| _id | d1b3b2026 |
| title |  |
| text | In accordance with the requirements of ASC 606, the disclosure of the impact of adoption on our consolidated
balance sheet as of the fiscal year ended February 28, 2019 is as follows:
(1) Deferred product costs included in Prepaid expenses and other current assets and Other assets amounted
to $6.2 million and $8.8 million, respectively, as of February 28, 2019.
(2) The balances as of February 28, 2019 also included deferred revenue of TRACKER, which was acquired
on February 25, 2019 (see Note 2).

on February 25, 2019 (see Note 2).
The impact of adopting ASC 606 on our consolidated statements of comprehensive income (loss) for the fiscal year ended February 28, 2019 was immaterial.

 |
| table | |                                      | As of February 28, 2019 |
--------------------------------------------- | ------------------------------------ | ----------------------- | ---------------
                                              |                                      | ASC 606                 | Without ASC 606
                                              | As reported                          | Adjustments             | Adoption
Assets                                        |                                      |                         |
Prepaid expenses and other current assets (1) | $19,373                              | (1,473)                 | $17,900
Deferred income tax assets                    | 22,626                               | (532)                   | 22,094
Other assets (1)                              | 22,510                               | (3,319)                 | 19,191
                                              | Liabilities and Stockholders' Equity |                         |
Deferred revenue (2)                          | $24,264                              | (1,945)                 | 22,319
Other non-current liabilities (2)             | 38,476                               | (5,353)                 | 33,123
Stockholders' equity:                         |                                      |                         |
Accumulated deficit                           | $(2,227)                             | 1,689                   | (538) |


| _id | d1b34ebe8 |
| title |  |
| text | 23. Associates (Cont'd)
The summarised financial information of the Group’s significant associate namely Intouch Holdings Public Company Limited (“Intouch”), based on its financial statements and a reconciliation with the carrying amount of the investment in the consolidated financial statements was as follows –
Note: (1) Others include adjustments to align the respective local accounting standards to SFRS(I).

 |
| table | | 2019    | 2018    | 2017
------------------------------------------------- | ------- | ------- | -------
                                                  | S$ Mil  | S$ Mil  | S$ Mil
Statement of comprehensive income                 |         |         |
Revenue                                           | 250.1   | 353.9   | 144.1
Profit after tax                                  | 451.7   | 488.2   | 166.1
Other comprehensive (loss)/ income                | (0.9)   | 10.9    | (1.6)
Total comprehensive income                        | 450.8   | 499.1   | 164.5
Statement of financial position                   |         |         |
Current assets                                    | 743.1   | 720.0   | 701.9
Non-current assets                                | 1,532.5 | 1,554.3 | 1,629.3
Current liabilities                               | (305.1) | (444.4) | (483.6)
Non-current liabilities                           | (205.5) | (313.4) | (395.3)
Net assets                                        | 1,765.0 | 1,516.5 | 1,452.3
Less: Non-controlling interests                   | (304.6) | (342.2) | (411.6)
Net assets attributable to equity holders         | 1,460.4 | 1,174.3 | 1,040.7
Proportion of the Group’s ownership               | 21.0%   | 21.0%   | 21.0%
Group’s share of net assets                       | 306.7   | 246.6   | 218.5
Goodwill and other identifiable intangible assets | 1,441.7 | 1,417.6 | 1,371.7
Others (1)                                        | (46.8)  | (23.0)  | (8.4)
Carrying amount of the investment                 | 1,701.6 | 1,641.2 | 1,581.8
Other items                                       |         |         |
Group’s share of market value                     | 1,653.2 | 1,639.6 | 1,525.0
Dividends received during the year                | 78.5    | 77.8    | - |


| _id | d1b333df2 |
| title |  |
| text | Accumulated Other Comprehensive Loss-Recognition and Deferrals

The following table presents cumulative items not recognized as a component of net periodic benefits expense as of December 31, 2018, items recognized as a component of net periodic benefits expense in 2019, additional items deferred during 2019 and cumulative items not recognized as a component of net periodic benefits expense as of December 31, 2019. The items not recognized as a component of net periodic benefits expense have been recorded on our consolidated balance sheets in accumulated other

consolidated balance sheets in accumulated other comprehensive loss:

 |
| table | |          |                                              | As of and for the Years Ended December 31, |                    |
------------------------------------------ | -------- | -------------------------------------------- | ------------------------------------------ | ------------------ | -------
                                           | 2018     | Recognition of Net Periodic Benefits Expense | Deferrals                                  | Net Change in AOCL | 2019
                                           |          |                                              | (Dollars in millions)                      |                    |
Accumulated other comprehensive loss:      |          |                                              |                                            |                    |
Pension plans:                             |          |                                              |                                            |                    |
Net actuarial (loss) gain                  | $(2,973) | 224                                          | (297)                                      | (73)               | (3,046)
Prior service benefit (cost)               | 46       | (8)                                          | 9                                          | 1                  | 47
Deferred income tax benefit (expense)      | 754      | (53)                                         | 69                                         | 16                 | 770
Total pension plans                        | (2,173)  | 163                                          | (219)                                      | (56)               | (2,229)
Post-retirement benefit plans:             |          |                                              |                                            |                    |
Net actuarial (loss) gain                  | 7        | —                                            | (182)                                      | (182)              | (175)
Prior service (cost) benefit               | (87)     | 16                                           | —                                          | 16                 | (71)
Deferred income tax benefit (expense)      | 22       | (4)                                          | 44                                         | 40                 | 62
Total post-retirement benefit plans        | (58)     | 12                                           | (138)                                      | (126)              | (184)
Total accumulated other comprehensive loss | $(2,231) | 175                                          | (357)                                      | (182)              | (2,413) |


| _id | d1a732a94 |
| title |  |
| text | Dividends are distributions of the Group’s profit after tax before significant items to its shareholders and represent one of the ways the Group distributes returns to its shareholders.
All dividends are fully franked at a 30% tax rate.

On 29 August 2019, the Board of Directors declared a final dividend in respect of the 2019 period of 57 cents per share, fully franked at a 30% tax rate. The amount will be paid on or around 30 September 2019 and is expected to be $717 million. As the dividend was declared subsequent to 30 June 2019, no provision had been made as at 30 June 2019.

The DRP remains active. Eligible shareholders may participate in the DRP in respect of all or part of their shareholding. There is currently no DRP discount applied and no limit on the number of shares that can participate in the DRP.

Shares will be allocated to shareholders under the DRP for the 2019 final dividend at an amount equal to the average of the daily volume weighted average market price of ordinary shares of the Company traded on the ASX over the period of 10 trading days commencing on 6 September 2019. The last date for receipt of election notices for the DRP is 5 September 2019. The Company may acquire shares on-market during this period to satisfy its obligations under the DRP.

During the period, 13.4% (2018: 39.9%) of the dividends paid were reinvested in shares of the Company. The change in the reinvestment participation rate reflects the removal of the discount with effect from the 2018 final dividend paid on 12 October 2018. The DRP in respect of the 2019 interim dividend was satisfied in full through the on-market purchase and transfer of $73 million of shares to participating shareholders.

 |
| table | | 2019      |        |                 |           | 2018   |
----------------------------------------- | --------- | ------ | --------------- | --------- | ------ | --------------
                                          | CENTS PER | TOTAL  | DATE OF         | CENTS PER | TOTAL  | DATE OF
                                          | SHARE     | AMOUNT | PAYMENT         | SHARE     | AMOUNT | PAYMENT
                                          |           | $M     |                 |           | $M     |
Current year interim                      | 45        | 593    | 5 April 2019    | 43        | 561    | 6 April 2018
Prior year final                          | 50        | 657    | 12 October 2018 | 50        | 647    | 6 October 2017
Prior year special                        | 10        | 131    | 12 October 2018 | -         | –      |
Dividends paid during the period          | 105       | 1,381  |                 | 93        | 1,208  |
Issues of shares to satisfy the dividend  |           |        |                 |           |        |
reinvestment plan                         |           | (114)  |                 |           | (482)  |
Dividends received - shares held in trust |           | -      |                 |           | (2)    |
Dividends paid in cash                    |           | 1,267  |                 |           | 724    | |


| _id | d1b32e28a |
| title |  |
| text | Contractual Obligations
Following is a summary of our contractual cash obligations as of February 28, 2019 (in thousands):
Purchase obligations consist primarily of inventory purchase commitments.

 |
| table | |           |          | Future Estimated Cash Payments Due by Period |           |
---------------------------------------- | --------- | -------- | -------------------------------------------- | --------- | --------
                                         | Less than | 1 - 3    | 3 - 5                                        |           |
Contractual Obligations                  | 1 year    | years    | years                                        | > 5 years | Total
Convertible senior notes principal       | $-        | $122,527 | $-                                           | $230,000  | $352,527
Convertible senior notes stated interest | 6,591     | 10,196   | 9,200                                        | 6,900     | 32,887
Operating leases                         | 7,565     | 12,628   | 12,325                                       | 7,659     | 40,177
Purchase obligations                     | 39,390    | -        | -                                            | -         | 39,390
Total contractual obligations            | $53,546   | $145,351 | $21,525                                      | $244,559  | $464,981 |


| _id | d1a73e6aa |
| title |  |
| text | 10. Other financial result
The other financial income and expenses from financial instruments are assigned to measurement categories according to IFRS 9 on the basis of the underlying transactions. Besides income and expenses from the measurement of financial instruments (except derivatives in hedging relationships in accordance with IAS 39), this also includes the measurement of foreign currency positions according to IAS 21.

The total comprehensive income from currency effects and measurement results from hedging transactions and hedging relationships totalled €17 million (2017/18: €−14 million). In addition, the other financial result reflects €−5 million (2017/18: €4 million) in currency effects resulting from the translation of the financial statements of foreign subsidiaries that are recognised through profit or loss in the year the subsidiary is deconsolidated or in the year business activities are discontinued. In

the year business activities are discontinued. In addition, impairment losses on financial assets amounting to €2 million (2017/18: €0 million) were recognised in the reporting period.

 |
| table | € million                                                                                | 2017/2018 | 2018/2019
------------------------------------------------------------------------------------------------------------ | --------- | ---------
Other financial income                                                                                | 182       | 159
thereof currency effects                                                                                | (126)     | (112)
thereof hedging transactions                                                                                | (16)      | (39)
Other financial expenses                                                                                | −184      | −158
thereof currency effects                                                                                | (−152)    | (−116)
thereof hedging transactions                                                                                | (−3)      | (−18)
Other financial result                                                                                | −2        | 1
thereof from financial instruments of the measurement categories according to IFRS 9 (previous year: IAS39): | (−16)     | (17)
thereof cash flow hedges:                                                                                |           |
ineffectiveness                                                                                | (7)       | (−1) |


| _id | d1b34a89a |
| title |  |
| text | Unaudited Pro Forma Financial Information

The unaudited pro forma financial information in the table below summarizes the combined results of operations for Oracle, Aconex and certain other companies that we acquired since the beginning of fiscal 2018 that were considered relevant for the purposes of unaudited pro forma financial information disclosure as if the companies were combined as of the beginning of fiscal 2018. The unaudited pro forma financial information for all periods presented included the business combination accounting effects

the business combination accounting effects resulting from these acquisitions, including amortization charges from acquired intangible assets (certain of which are preliminary), stock-based compensation charges for unvested restricted stock-based awards and stock options assumed, if any, and the related tax effects as though the aforementioned companies were combined as of the beginning of fiscal 2018. The unaudited pro forma financial information as presented below is for informational purposes only and

below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisitions had taken place at the beginning of fiscal 2018 or 2019.

The unaudited pro forma financial information for fiscal 2019 presented the historical results of Oracle for fiscal 2019 and certain other companies that we acquired since the beginning of fiscal 2019 based upon their respective previous reporting periods and the dates these companies were acquired by us, and the effects of the pro forma adjustments listed above.

The unaudited pro forma financial information for fiscal 2018 combined the historical results of Oracle for fiscal 201 8 and the historical results of Aconex for the twelve month period ended December 31, 2017 (adjusted due to differences in reporting periods and considering the date we acquired Aconex) and certain other companies that we acquired since the beginning of fiscal 201 8 based upon their respective previous reporting periods and the dates these companies were acquired by us, and the effects of

companies were acquired by us, and the effects of the pro forma adjustments listed above. The unaudited pro forma financial information was as follows:

 |
| table | | Year Ended May 31, |
------------------------------------ | ------------------ | -------
(in millions, except per share data) | 2019               | 2018
Total revenues                       | $39,512            | $39,546
Net income                           | $11,076            | $3,500
Basic earnings per share             | $3.05              | $0.85
Diluted earnings per share           | $2.97              | $0.83 |


| _id | d1b354372 |
| title |  |
| text | Concentrations
The Company may be subject to concentration of credit risk as a result of certain financial instruments consisting of accounts receivable and short term investments. The Company performs ongoing credit evaluations of its customers and generally does not require collateral in exchange for credit.
The following table sets forth major customers accounting for 10% or more of the Company’s net revenue:

 |
| table | | Year Ended    |               |
--------------------- | ------------- | ------------- | -------------
                      | June 30,
2019 | June 30,
2018 | June 30, 2017
Tech Data Corporation | 18%           | 14%           | 16%
Jenne Corporation     | 17%           | 13%           | 15%
Westcon Group Inc.    | 12%           | 13%           | 12% |


| _id | d1a71fa20 |
| title |  |
| text | 9. DEBT AND OTHER FINANCING ARRANGEMENTS
2021 Senior Convertible Notes

In 2017, the Company issued $300.0 million principal amount of 5.75% senior convertible notes (the “2021 Notes”) for a purchase price equal to 98% of the principal amount. The Company received net proceeds of $284.9 million, net of a discount of $6.0 million and issuance costs of $9.1 million. The debt discount is being accreted to interest expense over the term of the 2021 Notes using the interest method. The issuance costs were deferred and are being amortized to interest expense over the same term.

The 2021 Notes are governed by an Indenture, dated December 8, 2017 between the Company and US Bank National Association, as trustee (the “2017 Indenture”). The 2021 Notes mature on July 1, 2021, unless earlier repurchased or converted. Interest is payable semi-annually in arrears on January 1 and July 1, commencing January 1, 2018.

The 2021 Notes are convertible at an initial conversion rate of 23.8095 shares of the Company’s common stock per $1,000 principal amount of the 2021 Notes, which represents an initial conversion price of $42.00 per share, subject to adjustment for anti-dilutive issuances, voluntary increases in the conversion rate, and make-whole adjustments upon a fundamental change. A fundamental change includes a change in control, delisting of the Company’s common stock, and a liquidation of the Company. Upon

stock, and a liquidation of the Company. Upon conversion, the Company will deliver the applicable number of the Company’s common stock and cash in lieu of any fractional shares. Holders of the 2021 Notes may convert their 2021 Notes at any time prior to the close of business on the scheduled trading day immediately preceding the maturity date.

The holders of the 2021 Notes may require the Company to repurchase all or a portion of their 2021 Notes at a cash repurchase price equal to 100% of the principal amount of the 2021 Notes being repurchased, plus the remaining scheduled interest through and including the maturity date, upon a fundamental change and events of default, including non-payment of interest or principal and other obligations under the 2017 Indenture.

The net carrying amounts of the liability components of the 2021 Notes consist of the following (in thousands):
The effective interest rate of the liability component is 6.4% for the 2021 Notes.

 |
| table | | December 31, 2019 | December 31, 2018
---------------------------------------------------------- | ----------------- | -----------------
Principal amount                                           | $300,000          | $300,000
Unamortized debt discount                                  | (2,691)           | (4,348)
Net carrying amount before unamortized debt issuance costs | 297,309           | 295,652
Unamortized debt issuance costs                            | (4,135)           | (6,685)
Net carrying value                                         | $293,174          | $288,967 |


| _id | d1b389e46 |
| title |  |
| text | 11. Reportable Segments, Geographic Information and Major Customers

Reportable segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or group, in assessing performance and allocating resources. The Company uses an internal management reporting system, which provides important financial data to evaluate performance and allocate the Company’s resources on a regional basis. Net sales for the segments are attributed to the region in which the product is

attributed to the region in which the product is manufactured or the service is performed. The services provided, manufacturing processes used, class of customers serviced and order fulfillment processes used are similar and generally interchangeable across the segments. A segment’s performance is evaluated based upon its operating income (loss). A segment’s operating income (loss) includes its net sales less cost of sales and selling and administrative expenses, but excludes corporate and other expenses.

but excludes corporate and other expenses. Corporate and other expenses  fiscal 2019 and the $13.5 million one-time employee bonus paid to full-time, non-executive employees during fiscal 2018 due to the Company's ability to access overseas cash as a result of Tax Reform (the "one-time employee bonus"). These costs are not allocated to the segments, as management excludes such costs when assessing the performance of the segments. Inter-segment transactions are generally recorded at amounts that approximate

generally recorded at amounts that approximate arm’s length transactions. The accounting policies for the segments are the same as for the Company taken as a whole.

Information about the Company’s three reportable segments for fiscal 2019, 2018 and 2017 is as follows (in thousands):

 |
| table | | 2019    | 2018    | 2017
--------------------- | ------- | ------- | -------
Depreciation:         |         |         |
AMER                  | $22,531 | $21,224 | $19,694
APAC                  | 16,905  | 15,954  | 15,588
EMEA                  | 6,105   | 6,054   | 5,467
Corporate             | 5,344   | 4,863   | 4,581
                      | 50,885  | 48,095  | 45,330
Capital expenditures: |         |         |
AMER                  | $42,459 | $17,690 | $18,111
APAC                  | 33,454  | 33,018  | 13,816
EMEA                  | 5,186   | 7,923   | 5,748
Corporate             | 9,501   | 4,149   | 863
                      | $90,600 | $62,780 | $38,538 |


| _id | d1b3193e4 |
| title |  |
| text | 2. Earnings Per Share:
Basic earnings per share are computed by dividing net earnings by the weighted average number of shares of common stock outstanding for the period. Diluted
earnings per share are computed by dividing net earnings by the sum of (a) the weighted average number of shares of common stock outstanding during the period and
(b) the dilutive effect of potential common stock equivalents during the period. Stock options and unvested service-based RSU awards make up the common stock

equivalents and are computed using the treasury stock method.
The table below represents the basic and diluted earnings per share, calculated using the weighted average number of shares of common stock and potential
common stock equivalents outstanding for the years ended March 31, 2017, 2018, and 2019:
(1) Common stock equivalents not included in the computation of diluted earnings per share because the impact would have been anti-dilutive were 1,381 shares, 1,733

shares, and 4,375 shares for the fiscal years ended March 31, 2017, 2018, and 2019, respectively.

 |
| table | |          | Fiscal Year Ended March 31, |
--------------------------------------------------------------------- | -------- | --------------------------- | --------
                                                                      | 2017     | 2018                        | 2019
Net income                                                            | $125,785 | $4,910                      | $271,813
Computation of Basic EPS:                                             |          |                             |
Weighted Average Shares Outstanding used in Computing Basic EPS       | 167,506  | 168,262                     | 168,713
Basic earnings per share                                              | $0.75    | $0.03                       | $1.61
Computation of Diluted EPS:                                           |          |                             |
Weighted Average Shares Outstanding used in Computing Basic EPS       | 167,506  | 168,262                     | 168,713
Effect of stock options                                               | 311      | 663                         | 609
Weighted Average Shares Outstanding used in Computing Diluted EPS (1) | 167,837  | 168,925                     | 169,322
Diluted earnings per share                                            | $0.75    | $0.03                       | $1.61 |


| _id | d1b3c842a |
| title |  |
| text | Indefinite-lived Intangible Assets
The carrying amount of indefinite-lived intangible assets were as follows (in millions):

The Broadcasting segment strategically acquires assets across the United States, which results in the recording of FCC licenses. Providing the Company acts within the requirements and constraints of the regulatory authorities, the renewal and extension of these licenses is reasonably certain at minimal costs. Accordingly, we have concluded that the acquired FCC licenses are indefinite-lived intangible assets.

In 2019, FCC licenses increased $15.6 million, $18.2 million of which was through acquisitions, offset by $2.3 million of impairments and $0.3 million loss on the sale of licenses. Our Broadcasting segment recorded the impairment as a result of its decision to forfeit FCC licenses in certain lower-ranked markets, and does not expect any significant changes to future cash flows as a result of these forfeitures. The Company reports intangible impairment charges within the Asset impairment expense line of our

within the Asset impairment expense line of our Consolidated Statements of Operations.

 |
| table | | December 31, |
-------------- | ------------ | -------
               | 2019         | 2018
FCC licenses   | $ 136.2      | $ 120.6
State licenses | 2.5          | 2.5
Total          | $ 138.7      | $ 123.1 |


| _id | d1b32ddbc |
| title |  |
| text | Contract Balances

A contract asset will be recorded if we have recognized revenue but do not have an unconditional right to the related consideration from the customer. For example, this will be the case if implementation services offered in a cloud arrangement are identified as a separate performance obligation and are provided to a customer prior to us being able to bill the customer. In addition, a contract asset may arise in relation to subscription licenses if the license revenue that is recognized upfront exceeds the

revenue that is recognized upfront exceeds the amount that we are able to invoice the customer at that time. Contract assets are reclassified to accounts receivable when the rights become unconditional.

The balance for our contract assets and contract liabilities (i.e. deferred revenues) for the periods indicated below were as follows:

The difference in the opening and closing balances of our contract assets and deferred revenues primarily results from the timing difference between our performance and the customer’s payments. We fulfill our obligations under a contract with a customer by transferring products and services in exchange for consideration from the customer. During the year ended June 30, 2019, we reclassified $19.2 million of contract assets to receivables as a result of the right to the transaction consideration becoming

right to the transaction consideration becoming unconditional. During the year ended June 30, 2019, there was no significant impairment loss recognized related to contract assets.

We recognize deferred revenue when we have received consideration or an amount of consideration is due from the customer for future obligations to transfer products or services. Our deferred revenues primarily relate to customer support agreements which have been paid for by customers prior to the performance of those services. The amount of revenue that was recognized during the year ended June 30, 2019 that was included in the deferred revenue balances at July 1, 2018 was approximately $617 million.

 |
| table | | As of June 30, 2019 | As of July 1, 2018
--------------------------- | ------------------- | ------------------
Short-term contract assets  | $20,956             | $5,474
Long-term contract assets   | $15,386             | $12,382
Short-term deferred revenue | $641,656            | $618,197
Long-term deferred revenue  | $46,974             | $64,743 |


| _id | d1b3add00 |
| title |  |
| text | Overview of the Markets We Serve
The U.S. mortgage loan servicing market is comprised of first and second lien mortgage loans. Even through housing downturns, the mortgage loan servicing market generally remains stable, as the total number of first lien mortgage loans outstanding tends to stay relatively constant. The number of second lien mortgage loans outstanding can vary based on a number of factors including loan-to-value ratios, interest rates and lenders' desire to own such loans.

While delinquent mortgage loans typically represent a small portion of the overall mortgage loan servicing market, the mortgage loan default process is long and complex and involves multiple parties, a significant exchange of data and documentation and extensive regulatory requirements. Providers in the default process must be able to meet strict regulatory guidelines, which we believe are best met through the use of proven technology.

The U.S. mortgage loan origination market consists of both purchase and refinance mortgage loan originations. The mortgage loan origination process is complex and involves multiple parties, significant data exchange and significant regulatory oversight, which requires a comprehensive, scalable solution developed by a company with substantial industry experience. According to the Mortgage Bankers Association ("MBA"), the U.S. mortgage loan origination market for purchase and refinance mortgage loan

market for purchase and refinance mortgage loan originations is estimated as follows (in billions):

Note: Amounts may not recalculate due to rounding.
(1) The 2019, 2018 and 2017 U.S. mortgage loan origination market for purchase and refinance originations is estimated by the MBA Mortgage Finance Forecast as of February 18, 2020, February 11, 2019 and October 16, 2018, respectively.

 |
| table | | 2019     | 2018     | 2017
------------------------------ | -------- | -------- | --------
Mortgage loan originations(1): |          |          |
Purchase                       | $1,272.0 | $1,185.0 | $1,143.0
Refinance                      | 796.0    | 458.0    | 616.0
Total                          | $2,068.0 | $1,643.0 | $1,760.0 |


| _id | d1b38a04e |
| title |  |
| text | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except for share and per share data)
NOTE 18 — Income Taxes
Significant components of our deferred tax assets and liabilities are as follows:

 |
| table | | As of December 31, |
-------------------------------------- | ------------------ | -------
                                       | 2019               | 2018
Post-retirement benefits               | $1,100             | $1,061
Inventory reserves                     | 708                | 1,236
Loss carry-forwards                    | 4,724              | 4,647
Credit carry-forwards                  | 15,964             | 16,909
Accrued expenses                       | 4,932              | 5,685
Research expenditures                  | 17,953             | 16,847
Operating lease liabilities            | 6,211              | —
Stock compensation                     | 2,232              | 2,142
Foreign exchange loss                  | 1,986              | 2,245
Other                                  | 230                | 207
Gross deferred tax assets              | 56,040             | 50,979
Depreciation and amortization          | 12,453             | 11,500
Pensions                               | 13,552             | 11,736
Operating lease assets                 | 5,963              | —
Subsidiaries' unremitted earnings      | 1,903              | 1,258
Gross deferred tax liabilities         | 33,871             | 24,494
Net deferred tax assets                | 22,169             | 26,485
Deferred tax asset valuation allowance | (8,011)            | (8,274)
Total net deferred tax assets          | $14,158            | $18,211 |


| _id | d1b35575e |
| title |  |
| text | Deferred tax (liabilities) assets are comprised of the following at:

The Company has Federal tax credit carryforwards of $5.4 million that expire in various tax years from 2028 to 2038. The Company has a Federal operating loss carryforward of $24.5 million expiring from 2029 through 2037 and a Federal operating loss carryforward of $17.9 million with an unlimited carryforward period. The Company also has state tax credit carryforwards of $0.3 million and state operating loss carryforwards of $43.3 million, which vary by jurisdiction and expire in various tax years through

and expire in various tax years through 2039.

In assessing the ability to realize deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making

income, and tax planning strategies in making this assessment.

As a result of this analysis and based on the current year’s taxable income, and utilization of certain carryforwards management determined an increase in the valuation allowance in the current year to be appropriate.

In calculating the valuation allowance, the Company was not permitted to use its existing deferred tax liabilities related to its indefinite-lived intangible assets (i.e. “naked credit deferred tax liabilities”) as a source of taxable income to support the realization of its existing finite-lived deferred tax assets.

Due to the Tax Act, U.S. net operating losses ("NOLs") arising in tax years ending after December 31, 2017 will no longer be subject to the limited 20-year carryforward period. Under the new law, these NOLs carry forward indefinitely, resulting in the creation of indefinite-lived deferred tax assets. Consequently, as the Company schedules its deferred taxes and considers the ability to realize its deferred tax assets in future periods, it needs to consider how existing deferred tax assets, other than

how existing deferred tax assets, other than historical NOLs, will reverse.

If the reversal is expected to generate an indefinite carryforward NOL under the new law, this may impact the valuation allowance assessment. The indefinite carryforward period for NOLs also means that its deferred tax liabilities related to indefinite-lived intangibles, commonly referred to as “naked credits,” can be considered as support for realization. The adjustment for the 2019 “naked credit” resulted in a $0.01 million deferred tax liability.

In 2019, it was determined that the foreign tax credit carryforward of the Company would not be realizable. The reduction of the foreign tax credit carryforward resulted in a decrease in the valuation allowance for those credits. Therefore, there is no net income tax provision in 2019 related to the reduction in the foreign tax credit carryforward. A valuation allowance is required to the extent it is more likely than not that the future benefit associated with certain Federal and state tax loss

with certain Federal and state tax loss carryforwards will not be realized.

The current year income tax provision includes a reduction of the Company’s valuation allowance due to the establishment of a deferred tax liability in connection with the issuance of convertible debt. The establishment of that deferred tax liability created “future taxable income” for the utilization of existing deferred tax assets of the Company, resulting in the $4 million reduction of the Company’s valuation allowance.

The Company records the benefits relating to uncertain tax positions only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement.

At December 31, 2019, the Company’s reserve for uncertain tax positions is not material and we believe we have adequately provided for its tax-related liabilities. The Company is no longer subject to United States federal income tax examinations for years before 2014.

 |
| table | | December 31,   |
--------------------------------------------- | -------------- | --------
                                              | (in thousands) |
                                              | 2019           | 2018
Deferred tax (liabilities) assets:            |                |
Subordinated debt                             | $(3,659)       | $—
Indefinite lived intangibles                  | (64)           | —
Right of use assets                           | (756)          | —
Software development costs                    | (1,219)        | (1,954)
Acquired intangible assets                    | (446)          | (676)
Depreciation on property, plant and equipment | (352)          | —
Gross deferred tax liabilities                | (6,496)        | (2,630)
Allowances for bad debts and inventory        | 3,013          | 2,785
Capitalized inventory costs                   | 141            | 116
Intangible assets                             | 117            | 420
Employee benefit accruals                     | 2,427          | 1,742
Interest Limitation                           | 1,248          | —
Lease liabilities                             | 772            | —
Federal net operating loss carryforward       | 8,563          | 6,512
State net operating loss carryforward         | 2,317          | 2,112
Tax credit carryforwards                      | 5,777          | 6,176
Depreciation on property, plant and equipment | —              | 373
Other                                         | 912            | 722
Gross deferred tax assets                     | 25,287         | 20,958
Less valuation allowance                      | (18,855)       | (18,328)
Net deferred tax liabilities                  | $(64)          | $— |


| _id | d1b3489dc |
| title |  |
| text | Sales and Marketing
Sales and marketing expenses increased $3.1 million, or 1%, in 2019 as compared to 2018. As a percentage of revenue, sales and marketing expense decreased by approximately two percentage points, resulting from the 2018 Reallocation, increased cost efficiency, and leverage realized from changes to our sales commission plans as we continued our efforts to strategically scale our sales teams and improve their productivity.

Sales and marketing expenses decreased $15.6 million, or 7%, in 2018 as compared to 2017. As a percentage of revenue, sales and marketing expense decreased by approximately eight percentage points, primarily resulting from a combination of increased cost efficiency, reduction in headcount as part of our restructuring activities, and leverage realized from changes to our sales commission plans as we continued our efforts to strategically scale our sales teams and improve their productivity.

 |
| table | |          | Year Ended December 31, |
------------------- | -------- | ----------------------- | --------
                    | 2019     | 2018                    | 2017
                    |          | (dollars in thousands)  |
Sales and marketing | $227,733 | $224,635                | $240,271
Percent of revenue  | 39.5%    | 41.8%                   | 49.9% |


| _id | d1b32a07c |
| title |  |
| text | 1 Interest on borrowings includes interest on short-term borrowings and on long-term debt.
FOREIGN EXCHANGE AND CHANGE IN FAIR VALUE OF DERIVATIVE INSTRUMENTS We recognized $79 million in net foreign exchange gains in 2019 (2018 – $136 million in net losses). These gains and losses were primarily attributed to our US dollar-denominated commercial paper (US CP) program borrowings (see note 17).

These foreign exchange gains (2018 – losses) were partially offset by the $80 million loss related to the change in fair value of derivatives (2018 – $95 million gain) that was primarily attributed to the debt derivatives, which were not designated as hedges for accounting purposes, we used to substantially offset the foreign exchange risk related to these US dollar-denominated borrowings.

During the year ended December 31, 2018, after determining we would not be able to exercise our outstanding bond forward derivatives (bond forwards) within the designated time frame, we discontinued hedge accounting and reclassified a $21 million loss from the hedging reserve within shareholders’ equity to “change in fair value of derivative instruments” within finance costs.

We subsequently extended the bond forwards and redesignated them as effective hedges. During the year ended December 31, 2019, we exercised these bond forwards. See note 17 for more information on our bond forwards.
NOTE 11: FINANCE COSTS

 |
| table | | Years ended December 31 | Years ended December 31 | Years ended December 31
-------------------------------------------------- | ----------------------- | ----------------------- | -----------------------
(In millions of dollars)                           | Note                    | 2019                    | 2018
Interest on borrowings 1                           |                         | 746                     | 709
Interest on post-employment benefits liability     | 23                      | 11                      | 14
Loss on repayment of long-term debt                | 21                      | 19                      | 28
(Gain) loss on foreign exchange                    |                         | (79)                    | 136
Change in fair value of derivative instruments     |                         | 80                      | (95)
Capitalized interest                               |                         | (19)                    | (20)
Other                                              |                         | 21                      | 21
Finance costs before interest on lease liabilities |                         | 779                     | 793
Interest expense on lease liabilities              | 8                       | 61                      | -
Total finance costs                                |                         | 840                     | 793 |


| _id | d1b3c6152 |
| title |  |
| text | Note: 1 Primarily comprises foreign exchange differences reflected in the income statement in relation to sterling and US dollar balances.

Net financing costs increased by €1.3 billion, primarily driven by mark-to-market losses (including hedges of the mandatory convertible bond) and adverse foreign exchange rate movements. Net financing costs before interest on settlement of tax issues includes increased interest costs as part of the financing for the Liberty Global transaction as well as adverse interest rate movements on borrowings in foreign operations. Excluding these, underlying financing costs remained stable, reflecting consistent

costs remained stable, reflecting consistent average net debt balances and weighted average borrowing costs for both periods.

 |
| table | Net financing costs                                             |         |
--------------------------------------------------------------- | ------- | -------
                                                                | 2019    | 2018
                                                                | €m      | €m
Investment income                                               | 433     | 685
Financing costs                                                 | (2,088) | (1,074)
Net financing costs                                             | (1,655) | (389)
Analysed as:                                                    |         |
Net financing costs before interest on settlement of tax issues | (1,043) | (749)
Interest income arising on settlement of outstanding tax issues | 1       | 11
                                                                | (1,042) | (738)
Mark to market (losses)/gains                                   | (423)   | 27
Foreign exchange (losses)/gains1                                | (190)   | 322
Net financing costs                                             | (1,655) | (389) |


| _id | d1b2e9e46 |
| title |  |
| text | Fourth quarter gross profit was $1,081 million and gross margin was 39.3%. On a sequential basis, gross margin increased 140 basis points, mainly driven by improved product mix and better manufacturing efficiencies.
Gross margin decreased 70 basis points year-over-year, mainly impacted by price pressure and unsaturation charges, partially offset by improved manufacturing efficiencies, better product mix and favorable currency effects, net of hedging.

 |
| table | |                   | Three Months Ended       |                   | Variation  |
-------------------------------------------- | ----------------- | ------------------------ | ----------------- | ---------- | --------------
                                             | December 31, 2019 | September 29, 2018       | December 31, 2018 | Sequential | Year-Over-Year
                                             |                   | (Unaudited, in millions) |                   |            |
Gross profit                                 | $ 1,081           | $ 967                    | $ 1,059           | 11.8%      | 2.0%
Gross margin (as percentage of net revenues) | 39.3%             | 37.9%                    | 40.0%             | +140 bps   | -70 bps |


| _id | d1b38eae0 |
| title |  |
| text | * As adjusted to reflect the impact of the full retrospective adoption of IFRS 15. See Note 2 for further details.

The U.S. Tax Cuts and Jobs Act (the “Tax Act”) enacted on December 22, 2017 introduces a number of changes to U.S. income tax law. Among other changes, the Tax Act (i) reduces the U.S. federal corporate tax rate from 35% to 21%, (ii) enacts limitations regarding the deductibility of interest expense, (iii) modifies the provisions relating to the limitations on deductions for executive compensation of publicly traded corporations, (iv) imposes new limitations on the utilization of net operating loss arising

on the utilization of net operating loss arising in taxable years beginning after December 31, 2017, (v) repeals the corporate alternative minimum tax and provides for a refund of existing alternative minimum tax credits, and (vi) creates new taxes on certain foreign-sourced earnings and certain related-party payments, which are referred to as the global intangible low-taxed income tax and the base erosion tax, respectively.

As a result of the new U.S. federal statutory corporate tax rate of 21% contained within the Tax Act, the Group recorded non-cash charges of $16.9 million to tax expense and $16.9 million to equity to revalue the Group’s U.S. net deferred tax assets during fiscal year 2018.

In June 2019 and December 2017, as a result of the Group’s assessment of the realizability of its Australian and U.S. deferred tax assets, the Group recorded non-cash charges to tax expense of $54.7 million and $30.4 million, respectively, and $25.8 million to equity in December 2017 to reduce the carrying value of these assets. The assessment of the realizability of the Australian and U.S. deferred tax assets is based on all available positive and negative evidence. Such evidence includes, but is not

evidence. Such evidence includes, but is not limited to, recent cumulative earnings or losses, expectations of future taxable income by taxing jurisdiction, and the carry-forward periods available for the utilization of deferred tax assets. The Group will continue to assess and record any necessary changes to align its deferred tax assets to their realizable value.

In December 2017, the Group made changes to its corporate structure to include certain foreign subsidiaries in its U.S. consolidated tax group that resulted in the creation of certain deferred tax assets and liabilities, including a non-recognized deferred tax asset of $2.1 billion related to the fair market value of its intellectual property. The assets are included in the Group’s quarterly assessment and are only recognized to the extent they are determined to be realizable.

The impact on the net deferred tax asset from business combinations of $19.1 million in fiscal year 2019 represents the net deferred tax assets and liabilities recognized as a result of the acquisition of OpsGenie. The Group acquired net operating loss carryforward deferred tax assets of approximately $1.8 million from OpsGenie. The Group also recognized deferred tax liabilities of approximately $19.6 million primarily related to acquired intangibles from OpsGenie, the amortization of which will not be

OpsGenie, the amortization of which will not be deductible from future taxable profits.

 |
| table | | 2019                  | 2018
------------------------------------------- | --------------------- | ------------
                                            | (U.S. $ in thousands) |
                                            |                       | *As Adjusted
Reconciliation of deferred tax assets, net  |                       |
Balance at the beginning of                 | $47,060               | $140,532
Deferred tax expense for the year           | (15,916)              | (53,297)
Debited to equity                           | (8,884)               | (40,092)
Adjustment in respect of income tax payable | —                     | (83)
Impact from business combinations           | (19,092)              | —
Currency revaluation impact                 | 44                    | —
Balance at the ending of                    | $3,212                | $47,060 |


| _id | d1b371b5c |
| title |  |
| text | Foreign Currency Analysis
We generate a significant amount of our revenue in the United States, Germany, Japan, the United Kingdom and Canada
The following table shows the impact of foreign exchange rate changes on our net revenue and total spend:
(1) Please refer to the Glossary of Terms for the definitions of our constant currency growth rates.

Changes in the value of the U.S. dollar may have a significant effect on net revenue, total spend, and income (loss) from operations in future periods. We use foreign currency contracts to reduce the exchange rate effect on a portion of the net revenue of certain anticipated transactions but do not attempt to completely mitigate the impact of fluctuations of such foreign currency against the U.S. dollar.

 |
| table | | Fiscal Year Ended January 31, 2019                         |                                                                    |
----------- | ---------------------------------------------------------- | ------------------------------------------------------------------ | -------------------------------------------------------------------
            | Percent change compared to prior fiscal year (as reported) | Constant currency percent change compared to prior fiscal year (1) | Positive/negative/neutral impact from foreign exchange rate changes
Revenue     | 25%                                                        | 24%                                                                | Positive
Total spend | 1%                                                         | 1%                                                                 | Neutral |


| _id | d1b308d82 |
| title |  |
| text | Contractual Obligations
The following table presents the payments due by fiscal year for our outstanding contractual obligations as of December 31, 2019 (in thousands):
(1) Includes estimated cash interest to be paid over the remaining terms of the underlying debt. Interest payments are based on fixed and floating rates as of December 31, 2019.

(2) Purchase obligations represent agreements to purchase goods or services, including open purchase orders and contracts with fixed volume commitments, that are noncancelable or cancelable with a significant penalty. Purchase obligations for our long-term supply agreements for the purchase of substrate glass and cover glass represent specified termination penalties, which are up to $430 million in the aggregate under the agreements. Our actual purchases under these supply agreements are expected to be

under these supply agreements are expected to be approximately $2.4 billion of substrate glass and $500 million of cover glass.

(3) In connection with business or project acquisitions, we may agree to pay additional amounts to the selling parties upon achievement of certain milestones. See Note 14. “Commitments and Contingencies” to our consolidated financial statements for further information.

(4) Transition tax obligations represent estimated payments for U.S. federal taxes associated with accumulated earnings and profits of our foreign corporate subsidiaries. See Note 18. “Income Taxes” to our consolidated financial statements for further information.
(5) Includes expected letter of credit fees and unused revolver fees.
We have excluded $72.2 million of unrecognized tax benefits from the amounts presented above as the timing of such obligations is uncertain.

 |
| table | |            |           | Payments Due by Year |          |
-------------------------------- | ---------- | --------- | -------------------- | -------- | ---------
                                 |            | Less Than | 1 - 3                | 3 - 5    | More Than
                                 | Total      | 1 Year    | Years                | Years    | 5 Years
Long-term debt obligations       | $482,892   | $17,684   | $98,571              | $37,496  | $329,141
Interest payments (1) .          | 168,040    | 17,276    | 29,533               | 27,409   | 93,822
Operating lease obligations      | 162,913    | 15,153    | 28,771               | 26,708   | 92,281
Purchase obligations (2) .       | 1,424,267  | 900,200   | 221,888              | 187,277  | 114,902
Recycling obligations .          | 137,761    | —         | —                    | —        | 137,761
Contingent consideration (3) .   | 6,895      | 2,395     | 4,500                | —        | —
Transition tax obligations (4) . | 76,667     | 6,620     | 14,747               | 32,259   | 23,041
Other obligations (5) .          | 10,527     | 2,933     | 5,164                | 2,430    | —
Total .                          | $2,469,962 | $962,261  | $403,174             | $313,579 | $790,948 |


| _id | d1b3c1bb6 |
| title |  |
| text | Additional Information
The following table presents sales information by geographic area for the years ended December 31, 2019, 2018 and 2017:

Customers comprising more than 10% of revenue can change from year to year. Single customers comprising more than 10% of our revenue in 2019 included three customers at 19%, 17% and 13%. Single customers comprising more than 10% of our revenue in 2018 included two customers at 27% and 17%. Single customers comprising more than 10% of our revenue in 2017 included two customers at 40% and 16%. Other than those with more than 10% of revenues disclosed above, and excluding distributors, our next five largest

and excluding distributors, our next five largest customers can change, and has historically changed, from year-to-year. These combined customers represented 15%, 18% and 15% of total revenue in 2019, 2018 and 2017, respectively.

As of December 31, 2019, property, plant and equipment, net totaled $73.7 million, which included $69.9 million held in the U.S. and $3.9 million held outside the U.S. As of December 31, 2018, property, plant and equipment, net totaled $80.6 million, which included $77.3 million held in the U.S. and $3.3 million held outside the U.S. Property, plant and equipment, net is reported on a company-wide, functional basis only.

 |
| table | (In thousands)      | 2019     | 2018     | 2017
------------------- | -------- | -------- | --------
United States       | $300,853 | $288,843 | $508,178
Mexico              | 90,795   | 12,186   | 2,246
Germany             | 78,062   | 167,251  | 119,502
Other international | 60,351   | 60,997   | 36,974
Total               | $530,061 | $529,277 | $666,900 |


| _id | d1b326a3a |
| title |  |
| text | AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENT(Tabular amounts in millions, unless otherwise disclosed)
11. ASSET RETIREMENT OBLIGATIONS
The changes in the carrying amount of the Company’s asset retirement obligations were as follows:
(1) Revisions in estimates include decreases to the liability of $6.7 million and $49.4 million related to foreign currency translation for the years ended December 31, 2019 and 2018, respectively.

As of December 31, 2019, the estimated undiscounted future cash outlay for asset retirement obligations was $3.2 billion.

 |
| table | | 2019     | 2018
---------------------------------- | -------- | --------
Beginning balance as of January 1, | $1,210.0 | $1,175.3
Additions                          | 61.8     | 39.6
Accretion expense                  | 81.6     | 83.6
Revisions in estimates (1)         | 56.8     | (81.5)
Settlements                        | (26.1)   | (7.0)
Balance as of December 31,         | $1,384.1 | $1,210.0 |


| _id | d1b3c36a0 |
| title |  |
| text | Free Cash Flow (non-U.S. GAAP measure). We also present Free Cash Flow, which is a non-U.S. GAAP measure, defined as (i) net cash from operating activities plus (ii) net cash used in investing activities, excluding payment for purchases (and proceeds from the sale) of marketable securities, and net cash variation for joint ventures deconsolidation, which are considered as temporary financial investments. The result of this definition is ultimately net cash from operating activities plus payment for purchase

operating activities plus payment for purchase and proceeds from sale of tangible, intangible and financial assets, proceeds received in the sale of businesses and cash paid for business acquisitions.

We believe Free Cash Flow, a non-U.S. GAAP measure, provides useful information for investors and management because it measures our capacity to generate cash from our operating and investing activities to sustain our operations. Free Cash Flow is not a U.S. GAAP measure and does not represent total cash flow since it does not include the cash flows generated by or used in financing activities.

Free Cash Flow reconciles with the total cash flow and the net cash increase (decrease) by including the payment for purchases (and proceeds from the sale) of marketable securities and net cash variation from joint ventures deconsolidation, the net cash from (used in) financing activities and the effect of changes in exchange rates. In addition, our definition of Free Cash Flow may differ from definitions used by other companies. Free Cash Flow is determined from our Consolidated Statements of Cash Flows

from our Consolidated Statements of Cash Flows as follows:

(1) Reflects the total of the following line items reconciled with our Consolidated Statements of Cash Flows relating to the investing activities: Payment for purchase of tangible assets, Proceeds from sale of tangible assets, Payment for purchase of intangible assets, Payment for purchase of financial assets, Proceeds from sale of financial assets, Payment for disposal of equity investment, Proceeds received in sale of businesses, Payment for business acquisitions, net of cash and cash equivalents

acquisitions, net of cash and cash equivalents acquired.

Free Cash Flow was positive $497 million in 2019, compared to positive $533 million and positive $308 million in 2018 and 2017, respectively.

 |
| table | |         | Year Ended December 31, |
------------------------------------------------------------------------------------------------------------------------------- | ------- | ----------------------- | -------
                                                                                | 2019    | 2018                    | 2017
                                                                                |         | (In millions)           |
Net cash from operating activities                                                                                | $1,869  | $1,845                  | $1,677
Net cash used in investing activities                                                                                | (1,172) | (1,212)                 | (1,468)
Excluding:                                                                                |         |                         |
Payment for purchase and proceeds from sale of marketable securities, and net cash variation for joint ventures deconsolidation | (200)   | (100)                   | 99
Payment for purchase and proceeds from sale of tangible and intangible assets, payment for business acquisitions(1)             | (1,372) | (1,312)                 | (1,369)
Free Cash Flow (non-U.S. GAAP measure)                                                                                | $497    | $533                    | $308 |


| _id | d1b391e34 |
| title |  |
| text | 11. Segment Information and Geographic Area Information
The following table sets forth certain geographic financial information for fiscal 2019, fiscal 2018 and fiscal 2017. Geographic net sales are determined based on our sales from our various operational locations.

 |
| table | |                | Fiscal Year Ended |
---------------------------------------- | -------------- | ----------------- | --------------
(Dollars in Millions)                    | April 27, 2019 | April 28, 2018    | April 29, 2017
Net Sales:                               |                |                   |
U.S.                                     | $540.5         | $487.5            | $506.9
Malta                                    | 148.5          | 184.0             | 155.5
China                                    | 113.7          | 117.3             | 127.7
Canada                                   | 101.6          | 54.4              | —
Other                                    | 96.0           | 65.1              | 26.4
Total Net Sales                          | $1,000.3       | $908.3            | $816.5
Property, Plant and Equipment, Net:      |                |                   |
U.S.                                     | $83.9          | $63.3             | $44.9
Malta                                    | 33.0           | 36.8              | 26.4
Belgium                                  | 22.1           | 25.0              | —
China                                    | 18.6           | 7.2               | 5.9
Other                                    | 34.3           | 29.9              | 13.4
Total Property, Plant and Equipment, Net | $191.9         | $162.2            | $90.6 |


| _id | d1b3b24cc |
| title |  |
| text | Results of Continuing Operations
The analysis presented below is organized to provide the information we believe will facilitate an understanding of our historical performance and relevant trends going forward, and should be read in conjunction with our Consolidated Financial Statements, including the notes thereto, in Item 8 "Financial Statements and Supplementary Data" of this Annual Report on Form 10 - K.

The following table sets forth, for the periods indicated, certain data derived from our Consolidated Statements of Operations (in thousands):

 |
| table | | Year Ended December 31, |
------------------------------------------------------ | ----------------------- | ---------
                                                       | 2019                    | 2018
Sales                                                  | $788,948                | $718,892
Gross profit                                           | 315,652                 | 365,607
Operating expenses                                     | 261,264                 | 194,054
Operating income from continuing operations            | 54,388                  | 171,553
Other income (expense), net                            | 12,806                  | 823
Income from continuing operations before income taxes  | 67,194                  | 172,376
Provision for income taxes                             | 10,699                  | 25,227
Income from continuing operations, net of income taxes | $ 56,495                | $ 147,149 |


| _id | d1b386c5a |
| title |  |
| text | Commitments and Contractual Obligations
As of June 30, 2019, we have entered into the following contractual obligations with minimum payments for the indicated fiscal periods as follows:
1) Includes interest up to maturity and principal payments. Please see note 10 "Long-Term Debt" for more details.
(2) Net of $30.7 million of sublease income to be received from properties which we have subleased to third parties.

 |
| table | |            |                             | Payments due between        |                             |
------------------------------- | ---------- | --------------------------- | --------------------------- | --------------------------- | -----------------------
                                | Total      | July 1, 2019— June 30, 2020 | July 1, 2020— June 30, 2022 | July 1, 2022— June 30, 2024 | July 1, 2024 and beyond
Long-term debt obligations (1)  | $3,408,565 | $147,059                    | $292,156                    | $1,045,567                  | $1,923,783
Operating lease obligations (2) | 318,851    | 72,853                      | 106,394                     | 59,441                      | 80,163
Purchase obligations            | 11,280     | 8,364                       | 2,747                       | 169                         | —
                                | $3,738,696 | $228,276                    | $401,297                    | $1,105,177                  | $2,003,946 |


| _id | d1a7261ea |
| title |  |
| text | 8. Directors and Key Management remuneration
The remuneration of Directors is disclosed in the Directors’ remuneration report on pages 64 to 74:
Key Management compensation
During the year to 31 March 2019, Key Management comprised the members of the OLT and the Non-Executive Directors (2018: OLT and the Non-Executive Directors). The remuneration of all Key Management (including Directors) was as follows:

 |
| table | | 2019 | 2018
---------------------------- | ---- | ----
                             | £m   | £m
Short-term employee benefits | 5.3  | 4.9
Share-based payments         | 3.5  | 2.6
Termination benefits         | –    | 0.1
Pension contributions        | 0.2  | 0.2
Total                        | 9.0  | 7.8 |


| _id | d1b34279e |
| title |  |
| text | A.4.1 Orders and revenue by region
Positive currency translation effects added one percentage point each to order and revenue growth; portfolio transactions had only minimal effects on volume growth year-over-year. The resulting ratio of orders to revenue (book-to-bill) for Siemens in fiscal 2019 was a strong 1.13, again well above 1. The order backlog was € 146 billion as of September 30, 2019, a new high.
1 As defined by the International Monetary Fund.

Orders related to external customers were clearly up year-overyear on growth in nearly all industrial businesses, led by Mobility. Gas and Power, Siemens Healthineers, Smart Infrastructure and SGRE all posted clear growth, while orders declined slightly in Digital Industries. Volume from large orders for Industrial Businesses overall was up substantially due to a sharp increase at Mobility, but also due to a significant increase in SGRE and Gas and Power. Growth in emerging markets was driven by orders

Growth in emerging markets was driven by orders from China, and from Russia where Mobility won a € 1.2 billion contract for high-speed trains including maintenance.

Order development was mixed in the Europe, C. I. S., Africa, Middle East region. The majority of industrial businesses posted order growth, led by double-digit growth in Mobility, which won several large contracts in the year under review. This increase was more than offset by a substantial decline in SGRE due mainly to a lower volume from large orders and a decrease in Digital Industries. In contrast to the region overall, orders were up clearly in Germany, driven by sharp growth in Gas and Power which

driven by sharp growth in Gas and Power which recorded, among others, a large high voltage direct current (HVDC) order. Mobility recorded a significant increase in order intake in Germany, while the other industrial businesses posted declines.

Orders in the Americas region were up significantly year-over-year, benefiting from positive currency translation effects. Double-digit growth in nearly all industrial businesses was led by SGRE and Mobility with particularly sharp increases. The pattern of order development in the U. S. was largely the same as in the Americas region.

In the Asia, Australia region, orders also rose significantly due to growth in nearly all industrial businesses. The primary growth driver was SGRE, which recorded a sharply higher volume from large orders, including two large orders for offshore wind-farms
including service in Taiwan totaling € 2.3 billion. Orders for Mobility dropped substantially compared to the prior year. Clear growth in China included a majority of industrial businesses.

 |
| table | |        | Fiscal year |        | % Change
------------------------------------- | ------ | ----------- | ------ | --------
(in millions of €)                    | 2019   | 2018        | Actual | Comp.
Europe, C. I. S., Africa, Middle East | 46,086 | 46,495      | (1)%   | (1)%
therein: Germany                      | 12,021 | 11,254      | 7%     | 7%
Americas                              | 29,812 | 25,060      | 19%    | 14%
therein: U.S.                         | 21,166 | 18,106      | 17%    | 10%
Asia, Australia                       | 22,101 | 19,742      | 12%    | 11%
therein: China                        | 8,989  | 8,459       | 6%     | 6%
Siemens                               | 97,999 | 91,296      | 7%     | 6%
therein: emerging markets1            | 31,720 | 30,564      | 4%     | 4% |


| _id | d1b2f19b6 |
| title |  |
| text | Item 6. Selected Consolidated Financial Data

The following table presents selected consolidated financial data as of and for the five-year period ended December 31, 2019. Our past results of operations are not necessarily indicative of our future results of operations. The following selected consolidated financial data is qualified in its entirety by, and should be read in conjunction with, “Management's Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the notes thereto included

statements and the notes thereto included elsewhere herein.

Consolidated Statement of Operations Data:

 |
| table | |          |          | Year Ended December 31,               |          |
-------------------------------------------------------------------------- | -------- | -------- | ------------------------------------- | -------- | --------
                                                                           | 2019     | 2018     | 2017                                  | 2016     | 2015
                                                                           |          |          | (In thousands, except per share data) |          |
Revenues                                                                   | $111,412 | $111,322 | $106,524                              | $114,263 | $123,961
Income from operations                                                     | 9,464    | 8,238    | 4,545                                 | 10,186   | 3,820
Income from continuing operations, net of taxes                            | 4,155    | 4,661    | 1,592                                 | 6,007    | 8,523
Income from discontinued operations, net of taxes                          | —        | —        | 1,938                                 | 624      | 2,341
Net income                                                                 | $4,155   | $4,661   | $3,530                                | $6,631   | $10,864
Income per share—basic:                                                    |          |          |                                       |          |
Continuing operations                                                      | $0.35    | $0.38    | $0.12                                 | $0.43    | $0.58
Discontinued operations                                                    | —        | —        | 0.15                                  | 0.04     | 0.16
Net income per share                                                       | $0.35    | $0.38    | $0.27                                 | $0.47    | $0.74
Income per share—diluted:                                                  |          |          |                                       |          |
Continuing operations                                                      | $0.35    | $0.37    | $0.12                                 | $0.43    | $0.58
Discontinued operations                                                    | —        | —        | 0.15                                  | 0.04     | 0.16
Net income per share                                                       | $0.35    | $0.37    | $0.27                                 | $0.47    | $0.74
Shares used in per share calculation from continuing operations —basic     | 11,809   | 12,323   | 12,882                                | 13,997   | 14,722
Shares used in per share calculation from discontinued operations —basic   | 11,809   | 12,323   | 12,882                                | 13,997   | 14,722
Shares used in per share calculation from continuing operations—diluted    | 12,035   | 12,510   | 12,894                                | 13,997   | 14,722
Shares used in per share calculation from discontinuing operations—diluted | 12,035   | 12,510   | 12,894                                | 13,997   | 14,722 |


| _id | d1b30a394 |
| title |  |
| text | Deferred income taxes are recorded for differences in the basis of assets and liabilities for financial reporting purposes and tax reporting purposes. Deferred tax assets (liabilities) were comprised of the following:

At January 3, 2020, the Company had state net operating losses of $77 million and state tax credits of $7 million. Both will begin to expire in fiscal 2020; however, the Company expects to utilize $24 million and $7 million of these state net operating losses and state tax credits, respectively. The Company also had foreign net operating losses of $44 million, which do not expire. The Company expects to utilize $9 million of these foreign net operating losses.

Our valuation allowance for deferred tax assets was $20 million and $28 million as of January 3, 2020 and December 28, 2018, respectively. The valuation allowance decreased by $8 million primarily due to the sale of the commercial cybersecurity business and releases related to the expected utilization of certain carryover attributes, partially offset by an increase related to foreign withholding taxes.

 |
| table | | January 3, 2020 | December 28, 2018
----------------------------------------------- | --------------- | -----------------
                                                | (in millions)   |
Operating lease liabilities                     | $115            | $—
Accrued vacation and bonuses                    | 54              | 48
Reserves                                        | 46              | 57
Deferred compensation                           | 26              | 25
Credits and net operating losses carryovers     | 25              | 31
Vesting stock awards                            | 18              | 20
Accumulated other comprehensive loss            | 12              | —
Deferred rent and tenant allowances             | 4               | 18
Investments                                     | 2               | 18
Deferred gain                                   | —               | 20
Other                                           | 9               | 13
Total deferred tax assets                       | 311             | 250
Valuation allowance                             | (20)            | (28)
Deferred tax assets, net of valuation allowance | 291             | 222
Purchased intangible assets                     | $(339)          | $(326)
Operating lease right-of-use assets             | (103)           | —
Deferred revenue                                | (17)            | (40)
Employee benefit contributions                  | (6)             | (4)
Accumulated other comprehensive income          | —               | (6)
Partnership interest                            | —               | (2)
Other                                           | (10)            | (14)
Total deferred tax liabilities                  | (475)           | (392)
Net deferred tax liabilities                    | $(184)          | $(170) |


| _id | d1b373038 |
| title |  |
| text | Note 10 – Income taxes
The provision (benefit) for income taxes consists of the following:

 |
| table | | For the Years Ended December 31, |
------------------------------------ | -------------------------------- | -------
                                     | 2019                             | 2018
Current:                             |                                  |
Federal                              | $ (27)                           | $ (13 )
State and local                      | 276                              | 249
Total current                        | 249                              | 236
Deferred                             | 533                              | (461)
Provision (benefit) for income taxes | $ 782                            | $ (225) |


| _id | d1b343c66 |
| title |  |
| text | Equity, liabilities and net debt in the consolidated financial statements
Equity amounts to €2,735 million (30/9/2018: €3,074 million), while liabilities amounts to €11,762 million (30/9/2018: €12,132 million). Net debt related to continuing operations decreased by €0.2 billion in the adjusted year-on-year comparison and amounted to €2.9 billion as of 30 September 2019 (30/09/2018: €3.1 billion).
1 Adjustment of previous year according to explanation in notes

2 Shown in the balance sheet under other financial assets (current).
3 Adjusted for the effects of discontinued operations.

 |
| table | € million                                    | 30/9/2018 1 | 30/9/2018 adjusted3 | 30/9/2019
-------------------------------------------- | ----------- | ------------------- | ---------
Equity                                       | 3,074       | 3,074               | 2,735
Liabilities                                  | 12,132      | 12,132              | 11,762
Net debt                                     | 2,710       | 3,102               | 2,858
Financial liabilities (incl. finance leases) | 4,010       | 4,010               | 3,369
Cash and cash equivalents                    | 1,298       | 906                 | 500
Short-term financial investments2            | 2           | 2                   | 11 |


| _id | d1b3229ee |
| title |  |
| text | (c) Additional Segment Information
The majority of our assets as of July 27, 2019 and July 28, 2018 were attributable to our U.S. operations. In fiscal 2019, 2018, and 2017, no single customer accounted for 10% or more of revenue.
Property and equipment information is based on the physical location of the assets. The following table presents property and equipment information for geographic areas (in millions):

 |
| table | | July 27, 2019 | July 28, 2018 | July 29, 2017
---------------------------- | ------------- | ------------- | -------------
Property and equipment, net: |               |               |
United States                | $2,266        | $2,487        | $2,711
International                | 523           | 519           | 611
Total                        | $2,789        | $3,006        | $3,322 |


| _id | d1b394972 |
| title |  |
| text | NOTE 2. RIGHT-OF-USE ASSETS
The Company leases many assets, including land, buildings, houses, motor vehicles, machinery and equipment. Leases typically run up to a period of 5 years, some with an option to renew the lease after the end of the non-cancelable period. Lease payments are renegotiated on a periodic basis; timing is depending on the region and type of lease. The Company has not entered into any sub-lease arrangements.
Right-of-use assets

 |
| table | | Land and buildings | Motor vehicles | Other machinery and equipment | Total
------------------------------------------- | ------------------ | -------------- | ----------------------------- | -------
Balance January 1, 2019                     | 23,579             | 1,488          | 620                           | 25,687
Additions                                   | 6,475              | 1,588          | 16                            | 8,079
Transfer from property, plant and equipment | 459                | –              | –                             | 459
Modifications and reassessments             | 75                 | 31             | (24)                          | 82
Retirements                                 | –                  | –              | –                             | –
Depreciation for the year                   | (6,057)            | (1,008)        | (268)                         | (7,333)
Foreign currency translation effect         | 518                | 43             | 12                            | 573
Balance December 31, 2019                   | 25,049             | 2,142          | 356                           | 27,547 |


| _id | d1b326814 |
| title |  |
| text | EXECUTIVE OFFICERS OF THE REGISTRANT
Executive officers of our Company are appointed by the Board of Directors and serve at the discretion of the Board. The following table sets forth certain information with respect to all executive officers of our Company.

CHRISTOPHER H. ATAYAN has served in various senior executive positions with the Company since March 2006, including his service as Chairman of the Board since January 2008 and Chief Executive Officer since October 2006, and has been a director of the Company since 2004. Mr. Atayan has served as the Senior Managing Director of Slusser Associates, a private equity and investment banking firm, since 1988, and has been engaged in private equity and investment banking since 1982. He also serves on the Board of

since 1982. He also serves on the Board of Eastek Holdings, LLC, a manufacturing company.

ANDREW C. PLUMMER has served as our President and Chief Operating Officer since October 2018, as our Chief Financial Officer since January 2007, and as our Secretary from January 2007 to October 2018. From 2004 to 2007, Mr. Plummer served our company in various roles including Acting Chief Financial Officer, Corporate Controller, and Manager of SEC Compliance. Prior to joining our company in 2004, Mr. Plummer practiced public accounting, primarily with the accounting firm Deloitte and Touche, LLP (now

the accounting firm Deloitte and Touche, LLP (now Deloitte).

CHARLES J. SCHMADERER has served as the Company’s Vice President and Corporate Controller since April 2018 and as Secretary since October 2018. From 2006 to 2018, Mr. Schmaderer served the Company in various roles including as the Vice President of Financial Reporting and Assistant Secretary, and as the Director of Financial and SEC Reporting. Prior to joining AMCON in 2006, Mr. Schmaderer practiced public accounting, primarily with the accounting firm Grant Thornton, LLP and also holds a Master of

Grant Thornton, LLP and also holds a Master of Business Administration (MBA).

 |
| table | Name                  | Age | Position
--------------------- | --- | --------------------------------------------------------
Christopher H. Atayan | 59  | Chairman of the Board, Chief Executive Officer, Director
Andrew C. Plummer     | 45  | President, Chief Financial Officer, Director
Charles J. Schmaderer | 50  | Vice President, Corporate Controller, Secretary |


| _id | d1b33add2 |
| title |  |
| text | Accounts Receivable
The following is a summary of Accounts receivable (in thousands):

 |
| table | | June 30,
2019 | June 30,
2018
------------------------------- | ------------- | -------------
Accounts receivable             | $201,365      | $225,167
Allowance for doubtful accounts | (1,054)       | (1,478)
Allowance for product returns   | (25,897)      | (11,266)
Accounts receivable, net        | $174,414      | $212,423 |


| _id | d1b392bae |
| title |  |
| text | Financial position and cash flow
Capital expenditure and cash flow
Net operating cash inflow was $4,709,000, which was $4,081,000 lower than last year. The reduction in operating revenue was offset by lower operational costs. However, net cash was impacted by the increase in trail to upfront revenue mix. In addition, as a result of the loss position reported for FY18, the Group received a net tax refund of $2,327,000 during the year, compared to the prior year net tax paid of $172,000.

Net investing cash outflows for the year was $12,337,000. The $7,755,000 decrease in spend in investing activities relates to the Group’s controlling interest acquisition of iMoney in December 2017.
Net financing cash outflows for the 2019 year totalled $3,471,000. This included $2,839,000 lease payments and $497,000 interest expense related to leases. The material decrease against the prior year comparative period relates to $32,918,000 paid in share buy-backs and dividends in the prior period.

 |
| table | CASH FLOW SUMMARY                             | 2019 $’000 | 2018 $’000 RESTATED | CHANGE
--------------------------------------------- | ---------- | ------------------- | ------
Net cash provided  from operating  activities | 4,709      | 8,790               | 46%
Net cash used in  investing activities        | (12,337)   | (20,092)            | (39%)
Net cash used in financing activities         | (3,471)    | (36,014)            | (90%)
Net change in cash and cash equivalent        | (11,099)   | (47,316)            | (77%) |


| _id | d1b2f68da |
| title |  |
| text | Interest expense includes the following (in millions):
The remaining period over which the unamortized debt discount will be recognized as non-cash interest expense is 7.88 years, 5.88 years, and 17.88 years for the 2017 Senior Convertible Debt, 2015 Senior Convertible Debt and 2017 Junior Convertible Debt, respectively.

In November 2017, the Company called for redemption $14.6 million in principal value of the remaining outstanding 2007 Junior Subordinated Convertible Debt (2007 Junior Convertible Debt) with an effective redemption date of December 15, 2017 for which substantially all holders submitted requests to convert. Prior to the call, conversion requests were received in both the second and third quarters of fiscal 2018. Total conversions for fiscal 2018 were for a principal amount of $32.5 million for which the

a principal amount of $32.5 million for which the Company settled the principal amount in cash and issued 0.5 million shares of its common stock in respect of the conversion value in excess of the principal amount for the conversions occurring prior to the redemption notice and $41.0  of redemption. A loss on total conversions was recorded for $2.2 million.

In June 2017, the Company exchanged, in privately negotiated transactions, $111.3 million aggregate principal amount of its 2007 Junior Convertible Debt for (i) $111.3 million principal amount of 2017 Junior Convertible Debt with a market value of $119.3 million plus (ii) the issuance of 3.2 million shares of the Company's common stock with a value of $254.6 million, of which $56.3 million was allocated to the fair value of the liability and $321.1 million was allocated to the reacquisition of the equity

was allocated to the reacquisition of the equity component for total consideration of $374.0 million. The transaction resulted in a loss on settlement of the 2007 Junior Convertible Debt of approximately $13.8 million, which represented the difference between the fair value of the liability component at time of repurchase and the sum of the carrying values of the debt component and any unamortized debt issuance costs. The debt discount on the new 2017 Junior Convertible Debt was the difference between the

Convertible Debt was the difference between the par value and the fair value of the debt resulting in a debt discount of $55.1 million which will be amortized to interest expense using the effective interest method over the term of the debt.

In February 2017, the Company issued the 2017 Senior Convertible Debt and 2017 Junior Convertible Debt for net proceeds of $2.04 billion and $567.7 million, respectively. In connection with the issuance of these instruments, the Company incurred issuance costs of $33.7 million, of which $17.8 million and $3.4 million was recorded as convertible debt issuance costs related to the 2017 Senior Convertible Debt and 2017 Junior Convertible Debt, respectively, and will be amortized using the effective interest

will be amortized using the effective interest method over the term of the debt. The balance of $12.5 million in fees was recorded to equity. Interest on both instruments is payable semi-annually on February 15 and August 15 of each year.

In February 2015, the Company issued the 2015 Senior Convertible Debt for net proceeds of approximately $1.69 billion. In connection with the issuance, the Company incurred issuance costs of $30.3 million, of which $20.4 million was recorded as debt issuance costs and will be amortized using the effective interest method over the term of the debt. The balance of $9.9 million was recorded to equity.

The Company utilized the proceeds from the issuances of the 2017 Senior Convertible Debt, 2017 Junior Convertible Debt, and 2015 Senior Convertible Debt to reduce amounts borrowed under its Credit Facility and to settle a portion of the 2007 Junior Convertible Debt in privately negotiated transactions. In February 2017 and February 2015, the Company settled $431.3 million and $575.0 million, respectively, in aggregate principal of its 2007 Junior Convertible Debt. The February 2015 repurchase consisted

Debt. The February 2015 repurchase consisted solely of cash. In February 2017, the Company used cash of $431.3 million and an aggregate of 12.0 million in shares of the Company's common stock valued at $862.7 million for total consideration of $1.29 billion to repurchase $431.3 million of the 2007 Junior Convertible Debt, of which $188.0 million was allocated to the liability component and $1.11 billion was allocated to the equity component. In addition, in February 2017, there was an inducement fee of

in February 2017, there was an inducement fee of $5.0 million which was recorded in the consolidated statements of income in loss on settlement of debt. The consideration transferred in February 2015 was $1.13 billion, of which $238.3 million was allocated to the liability component and $896.3 million was allocated to the equity component. In the case of both settlements of the 2007 Junior Convertible Debt, the consideration was allocated to the liability and equity components using the equivalent rate

and equity components using the equivalent rate that reflected the borrowing rate for a similar nonconvertible debt prior to the retirement. The transactions resulted in a loss on settlement of debt of approximately $43.9 million and $50.6 million in fiscal 2017 and fiscal 2015, respectively, which represented, in each case, the difference between the fair value of the liability component at time of repurchase and the sum of the carrying values of the debt component and any unamortized debt issuance costs.

 |
| table | |        | Year Ended March 31, |
----------------------------------------------------- | ------ | -------------------- | ------
                                                      | 2019   | 2018                 | 2017
Debt issuance amortization                            | $12.9  | $3.1                 | $2.4
Debt discount amortization                            | 2.2    | —                    | —
Interest expense                                      | 291.8  | 6.6                  | 40.4
Total interest expense on Senior Secured Indebtedness | 306.9  | 9.7                  | 42.8
Debt issuance amortization                            | 3.6    | 3.5                  | 2.1
Debt discount amortization                            | 112.4  | 106.1                | 56.1
Coupon interest expense                               | 77.1   | 77.3                 | 44.5
Total interest expense on Convertible Debt            | 193.1  | 186.9                | 102.7
Other interest expense                                | 2.9    | 2.4                  | 0.8
Total interest expense                                | $502.9 | $199.0               | $146.3 |


| _id | d1b3780ba |
| title |  |
| text | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except for share and per share data)
NOTE 9 — Accrued Expenses and Other Liabilities
The components of accrued expenses and other liabilities are as follows:

 |
| table | | As of December 31, |
-------------------------------------------- | ------------------ | -------
                                             | 2019               | 2018
Accrued product-related costs                | $4,464             | $4,377
Accrued income taxes                         | 7,903              | 6,914
Accrued property and other taxes             | 1,574              | 1,976
Accrued professional fees                    | 1,599              | 3,350
Contract liabilities                         | 2,877              | 1,981
Dividends payable                            | 1,299              | 1,310
Remediation reserves                         | 11,444             | 11,274
Other accrued liabilities                    | 5,218              | 6,165
Total accrued expenses and other liabilities | $36,378            | $37,347 |


| _id | d1b30f3ee |
| title |  |
| text | Restricted Share Units
The following table illustrates the number and WASP on date of award, and movements in, restricted share units (“RSUs”) and cash-based awards granted under the 2015 LTIP:
RSUs and cash-based awards have a vesting period between two to five years, with no award vesting within the first 12 months of the grant.

 |
| table | | Year-ended 31 March 2019 |         | Year-ended 31 March 2018 |
------------------------------------ | ------------------------ | ------- | ------------------------ | -------
                                     | Number                   | WASP    | Number                   | WASP
Restricted share units               | 000’s                    | £ pence | 000’s                    | £ pence
Outstanding at the start of the year | 14,840                   | 316.09  | 15,350                   | 215.92
Awarded                              | 8,749                    | 478.44  | 6,337                    | 453.14
Forfeited                            | (1,421)                  | 426.11  | (1,421)                  | 284.15
Released                             | (6,822)                  | 309.77  | (5,426)                  | 218.49
Outstanding at the end of the year   | 15,346                   | 401.27  | 14,840                   | 316.09 |