| _id | d1b349f26 |
| title |  |
| text | B. Liquidity and Capital Resources

Navios Holdings has historically financed its capital requirements with cash flows from operations, issuances of debt securities and borrowings under bank credit facilities. Main uses of funds have been refinancings of outstanding debt, capital expenditures for the acquisition of new vessels, new construction and upgrades at the port terminals and expenditures incurred in connection with ensuring that the owned vessels comply with international and regulatory standards. Navios Holdings may from time to

standards. Navios Holdings may from time to time, subject to restrictions under its debt and equity instruments, including limitations on dividends and repurchases under its preferred stock, depending upon market conditions and financing needs, use available funds to refinance or repurchase its debt in privately negotiated or open market transactions, by tender offer or otherwise, in compliance with applicable laws, rules and regulations, at prices and on terms Navios Holdings deems appropriate (which may

Navios Holdings deems appropriate (which may be below par) and subject to Navios Holdings cash requirements for other purposes, compliance with the covenants under Navios Holdings’ debt agreements, and other factors management deems relevant. Generally, our sources of funds may be from cash flows from operations, long-term borrowings and other debt or equity financings, proceeds from asset sales and proceeds from sale of our stake in our investments. We cannot assure you that we will be able to secure

cannot assure you that we will be able to secure adequate financing or obtain additional funds on favorable terms, to meet our liquidity needs.

See “Item 4.B Business Overview — Exercise of Vessel Purchase Options”, “Working Capital Position” and “Long-Term Debt Obligations and Credit Arrangements” for further discussion of Navios Holdings’ working capital position.
The following table presents cash flow information for each of the years ended December 31, 2019, 2018, and 2017 and were adjusted to reflect the adoption of ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash.

Cash provided by operating activities for the year ended December 31, 2019 as compared to the year ended December 31, 2018:
Net cash provided by operating activities increased by $40.5 million to $96.1 million for the year ended December 31, 2019, as compared to $55.6 million for the year ended December 31, 2018. In determining net cash provided by operating activities, net loss is adjusted for the effects of certain non-cash items, which may be analyzed in detail as follows:

 |
| table | (in thousands of U.S. dollars)                                       | Year Ended December 31, 2019 | Year Ended December 31, 2018 | Year Ended December 31, 2017
-------------------------------------------------------------------- | ---------------------------- | ---------------------------- | ----------------------------
Net cash provided by operating activities                            | $96,112                      | $55,637                      | $48,117
Net cash (used in)/ provided by investing activities                 | (56,467)                     | 27,863                       | (42,365)
Net cash used in financing activities                                | (111,692)                    | (66,916)                     | (12,940)
(Decrease)/Increase in cash and cash equivalents and restricted cash | (72,047)                     | 16,584                       | (7,188)
Cash and cash equivalents and restricted cash, beginning of year     | 150,774                      | 134,190                      | 141,378
Cash and cash equivalents and restricted cash, end of year           | $78,727                      | 150,774                      | $134,190 |


| _id | d1b3bf6e0 |
| title |  |
| text | The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:
Of the $2.8 billion and $2.4 billion net deferred tax liability at December 31, 2019 and 2018, respectively, $2.9 billion and $2.5 billion is reflected as a long-term liability and $118 million and $131 million is reflected as a net noncurrent deferred tax asset at December 31, 2019 and 2018, respectively.

 |
| table | | As of December 31,    |
------------------------------------------------------------------------ | --------------------- | -------
                                                                         | 2019                  | 2018
                                                                         | (Dollars in millions) |
Deferred tax assets                                                      |                       |
Post-retirement and pension benefit costs                                | $1,169                | 1,111
Net operating loss carryforwards                                         | 3,167                 | 3,445
Other employee benefits                                                  | 134                   | 162
Other                                                                    | 577                   | 553
Gross deferred tax assets                                                | 5,047                 | 5,271
Less valuation allowance                                                 | (1,319)               | (1,331)
Net deferred tax assets                                                  | 3,728                 | 3,940
Deferred tax liabilities                                                 |                       |
Property, plant and equipment, primarily due to depreciation differences | (3,489)               | (3,011)
Goodwill and other intangible assets                                     | (3,019)               | (3,303)
Other                                                                    | —                     | (23)
Gross deferred tax liabilities                                           | (6,508)               | (6,337)
Net deferred tax liability                                               | $(2,780)              | (2,397) |


| _id | d1b355a38 |
| title |  |
| text | Option Exercises and Stock Vested in 2018
The following table sets forth the number of shares of common stock acquired during 2018 by our named executive officers upon the exercise of stock options or upon the vesting of RSUs or RSAs, as well as the value realized upon such equity award transactions.

(1) Calculated by multiplying (i) the fair market value of Class A common stock on the vesting date, which was determined using the closing price on the New York Stock Exchange of a share of Class A common stock on the date of vest, or if such day is a holiday, on the immediately preceding trading day less the option exercise price paid for such shares of common stock, by (ii) the number of shares of common stock acquired upon exercise.

(2) Reflects the aggregate number of shares of Class A common stock underlying RSUs and RSAs that vested in 2018. Of the amount shown for Messrs. Daswani and Murphy and Mses. Friar, Henry, Reses and Whiteley, 20,132, 6,741, 44,857, 59,014, 91,306 and 17,217 shares, respectively, of Class A common stock were withheld to cover tax withholding obligations upon vesting.

(3) Calculated by multiplying (i) the fair market value of Class A common stock on the vesting date, which was determined using the closing price on the New York Stock Exchange of a share of common stock on the date of vest, or if such day is a holiday, on the immediately preceding trading day, by (ii) the number of shares of common stock acquired upon vesting. Of the amount shown for Messrs. Daswani and Murphy and Mses. Friar, Henry, Reses and Whiteley, $1,389,704, $414,596, $2,782,628, $3,619,149,

$1,389,704, $414,596, $2,782,628, $3,619,149, $5,502,076 and $1,114,287, respectively, represents the value of shares withheld to cover tax withholding obligations upon vesting.

 |
| table | | Option Awards                             |                                             | Stock Awards                                        |
------------ | ----------------------------------------- | ------------------------------------------- | --------------------------------------------------- | --------------------------------------------------
Name         | Number of Shares Acquired on Exercise (#) | Number of Value Realized on Exercise ($)(1) | Shares Acquired on Vesting of RSUs and RSAs (#) (2) | Value Realized on Vesting of RSUs and RSAs ($) (3)
Mr. Dorsey   | —                                         | —                                           | —                                                   | —
Ms. Friar    | 1,082,343                                 | 54,631,297                                  | 95,889                                              | 5,788,657
Ms. Henry    | 200,000                                   | 13,187,645                                  | 124,498                                             | 7,475,787
Ms. Reses    | —                                         | —                                           | 189,577                                             | 11,284,454
Ms. Whiteley | 20,625                                    | 989,821                                     | 38,156                                              | 2,375,984
Mr. Daswani  | —                                         | —                                           | 45,310                                              | 3,106,268
Mr. Murphy   | —                                         | —                                           | 18,024                                              | 1,120,072 |


| _id | d1b364a7e |
| title |  |
| text | A tax credit of £8.9m in the year compared to a £13.7m charge in the prior year. This included a deferred tax credit in the current year of £6.1m, largely reflecting the loss before tax reported of £42.7m and a credit of £1.7m relating to the adjustment of prior period losses and capital allowances. A current year tax credit of £1.1m was in respect of overseas tax.

A deferred tax liability at 30 March 2019 of £13.5m compared to a liability of £12.1m at 31 March 2018. This movement is primarily due to a slightly higher pensions surplus reported at 30 March 2019 compared to 31 March 2018 reflecting the allowability for tax on pensions contribution payments. Recognised and unrecognised deferred tax assets relating to brought forward losses were approximately £44m at 30 March 2019 and equate to around £250m of future taxable profits.

The corporation tax rate and deferred tax rate applied in calculations are 19.0% and 17.0% respectively.

 |
| table | £m                                                    | 2018/19 | 2017/18 | Change
----------------------------------------------------- | ------- | ------- | ------
Overseas current tax                                  |         |         |
Current year                                          | 1.1     | 0.8     | 0.3
Deferred tax                                          |         |         |
Current period                                        | 6.1     | (4.1)   | 10.2
Prior periods                                         | 1.7     | (8.1)   | 9.8
– Adjustment to restate opening deferred tax at 17.0% | –       | (2.3)   | 2.3
Income tax credit/ (charge)                           | 8.9     | (13.7)  | 22.6 |


| _id | d1b3b7a9e |
| title |  |
| text | A reconciliation of the provision for income taxes to the amount computed by applying the statutory federal income tax rate to income before income taxes for the periods presented was as follows:

The Company's effective tax rate for fiscal 2019 was favorably impacted primarily by excess tax benefits related to employee stock-based payment transactions and federal research tax credits, partially offset by an increase in valuation allowances arising from foreign withholding tax and an increase in taxes related to the sale of the commercial cybersecurity business.

The Company's effective tax rate for fiscal 2018 was favorably impacted primarily by a decrease in valuation allowances arising from the taxable conversion of a subsidiary and the utilization of capital losses, an increase in deferred tax assets related to stock basis of a subsidiary held for sale, excess tax benefits related to employee stock-based payment transactions and federal research tax credits.

The Company's effective tax rate for fiscal 2017 was favorably impacted primarily by the Tax Act's reduction of the federal corporate tax rate from 35% to 21% applied to the Company's fiscal 2017 year-end deferred tax balances and excess tax benefits related to employee stock-based payment transactions.

 |
| table | |                 | Year Ended        |
-------------------------------------------------------- | --------------- | ----------------- | -----------------
                                                         | January 3, 2020 | December 28, 2018 | December 29, 2017
                                                         |                 | (in millions)     |
Amount computed at the statutory federal income tax rate | $182            | $128              | $138
State income taxes, net of federal tax benefit           | 22              | 10                | 31
Excess tax benefits from stock-based compensation        | (11)            | (9)               | (12)
Research and development credits                         | (11)            | (9)               | (7)
Change in valuation allowance for deferred tax assets    | 6               | (49)              | 7
Stock basis in subsidiary held for sale                  | 5               | (16)              | —
Change in accruals for uncertain tax positions           | 4               | 1                 | —
Dividends paid to employee stock ownership plan          | (2)             | (2)               | (4)
Impact of foreign operations                             | 2               | —                 | (4)
Taxable conversion of a subsidiary                       | —               | (17)              | —
Change in statutory federal tax rate                     | —               | (10)              | (125)
Capitalized transaction costs                            | —               | —                 | 9
Other                                                    | (1)             | 1                 | (4)
Total                                                    | $196            | $28               | $29
Effective income tax rate                                | 22.6%           | 4.6%              | 7.4% |


| _id | d1b2f54f8 |
| title |  |
| text | Our revenues for 2019 include $1.9 million related to the acquired MGI business. Our net loss for 2019 includes $0.3 million of net loss from the acquired MGI business. The following table provides unaudited pro forma information for the periods presented as if the MGI acquisition had occurred January 1, 2018.

No adjustments have been made in the pro forma information for synergies that are resulting or planned from the MGI acquisition. The unaudited proforma information is not indicative of the results that may have been achieved had the companies been combined as of January 1, 2018, or of our future operating results.

 |
| table | | Year Ended December 31 |
------------------------------------------------------------------------ | ---------------------- | ------------------
                                                                         | 2019                   | 2018
Revenues (in thousands)                                                  | $ 224,913              | $ 17,542
Loss from continuing operations (in thousands)                           | $ (13,432)             | $ ( 7,792)
Loss per share - continuing operations                                   | $           (0.42)     | $          ( 0.35)
Weighted average number of common shares outstanding - basic and diluted | 32,359,316             | 22,099,149 |


| _id | d1b34e72e |
| title |  |
| text | NOTE 8. PROPERTY AND EQUIPMENT
The following table details the components of property and equipment (amounts in thousands).

Amounts payable for property and equipment included in accounts payable totaled $0.1 million at December 31, 2019, and $0.2 million at December 31, 2018. During 2019, we financed the purchase of $0.3 million of property with finance leases and equipment notes. Assets which had not yet been placed in service, included in property and equipment, totaled $1.5 million at December 31, 2019, and $2.2 million at December 31, 2018.

 |
| table | | December 31   |              |
----------------------------- | ------------- | ------------ | ----------------------------
                              | 2019          | 2018         | Estimated Useful Lives
Land                          | $730          | $585         |
Furniture and fixtures        | 476           | 430          | 5-10 years
Plant                         | 9,667         | 8,613        | 20-40 years, or life of lea
Computer and software         | 1,317         | 1,295        | 3-5 years
Leasehold improvements        | 2,019         | 681          | 4-15 years, or life of lease
Machinery and equipment       | 16,864        | 13,528       | 5-15 years
Property and equipment, cost  | 31,073        | 25,132       |
Less accumulated depreciation | 11,996        | 10,122       |
Property and equipment, net   | $      19,077 | $     15,010 | |


| _id | d1b2e9086 |
| title |  |
| text | The pension expenses of the direct and indirect company pension plan commitments can be broken down as follows:
1 Netted against employees’ contributions.
2 Included therein: Interest effect from the adjustment of the asset ceiling.

The entire loss to be recognised outside of profit or loss in the other comprehensive income amounts to €90 million in financial year 2018/19. This figure is comprised of the effect from the change in actuarial parameters in the amount of €+247 million and the experience-based adjustments of €+4 million. It was offset by income from plan assets of €103 million and a gain of €58 million resulting from the change in the effect of the asset ceiling in the Netherlands.

In addition to expenses from defined benefit commitments, expenses for payments to external pension providers relating to defined contribution pension commitments of €82 million in financial year 2018/19 (2017/18: €82 million) were recorded. These figures also include payments to statutory pension insurance.

The provisions for obligations similar to pensions essentially comprise commitments from employment anniversary allowances, death benefits and partial retirement plans. Provisions amounting to €34 million (30/9/2018: €41 million) were allocated for these commitments. The commitments are valued on the basis of actuarial expert opinions. The valuation parameters used for this purpose are generally determined in the same way as for the company pension plan.

 |
| table | € million                                          | 2017/2018 | 2018/2019
-------------------------------------------------- | --------- | ---------
Current service cost1                              | 24        | 21
Net interest expenses2                             | 11        | 9
Past service cost (incl. curtailments and changes) | 0         | 0
Settlements                                        | 0         | 0
Other pension expenses                             | 1         | 1
Pension expenses                                   | 36        | 31 |


| _id | d1b384f36 |
| title |  |
| text | Item 14. Principal Accountant Fees and Services
Fees For Professional Audit Services
The following is a summary of fees billed by the Company’s independent registered public accountants, PricewaterhouseCoopers LLP, for the years ended December 31, 2019 and 2018:

(1) Represents the aggregate fees billed for the audit of the Company’s financial statements, review of the financial statements included in the Company’s quarterly reports and services in connection with the statutory and regulatory filings or engagements for those years.
(2)  Represents the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under “audit fees.”

(3)  Represents the aggregate fees billed for tax compliance, advice and planning.
(4)  Represents the aggregate fees billed for all products and services provided that are not included under “audit fees,” “audit-related fees” or “tax fees.”

 |
| table | | Fiscal Year | Fiscal Year
--------------------- | ----------- | -----------
                      | 2019        | 2018
Audit Fees(1)         | $1,925,000  | $1,956,000
Audit-Related Fees(2) | —           | 14,000
Tax Fees(3)           | —           | —
All Other Fees(4)     | 222,000     | 157,000
Total Fees            | $2,147,000  | $2,127,000 |


| _id | d1b2e50e4 |
| title |  |
| text | (a) Description of segments and principal activities (continued)                                                                                The chief operating decision-makers assess the performance of the operating segments mainly based on segment revenue and gross profit of each operating segment. The selling and marketing expenses and general and administrative expenses are common costs incurred for these operating segments as a whole and therefore, they are not

segments as a whole and therefore, they are not included in the measure of the segments’ performance which is used by the chief operating decisionmakers as a basis for the purpose of resource allocation and assessment of segment performance. Interest income, other gains/(losses), net, finance income/(costs), net, share of profit/(loss) of associates and joint ventures and income tax expense are also not allocated to individual operating segment.

There were no material inter-segment sales during the years ended 31 December 2019 and 2018. The revenues from external customers reported to the chief operating decision-makers are measured in a manner consistent with that applied in the consolidated income statement.

Other information, together with the segment information, provided to the chief operating decision-makers, is measured in a manner consistent with that applied in these consolidated financial statements. There were no segment assets and segment liabilities information provided to the chief operating decision-makers.
The segment information provided to the chief operating decision-makers for the reportable segments for the years ended 31 December 2019 and 2018 is as follows:

 |
| table | | VAS         | FinTech and Business Services | Online Advertising | Others      | Total
---------------- | ----------- | ----------------------------- | ------------------ | ----------- | -----------
                 | RMB’Million | RMB’Million                   | RMB’Million        | RMB’Million | RMB’Million
Segment revenues | 199,991     | 101,355                       | 68,377             | 7,566       | 377,289
Gross profit     | 105,905     | 27,524                        | 33,517             | 587         | 167,533
Depreciation     | 3,461       | 6,669                         | 2,065              | 108         | 12,303
Amortisation     | 14,710      | –                             | 9,977              | 3,115       | 27,802 |


| _id | d1b3698ee |
| title |  |
| text | NOTE 17. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
FINANCIAL INSTRUMENTS
Financial instruments include:
The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable equal their fair values because of the short-term nature of these instruments.

 |
| table | | December 31, |
------------------------- | ------------ | -------
                          | 2018         | 2019
Financial assets:         |              |
Cash and cash equivalents | 285,907      | 497,874
Accounts receivable       | 173,450      | 199,535
Financial liabilities:    |              |
Accounts payable          | 80,640       | 119,712 |


| _id | d1a738764 |
| title |  |
| text | NOTE 7 – PROPERTY AND EQUIPMENT
Property and equipment consist of the following (in thousands):
Depreciation expense was $8.6 million, $8.0 million, and $8.4 million in fiscal years ended February 28, 2019, 2018 and 2017, respectively.
Fixed assets not yet in service consist primarily of capitalized internal-use software and certain tooling and other equipment that have not been placed into service.

 |
| table | | February 28, |
---------------------------------------------- | ------------ | --------
                                               | 2019         | 2018
Leasehold improvements                         | $3,522       | $3,157
LoJack system components and law enforcement   |              |
tracking units                                 | 20,326       | 20,558
Plant equipment and tooling                    | 13,078       | 16,842
Office equipment, computers and furniture      | 11,553       | 14,206
Software                                       | 31,349       | 31,427
                                               | 79,828       | 86,190
Less accumulated depreciation and amortization | (58,641)     | (69,585)
                                               | 21,187       | 16,605
Fixed assets not yet in service                | 5,836        | 4,657
                                               | $27,023      | $21,262 |


| _id | d1b32f284 |
| title |  |
| text | Opening Equity Balance Sheet Adjustments from Accounting Standards Adopted in 2018
On January 1, 2018, we adopted Topic 606, ASU 2018-02, Income Statement-Reporting Comprehensive Income and other ASUs. We adopted Topic 606 using the modified retrospective method. We early adopted ASU 2018-02, which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Tax Cuts and Jobs Act (TCJA).

The cumulative after-tax effect of the changes made to our consolidated balance sheet for the adoption of Topic 606, ASU 2018-02 and other ASUs was as follows:

 |
| table | |                      | Adjustments due to | Adjustments due to | Adjustments due to |
-------------------------------------- | -------------------- | ------------------ | ------------------ | ------------------ | ------------------
(dollars in millions)                  | At December 31, 2017 | Topic 606          | ASU 2018-02        | Other ASUs         | At January 1, 2018
Retained earnings                      | 35,635               | 2,890              | (652)              | (6)                | 37,867
Accumulated other comprehensive income | 2,659                | —                  | 652                | (22)               | 3,289
Noncontrolling interests               | 1,591                | 44                 | —                  | —                  | 1,635 |


| _id | d1b35c64e |
| title |  |
| text | Share-Based Compensation Expense
The following table sets forth the total share-based compensation expense included in our consolidated statements of operations (amounts in millions):

 |
| table | |      | For the Years Ended December 31, |
---------------------------------------------------------------------------------------------------------------------------------- | ---- | -------------------------------- | ----
                                                                                | 2019 | 2018                             | 2017
Cost of revenues—product sales: Software royalties, amortization, and intellectual property licenses                               | $19  | $13                              | $10
Cost of revenues—subscription, licensing, and other revenues: Game Operations and Distribution Costs                               | 1    | 2                                | 1
Cost of revenues—subscription, licensing, and other revenues: Software royalties, amortization, and intellectual property licenses | 1    | 3                                | 3
Product development                                                                                | 53   | 61                               | 57
Sales and marketing                                                                                | 10   | 15                               | 15
General and administrative                                                                                | 82   | 115                              | 92
Share-based compensation expense before income taxes                                                                               | 166  | 209                              | 178
Income tax benefit                                                                                | (29) | (46)                             | (34)
Total share-based compensation expense, net of income tax benefit                                                                  | $137 | $163                             | $144 |


| _id | d1b34665a |
| title |  |
| text |  |
| table | ITEM 6 | SELECTED FINANCIAL DATA
You should read the table below in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Consolidated Financial Statements and related notes included in this Annual Report (amounts in millions, except per share data).
(1)  Includes results from the acquisitions of Foundry from April 18, 2019, ComputerEase from August 19, 2019, iPipeline from August 22, 2019, and Bellefield from December 18, 2019; and the results from the Imaging businesses through disposal on February 5, 2019 and Gatan through disposal on October 29, 2019.
(2)  Includes results from the acquisitions of Quote Software from January 2, 2018, PlanSwift Software from March 28, 2018, Smartbid from May 8, 2018, PowerPlan, Inc. from June 4, 2018, ConceptShare from June 7, 2018, BillBlast from July 10, 2018 and Avitru from December 31, 2018.
(3)  Includes results from the acquisitions of Phase Technology from June 21, 2017, Handshake Software, Inc. from August 4, 2017, Workbook Software A/S from September 15, 2017 and Onvia, Inc. from November 17, 2017.
(4)  Includes results from the acquisitions of CliniSys Group Ltd. from January 7, 2016, PCI Medical Inc. from March 17, 2016, GeneInsight Inc. from April 1, 2016, iSqFt Holdings Inc. (d/b/a ConstructConnect) from October 31, 2016, UNIConnect LC from November 10, 2016 and Deltek, Inc. from December 28, 2016.
(5)  Includes results from the acquisitions of Strata Decision Technologies LLC from January 21, 2015, SoftWriters Inc. from February 9, 2015, Data Innovations LLC from March 4, 2015, On Center Software LLC from July 20, 2015, RF IDeas Inc. from September 1, 2015, Atlantic Health Partners LLC from September 4, 2015, Aderant Holdings Inc. from October 21, 2015, Atlas Database Software Corp. from October 26, 2015; and the results from the Black Diamond Advanced Technologies through disposal on March 20, 2015 and Abel Pumps through disposal on October 2, 2015.
(6)  The Company recognized an after tax gain of $687.3 in connection with the dispositions of the Imaging businesses and Gatan during 2019. The Tax Cuts and Jobs Act of 2017 (“the Tax Act”) was signed into U.S. law on December 22, 2017, which was prior to the end of the Company’s 2017 reporting period and resulted in a one-time net income tax benefit of $215.4.
(7)  Net working capital equals current assets, excluding cash, less total current liabilities, excluding debt.
(8)  In 2019 working capital includes the impact of the increase in income taxes payable of approximately $200.0 due to the taxes incurred on the gain on sale of Gatan, and the adoption of Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”) which resulted in an increase to current liabilities of $56.8 as of December 31, 2019. The other balance sheet accounts impacted due to the adoption of ASC 842 are set forth in Note 16 of the Notes to Consolidated Financial Statements included in this Annual Report. |


| _id | d1b355d9e |
| title |  |
| text | Class A
As of December 31, 2019 and 2018, there were no weighted average shares of unvested Class A restricted common stock shares considered to be participating securities.
The computation of diluted earnings per share assumes the issuance of common stock for all potentially dilutive stock options and restricted stock units not classified as participating securities.

As of December 31, 2019, there were 1,718,865 shares of Class A restricted stock units and 1,478,756 Class A stock options outstanding and considered to be potentially dilutive securities. As of December 31, 2018, there were 912,315 shares of Class A restricted stock units and 866,011 Class A stock options outstanding and considered to be potentially dilutive securities.
The components of the calculation of basic earnings per share and diluted earnings per share are as follows:

For annual earnings per share calculations, there were 407,120 and 651,154 dilutive equity awards outstanding for the years ended December 31, 2019 and 2018. Awards of 920,845 and 469,112 shares of common stock for 2019 and 2018, respectively, were not included in the computation of diluted earnings per share because inclusion of these awards would be anti-dilutive.

 |
| table | | Years Ended December 31, |
------------------------------------------- | ------------------------ | ----------
                                            | 2019                     | 2018
Net income                                  | $8,675                   | $13,489
Weighted average common shares outstanding: |                          |
Class A common stock - basic                | 89,251,818               | 88,394,580
Class A common stock - diluted              | 89,658,938               | 89,045,734 |


| _id | d1b35f81c |
| title |  |
| text | Free cash flow
The Free cash flow for the Industrial Businesses amounted to €8,000 millions, resulting in a cash conversation rate of 0.89.
Beginning with fiscal 2020, Siemens adopts IFRS 16, Leases, applying
the modified retrospective approach as described in more detail in NOTE 2 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. As a result, the shift of lease payments from cash flows from operating activities to cash flows from financing activities will have a positive effect on Free cash flow.

With our ability to generate positive operating cash flows, our total liquidity (defined as cash and cash equivalents plus current interest-bearing debt securities) of €13.7 billion, our unused lines of credit, and our credit ratings at year-end, we believe that we have sufficient flexibility to fund our capital requirements. Also in our opinion, our operating net working capital is sufficient for our present requirements.

 |
| table | |                       |                         | Fiscal Year 2019
---------------------------------------------------------------- | --------------------- | ----------------------- | --------------------------------------
(in millions of €)                                               | Continuing operations | Discontinued operations | Continuing and discontinued operations
Cash flows from operating activities                             | 8,482                 | (27)                    | 8,456
Additions to intangible assets and property, plant and equipment | (2,610)               | −                       | (2,610)
Free cash flow                                                   | 5,872                 | (27)                    | 5,845 |


| _id | d1b3b712a |
| title |  |
| text | 6 Segment Information continued
The Group’s revenue is diversified across its entire end customer base and no single end user accounted for greater than 10 per cent of the Group’s revenue in either 2018 or 2019. In 2019 two distributors accounted for 15 per cent each, and one distributor for 11 per cent of Group billings which were attributable to all segments of the Group (2018: three distributors accounted for 15 per cent, 14 per cent and 12 per cent each).

 |
| table | | Year-ended 31 March 2019 | Year-ended 31 March 2018 Restated See note 2
------------------------------------------------ | ------------------------ | --------------------------------------------
Revenue from external customers by country       | $M                       | $M
UK                                               | 83.2                     | 73.5
USA                                              | 222.2                    | 199.0
Germany                                          | 143.5                    | 128.4
Other countries                                  | 261.7                    | 238.1
Total revenue from external customers by country | 710.6                    | 639.0 |


| _id | d1b3301a2 |
| title |  |
| text | The 2022 Notes consist of the following (in thousands):
(1) Recorded in the consolidated balance sheet within additional paid-in capital, net of $0.8 million transaction costs in equity. December 31, 2019 also includes $36.7 million market premium representing the excess of the total consideration delivered over the fair value of the liability recognized related to the $23.0 million principal balance repurchase of the 2022 Notes.

 |
| table | | As of December 31, |
---------------------------------------- | ------------------ | --------
                                         | 2019               | 2018
Liability component:                     |                    |
Principal                                | $92,000            | $115,000
Less: debt discount, net of amortization | (12,776)           | (20,903)
Net carrying amount                      | $79,224            | $94,097
Equity component (1)                     | (14,555)           | 22,094 |


| _id | d1b3c4d8e |
| title |  |
| text | General and administrative expenses consist primarily of payroll and payroll related benefits expenses, related overhead, audit fees, other professional fees, contract labour and consulting expenses and public company costs.

General and administrative expenses increased by $2.7 million during the year ended June 30, 2019 as compared to the prior fiscal year. This was primarily due to an increase in payroll and payroll-related benefits of $4.1 million and an increase in other miscellaneous expenses of $2.2 million, which includes professional fees such as legal, audit and tax related expenses. These were partially offset by a reduction in the use of facility and related expenses of $4.5 million. The remainder of the change was

of $4.5 million. The remainder of the change was attributable to other activities associated with normal growth in our business operations. Overall, general and administrative expenses, as a percentage of total revenue, remained at approximately 7%.

Our general and administrative labour resources increased by 119 employees, from 1,501 employees at June 30, 2018 to 1,620 employees at June 30, 2019.

 |
| table | | Change between Fiscal increase (decrease) |
--------------------------------------------------- | ----------------------------------------- | -------------
(In thousands)                                      | 2019 and 2018                             | 2018 and 2017
Payroll and payroll-related benefits                | $4,089                                    | $22,908
Contract labour and consulting                      | (618)                                     | (1,054)
Share-based compensation                            | 768                                       | (1,709)
Travel and communication                            | 794                                       | 80
Facilities                                          | (4,537)                                   | 5,777
Other miscellaneous                                 | 2,186                                     | 8,872
Total change in general and administrative expenses | $2,682                                    | $34,874 |


| _id | d1b340732 |
| title |  |
| text | Return on invested capital (ROIC)
ROIC measures the after tax return on the total capital invested in the business. It is calculated as adjusted operating profit after tax divided by average invested capital.
An analysis of the components is as follows:

 |
| table | | 2019    | 2018
------------------------------------------------------- | ------- | -------
                                                        | £m      | £m
Total equity                                            | 826.3   | 766.9
Net debt                                                | 334.1   | 235.8
Total invested capital                                  | 1,160.4 | 1,002.7
Average invested capital                                | 1,081.6 | 992.9
Average invested capital (excluding IFRS 16)            | 1,061.2 | 992.9
Operating profit as reported under IFRS                 | 245.0   | 299.1
Adjustments (see adjusted operating profit)             | 37.7    | (34.2)
Adjusted operating profit                               | 282.7   | 264.9
Taxation                                                | (80.6)  | (73.1)
Adjusted operating profit after tax                     | 202.1   | 191.8
Adjusted operating profit after tax (excluding IFRS 16) | 201.2   | 191.8
Return in invested capital                              | 18.7%   | 19.3%
Return in invested capital (excluding IFRS 16)          | 19.0%   | 19.3% |


| _id | d1b3bf28a |
| title |  |
| text | Other income (expense)
nm—not meaningful
Other income (expense), net changed $9.9 million in the year ended March 31, 2018 compared to the year ended March 31, 2017, which was primarily attributable to a change of $10.4 million in foreign exchange expense which was primarily attributable to the re-measurement of short-term intercompany balances denominated in currencies other than the functional currency of our operating units. The increase in interest income is primarily due to interest on investments.

 |
| table | | Year ended March 31, |                        | Period-to-period change |
-------------------------------------------------- | -------------------- | ---------------------- | ----------------------- | --------
% Change                                           | 2018                 | 2017                   | Amount                  | % Change
                                                   |                      | (dollars in thousands) |                         |
Other income (expense):                            |                      |                        |                         |
Interest income                                    | $1,310               | $510                   | $800                    | 157%
Interest expense                                   | (598)                | (268)                  | (330)                   | 123%
Foreign exchange (expense) income and other, net   | (3,439)              | 6,892                  | (10,331)                | nm
Total other income (expense), net                  | $(2,727)             | $7,134                 | $(9,861)                | nm |


| _id | d1b3b3c00 |
| title |  |
| text | In 2019, 2018 and 2017, we adopted the revised mortality tables and projection scales released by the Society of Actuaries, which decreased the projected benefit obligation of our benefit plans by $4 million, $38 million and $113 million, respectively. The change in the projected benefit obligation of our benefit plans was recognized as part of the net actuarial (gain) loss and is included in accumulated other comprehensive loss, a portion of which is subject to amortization over the remaining estimated

to amortization over the remaining estimated life of plan participants, which was approximately 16 years as of December 31, 2019.

The following tables summarize the change in the benefit obligations for the Combined Pension Plan and post-retirement benefit plans:

 |
| table | |         | Combined Pension Plan    |
--------------------------------------- | ------- | ------------------------ | -------
                                        |         | Years Ended December 31, |
                                        | 2019    | 2018                     | 2017
                                        |         | (Dollars in millions)    |
Change in benefit obligation            |         |                          |
Benefit obligation at beginning of year | $11,594 | 13,064                   | 13,244
Service cost                            | 56      | 66                       | 63
Interest cost                           | 436     | 392                      | 409
Plan amendments                         | (9)     | —                        | —
Special termination benefits charge     | 6       | 15                       | —
Actuarial (gain) loss                   | 1,249   | (765)                    | 586
Benefits paid from plan assets          | (1,115) | (1,178)                  | (1,238)
Benefit obligation at end of year       | $12,217 | 11,594                   | 13,064 |


| _id | d1b350f2e |
| title |  |
| text | Additional sources of cash available to us were international currency lines of credit and bank credit facilities totaling $26.0 million as of September 28, 2019, of which $20.8 million was unused and available. These unsecured international credit facilities were used in Europe and Japan during fiscal 2018. As of September 28, 2019, we had utilized $5.2 million of the international credit facilities as guarantees in Europe.

Our ratio of current assets to current liabilities increased to 4.6:1 at September 28, 2019 compared to 3.3:1 at September 29, 2018. The increase in our ratio was primarily due to lower income taxes payable, partially offset by decreases in our ratio due to lower accounts receivable and inventories. Our cash and cash equivalents, short-term investments and working capital are as follows (in thousands):

 |
| table | | Fiscal   |
------------------------- | -------- | --------
                          | 2019     | 2018
Cash and cash equivalents | $305,833 | $310,495
Short-term investments    | 120      | 120
Working capital           | 854,507  | 865,664 |


| _id | d1b336fb6 |
| title |  |
| text | Restricted Share Awards

During the years ended December 31, 2017, pursuant to the Company’s 2016 Incentive Plan and 2005 Incentive Plan, the Company granted RSAs. The awards have requisite service periods of three years and vest in increments of 33% on the anniversary of the grant dates. Under each arrangement, shares are issued without direct cost to the employee. RSAs granted to our board vest one year from grant or as of the next annual shareholders meeting, whichever is earlier. The Company estimates the fair value of the

The Company estimates the fair value of the RSAs based upon the market price of the Company’s stock at the date of grant. The RSA grants provide for the payment of dividends on the Company’s common stock, if any, to the participant during the requisite service period, and the participant has voting rights for each share of common stock. The Company recognizes compensation expense for RSAs on a straight-line basis over the requisite service period.

A summary of nonvested RSAs is as follows:
During the year ended December 31, 2019, a total of 106,610 RSAs vested. The Company withheld 32,371 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

 |
| table | | Number of Shares | Weighted Average Grant Date Fair Value
------------------------------ | ---------------- | --------------------------------------
Nonvested at December 31, 2018 | 213,337          | $20.21
Vested                         | -106,610         | 20.17
Forfeited                      | -13,885          | 20.64
Nonvested at December 31, 2019 | 92,842           | $20.13 |


| _id | d1b329dc0 |
| title |  |
| text | Europe
Europe net revenues increased $749,000 in 2019 compared to 2018 (see “Revenues” above). Europe expenses increased $1.3 million from 2018 to 2019 primarily due to increased marketing costs.
Foreign currency movements relative to the U.S. dollar negatively impacted our local currency income from our operations in Europe by approximately $207,000 and $181,000 for 2019 and 2018, respectively.

 |
| table | Year Ended December 31,                   |         |
----------------------------------------- | ------- | -------
                                          | 2019    | 2018
(In thousands)                            |         |
Revenues                                  | $36,898 | $36,149
Income from operations                    | $4,461  | $4,973
Income from operations as a % of revenues | 12%     | 14% |


| _id | d1b2e67a0 |
| title |  |
| text | NOTE 21 — QUARTERLY INFORMATION (UNAUDITED)
(a) Reflects the $157 million net charge related to the enactment of the TCJA for the second quarter and the $2.6 billion net income tax benefit related to the intangible property transfers for the fourth quarter, which together increased net income by $2.4 billion for fiscal year 2019. See Note 12 – Income Taxes for further information.

(b) Reflects the net charge related to the enactment of the TCJA and the net income tax benefit related to the intangible property transfers, which decreased (increased) diluted EPS $0.02 for the second quarter, $(0.34) for the fourth quarter, and $(0.31) for fiscal year 2019.
(c) Reflects the net charge (benefit) related to the enactment of the TCJA of $13.8 billion for the second quarter, $(104) million for the fourth quarter, and $13.7 billion for fiscal year 2018.

(d) Reflects the net charge (benefit) related to the enactment of the TCJA, which decreased (increased) diluted EPS $1.78 for the second quarter, $(0.01) for the fourth quarter, and $1.75 for fiscal year 2018.

 |
| table | (In millions, except per share amounts) |              |             |           |           |
--------------------------------------- | ------------ | ----------- | --------- | --------- | ----------
Quarter Ended                           | September 30 | December 31 | March 31  | June 30   | Total
Fiscal Year 2019                        |              |             |           |           |
Revenue                                 | $  29,084    | $  32,471   | $  30,571 | $  33,717 | $  125,843
Gross margin                            | 19,179       | 20,048      | 20,401    | 23,305    | 82,933
Operating income                        | 9,955        | 10,258      | 10,341    | 12,405    | 42,959
Net income (a)                          | 8,824        | 8,420       | 8,809     | 13,187    | 39,240
Basic earnings per share                | 1.15         | 1.09        | 1.15      | 1.72      | 5.11
Diluted earnings per share (b)          | 1.14         | 1.08        | 1.14      | 1.71      | 5.06
Fiscal Year 2018                        |              |             |           |           |
Revenue                                 | $  24,538    | $ 28,918    | $ 26,819  | $ 30,085  | $ 110,360
Gross margin                            | 16,260       | 17,854      | 17,550    | 20,343    | 72,007
Operating income                        | 7,708        | 8,679       | 8,292     | 10,379    | 35,058
Net income (loss) (c)                   | 6,576        | (6,302)     | 7,424     | 8,873     | 16,571
Basic earnings (loss) per share         | 0.85         | (0.82)      | 0.96      | 1.15      | 2.15
Diluted earnings (loss) per share (d)   | 0.84         | (0.82)      | 0.95      | 1.14      | 2.13 |


| _id | d1b3280ce |
| title |  |
| text | 2. Disaggregation of Revenue
The following table disaggregates our net sales by product category (in millions):

 |
| table | Product Category             | Fiscal Year 2019 | Fiscal Year 2018  | Fiscal Year 2017
---------------------------- | ---------------- | ----------------- | ----------------
Fresh, vacuum-sealed chicken | $1,310.2         | $1,139.3          | $1,339.1
Fresh, chill-packed chicken  | 1,137.7          | 1,158.3           | 1,044.7
Fresh, ice-packed chicken    | 511.5            | 503.6             | 547.1
Prepared chicken             | 240.8            | 207.6             | 170.8
Frozen chicken               | 213.0            | 211.5             | 223.9
Other                        | 27.1             | 15.7              | 16.6
Total net sales              | $3,440.3         | $3,236.0          | $3,342.2 |


| _id | d1b35c2de |
| title |  |
| text | Investments
As of June 30, 2019, the Group’s investments consisted of the following:

As of June 30, 2019, the Group had $445.0 million of investments which were classified as short-term investments on the Group’s consolidated statements of financial position. Additionally, the Group had marketable equity securities totaling $58.9 million, non-marketable equity securities totaling $3.0 million, and certificates of deposit and time deposits totaling $3.7 million which were classified as long-term and were included in other non-current assets on the Group’s consolidated statements of

assets on the Group’s consolidated statements of financial position.

 |
| table | | Amortized Cost | Unrealized Gains      | Unrealized Losses | Fair Value
----------------------------------------- | -------------- | --------------------- | ----------------- | ----------
                                          |                | (U.S. $ in thousands) |                   |
Debt Investments                          |                |                       |                   |
Marketable debt securities                |                |                       |                   |
U.S. treasury securities                  | $101,563       | $203                  | $(7)              | 101,759
Agency securities                         | 26,936         | 33                    | (3)               | 26,966
Certificates of deposit and time deposits | 24,126         | —                     | —                 | 24,126
Commercial paper                          | 94,035         | —                     | —                 | 94,035
Corporate debt securities                 | 201,552        | 292                   | (24)              | 201,820
Total debt investments                    | 448,212        | 528                   | (34)              | 448,706
Equity Investments                        |                |                       |                   |
Marketable equity securities              | 20,270         | 38,662                | —                 | 58,932
Non-marketable equity securities          | 3,000          | —                     | —                 | 3,000
Total equity investments                  | 23,270         | 38,662                | —                 | 61,932
Total investments                         | $471,482       | $39,190               | $(34)             | $510,638 |


| _id | d1b375ee6 |
| title |  |
| text | 12. INCOME TAXES

On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into law in the U.S. The Tax Act significantly revised the future ongoing U.S. corporate income tax by, among other things, lowering the U.S. corporate income tax rate to 21% from 35%, providing full expensing for investments in new and used qualified property made after September 27, 2017, and implementing a territorial tax system. In connection with the transition to the new territorial tax system, a one-time transition tax on certain

tax system, a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries was imposed for fiscal 2018 (the “Transitional Repatriation Tax”), for which an election can be made to pay over eight years. In addition, the Tax Act included two new U.S. tax base erosion provisions, the Global Intangible Low-Taxed Income (“GILTI”) provisions and the Base- Erosion and Anti-Abuse Tax (“BEAT”) provisions, which became effective for the Company during fiscal 2019. The GILTI provisions generally

fiscal 2019. The GILTI provisions generally result in inclusion of income earned by foreign subsidiaries in the U.S. taxable income.

In response to the Tax Act, the SEC issued Staff Accounting Bulletin No. 118 which allowed companies to recognize provisional estimates in the preparation of a Company’s financial statements and permitted up to a one year measurement period after the enactment date of the Tax Act to finalize the recording of the related tax impacts.

During fiscal 2018, the Company recorded a net provisional tax expense of $77.3 million for the estimated effects of the Tax Act. This was comprised of a provisional Transitional Repatriation Tax expense of $116.4 million, offset by a provisional deferred tax benefit of $39.1 million from the remeasurement of U.S. deferred tax assets and liabilities. The Company completed its analysis of the impact of the Tax Act during the third quarter of fiscal 2019, and during the first three quarters of fiscal 2019

during the first three quarters of fiscal 2019 recorded a net discrete income tax benefit adjustment of $17.0 million to the prior year provisional estimates, comprised of a $1.9 million reduction to the provisional Transitional Repatriation Tax and a $15.1 million increase in U.S. deferred tax assets.

The GILTI provisions became effective for the Company in fiscal 2019 and resulted in a net $30.4 million tax expense, consisting of a $70.8 million expense related to the inclusion of unremitted foreign earnings offset by a $40.4 million tax benefit from additional foreign tax credits. The Company has made an accounting policy decision under U.S. GAAP to treat taxes due on future GILTI inclusions in U.S. taxable income as a current-period expense (the “period cost method”).

Income (loss) before income taxes consists of the following components (in thousands):

 |
| table | |            | Fiscal Year |
------------- | ---------- | ----------- | -------
              | 2019       | 2018        | 2017
United States | $(297,975) | $(151,083)  | $2,439
Foreign       | 389,767    | 168,228     | 24,866
Total         | $91,792    | $17,145     | $27,305 |


| _id | d1b39c5b4 |
| title |  |
| text | Indebtedness
The following table presents selected financial information on our indebtedness (in thousands):
As of December 27, 2019, we have various floating- and fixed-rate debt instruments with varying maturities for an aggregate principal amount of $392.1 million. See Note 9 “Debt Obligations” to our consolidated financial statements for a full description of our debt instruments.

On November 22, 2019, we issued $150.0 million aggregate principal amount of 1.875% Convertible Senior Notes (the “Senior Notes”). Approximately $43.2 million of the net proceeds were used to repay all outstanding borrowings then outstanding under our ABL and we intend to use the remainder for working capital and general corporate purposes, which may include future acquisitions.

On July 25, 2018, the holders of the $36.8 million principal amount of convertible subordinated notes that were issued in connection with our acquisition of Del Monte converted these notes and related accrued interest of $0.3 million into 1,246,272 shares of the Company’s common stock.

On June 29, 2018, we entered into an asset-based loan facility (“ABL”) that increased our borrowing capacity from $75.0 million to $150.0 million. Additionally, we reduced the fixed-rate portion of interest charged on our senior secured term loan (“Term Loan”) from 475 basis points to 350 basis points over Adjusted LIBOR as a result of repricings executed on December 14, 2017 and November 16, 2018.

A portion of the interest rate charged on our Term Loan is currently based on LIBOR and, at our option, a component of the interest charged on the borrowings outstanding on our ABL, if any, may bear interest rates based on LIBOR. LIBOR has been the subject of reform and is expected to phase out by the end of fiscal 2021. The consequences of the discontinuation of LIBOR cannot be entirely predicted but could impact the interest expense we incur on these debt instruments. We will negotiate alternatives to

instruments. We will negotiate alternatives to LIBOR with our lenders before LIBOR ceases to be a widely available reference rate.

 |
| table | |                   | Fiscal Year Ended |
--------------------------------------------------- | ----------------- | ----------------- | -----------------
                                                    | December 27, 2019 | December 28, 2018 | December 29, 2017
Senior secured term loan                            | $238,129          | $239,745          | $238,435
Total Convertible debt                              | $154,000          | $—                | $36,750
Borrowings outstanding on asset-based loan facility | $—                | $44,185           | $—
Finance leases and other financing obligations      | $3,905            | $193              | $664 |


| _id | d1b2feed6 |
| title |  |
| text | ITEM 6. SELECTED FINANCIAL DATA
The selected financial data should be read in conjunction with our “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our audited consolidated financial statements and the related notes to those consolidated financial statements included in this Annual Report.

Year-over-year comparisons are significantly affected by our acquisitions, dispositions and construction of towers. Our transaction with Verizon Communications Inc. (“Verizon” and the transaction, the “Verizon Transaction”) and the acquisition of a controlling ownership interest in Viom Networks Limited (“Viom” and the acquisition, the “Viom Acquisition”), which closed in March 2015 and April 2016, respectively, significantly impact the comparability of reported results between periods. Our principal 2019

results between periods. Our principal 2019 acquisitions are described in note 7 to our consolidated financial statements included in this Annual Report.

(2) As of December 31, 2019, 2018, 2017, 2016 and 2015, amounts include $76.8 million, $96.2 million, $152.8 million, $149.3 million, and $142.2 million, respectively, of restricted funds pledged as collateral to secure obligations and cash, the use of which is otherwise limited by contractual provisions.

(3) Total assets as of December 31, 2019 includes the Right-of-use asset recognized in connection with our adoption of the new lease accounting standard described in note 1 to our consolidated financial statements included in this Annual Report

 |
| table | |          |          | As of December 31, |          |
--------------------------------------------------------- | -------- | -------- | ------------------ | -------- | --------
                                                          | 2019     | 2018     | 2017               | 2016     | 2015
(In millions)                                             |          |          |                    |          |
Balance Sheet Data:                                       |          |          |                    |          |
Cash and cash equivalents (including restricted cash) (2) | $1,578.0 | $1,304.9 | $954.9             | $936.5   | $462.9
Property and equipment, net                               | 12,084.4 | 11,247.1 | 11,101.0           | 10,517.3 | 9,866.4
Total assets (3)                                          | 42,801.6 | 33,010.4 | 33,214.3           | 30,879.2 | 26,904.3
Long-term obligations, including current portion          | 24,055.4 | 21,159.9 | 20,205.1           | 18,533.5 | 17,119.0
Redeemable noncontrolling interests                       | 1,096.5  | 1,004.8  | 1,126.2            | 1,091.3  | —
Total American Tower Corporation equity                   | 5,055.4  | 5,336.1  | 6,241.5            | 6,763.9  | 6,651.7 |


| _id | d1b3ad242 |
| title |  |
| text | We recorded a liability for unrecognized tax positions. The aggregate changes in the balance of our gross unrecognized tax benefits were as follows for the years ended March 31:
As of March 31, 2019, we had a liability of $0.6 million related to uncertain tax positions, the recognition of which would affect our effective income tax rate.

Although the timing and outcome of tax settlements are uncertain, it is reasonably possible that during the next 12 months an immaterial reduction in unrecognized tax benefits may occur as a result of the expiration of various statutes of limitations. We are routinely audited and the outcome of tax examinations could also result in a reduction in unrecognized tax benefits. Other changes could occur in the amount of gross unrecognized tax benefits during the next 12 months which cannot be estimated at this

next 12 months which cannot be estimated at this time.

We recognize interest accrued on any unrecognized tax benefits as a component of income tax expense. Penalties are recognized as a component of general and administrative expenses. We recognized interest and penalty expense of less than $0.1 million for the years ended March 31, 2019, 2018 and 2017. As of March 31, 2019 and 2018, we had approximately $0.5 million and $0.8 million of interest and penalties accrued.

In the U.S. we file consolidated federal and state income tax returns where statutes of limitations generally range from three to five years. Although we have resolved examinations with the IRS through tax year ended March 31, 2010, U.S. federal tax years are open from 2006 forward due to attribute carryforwards.

The statute of limitations is open from fiscal year 2012 forward in certain state jurisdictions. We also file income tax returns in international jurisdictions where statutes of limitations generally range from three to seven years. Years beginning after 2008 are open for examination by certain foreign taxing authorities.

 |
| table | (In thousands)                                | 2019  | 2018  | 2017
--------------------------------------------- | ----- | ----- | ------
Balance at April 1                            | $687  | $988  | $1,617
Reductions:                                   |       |       |
Relating to positions taken during prior year | —     | (300) | (604)
Relating to lapse in statute                  | (107) | (1)   | (25)
Balance at March 31                           | $580  | $687  | $988 |


| _id | d1a72d3f0 |
| title |  |
| text | 29. Share-based payments continued
The number of options outstanding and exercisable as at 31 March was as follows:

The weighted average market value per ordinary share for DABP options exercised in 2019 was 438.1p (2018: n/a). The DABP awards outstanding at 31 March 2018 have a weighted average remaining vesting period of 0.8 years (2018: 1.2 years) and a weighted average contractual life of 8.8 years (2018: 9.2 years). The charge for the year includes an estimate of the awards to be granted after the balance sheet date in respect of achievement of 2019 targets.

 |
| table | | 2019      | 2018
----------------------------- | --------- | --------
                              | Number    | Number
Outstanding at 1 April        | 303,880   | 248,263
Options granted in the year   | 71,552    | 127,691
Dividend shares awarded       | 3,343     | 1,306
Options forfeited in the year | –         | (73,380)
Options exercised in the year | (229,378) | –
Outstanding at 31 March       | 149,397   | 303,880
Exercisable at 31 March       | –         | 74,686 |


| _id | d1b398748 |
| title |  |
| text | ITEM 6. SELECTED FINANCIAL DATA
Financial Highlights (dollars in thousands, except per share amounts)
(1) During fiscal 2019, the Company recorded $7.0 million of special tax expense in accordance with regulations under U.S. Tax Reform, and reasserted that certain historical undistributed earnings of two foreign subsidiaries will be permanently reinvested, resulting in a $10.5 million benefit.

(2) During fiscal 2019, the Company recorded $1.7 million, $1.5 million net of taxes, in restructuring costs, which are included in operating income.
(3) During fiscal 2018, the Company recorded $85.9 million of non-recurring income tax expense due to the enactment of U.S. Tax Reform and paid a $13.5 million one-time non-executive employee bonus.

(4) During fiscal 2016, the Company recorded $7.0 million in restructuring costs and $5.2 million in selling and administrative expenses, which are included in operating income. The $7.0 million was largely related to the Company's closure of its manufacturing facility in Fremont, California, and the partial closure of its Livingston, Scotland facility. The $5.2 million was related to accelerated share-based compensation expense recorded pursuant to the retirement agreement with the Company's former Chief

agreement with the Company's former Chief Executive Officer. During fiscal 2015 the Company recorded $1.7 million of restructuring costs, largely related to the Company's consolidation of its manufacturing facilities in Wisconsin, as well as its relocation of manufacturing operations from Juarez, Mexico to Guadalajara, Mexico.

(5) The Company defines return on invested capital ("ROIC"), a non-GAAP financial measure, as tax-effected operating income divided by average invested capital over a rolling five-quarter period. Invested capital is defined as equity plus debt, less cash and cash equivalents, as discussed in Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations - Return on Invested Capital ("ROIC") and Economic Return." For a reconciliation of ROIC and Economic Return to

a reconciliation of ROIC and Economic Return to our financial statements that were prepared in accordance with GAAP, see Exhibit 99.1 to this annual report on Form 10-K.

(6) Fiscal 2015 included 53 weeks. All other periods presented included 52 weeks.

 |
| table | |                    |                    | Fiscal Years Ended |                 |
-------------------------------------------- | ------------------ | ------------------ | ------------------ | --------------- | ------------------
Income Statement Data                        | September 28,
2019 | September 29,
2018 | September 30,
2017 | October 1,
2016 | October 3,
2015(6)
Net sales                                    | $3,164,434         | $2,873,508         | $2,528,052         | $2,556,004      | $2,654,290
Gross profit                                 | 291,838            | 257,600            | 255,855            | 227,359         | 239,550
Gross margin percentage                      | 9.2%               | 9.0%               | 10.1%              | 8.9%            | 9.0%
Operating income (2) (3) (4)                 | 142,055            | 118,283            | 129,908            | 99,439          | 115,436
Operating margin percentage (2) (3) (4)      | 4.5%               | 4.1%               | 5.1%               | 3.9%            | 4.3%
Net income (1) (2) (3) (4)                   | 108,616            | 13,040             | 112,062            | 76,427          | 94,332
Earnings per share (diluted) (1) (2) (3) (4) | $3.50              | $0.38              | $3.24              | $2.24           | $2.74
Cash Flow Statement Data                     |                    |                    |                    |                 |
Cash flows provided by operations            | $115,300           | $66,831            | $171,734           | $127,738        | $76,572
Capital equipment additions                  | 90,600             | 62,780             | 38,538             | 31,123          | 35,076
Balance Sheet Data                           |                    |                    |                    |                 |
Total assets                                 | $2,000,883         | $1,932,642         | $1,976,182         | $1,765,819      | $1,691,760
Total debt obligations                       | 287,980            | 188,617            | 313,107            | 262,509         | 261,806
Shareholders’ equity                         | 865,576            | 921,143            | 1,025,939          | 916,797         | 842,272
Return on invested capital (5)               | 13.1%              | 16.1%              | 16.2%              | 13.8%           | 14.0%
Inventory turnover ratio                     | 3.8x               | 3.6x               | 3.7x               | 4.2x            | 4.3x |


| _id | d1b380a62 |
| title |  |
| text | CONTRACTUAL OBLIGATIONS
Significant contractual obligations as of December 28, 2019 were as follows:
1 Operating lease obligations represent the undiscounted lease payments under non-cancelable leases, but exclude non-lease components.

2 Capital purchase obligations represent commitments for the construction or purchase of property, plant and equipment. They were not recorded as liabilities on our Consolidated Balance Sheets as of December 28, 2019, as we had not yet received the related goods nor taken title to the property.
3 Other purchase obligations and commitments include payments due under various types of licenses and agreements to purchase goods or services.

4 Tax obligations represent the future cash payments related to Tax Reform enacted in 2017 for the one-time transition tax on our previously untaxed foreign earnings.

5 Amounts represent principal payments for all debt obligations and interest payments for fixed-rate debt obligations. Interest payments on floating-rate debt obligations, as well as the impact of fixed-rate to floating-rate debt swaps, are excluded. Debt obligations are classified based on their stated maturity date, regardless of their classification on the Consolidated Balance Sheets.

6 Amounts represent future cash payments to satisfy other long-term liabilities recorded on our Consolidated Balance Sheets, including the short-term portion of these long-term liabilities. Derivative instruments are excluded from the preceding table, because they do not represent the amounts that may ultimately be paid.

7 Total excludes contractual obligations already recorded on our Consolidated Balance Sheets as current liabilities, except for the short-term portions of long-term debt obligations and other long-term liabilities.
The expected timing of payments of the obligations in the preceding table is estimated based on current information. Timing of payments and actual amounts paid may be different, depending on the time of receipt of goods or services, or changes to agreed-upon amounts for some obligations.

Contractual obligations for purchases of goods or services included in “Other purchase obligations and commitments” in the preceding table include agreements that are enforceable and legally binding and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. For obligations with cancellation provisions, the amounts included in the preceding table were limited to the non-cancelable

table were limited to the non-cancelable portion of the agreement terms or the minimum cancellation fee.

For the purchase of raw materials, we have entered into certain agreements that specify minimum prices and quantities based on a percentage of the total available market or based on a percentage of our future purchasing requirements. Due to the uncertainty of the future market and our future purchasing requirements, as well as the non-binding nature of these agreements, obligations under these agreements have been excluded from the preceding table. Our purchase orders for other products are based on our

orders for other products are based on our current manufacturing needs and are fulfilled by our vendors within short time horizons. In addition, some of our purchase orders represent authorizations to purchase rather than binding agreements.

Contractual obligations that are contingent upon the achievement of certain milestones have been excluded from the preceding table. Approximately half of our milestone-based contracts are tooling related for the purchase of capital equipment. These arrangements are not considered contractual obligations until the milestone is met by the counterparty. As of December 28, 2019, assuming that all future milestones are met, the additional required payments would be approximately $498 million.

For the majority of RSUs granted, the number of shares of common stock issued on the date the RSUs vest is net of the minimum statutory withholding requirements that we pay in cash to the appropriate taxing authorities on behalf of our employees. The obligation to pay the relevant taxing authority is excluded from the preceding table, as the amount is contingent upon continued employment. In addition, the amount of the obligation is unknown, as it is based in part on the market price of our common stock

in part on the market price of our common stock when the awards vest.

 |
| table | |         |                  | Payments Due by Period |           |
-------------------------------------------- | ------- | ---------------- | ---------------------- | --------- | -----------------
(In Millions)                                | Total   | Less Than 1 Year | 1–3 Years              | 3–5 Years | More Than 5 Years
Operating lease obligations 1                | $595    | $178             | $232                   | $128      | $57
Capital purchase obligations 2               | 10,918  | 9,300            | 1,595                  | 14        | 9
Other purchase obligations and commitments 3 | 2,757   | 1,636            | 947                    | 147       | 27
Tax obligations 4                            | 4,442   | 10               | 746                    | 1,853     | 1,833
Long-term debt obligations 5                 | 41,328  | 4,706            | 8,510                  | 3,508     | 24,604
Other long-term liabilities 6                | 1,692   | 898              | 640                    | 40        | 114
Total 7                                      | $61,732 | $16,728          | $12,670                | $5,690    | $26,644 |


| _id | d1b313944 |
| title |  |
| text | Liquidity and Capital Resources
As of December 31, 2019, we had approximately $36.1 million of cash and cash equivalents and short term investments, a decrease of approximately $7.2 million from $43.3 million in 2018.

During 2018, our board of directors authorized the repurchase of issued and outstanding shares of our common stock having an aggregate value of up to $10.0 million pursuant to a share repurchase program. No shares were repurchased under this program in 2019, As of December 31, 2019, we have a remaining authorization of $8.0 million for future share repurchases.

In 2013, we made a $5 million commitment to invest in an innovation fund through JVP to invest in early-stage cyber technology companies. We sold our interest in JVP in December 2019. There is no further commitment remaining.

 |
| table | | December 31, |
----------------------- | ------------ | --------------
                        | 2019         | 2018
                        |              | (in thousands)
Cash & cash equivalents | $18,304      | $32,011
Short term investments  | 17,779       | 11,303
                        | $36,083      | $43,314 |


| _id | d1b2ebe26 |
| title |  |
| text | The carrying amounts and fair values of Teradyne’s financial instruments at December 31, 2019 and 2018 were as follows:
(1) The carrying value represents the bifurcated debt component only, while the fair value is based on quoted market prices for the convertible note which includes the equity conversion features.
The fair values of accounts receivable, net and accounts payable approximate the carrying amount due to the short term nature of these instruments.

 |
| table | | December 31, 2019 |                | December 31, 2018 |
------------------------- | ----------------- | -------------- | ----------------- | ----------
                          | Carrying Value    | Fair Value     | Carrying Value    | Fair Value
                          |                   | (in thousands) |                   |
Assets                    |                   |                |                   |
Cash and cash equivalents | $773,924          | $773,924       | $926,752          | $926,752
Marketable securities     | 241,793           | 241,793        | 277,827           | 277,827
Derivative assets         | 528               | 528            | 79                | 79
Liabilities               |                   |                |                   |
Contingent consideration  | 39,705            | 39,705         | 70,543            | 70,543
Derivative liabilities    | 203               | 203            | 514               | 514
Convertible debt (1)      | 394,687           | 1,010,275      | 379,981           | 547,113 |


| _id | d1b3c794e |
| title |  |
| text | 3.1 Financial risk factors (continued)
(a) Market risk (continued)
(iii) Interest rate risk (continued)

During the year ended 31 December 2019, the Group entered into certain interest rate swap contracts to hedge its exposure arising from borrowings carried at floating rates. Under these interest rate swap contracts, the Group agreed with the counterparties to exchange, at specified interval, the difference between fixed contract rates and floating-rate interest amounts calculated by reference to the agreed notional amounts. These interest rate swap contracts had the economic effect of converting borrowings

had the economic effect of converting borrowings from floating rates to fixed rates and were qualified for hedge accounting. Details of the Group’s outstanding interest rate swap contracts as at 31 December 2019 have been disclosed in Note 38.

The effects of the interest rate swaps on the Group’s financial position and performance are as follows:
Swaps currently in place cover majority of the floating-rate borrowing and notes payable principal outstanding.

As at 31 December 2019 and 2018, management considered that any reasonable changes in the interest rates would not result in a significant change in the Group’s results as the Group’s exposure to cash flow interest-rate risk arising from its borrowings and notes payable carried at floating rates after considering the effect of hedging is considered to be insignificant. Accordingly, no sensitivity analysis is presented for interest rate risk.

 |
| table | | 2019        | 2018
----------------------------------------------------------------------- | ----------- | -----------
                                                                        | RMB’Million | RMB’Million
Interest rate swaps                                                     |             |
Carrying amount (non-current (liabilities)/assets)                      | (494)       | 1,663
Notional amount                                                         | 29,423      | 77,630
Maturity date                                                           | 30/7/2021~  | 28/6/2019~
                                                                        | 11/4/2024   | 8/12/2023
Hedge ratio                                                             | 1:1         | 1:1
Change in fair value of outstanding hedging instruments since 1 January | (2,139)     | 181
Change in value of hedged item used to determine hedgeeffectiveness     | (2,139)     | 181
Weighted average hedged rate for the year                               | 2.10%       | 1.60% |


| _id | d1b3a863e |
| title |  |
| text | Restricted Stock and Restricted Stock Units

Historically, we have granted shares of restricted stock to certain employees that have vested in three equal annual installments on the anniversary dates of their grant. However, beginning in 2019, we altered our approach for these grants to replace the grant of restricted stock subject to time-based vesting with the grant of a combination of restricted stock units ("RSUs") subject to time- based vesting and performance-based vesting. Each RSU represents the contingent right to receive a single share of

the contingent right to receive a single share of our common stock upon the vesting of the award. For the year ended December 31, 2019, we granted an aggregate of 280,000 RSUs to certain employees. Of the RSUs granted during 2019, 217,000 of such RSUs are subject to time-based vesting and are scheduled to vest in three equal annual installments on the anniversary dates of the grant. The remaining 63,000 RSUs are performance-based awards that will vest based on our achievement of long-term performance

based on our achievement of long-term performance goals, in particular, based on our levels of 2021 revenue and operating income. The 63,000 shares issuable upon vesting of the performance-based RSUs represent the maximum payout under our performance-based awards, based upon 150% of our target performance for 2021 revenue and operating income (the payout of such awards based on target performance for 2021 revenue and operating income would be 42,000 shares). In the case of the time-based and

42,000 shares). In the case of the time-based and performance-based RSUs, vesting is also subject to the employee's continuous service with us through vesting. In 2018, we granted 280,000 shares of restricted stock to certain employees. Shares issued to employees vest in three equal annual installments on the anniversary dates of their grant. In 2019 and 2018, 194,333 and 182,500 shares of restricted stock vested, respectively.

In addition, in conjunction with our 2018 and 2019 Annual Meetings of Stockholders, we granted RSUs to certain members of our Board of Directors in respect of the annual equity compensation under our non-employee director compensation policy (other members of our Board of Directors elected to receive their annual equity compensation for Board service in the form of stock units under our Deferred Compensation Plan as described below). In 2019 and 2018, we granted 11,600 and 16,286, respectively, RSUs to

granted 11,600 and 16,286, respectively, RSUs to members of our Board of Directors in respect of the annual equity compensation under our non-employee director compensation policy. RSUs issued to our Board of Directors vest at the earlier of the one-year anniversary of their grant or the next annual stockholders' meeting. In 2019 and 2018, 16,286 and 129,865 RSUs, respectively, vested.

The following table summarizes our aggregate restricted stock awards and RSU activity in 2019 and 2018:
We recognized $1.5 million and $0.6 million in stock-based compensation expense, which is recorded in selling, general and administrative expense on the consolidated statement of operations for the years ended December 31, 2019 and 2018, respectively, and we will recognize $4.0 million over the remaining requisite service period for unamortized restricted stock, RSUs and stock options.

Unamortized restricted stock and RSUs expense at December 31, 2019 that will be amortized over the weighted-average remaining service period of 2 years totaled $1.2 million.

 |
| table | | Number of Unvested Shares  | Weighted Average Grant Date Fair Value | Aggregate Grant Date Fair Value of Unvested Shares
---------------------------- | -------------------------- | -------------------------------------- | --------------------------------------------------
Balance at January 1, 2017   | 489,698                    | $1.51                                  | 738,345
Granted                      | 296,287                    | $3.07                                  | $909,600
Vested                       | (312,365)                  | $1.45                                  | $(454,339)
Forfeitures                  | (15,000)                   | $1.41                                  | $(21,150)
Balance at December 31, 2018 | 458,620                    | $2.56                                  | $1,172,456
Granted                      | 291,600                    | $3.75                                  | $1,094,430
Vested                       | (210,619)                  | $2.33                                  | $(490,769)
Forfeitures                  | (37,499)                   | $2.96                                  | $(111,115)
Balance at December 31, 2019 | 502,102                    | $3.32                                  | $1,665,002 |


| _id | d1b37f8a6 |
| title |  |
| text | NOTE 23. EXPENSES BY NATURE
Research and development consists of the following:
The impairment expenses in 2018 and 2019 are related to customer specific projects.
The Company’s operations in the Netherlands, Belgium and the United States receive research and development grants and credits from various sources.

 |
| table | | Year ended December 31, |
----------------------------------------------------- | ----------------------- | --------
                                                      | 2018                    | 2019
Research and development expenses                     | 125,280                 | 150,745
Capitalization of development expenses                | (49,688)                | (60,202)
Amortization of capitalized development expenses      | 12,039                  | 15,597
Research and development grants and credits           | (321)                   | (49)
Total research and development expenses               | 87,310                  | 106,091
Impairment of research and development related assets | 1,278                   | 4,755
Total                                                 | 88,588                  | 110,846 |


| _id | d1b38c628 |
| title |  |
| text | 20. Net Loss Per Share
The Company intends to settle the principal of the Convertible Notes in cash on conversion and calculates diluted earnings per share using the treasury-stock method. Stock-based awards and the conversion feature on the Convertible Notes that have an anti-dilutive effect on the calculation of diluted loss per common share, are excluded from this calculation.

For the years ended December 31, 2019, 2018 and 2017, the number of Common Stock from stock-based awards and the conversion feature on the Convertible Notes that had an anti-dilutive effect on the calculation of diluted earnings per common share were 3.5 million, 4.0 million and 3.6 million respectively.
In periods where a loss attributable to shareholders has been incurred all stock-based awards and the conversion feature on the Convertible Notes are anti-dilutive.

 |
| table | |             | Year Ended December 31, |
----------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | ----------------------- | ----------
                                                                                | 2019        | 2018                    | 2017
                                                                                | $           | $                       | $
Net loss attributable to shareholders of Teekay Corporation for basic loss per share                                                                        | (310,577)   | (79,237)                | (163,276)
Reduction in net earnings due to dilutive impact of stock-based compensation in Teekay LNG, Altera and Teekay Tankers and stock purchase warrants in Altera | —           | —                       | (90)
Net loss attributable to shareholders of Teekay Corporation for diluted loss per share                                                                      | (310,577)   | (79,237)                | (163,366)
Weighted average number of common shares                                                                                | 100,719,224 | 99,670,176              | 86,335,473
Dilutive effect of stock-based compensation                                                                                | —           | —                       | —
Common stock and common stock equivalents                                                                                | 100,719,224 | 99,670,176              | 86,335,473
Loss per common share - basic and diluted                                                                                | (3.08)      | (0.79)                  | (1.89) |


| _id | d1b2fa340 |
| title |  |
| text | A.5 Net assets position
Our total assets at the end of fiscal 2019 were influenced by positive currency translation effects of € 4.0 billion (mainly goodwill), primarily involving the U. S. dollar.

The increase in other current financial assets was driven by higher loans receivable at SFS, which were mainly due to new business and reclassification of non-current loans receivable from other financial assets. While higher loans receivable and receivables from finance leases from new business at SFS contributed also to growth in other financial assets, a large extent of the overall increase resulted from increased fair values of derivative financial instruments.

Inventories increased in several industrial businesses, with the build-up most evident at SGRE, Mobility and Siemens Healthineers.
Assets classified as held for disposal increased mainly due to reclassification of two investments from investments accounted for using the equity method.
The increase in goodwill included the acquisition of Mendix.
Deferred tax assets increased mainly due to income tax effects related to remeasurement of defined benefits plans.

The increase in other assets was driven mainly by higher net defined benefit assets from actuarial gains.

 |
| table | |         | Sep 30, |
------------------------------------------------- | ------- | ------- | --------
(in millions of €)                                | 2019    | 2018    | % Change
Cash and cash equivalents                         | 12,391  | 11,066  | 12 %
Trade and other receivables                       | 18,894  | 18,455  | 2 %
Other current financial assets                    | 10,669  | 9,427   | 13 %
Contract assets                                   | 10,309  | 8,912   | 16 %
Inventories                                       | 14,806  | 13,885  | 7 %
Current income tax assets                         | 1,103   | 1,010   | 9 %
Other current assets                              | 1,960   | 1,707   | 15 %
Assets classified as held for disposal            | 238     | 94      | 154 %
Total current assets                              | 70,370  | 64,556  | 9 %
Goodwill                                          | 30,160  | 28,344  | 6 %
Other intangible assets                           | 9,800   | 10,131  | (3) %
Property, plant and equipment                     | 12,183  | 11,381  | 7 %
Investments accounted for using the equity method | 2,244   | 2,579   | (13) %
Other financial assets                            | 19,843  | 17,774  | 12 %
Deferred tax assets                               | 3,174   | 2,341   | 36 %
Other assets                                      | 2,475   | 1,810   | 37 %
Total non-current assets                          | 79,878  | 74,359  | 7 %
Total assets                                      | 150,248 | 138,915 | 8 % |


| _id | d1b347e60 |
| title |  |
| text | Beginning fiscal 2011, we replaced the ownership share grants with time-vested RSUs for certain Vice Presidents and Officers that vest ratably overfour to five years and have a 50% or 100% holding requirement on settled shares, which must be held until termination. There were146,268 of such RSUs outstanding as of September 29, 2019. RSUs issued to non-management directors and certain other employees vest12 months from the date of grant, or upon termination of board service if the director or employee elects

board service if the director or employee elects to defer receipt, and totaled 69,411 units outstanding as of September 29, 2019. RSUs issued to certain other employees either cliff vest or vest ratably over three years and totaled 35,864 units outstanding as of September 29, 2019. These awards are amortized to compensation expense over the estimated vesting period based upon the fair value of our common stock on the award date discounted by the present value of the expected dividend stream over the

value of the expected dividend stream over the vesting period.

The following is a summary of RSU activity for fiscal 2019:

As of September 29, 2019, there was approximately $7.4 million of total unrecognized compensation cost related to RSUs, which is expected to be recognized over a weighted-average period of 2.2 years. The weighted-average grant date fair value of awards granted was$86.08, $94.93, and $102.42 in fiscal years 2019, 2018, and 2017, respectively. In fiscal years 2019, 2018, and 2017, the total fair value of RSUs that vested and were released was$4.7 million, $4.4 million, and $4.4 million, respectively.

 |
| table | |          | Weighted-
-------------------------------------- | -------- | -------------
                                       |          | Average Grant
                                       |          | Date Fair
                                       | Shares   | Value
RSUs outstanding at September 30, 2018 | 288,098  | $64.57
Granted                                | 93,686   | $86.08
Released                               | (55,642) | $84.23
Forfeited                              | (14,297) | $94.00
RSUs outstanding at September 29, 2019 | 311,845  | $66.18 |


| _id | d1b391812 |
| title |  |
| text | IBM Working Capital
Working capital decreased $10,200 million from the year-end
2018 position. The key changes are described below:

Current assets decreased $10,726 million ($10,477 million adjusted for currency) due to: • A decline in receivables of $6,769 million ($6,695 million adjusted for currency) driven by a decline in financing receivables of $8,197 million primarily due to the wind down of OEM IT commercial financing operations; partially offset by an increase in other receivables of $989 million primarily related to divestitures; and • A decrease of $3,213 million ($3,052 million adjusted for currency) in cash and cash

million adjusted for currency) in cash and cash equivalents, restricted cash, and marketable securities primarily due to retirement of debt.

Current liabilities decreased $526 million ($449 million adjusted
for currency) as a result of:

• A decrease in accounts payable of $1,662 million primarily due to the wind down of OEM IT commercial financing operations; and • A decrease in short-term debt of $1,410 million due to maturities of $12,649 million and a decrease in commercial paper of $2,691 million; partially offset by reclassifications of $7,592 million from long-term debt to reflect upcoming maturities and issuances of $6,334 million; offset by • An increase in operating lease liabilities of $1,380 million as a result of the adoption

of $1,380 million as a result of the adoption of the new leasing standard on January 1, 2019; and • An increase in deferred income of $861 million ($890 million adjusted for currency).

 |
| table | ($ in millions)     |         |
------------------- | ------- | -------
At December 31:     | 2019    | 2018
Current assets      | $38,420 | $49,146
Current liabilities | 37,701  | 38,227
Working capital     | $   718 | $10,918
Current ratio       | 1.02:1  | 1.29:1 |