease in expected net earnings, adverse equity market conditions, a decline in current market multiples, a decline in our common stock price, a significant

decline in our common stock price, a significant adverse change in legal factors or business climates, an adverse action or assessment by a regulator, unanticipated competition, strategic decisions made in response to economic or competitive conditions, or a more likely than not expectation that a reporting unit or a significant portion of a reporting unit will be sold or disposed of. In the event of significant adverse changes of the nature described above, we may have to recognize a non-cash impairment

we may have to recognize a non-cash impairment of goodwill, which could have a material adverse effect on our consolidated financial condition and results of operations.

 |
| table | (In millions)                                     | Food Care | Product Care | Total
------------------------------------------------- | --------- | ------------ | ---------
Gross Carrying Value at December 31, 2017         | $ 576.5   | $ 1,554.1    | $ 2,130.6
Accumulated impairment                            | (49.6 )   | (141.2)      | (190.8)
Carrying Value at December 31, 2017               | $ 526.9   | $ 1,412.9    | $ 1,939.8
Acquisition, purchase price and other adjustments | (0.6 )    | 18.2         | 17.6
Currency translation                              | (6.6 )    | (3.2)        | (9.8)
Gross Carrying Value at December 31, 2018         | $ 568.9   | $ 1,568.9    | $ 2,137.8
Accumulated impairment                            | (49.2 )   | (141.0)      | (190.2)
Carrying Value at December 31, 2018               | $ 519.7   | $ 1,427.9    | $ 1,947.6
Acquisition, purchase price and other adjustments | 6.3       | 257.0        | 263.3
Currency translation                              | 2.0       | 4.1          | 6.1
Gross Carrying Value at December 31, 2019         | $ 577.2   | $ 1,830.0    | $ 2,407.2
Accumulated impairment                            | (49.3 )   | (141.0)      | (190.3)
Carrying Value at December 31, 2019               | $ 527.9   | $ 1,689.0    | $ 2,216.9 |


| _id | d1b3c0a5e |
| title |  |
| text | Item 6. Selected Financial Data
The following selected financial data should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this report.

The Consolidated Statements of Income data for fiscal 2019, fiscal 2018 and fiscal 2017, and the Consolidated Balance Sheets data as of April 27, 2019 and April 28, 2018, are derived from, and are qualified by reference to, our audited consolidated financial statements included elsewhere in this report. The Consolidated Statements of Income data for fiscal 2016 and fiscal 2015, and the Consolidated Balance Sheets data as of April 29, 2017, April 30, 2016 and May 2, 2015 are derived from audited

30, 2016 and May 2, 2015 are derived from audited consolidated financial statements not included in this report.

(1) Fiscal 2019 includes $3.5 million of pre-tax legal expense relating to the Hetronic litigation. See Note 9, "Commitments and Contingencies," in our consolidated financial statements for more information. During Fiscal 2019, we engaged in initiatives to reduce overall costs and improve operational profitability, which increased costs during the period by $6.9 million.

Fiscal 2019 also includes pre-tax acquisition expenses of $15.4 million related to the acquisition of Grakon, income of $5.8 million for an international government grant for maintaining certain employment levels during the period and $7.4 million of stock-based compensation expense related to the re-estimation of RSA compensation expense based upon target levels of performance.

The results for fiscal 2019 also include a discrete tax benefit from the re-measurement of the deemed repatriated foreign earnings associated with the Tax Cuts and Jobs Act ("U.S. Tax Reform") of $4.8 million and a tax benefit of $2.0 million for foreign investment tax credits. In addition, fiscal 2019 includes net tariff expense on imported Chinese goods of $2.3 million.

(2) Fiscal 2018 includes $8.1 million of pre-tax legal expense relating to the Hetronic litigation. Fiscal 2018 also includes pre-tax acquisition expenses of $6.8 million related to the acquisitions of Procoplast and Pacific Insight, income of $7.3 million for an international government grant for maintaining certain employment levels during the period and a $6.0 million stock-based compensation expense reversal related to the re-estimation of RSA compensation expense based upon threshold levels of

expense based upon threshold levels of performance.

The results for fiscal 2018 also includes a provisional estimated tax charge of $53.7 million as a result of U.S. Tax Reform and a tax benefit of $9.8 million for foreign investment tax credits.

(3) Fiscal 2017 includes $11.0 million of pre-tax legal expense relating to the Hetronic litigation. Fiscal 2017 also includes pre-tax exit costs for two reporting units of $2.3 million, pre-tax acquisition expenses of $1.5 million, primarily related to a potential acquisition we elected not to undertake, and income of $4.5 million for an international government grant for maintaining certain employment levels during the period.

The results for fiscal 2017 include a tax benefit of $4.0 million for foreign investment tax credits, partially offset by a tax expense of $1.7 million on a dividend between foreign entities. (4) Fiscal 2016 includes $9.9 million of pre-tax legal expense relating to the Hetronic litigation.

(5) Fiscal 2015 includes a goodwill pre-tax impairment charge of $11.1 million, a pre-tax gain on the sale of a business of $7.7 million and $3.1 million of pre-tax legal expense relating to the Hetronic litigation. Fiscal 2015 also includes a $5.0 million tax benefit related to the release of a valuation allowance against deferred tax assets in Malta.

 |
| table | |                    |                    | Fiscal Year Ended  |                    |
------------------------------------------------------- | ------------------ | ------------------ | ------------------ | ------------------ | ---------------
(In Millions, Except Percentages and Per Share Amounts) | April 27, 2019 (1) | April 28, 2018 (2) | April 29, 2017 (3) | April 30, 2016 (4) | May 2, 2015 (5)
Income Statement Data:                                  |                    |                    |                    |                    |
Net Sales                                               | $1,000.3           | $908.3             | $816.5             | $809.1             | $881.1
Income before Income Taxes                              | 103.6              | 123.8              | 115.9              | 110.9              | 120.8
Income Tax Expense                                      | 12.0               | 66.6               | 23.0               | 26.3               | 19.8
Net Income                                              | 91.6               | 57.2               | 92.9               | 84.6               | 101.1
Per Common Share Data:                                  |                    |                    |                    |                    |
Basic Net Income                                        | 2.45               | 1.54               | 2.49               | 2.21               | 2.61
Diluted Net Income                                      | 2.43               | 1.52               | 2.48               | 2.20               | 2.58
Dividends                                               | 0.44               | 0.40               | 0.36               | 0.36               | 0.36
Book Value                                              | 18.43              | 16.82              | 14.53              | 12.61              | 11.82
Balance Sheet Data:                                     |                    |                    |                    |                    |
Total Debt                                              | 292.6              | 57.8               | 27.0               | 57.0               | 5.0
Retained Earnings                                       | 545.2              | 472.0              | 427.0              | 358.6              | 356.5
Fixed Assets, Net                                       | 191.9              | 162.2              | 90.6               | 93.0               | 93.3
Total Equity                                            | 689.7              | 630.0              | 541.1              | 470.1              | 459.0
Total Assets                                            | 1,231.7            | 915.9              | 704.0              | 655.9              | 605.8
Other Financial Data:                                   |                    |                    |                    |                    |
Return on Average Equity                                | 13.9%              | 9.8%               | 18.6%              | 18.2%              | 23.5%
Pre-tax Income as a Percentage of Sales                 | 10.4%              | 13.6%              | 14.2%              | 13.7%              | 13.7%
Net Income as a Percentage of Sales                     | 9.2%               | 6.3%               | 11.4%              | 10.5%              | 11.5% |


| _id | d1b323c72 |
| title |  |
| text | Note 22. Supplemental Financial Information
Cash paid for income taxes amounted to $77.6 million, $25.9 million and $48.4 million during fiscal 2019, 2018 and 2017, respectively. Cash paid for interest on borrowings amounted to $347.9 million, $85.3 million and $82.5 million during fiscal 2019, 2018 and 2017, respectively.
A summary of additions and deductions related to the valuation allowance for deferred tax asset accounts for the years ended March 31, 2019, 2018 and 2017 follows (amounts in millions):

 |
| table | | Balance at Beginning of Year | Additions Charged to Costs and Expenses | Additions Charged to Other Accounts | Deductions | Balance at End of Year
-------------------------------------------- | ---------------------------- | --------------------------------------- | ----------------------------------- | ---------- | ----------------------
Valuation allowance for deferred tax assets: |                              |                                         |                                     |            |
Fiscal 2019                                  | $204.5                       | $16.2                                   | $175.8                              | $(64.4)    | $332.1
Fiscal 2018                                  | $210.1                       | $36.2                                   | $—                                  | $(41.8)    | $204.5
Fiscal 2017                                  | $161.8                       | $15.2                                   | $37.6                               | $(4.5)     | $210.1 |


| _id | d1b3bc1a2 |
| title |  |
| text | The Group has assumed that mortality will be in line with nationally published mortality table S2NA with CMI 2018 projections related to members’ years of birth with long-term rate of improvement of 1.5% per annum. These tables translate into an average life expectancy for a pensioner retiring at age 65 as follows:
It is assumed that 50% of non-retired members of the Scheme will commute the maximum amount of cash at retirement (2018: 50% of

non-retired members of the Scheme will commute the maximum amount of cash at retirement).

 |
| table | | 2019  |       | 2018  |
------------------------------------------ | ----- | ----- | ----- | -----
                                           | Men   | Women | Men   | Women
                                           | Years | Years | Years | Years
Member aged 65 (current life expectancy)   | 86.8  | 88.9  | 87.3  | 89.3
Member aged 45 (life expectancy at age 65) | 88.5  | 90.7  | 89.0  | 91.1 |


| _id | d1b325a7c |
| title |  |
| text | Key Performance Indicators
Key performance indicators, which we do not consider to be non-GAAP measures, that we use to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions include Monthly Recurring Revenue ("MRR") and Gross Merchandise Volume ("GMV"). Our key performance indicators may be calculated in a manner different than similar key performance indicators used by other companies.

The following table shows MRR and GMV for the years ended December 31, 2019 and 2018.

 |
| table | | Years ended December 31, |
------------------------- | ------------------------ | -----------
                          | 2019                     | 2018
                          | (in thousands)           |
Monthly Recurring Revenue | $53,898                  | $40,932
Gross Merchandise Volume  | $61,138,457              | $41,103,238 |


| _id | d1b35313e |
| title |  |
| text | FLNG segment
Total operating revenues: On May 31, 2018, the Hilli was accepted by the customer and, accordingly, commenced operations. The Hilli generated $218.1 million of total operating revenues, as a result of a full year of operations during 2019, in relation to her liquefaction services, compared to $127.6 million in 2018.

Vessel operating expenses: The Hilli incurred $53.7 million of vessel operating expenses for the year ended December 31, 2019, as a result of a full year of operations in 2019, compared to $26.3 million in 2018 following commencement of operations on May 31, 2018.

Voyage, charterhire and commission expenses: The decrease in voyage, charterhire and commission expenses of $0.9 million to $0.5 million for the year ended December 31, 2019 compared to $1.4 million in 2018, is due to lower bunker consumption as a result of the Hilli undergoing commissioning in preparation for her commercial readiness in 2018.

Administrative expenses: Administrative expenses increased by $1.5 million to $1.4 million for the year ended December 31, 2019 compared to a credit $0.2 million in 2018, principally due to an increase in corporate expenses, salaries and employee benefits following the full year of operation of the Hilli, compared to seven months in 2018.

Project development expenses: This relates to non-capitalized project-related expenses comprising of legal, professional and consultancy costs. The decrease was due to the commencement of capitalization of engineering consultation fees in relation to the Gimi GTA Project following the Gimi entering Keppel's shipyard for her conversion into a FLNG in December 2018.

Depreciation and amortization: Following the Hilli's commencement of operations on May 31, 2018, depreciation and amortization of the vessel was recognized. A full year of depreciation was recognized for the year ended December 31, 2019 compared to the seven months of depreciation in 2018.

Other operating (losses)/gains: Included in other operating (losses)/gains are: • realized gain on the oil derivative instrument, based on monthly billings above the base tolling fee under the LTA of $13.1 million for the year ended December 31, 2019 compared to $26.7 million in 2018; • unrealized loss on the oil derivative instrument, due to changes in oil prices above a contractual floor price over term of the LTA of $39.1 million for the year ended December 31, 2019 compared to unrealized loss of $10.0

31, 2019 compared to unrealized loss of $10.0 million in 2018; and • write-off of $3.0 million and $12.7 million of unrecoverable receivables relating to OneLNG for the year ended December 31, 2019 and 2018, respectively.

Equity in net losses of affiliates: In April 2018, we and Schlumberger decided to wind down OneLNG and work on FLNG projects on a case-by-case basis.

 |
| table | |          | December 31, |          |
----------------------------------------------------- | -------- | ------------ | -------- | --------
(in thousands of $)                                   | 2019     | 2018         | Change   | % Change
Total operating revenues                              | 218,096  | 127,625      | 90,471   | 71%
Vessel operating expenses                             | (53,689) | (26,317)     | (27,372) | 104%
Voyage expenses, charter-hire and commission expenses | (460)    | (1,363)      | 903      | (66)%
Administrative expenses                               | (1,371)  | 175          | (1,546)  | (883)%
Project development expenses                          | (2,939)  | (16,526)     | 13,587   | (82)%
Depreciation and amortization                         | (48,088) | (28,193)     | (19,895) | 71%
Other operating (losses)/gains                        | (28,963) | 2,749        | (31,712) | (1,154)%
Operating income                                      | 82,586   | 58,150       | 24,436   | 42%
Equity in net losses of affiliates                    | —        | (2,047)      | 2,047    | (100)% |


| _id | d1b36cd96 |
| title |  |
| text | The reconciliation of income tax computed at the U.S. federal statutory tax rate to income tax expense is as follows:

(1) In 2018, we recorded $3.5 million of tax expense related to foreign earnings which were not permanently reinvested prior to the enactment of the U.S. Tax Act. After enactment, certain foreign earnings are taxed at higher statutory rates than the U.S. which results in $2.1 million of incremental tax expense in 2019. In 2017, we provided for deferred taxes on all cumulative unremitted foreign earnings, as the earnings were no longer considered permanently reinvested resulting in a charge of $9.5 million.

 |
| table | |           | Years Ended September 30, |
------------------------------------------------ | --------- | ------------------------- | ----------
                                                 | 2019      | 2018                      | 2017
                                                 |           | (in thousands)            |
Tax expense at U.S. statutory rate               | $ 10,992  | $  3,124                  | $  (3,877)
State income taxes, net of federal tax effect    | 1,416     | (237)                     | (923)
Nondeductible expenses                           | 1,720     | 1,186                     | (185)
Change in reserve for tax contingencies          | (1,468)   | (1,047)                   | (4,435)
Change in deferred tax asset valuation allowance | (10,007)  | 8,784                     | 17,374
Foreign rate differential (1)                    | 2,149     | 5,684                     | 9,912
Tax credits                                      | (4,767)   | (2,656)                   | (3,459)
Impact of U.S. Tax Reform                        | —         | (7,053)                   | —
Global Intangible Low-Tax Income                 | 8,182     | —                         | —
Stock Based Compensation                         | (448)     | 59                        | 16
Non-controlling interest in equity arrangements  | 1,802     | 99                        | —
Other                                            | 1,469     | (850)                     | 235
Provision for income taxes                       | $  11,040 | $  7,093                  | $  14,658 |


| _id | d1b392d3e |
| title |  |
| text | (1) For a description and reconciliation of non-GAAP financial measures presented in this document, please see the Non-GAAP Financial Measures page, or visit the Black Knight Investor Relations website at https://investor.blackknightinc.com.

(2) In 2019, the effect of our indirect investment in The Dun and Bradstreet Corporation was a reduction of Net earnings of $73.9 million primarily due to the effect of its purchase accounting adjustments, restructuring charges and other non-operating charges. In 2017, Net earnings includes a one-time, non-cash net tax benefit of $110.9 million related to the revaluation of our deferred income tax assets and liabilities as a result of the Tax Cuts and Jobs Act of 2017 (the “Tax Reform Act”).

 |
| table | (in millions, except per share data)                          | 2019     | 2018     | 2017
------------------------------------------------------------- | -------- | -------- | --------
Revenues                                                      | $1,177.2 | $1,114.0 | $1,051.6
Adjusted Revenues(1)                                          | $1,177.7 | $1,116.5 | $1,056.1
Earnings before equity in losses of unconsolidated affiliates | $182.8   | $168.5   | $254.2
Net earnings(2)                                               | $108.8   | $168.5   | $254.2
Net earnings margin                                           | 9.2%     | 15.1%    | 24.2%
Net earnings attributable to Black Knight                     | $108.8   | $168.5   | $182.3
Net earnings attributable to Black Knight, per diluted share  | $0.73    | $1.14    | $1.47
Adjusted Net Earnings(1)                                      | $295.4   | $277.9   | $209.6
Adjusted EPS(1)                                               | $1.99    | $1.87    | $1.38
Adjusted EBITDA(1)                                            | $583.4   | $542.5   | $505.8
Adjusted EBITDA Margin(1)                                     | 49.5%    | 48.6%    | 47.9% |


| _id | d1a72991c |
| title |  |
| text | Goodwill Impairment and Restructuring Charges

A goodwill impairment charge of $9.2 million was recorded in 2018 and a $8.4 million goodwill impairment charge was recorded in 2017, both of which related to our Brazilian operations (see Note 7 of the notes to our consolidated financial statements). There were no restructuring charges incurred in the year ended December 31, 2018, compared to $0.8 million incurred in the year ended December 31, 2017. We incurred restructuring charges in the third quarter of 2017 associated with the closure of our Overland

2017 associated with the closure of our Overland Park office, including termination benefits and other reorganization costs, primarily associated with integrating operations.

 |
| table | | For the Year Ended December 31, |        | Change Amount
--------------------------------------------------- | ------------------------------- | ------ | -------------
                                                    | 2018                            | 2017   |
                                                    | (dollars in thousands)          |        |
Goodwill impairment and restructuring charges:      |                                 |        |
Restructuring charges                               | $ -                             | $752   | $(752)
Goodwill impairment                                 | 9,174                           | 8,418  | 756
Total goodwill impairment and restructuring charges | $9,174                          | $9,170 | $4 |


| _id | d1b3a197e |
| title |  |
| text | Cost of Revenues and Gross Margins
Cost of revenues consists primarily of manufacturing materials, payroll, shipping and handling costs, manufacturing-related overhead and amortization of certain intangible assets. Our manufacturing operations rely on a limited number of suppliers to provide key components and materials for our products, some of which are a sole source. We order materials and supplies based on backlog and forecasted customer orders.

Tooling and setup costs related to changing manufacturing lots at our suppliers are also included in the cost of revenues. We expense all warranty costs, inventory provisions and amortization of certain intangible assets as cost of revenues. Gross profit and gross margin by segment were as follows (dollars in thousands):

Probe Cards Gross profit in the Probe Cards segment increased in fiscal 2019 compared to fiscal 2018 primarily due to increased sales, offset by higher variable costs and by less favorable product mix.
Systems Gross profit and gross margin in the Systems segment increased in fiscal 2019 compared to fiscal 2018 due to increased sales.

Corporate and Other Corporate and Other includes unallocated expenses relating to amortization of intangible assets, share-based compensation, restructuring charges, net, and acquisition-related costs, including charges related to inventory stepped up to fair value and other costs, which are not used in evaluating the results of, or in allocating resources to, our reportable segments.

Overall Gross profit and gross margin fluctuate with revenue levels, product mix, selling prices, factory loading and material costs. For fiscal 2019 compared to fiscal 2018, gross profit increased due to increased sales while gross margins remained relatively consistent with fluctuations in product mix.
Stock-based compensation expense included in gross profit for fiscal 2019 and 2018 was $4.1 million and $3.5 million, respectively.

 |
| table | |             | Fiscal 2019 |                     |
------------ | ----------- | ----------- | ------------------- | --------
             | Probe Cards | Systems     | Corporate and Other | Total
Gross profit | $211,382    | $50,927     | $(24,813)           | $237,496
Gross margin | 43.0 %      | 51.9 %      | — %                 | 40.3 %
Fiscal 2018  |             |             |                     |
             | Probe Cards | Systems     | Corporate and Other | Total
Gross profit | $187,320    | $47,074     | $(24,055)           | $210,339
Gross margin | 43.1 %      | 49.3 %      | — %                 | 39.7 %
Fiscal 2017  |             |             |                     |
             | Probe Cards | Systems     | Corporate and Other | Total
Gross profit | $195,903    | $46,647     | $(26,953)           | $215,597
Gross margin | 43.1 %      | 49.8 %      | — %                 | 39.3 % |